EX-10.18.3







Exhibit
10.18.3






EXECUTION COPY




Date:
January 5, 2009




ORPOWER4 INC.

as Company




and




DEG — DEUTSCHE INVESTITIONS- UND

ENTWICKLUNGSGESELLSCHAFT MBH




SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION POUR LA

COOPÉRATION ECONOMIQUE

as Original Lenders




and




DEG — DEUTSCHE INVESTITIONS- UND

ENTWICKLUNGSGESELLSCHAFT MBH

as Global Agent




and




BNY CORPORATE TRUSTEE SERVICES LIMITED

as Offshore Security Agent




 






COMMON TERMS AGREEMENT

in relation to the financing of the 48MW Olkaria III

geothermal power project in Kenya





 











 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	1
	 	DEFINITIONS AND INTERPRETATION	 	 	1	 
	1.1
	 	Definitions	 	 	1	 
	1.2
	 	Construction	 	 	43	 
	1.3
	 	Financial Calculations	 	 	45	 
	1.4
	 	Third Party Rights	 	 	46	 
	 
	 	 	 	 	 	 
	2
	 	FACILITIES	 	 	46	 
	2.1
	 	General	 	 	46	 
	2.2
	 	Finance Parties’ Rights and Obligations	 	 	46	 
	 
	 	 	 	 	 	 
	3
	 	PURPOSE	 	 	46	 
	3.1
	 	Purpose	 	 	46	 
	3.2
	 	Monitoring	 	 	47	 
	 
	 	 	 	 	 	 
	4
	 	CONDITIONS	 	 	47	 
	4.1
	 	Conditions of First Disbursement	 	 	47	 
	4.2
	 	Conditions of Each Disbursement	 	 	47	 
	4.3
	 	Conditions of Second Disbursement	 	 	48	 
	4.4
	 	Waiver of Conditions of Disbursement	 	 	48	 
	4.5
	 	Suspension or Cancellation by Lenders	 	 	49	 
	4.6
	 	Participation Agreement	 	 	50	 
	 
	 	 	 	 	 	 
	5
	 	DISBURSEMENT	 	 	50	 
	5.1
	 	Delivery of a Drawdown Request	 	 	50	 
	5.2
	 	Completion of a Drawdown Request	 	 	51	 
	5.3
	 	Making of Loans	 	 	51	 
	5.4
	 	Delay of Loan	 	 	51	 
	5.5
	 	True-up Disbursement	 	 	52	 
	 
	 	 	 	 	 	 
	6
	 	REPAYMENT	 	 	53	 
	6.1
	 	Repayment of Loans	 	 	53	 
	6.2
	 	Reborrowing	 	 	53	 
	6.3
	 	Other Debt Service Obligations	 	 	53	 
	 
	 	 	 	 	 	 
	7
	 	VOLUNTARY PREPAYMENT AND CANCELLATION	 	 	53	 
	7.1
	 	Voluntary Cancellation	 	 	53	 
	7.2
	 	Voluntary Prepayment	 	 	54	 
	7.3
	 	Right of Repayment and Cancellation in Relation to a Single Lender	 	 	54	 
	7.4
	 	Restrictions	 	 	56	 
	 
	 	 	 	 	 	 
	8
	 	MANDATORY PREPAYMENTS	 	 	56	 
	8.1
	 	Mandatory Prepayment due to Illegality	 	 	56	 
	8.2
	 	Mandatory Prepayment of Insurance Proceeds and Compensation Proceeds	 	 	57	 






-i-









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	8.3
	 	Mandatory Prepayment of Non-Delay Liquidated Damages	 	 	59	 
	8.4
	 	Mandatory Prepayment of Termination Payment	 	 	59	 
	8.5
	 	Application of Prepayments	 	 	59	 
	 
	 	 	 	 	 	 
	9
	 	INTEREST AND BREAK COSTS	 	 	59	 
	9.1
	 	Interest	 	 	59	 
	9.2
	 	Break Costs	 	 	59	 
	9.3
	 	Default Interest	 	 	60	 
	9.4
	 	Fixed Rate Loans	 	 	60	 
	9.5
	 	Fixed Rate Basis	 	 	61	 
	9.6
	 	Absence of quotations	 	 	61	 
	9.7
	 	Market disruption	 	 	62	 
	9.8
	 	Alternative basis of interest or funding	 	 	62	 
	 
	 	 	 	 	 	 
	10
	 	FEES	 	 	62	 
	10.1
	 	Global Agency Fee	 	 	62	 
	10.2
	 	Front-end Fees	 	 	62	 
	10.3
	 	Commitment Fees	 	 	63	 
	10.4
	 	Security Agents’ Fees	 	 	63	 
	10.5
	 	Account Banks’ Fees	 	 	63	 
	10.6
	 	Monitoring Fees	 	 	63	 
	 
	 	 	 	 	 	 
	11
	 	TAXES	 	 	63	 
	11.1
	 	Gross-up	 	 	63	 
	11.2
	 	Tax indemnity	 	 	64	 
	11.3
	 	Tax Credit	 	 	65	 
	11.4
	 	Stamp taxes	 	 	65	 
	11.5
	 	Value added taxes	 	 	65	 
	 
	 	 	 	 	 	 
	12
	 	INCREASED COSTS	 	 	66	 
	12.1
	 	Increased Costs	 	 	66	 
	12.2
	 	Increased Cost Claims	 	 	67	 
	12.3
	 	Exceptions	 	 	67	 
	 
	 	 	 	 	 	 
	13
	 	OTHER INDEMNITIES	 	 	67	 
	13.1
	 	Currency Indemnity	 	 	67	 
	13.2
	 	Other Indemnities	 	 	68	 
	13.3
	 	Additional Indemnities in Favour of Global Agent and the Security Agents	 	 	69	 
	 
	 	 	 	 	 	 
	14
	 	MITIGATION BY THE FINANCE PARTIES	 	 	69	 
	14.1
	 	Mitigation	 	 	69	 
	14.2
	 	Limitation of Liability	 	 	70	 
	 
	 	 	 	 	 	 
	15
	 	COSTS AND EXPENSES	 	 	70	 
	15.1
	 	Transaction Expenses	 	 	70	 
	15.2
	 	Amendment Costs	 	 	70	 
	15.3
	 	Enforcement Costs	 	 	71	 






-ii-









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	15.4
	 	Advisors	 	 	71	 
	 
	 	 	 	 	 	 
	16
	 	FINANCIAL REPORTS	 	 	71	 
	16.1
	 	Financial Information	 	 	71	 
	16.2
	 	Requirements as to Financial Statements	 	 	72	 
	16.3
	 	Change to Accounting Policies	 	 	73	 
	 
	 	 	 	 	 	 
	17
	 	REPORTING REQUIREMENTS	 	 	74	 
	17.1
	 	Reporting Requirements	 	 	74	 
	17.2
	 	Form of Reports	 	 	76	 
	17.3
	 	Accuracy and Completeness	 	 	76	 
	 
	 	 	 	 	 	 
	18
	 	OPERATING BUDGETS	 	 	77	 
	18.1
	 	Operating Budgets	 	 	77	 
	18.2
	 	Increase in Operating Budget	 	 	77	 
	 
	 	 	 	 	 	 
	19
	 	FINANCIAL CALCULATIONS	 	 	78	 
	19.1
	 	Economic and Financial Assumptions	 	 	78	 
	19.2
	 	Technical Assumptions	 	 	78	 
	19.3
	 	Preparation of Financial Test	 	 	78	 
	19.4
	 	Interim Financial Tests	 	 	80	 
	19.5
	 	Calculation of Interim Financial Tests	 	 	80	 
	19.6
	 	Changes Required by Lenders	 	 	81	 
	19.7
	 	Revised Financial Test	 	 	81	 
	19.8
	 	Prevailing Assumptions	 	 	81	 
	19.9
	 	Equity Cure	 	 	81	 
	 
	 	 	 	 	 	 
	20
	 	FINANCIAL MODEL	 	 	82	 
	20.1
	 	Amendments to the Financial Model	 	 	82	 
	20.2
	 	Resolution of Disputes	 	 	83	 
	20.3
	 	Custody of the Financial Model	 	 	83	 
	20.4
	 	Conflict	 	 	83	 
	 
	 	 	 	 	 	 
	21
	 	EXPERT	 	 	83	 
	21.1
	 	Appointment of Expert	 	 	83	 
	21.2
	 	Conflicting Interest	 	 	84	 
	21.3
	 	Expert’s Terms of Reference	 	 	84	 
	21.4
	 	Determination by Expert	 	 	85	 
	21.5
	 	Expert not Arbitrator	 	 	85	 
	21.6
	 	Expert’s Decision	 	 	85	 
	21.7
	 	Revised Financial Test/Operating Budget	 	 	85	 
	21.8
	 	Costs	 	 	85	 
	 
	 	 	 	 	 	 
	22
	 	INSURANCES	 	 	86	 
	22.1
	 	Insurance Requirements	 	 	86	 
	 
	 	 	 	 	 	 
	23
	 	REPRESENTATIONS AND WARRANTIES	 	 	86	 
	23.1
	 	Representations and Warranties	 	 	86	 






-iii-









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	23.2
	 	Lenders’ Reliance	 	 	93	 
	23.3
	 	Repetition	 	 	93	 
	 
	 	 	 	 	 	 
	24
	 	AFFIRMATIVE COVENANTS	 	 	94	 
	24.1
	 	Affirmative Covenants	 	 	94	 
	 
	 	 	 	 	 	 
	25
	 	NEGATIVE COVENANTS	 	 	102	 
	25.1
	 	Negative Covenants	 	 	102	 
	 
	 	 	 	 	 	 
	26
	 	EVENTS OF DEFAULT	 	 	109	 
	26.1
	 	Events of Default	 	 	109	 
	26.2
	 	Remedies on an Event of Default	 	 	116	 
	26.3
	 	Expropriation or Bankruptcy	 	 	117	 
	 
	 	 	 	 	 	 
	27
	 	CHANGES TO LENDERS	 	 	117	 
	27.1
	 	Assignments and Transfers by the Lenders	 	 	117	 
	27.2
	 	Procedure for Assignment or Transfer	 	 	117	 
	27.3
	 	Copy of Transfer Certificate to Company	 	 	119	 
	27.4
	 	Limitation of Responsibility of Lenders	 	 	119	 
	27.5
	 	Assignment or transfer fee	 	 	120	 
	 
	 	 	 	 	 	 
	28
	 	ASSIGNMENTS AND TRANSFERS BY THE PARTIES	 	 	120	 
	 
	 	 	 	 	 	 
	29
	 	AGENCY PROVISIONS	 	 	121	 
	29.1
	 	Appointment and Duties of the Global Agent	 	 	121	 
	29.2
	 	Relationship	 	 	121	 
	29.3
	 	Delegation	 	 	121	 
	29.4
	 	Directions	 	 	122	 
	29.5
	 	Business with the Group	 	 	123	 
	29.6
	 	Default	 	 	123	 
	29.7
	 	Responsibility	 	 	123	 
	29.8
	 	Information	 	 	125	 
	29.9
	 	Reliance	 	 	126	 
	29.10
	 	Exclusion of Liability	 	 	126	 
	29.11
	 	Compliance	 	 	127	 
	29.12
	 	Relationship with Lenders	 	 	127	 
	29.13
	 	Individual position of an Administrative Party	 	 	128	 
	29.14
	 	Lenders’ Indemnity to the Global Agent	 	 	128	 
	29.15
	 	Notice period	 	 	129	 
	 
	 	 	 	 	 	 
	30
	 	RESIGNATION AND REMOVAL OF AGENTS	 	 	129	 
	30.1
	 	Resignation and Removal of the Global Agent	 	 	129	 
	30.2
	 	Replacement of the Global Agent	 	 	129	 
	30.3
	 	Rights and Obligations	 	 	130	 
	 
	 	 	 	 	 	 
	31
	 	DISCLOSURE OF INFORMATION	 	 	130	 
	31.1
	 	Disclosure by Finance Parties	 	 	130	 
	31.2
	 	Disclosure by the Company	 	 	132	 






-iv-









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	32
	 	CONDUCT OF BUSINESS BY THE FINANCE PARTIES	 	 	132	 
	 
	 	 	 	 	 	 
	33
	 	PAYMENT MECHANICS	 	 	133	 
	33.1
	 	Payments to Lenders and the Company	 	 	133	 
	33.2
	 	Distributions by the Global Agent	 	 	133	 
	33.3
	 	Clawback	 	 	133	 
	33.4
	 	No Set-Off by the Company	 	 	133	 
	33.5
	 	Business Days	 	 	134	 
	33.6
	 	Currency of Account	 	 	134	 
	33.7
	 	Change of Currency	 	 	134	 
	33.8
	 	Partial payments	 	 	135	 
	33.9
	 	Disruption to payment systems	 	 	135	 
	33.10
	 	Timing of payments	 	 	136	 
	 
	 	 	 	 	 	 
	34
	 	NOTICES	 	 	136	 
	34.1
	 	Communications in Writing	 	 	136	 
	34.2
	 	Addresses	 	 	137	 
	34.3
	 	Delivery	 	 	138	 
	34.4
	 	Use of websites	 	 	139	 
	34.5
	 	Notification of Address, Fax number	 	 	140	 
	34.6
	 	English Language	 	 	140	 
	 
	 	 	 	 	 	 
	35
	 	CALCULATIONS AND CERTIFICATES	 	 	140	 
	35.1
	 	Accounts	 	 	140	 
	35.2
	 	Certificates and Determinations	 	 	140	 
	35.3
	 	Day Count Convention	 	 	141	 
	 
	 	 	 	 	 	 
	36
	 	PARTIAL INVALIDITY	 	 	141	 
	 
	 	 	 	 	 	 
	37
	 	AMENDMENTS AND WAIVERS	 	 	141	 
	37.1
	 	Procedure	 	 	141	 
	37.2
	 	Exceptions	 	 	141	 
	37.3
	 	Waivers and remedies cumulative	 	 	143	 
	 
	 	 	 	 	 	 
	38
	 	TERMINATION	 	 	143	 
	 
	 	 	 	 	 	 
	39
	 	COUNTERPARTS	 	 	143	 
	 
	 	 	 	 	 	 
	40
	 	GOVERNING LAW	 	 	143	 
	 
	 	 	 	 	 	 
	41
	 	ENFORCEMENT	 	 	144	 
	41.1
	 	Jurisdiction	 	 	144	 
	41.2
	 	Arbitration	 	 	144	 
	41.3
	 	Service of Process	 	 	145	 
	41.4
	 	Waiver	 	 	146	 
	 
	 	 	 	 	 	 
	42
	 	ENTIRE AGREEMENT	 	 	146	 






-v-









 






	 	 	 	 	 
	 	 	Page	 
	 
	SCHEDULE 1
	 	 	 	 
	The Original Lenders
	 	 	147	 
	 
	 	 	 	 
	SCHEDULE 2
	 	 	 	 
	Conditions of Disbursement
	 	 	148	 
	 
	 	 	 	 
	SCHEDULE 3
	 	 	 	 
	Project Costs and Financial Plan
	 	 	160	 
	 
	 	 	 	 
	SCHEDULE 4
	 	 	 	 
	Form of Transfer Certificate
	 	 	162	 
	 
	 	 	 	 
	SCHEDULE 5
	 	 	 	 
	Form of Accession Letter
	 	 	164	 
	 
	 	 	 	 
	SCHEDULE 6
	 	 	 	 
	Economic and Financial Assumptions
	 	 	166	 
	 
	 	 	 	 
	SCHEDULE 7
	 	 	 	 
	Technical Assumptions
	 	 	167	 
	 
	 	 	 	 
	SCHEDULE 8
	 	 	 	 
	Initial Operating Budget
	 	 	168	 
	 
	 	 	 	 
	SCHEDULE 9
	 	 	 	 
	Form of Operating Report
	 	 	169	 
	 
	 	 	 	 
	SCHEDULE 10
	 	 	 	 
	Form of Insurance Review
	 	 	179	 
	 
	 	 	 	 
	SCHEDULE 11
	 	 	 	 
	Repayment Schedule
	 	 	180	 
	 
	 	 	 	 
	SCHEDULE 12
	 	 	 	 
	Insurance Requirements
	 	 	181	 
	 
	 	 	 	 
	EXHIBIT A
	 	 	 	 
	INSURANCES
	 	 	194	 
	 
	 	 	 	 
	EXHIBIT B
	 	 	 	 
	INSURANCE POLICY ENDORSEMENTS
	 	 	 	 
	PART 1
	 	 	 	 
	(ENDORSEMENTS TO DIRECT INSURANCE POLICIES)
	 	 	198	 
	 
	 	 	 	 
	PART 2
	 	 	 	 
	(REINSURANCE POLICY ENDORSEMENTS
FOR REINSURANCE POLICIES IN KENYA)
	 	 	204	 






-vi-









 






	 	 	 	 	 
	 	 	Page	 
	 
	PART 3
	 	 	 	 
	(REINSURANCE POLICY ENDORSEMENT
FOR OFFSHORE REINSURANCE POLICIES)
	 	 	210	 
	 
	 	 	 	 
	EXHIBIT C
	 	 	 	 
	BROKERS’ LETTER OF CONFIRMATION AND UNDERTAKING
	 	 	216	 
	 
	 	 	 	 
	SCHEDULE 13
	 	 	 	 
	Form of Equity Distribution Transfer Certificate
	 	 	219	 
	 
	 	 	 	 
	SCHEDULE 14
	 	 	 	 
	HIV Protective Measures
	 	 	222	 
	 
	 	 	 	 
	SCHEDULE 15
	 	 	 	 
	Authorisations
	 	 	223	 
	 
	 	 	 	 
	SCHEDULE 16
	 	 	 	 
	Form of Drawdown Request
	 	 	226	 
	 
	 	 	 	 
	SCHEDULE 17
	 	 	 	 
	Corporate Structure Chart
	 	 	228	 
	 
	 	 	 	 
	SCHEDULE 18
	 	 	 	 
	Incumbency Certificate
	 	 	229	 
	 
	 	 	 	 
	SCHEDULE 19
	 	 	 	 
	Form of Financial Statements
	 	 	 	 
	Part 1
	 	 	 	 
	Form of Unaudited Financial Statements for Company
	 	 	230	 
	 
	 	 	 	 
	Part 2
	 	 	 	 
	Form of Audited Financial Statements for Kenyan Branch
	 	 	233	 
	 
	 	 	 	 
	Part 3
	 	 	 	 
	Form of Audited Financial Statements for Company
	 	 	248	 
	 
	 	 	 	 
	Part 4
	 	 	 	 
	Form of Unaudited Financial Statements for Kenyan branch
	 	 	273	 
	 
	 	 	 	 
	SCHEDULE 20
	 	 	 	 
	Excluded Activities
	 	 	276	 
	 
	 	 	 	 
	SCHEDULE 21
	 	 	 	 
	Calculation of the Mandatory Cost
	 	 	278	 
	 
	 	 	 	 
	SCHEDULE 22
	 	 	 	 
	Site Plan
	 	 	281	 






-vii-









 






	 	 	 	 	 
	 	 	Page	 
	 
	SCHEDULE 23
	 	 	 	 
	Form of Project Costs Reports
	 	 	282	 
	 
	 	 	 	 
	SCHEDULE 24
	 	 	 	 
	Form of PPA Direct Agreement
	 	 	285	 
	 
	 	 	 	 
	SCHEDULE 25
	 	 	 	 
	Form of Compliance Certificate
	 	 	302	 
	 
	 	 	 	 
	SCHEDULE 26
	 	 	 	 
	Form of Environmental and Social Action Plan
	 	 	304	 
	 
	 	 	 	 
	SCHEDULE 27
	 	 	 	 
	Form of ERC Comfort Letter
	 	 	308	 
	 
	 	 	 	 
	SCHEDULE 28
	 	 	 	 
	Form of Lender KPLC Confirmation
	 	 	310	 
	 
	 	 	 	 
	SCHEDULE 29
	 	 	 	 
	Form of Agent Deed of Accession
	 	 	311	 
	 
	 	 	 	 
	SIGNATORIES
	 	 	316	 







-viii-











 





COMMON TERMS AGREEMENT




THIS AGREEMENT by and between





	(1)	 	ORPOWER4 INC., a limited liability company incorporated under the laws of the Cayman Islands,
with its registered office at Ugland House, South Church Street, P.O. Box 309, George Town,
Grand Cayman, Cayman Islands, British Virgin Islands, and registered in the Republic of Kenya
as a foreign company having a place of business in the Republic of Kenya under Certificate of
Compliance number F.53/98 with its principal office located at Off Moi South Lake Road,
Hellsgate National Park, P.O. Box 1566-20117, Naivasha, Kenya (the “Company”);
	 
	(2)	 	DEG — DEUTSCHE INVESTITIONS- UND ENTWICKLUNGSGESELLSCHAFT MBH, as the global agent on behalf
of the Finance Parties (the “Global Agent”);
	 
	(3)	 	BNY CORPORATE TRUSTEE SERVICES LIMITED, as the offshore security agent (the “Offshore
Security Agent”); and
	 
	(4)	 	the LENDERS, as defined herein,




collectively referred to as the “Parties” (or, individually, a “Party”).




WHEREAS:





	(A)	 	The Company has entered into a Power Purchase Agreement with KPLC in relation to the sale of
capacity and energy at the Plant, to be constructed, developed and operated pursuant to the
Project Documents.
	 
	(B)	 	The Parties to this Agreement have agreed to enter into this Agreement to record the common
terms and conditions on which the Lenders propose to make available to the Company certain
loan facilities (each of which will be recorded in a separate Loan Agreement) in relation to
the Project.




NOW, THEREFORE, the parties agree as follows:



IT IS AGREED as follows:





	1	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Definitions
	 
	 	 	In this Agreement:
	 
	 	 	“Accession Letter” means a document substantially in the form set out in Schedule 5 (Form
of Accession Letter).




1









 












	 	 	“Account Bank” means either the Offshore Account Bank or the Onshore Account Bank and
“Account Banks” means both such Persons.
	 
	 	 	“Accounting Principles” means GAAP or IFRS, as the case may be, in each case consistently
applied.
	 
	 	 	“Acknowledgement from the Commissioner of Lands” means the letter agreement entered or to
be entered into on or about the date hereof amongst the Company, the Global Agent, the
Onshore Security Agent and GOK in relation to the Land Agreements pursuant to which GOK
acknowledges the Lenders’ rights.
	 
	 	 	“Administrative Party” means the Global Agent, the Onshore Security Agent, the Offshore
Security Agent, the Onshore Account Bank or the Offshore Account Bank.
	 
	 	 	“AfD” means Agence Française de Développement.
	 
	 	 	“Affiliate” means a Subsidiary or a Holding Company of a Person or any other Subsidiary of
that Holding Company.
	 
	 	 	“Agent Deed of Adherence” means the deed of adherence substantially in the form set out in
Schedule 29 (Form of Agent Deed of Adherence).
	 
	 	 	“Agreement” means this Common Terms Agreement, together with its Schedules.
	 
	 	 	“Annual Environmental and Social Monitoring Report” means the annual monitoring report to
be provided by a NEMA-approved consultant acceptable to the Global Agent (acting on the
instructions of the Lenders) describing the environmental and social performance of the
Company, demonstrating compliance by the Company with the Environmental and Social
Requirements and, if the Company fails to comply with the Environmental and Social
Requirements detailing such non-compliance together with the action being taken to remedy
such failure.
	 
	 	 	“Appointing Body” means:






	 	(a)	 	in relation to the Economic and Financial Assumptions, the president for the
time being of the Institute of Chartered Accountants in England and Wales;
	 
	 	(b)	 	in relation to the any Assumptions relating to Tax, the president for the
time being of the Institute of Chartered Accountants in England and Wales;
	 
	 	(c)	 	in relation to the Technical Assumptions, the president for the time being of
the Institution of Mechanical Engineers of 1 Birdcage Walk, Westminster, London, SW1H
9JJ, UK; and




2









 












	 	(d)	 	in relation to the Financial Model, the president for the time being of the
Institute of Chartered Accountants in England and Wales.






	 	 	“Assumptions” means:






	 	(a)	 	the Economic and Financial Assumptions;
	 
	 	(b)	 	the Technical Assumptions; and
	 
	 	(c)	 	any other applicable assumptions agreed between the Company and the Global
Agent (acting on the instructions of the Lenders),






	 	 	each as they may be amended from time to time pursuant to this Agreement.
	 
	 	 	“Auditors” means PricewaterhouseCoopers or such other firm as the Company appoints from
time to time as its auditors in accordance with Clause 24.1(e) (Auditors).
	 
	 	 	“Authorisations” means any consent, registration, filing, agreement, notarisation,
certificate, licence, approval, permit, authority or exemption from, by or with any
Authority, whether given by express action or deemed given by failure to act within any
specified time period and all corporate, creditors’ and shareholders’ approvals or
consents.
	 
	 	 	“Authorised Representative” means any natural person who is duly authorised by any Person
to act on its behalf for the relevant purposes and, in the case of the Company, who is an
officer of the Company and whose name and a specimen of whose signature appear on the
Certificate of Incumbency most recently delivered by the Company to the Global Agent.
	 
	 	 	“Authority” means:






	 	(a)	 	any national, supranational, regional or local government or governmental,
administrative, fiscal, judicial or government owned body, department, political
subdivision, instrumentality, agency, regulatory authority, corporation or commission,
court or tribunal; or
	 
	 	(b)	 	any Person, whether or not government owned or controlled and howsoever
constituted or called, that exercises the functions of a central bank.






	 	 	“Availability Period” means, in respect of each Facility, the period from and including the
date of this Agreement to and including the earliest of:






	 	(a)	 	three Months immediately prior to the First Repayment Date or such longer
period as the Global Agent (acting on the instructions of the Lenders) may agree in
respect the Facilities;




3









 












	 	(b)	 	twelve Months after Financial Close; and
	 
	 	(c)	 	the first Business Day on which the Available Commitment of such Facility is
zero.






	 	 	“Available Commitment” means, in respect of each Lender under its relevant Facility, that
Lender’s Commitment minus:






	 	(a)	 	the amount of any Loans made available by that Lender or, where relevant, its
participation in any Loans made available under the relevant Facility; and
	 
	 	(b)	 	in relation to any proposed Disbursement, the amount of any Loans or, where
relevant, its participation in such Loans which have been or are due to be made on or
before the proposed Disbursement Date under the relevant Facility.






	 	 	“Available Facility” means, in respect of any Facility, the aggregate for the time being of
the Available Commitment of each of the Lenders making or participating in Loans under that
Facility.
	 
	 	 	“Base Case” means the base case financial projections for the Project and relating to the
economic and financial prospects of the Company, based on certain Assumptions agreed prior
to Financial Close and demonstrating, inter alia, the Projected Debt Service Cover Ratio
over the life of the Facilities and forming part of the Financial Model.
	 
	 	 	“Base Equity Amount” means the aggregate equity investment from the Shareholders from time
to time being the aggregate amount paid in consideration for the issue of equity share
capital, share premium account, retained earnings of the Company and the aggregate
principal amount of subordinated loans made available to the Company.
	 
	 	 	“Basic Terms and Conditions of Employment” means wage, working hours, labour contract and
occupation health and safety issues based on the relevant ILO Conventions 26 and 131
(Remuneration) 1 (working hours) and 155 (Health and Safety) and recommendations.
	 
	 	 	“Break Costs” means in respect of the Loans other than any Fixed Rate Loan, the amount (if
any) by which (i) the interest which a Lender should have received for the period from the
date of receipt of all or any part of such Loan or its participation in such Loan or Unpaid
Sum (as applicable) to the last day of the Interest Period (had the principal amount or
Unpaid Sum (as applicable) been paid on the last day of the Interest Period) exceeds (ii)
the amount which such Lender would be able to obtain by placing an amount equal to the
principal amount or Unpaid Sum (as applicable) received by it on deposit with a leading
bank in the Interbank Market for a period starting on the Business Day following receipt or
recovery and ending on the last day of the Interest Period.




4









 












	 	 	“Business Day” means a day (other than a Saturday, Sunday or any other day which is a legal
holiday) on which banks are open for general business in:






	 	(a)	 	London, Paris, New York, Nairobi and Frankfurt; and
	 
	 	(b)	 	solely for the purposes of:






	 	(i)	 	the giving of notices (including a Drawdown Request) to or
by;
	 
	 	(ii)	 	the giving of any instruction by; or
	 
	 	(iii)	 	the granting of any waiver or consent by,






	 	 	each Lender, in their respective principal place of doing business.
	 
	 	 	“Calculation Date” means each Interest Payment Date;
	 
	 	 	“Calculation Period” means for a given Calculation Date, the period starting from (and
including) such Calculation Date and ending on (and including) the day immediately
preceding the next Calculation Date and in respect of the first Calculation Period, the
period from (and including) the first Disbursement Date and ending on (and including) the
day immediately preceding the first Calculation Date.
	 
	 	 	“Cashflow Available For Debt Service” means at any time and in respect of any Calculation
Period, EBITDA adding the amount of any decrease (and deducting the amount of any increase)
in Working Capital for that Calculation Period less Taxes, payments made to the Well
Drilling Reserve Account and capital expenditures actually made (without double-counting in
respect of spare parts already accounted for under EBITDA) during that Calculation Period.
	 
	 	 	“Cayman Share Charge” means a Cayman law-governed charge over shares in the Company held by
the Shareholder (representing 100% of issued shares).
	 
	 	 	“CER Documents” means any documents entered into by the Company in respect of the sale or
commercialising of Certified Emissions Reductions in relation to the Project in form and
substance satisfactory to the Global Agent (acting on the instructions of the Lenders).
	 
	 	 	“Certificate of Incumbency” means a certificate provided by the Company substantially in
the form of Schedule 18 (Incumbency Certificate).
	 
	 	 	“Certified Emissions Reductions” means a unit issued pursuant to Article 12 of the Kyoto
Protocol as well as all other relevant international agreements and resolutions and is
equal to one metric tonne of Carbon Dioxide Equivalent, calculated in accordance with such
agreements and resolutions.




5









 












	 	 	“Charged Shares” means the Shares in the Company charged (or as the context may require, to
be charged) in favour of the Offshore Security Agent pursuant to the Cayman Share Charge
for the benefit of the Finance Parties.
	 
	 	 	“Charter Documents” means with respect to any Person, its constitutive documents,
including, where relevant, its memorandum and articles of association and a certificate of
good standing.
	 
	 	 	“Claims Cooperation Agreement” means the agreement entered, or to be entered, into between,
amongst others, MIGA, the Global Agent, the Offshore Security Agent, the Company and the
Shareholder relating to the cooperation agreed between MIGA and the Lenders in the event of
a claim pursuant to the MIGA Equity Guarantee where an Event of Default has also arisen.
	 
	 	 	“Commitment” means:






	 	(a)	 	in relation to an Original Lender, the amount set opposite its name under the
heading “Commitment” in Schedule 1 (The Original Lenders) and the amount of any other
Commitment transferred to it under this Agreement and the relevant Loan Agreement; and
	 
	 	(b)	 	in relation to any other Lender, the amount of any Commitment under any
Facility transferred to it in accordance with the relevant Loan Agreement and the
Finance Documents,






	 	 	in each case to the extent not cancelled, reduced or transferred by it under the Finance
Documents.
	 
	 	 	“Company’s Legal Counsel” means Chadbourne & Parke LLP and the Company’s Kenyan Counsel or
such other legal counsel as the Company may choose with the consent of the Global Agent
(acting on the instructions of the Lenders) (such consent not to be unreasonably withheld
or delayed).
	 
	 	 	“Company’s Kenyan Counsel” means Kaplan & Stratton or such other legal counsel as the
Company may choose with the consent of the Global Agent (acting on the instructions of the
Lenders) (such consent not to be unreasonably withheld or delayed).
	 
	 	 	“Compensation Account” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Compensation Proceeds” means all proceeds (if any) of any indemnity payments, guarantee
payments, damages for warranty claims, recovery of cash claims, or other claims payable to
the Company under or with respect to any of the Project Documents (including under the GOK
Letter, the PPA Direct Agreement or otherwise), including in respect of the expropriation
or compulsory purchase of any or all of the Project’s assets other than any Insurance
Proceeds, Liquidated Damages and Termination Payments.




6









 












	 	 	“Compliance Certificate” means a certificate provided by the Company substantially in the
form set out in Schedule 25 (Form of Compliance Certificate).
	 
	 	 	“Confidentiality Undertaking” means a confidentiality undertaking in a recommended form of
the LMA or such other form as the Company and the Global Agent (acting on the instructions
of the Lenders) may agree.
	 
	 	 	“Construction Warranty Agreement” means the agreement entered, or to be entered, into
between the Company, the Global Agent, the EPC Contractor and the Sponsor pursuant to which
certain warranties are made available to the Company in respect of the integrity of the
works undertaken by the EPC Contractor.
	 
	 	 	“Control” means the possession, directly or indirectly, by a Person or group of Persons
acting in concert, of the power to direct or cause the direction of the management and
policies of another Person, through the ownership of voting securities, enforceable voting
arrangements or by contract, in respect of both ordinary and extraordinary matters
including reorganization, restructuring, and the amendment of that Person’s memorandum and
articles of association or other constitutive documents; and “Controlled” and “Controlling”
shall be construed accordingly.
	 
	 	 	“Corporate Structure Chart” means the chart set out in Schedule 17 (Corporate Structure
Chart).
	 
	 	 	“Cure Amount” means the cash proceeds received by the Company from any Shareholder Debt for
the purposes of Clause 19.9 (Equity Cure).
	 
	 	 	“Current Assets” means the aggregate of all inventory, work in progress, trade and other
receivables of the Company including prepayments in relation to operating items and sundry
debtors (but excluding cash) expected to be realised within twelve months from the date of
computation but excluding amounts in respect of:






	 	(a)	 	receivables in relation to Tax;
	 
	 	(b)	 	Exceptional Items and other non-operating items;
	 
	 	(c)	 	insurance claims; and
	 
	 	(d)	 	any interest owing to the Company.






	 	 	“Current Debt Service Amount” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Current Liabilities” means the aggregate of all liabilities (including trade creditors,
accruals and provisions) of the Company falling due within twelve months from the date of
computation but excluding amounts in respect of:




7









 












	 	(a)	 	current portion of payables in respect of Tax;
	 
	 	(b)	 	liabilities for Debt and Financing Costs; and
	 
	 	(c)	 	Exceptional Items and other non-operating items.






	 	 	“Debt” means any indebtedness of the Company for or in respect of:






	 	(a)	 	moneys borrowed;
	 
	 	(b)	 	any acceptance credit (including any dematerialised equivalent);
	 
	 	(c)	 	any bond, note, debenture, loan stock or other similar instrument;
	 
	 	(d)	 	any redeemable preference share;
	 
	 	(e)	 	any agreement treated as a finance or capital lease in accordance with the
Accounting Principles;
	 
	 	(f)	 	receivables sold or discounted (other than any receivables to the extent they
are sold on a non-recourse basis);
	 
	 	(g)	 	the acquisition cost of any asset or service to the extent payable before or
after its acquisition or possession by the party liable where the advance or deferred
payment:






	 	(i)	 	is arranged primarily as a method of raising finance or of
financing the acquisition of that asset or service or construction of that
asset or service; or
	 
	 	(ii)	 	involves a period of more than three months before or after
the date of acquisition or supply;






	 	(h)	 	any Derivative Transaction (and, when calculating the value of that
Derivative Transaction, only the marked to market value (or, if any actual amount is
due as a result of the termination or close-out of that Derivative Transaction, that
amount) shall be taken into account);
	 
	 	(i)	 	any other transaction (including any forward sale or purchase agreement)
which has the commercial effect of a borrowing and would be classified as a borrowing
under the Accounting Principles;
	 
	 	(j)	 	any counter-indemnity obligation in respect of any guarantee, indemnity,
bond, letter of credit or any other instrument issued by a bank or financial
institution; or
	 
	 	(k)	 	any guarantee, indemnity or similar assurance against financial loss of any
person in respect of any item referred to in the above paragraphs.




8









 












	 	 	“Debt Service Cover Ratio” means at any time and in respect of any Calculation Period, the
ratio obtained by dividing:






	 	(a)	 	Cashflow Available for Debt Service in respect of that Calculation Period; by
	 
	 	(b)	 	the aggregate of all Debt Service Requirements relating to all Facilities and
all amounts payable in respect of all other Debt (excluding Shareholder Debt and any
other Debt which is subordinated to the Facilities pursuant to the Security Trust and
Intercreditor Deed) which fall due during that Calculation Period.






	 	 	“Debt Service Obligations” means:






	 	(a)	 	all loans, advances, debts, liabilities and obligations, howsoever arising,
owed by the Company under a Finance Document, or otherwise to any Finance Party of
every kind and description (whether or not evidenced by any note or instrument),
direct or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, pursuant to the terms of this Agreement or any of the other Finance
Documents, including all interest, fees (including fees payable to the Agents or other
Finance Parties), charges, expenses, attorneys’ fees and accountants’ fees chargeable
to the Company in connection with any Finance Party’s dealings with the Company and
payable by the Company hereunder or thereunder;
	 
	 	(b)	 	any and all sums advanced by any Finance Party in order to preserve the
Security or preserve the Finance Parties’ security interest in the Security in
accordance with the Finance Documents; and
	 
	 	(c)	 	any amounts paid by a Finance Party to cure a default under a Hedging
Contract.






	 	 	“Debt Service Payment Account” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Debt Service Requirements” in respect of a Facility, means, in respect of a Calculation
Date and any period, the net aggregate of all amounts payable by the Company in respect of:






	 	(a)	 	Financing Principal repayable under that Facility;
	 
	 	(b)	 	Financing Costs;
	 
	 	(c)	 	net payments by the Company under any Hedging Contract (expressed as a
positive number) or net payments to the Company under any Hedging Contract (expressed
as a negative number);




9









 












	 	 	“Debt Service Reserve Account” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Debt to Equity Ratio” means, on any date on which such ratio is to be calculated, the
ratio of:






	 	(a)	 	the aggregate of all Debt (excluding Shareholder Debt and any other Debt
subordinated to the Facilities); to
	 
	 	(b)	 	the Base Equity Amount including any net result of the profit and loss
account of the Company for the Calculation Period and deducting any amount in respect
of any Distribution Transferred to the Equity Distribution Account.






	 	 	“Default” means an Event of Default or any event or circumstance which would, with the
expiry of any applicable grace period or other lapse of time, the giving of any applicable
notice, the making by a Finance Party of any applicable determination under the Finance
Documents or any combination of any of the foregoing, be an Event of Default.
	 
	 	 	“Defects Liability Period” has the meaning given to such term in the Construction Warranty
Agreement.
	 
	 	 	“DEG” means DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH.
	 
	 	 	“DEG “A” Facility” means the “A” loan facility to be made available to the Company under
the DEG A Loan Agreement.
	 
	 	 	“DEG “A” Lender” means:






	 	(a)	 	the Original Lender under the DEG “A” Facility; and
	 
	 	(b)	 	any New Lender under the DEG “A” Facility,






	 	 	and in each case which has not ceased to be a Party hereto in accordance with the terms of
the Finance Documents.
	 
	 	 	“DEG A Loan” means a loan made by a DEG A Lender.
	 
	 	 	“DEG A Loan Agreement” means the loan agreement between the Company, the Global Agent and
DEG in relation to the DEG A Loan.
	 
	 	 	“DEG “B” Facility” means the “B” loan facility to be made available to the Company under
the DEG B Loan Agreement.
	 
	 	 	“DEG “B” Lender” means:






	 	(a)	 	any Original Lender under the DEG “B” Facility; and




10









 












	 	(b)	 	any New Lender under the DEG “B” Facility,






	 	 	and in each case which has not ceased to be a Party hereto in accordance with the terms of
the Finance Documents.
	 
	 	 	“DEG B Loan” means a loan made by a DEG B Lender.
	 
	 	 	“DEG B Loan Agreement” means the loan agreement between the Company, the Global Agent and
DEG in relation to the DEG B Loan.
	 
	 	 	“DEG “C” Facility” means the “C” loan facility to be made available to the Company under
the DEG C Loan Agreement.
	 
	 	 	“DEG “C” Lender” means:






	 	(a)	 	any Original Lender under the DEG “C” Facility; and
	 
	 	(b)	 	any New Lender under the DEG “C” Facility,






	 	 	and in each case which has not ceased to be a Party hereto in accordance with the terms of
the Finance Documents.
	 
	 	 	“DEG C Loan” means a loan made by a DEG C Lender.
	 
	 	 	“DEG C Loan Agreement” means the loan agreement between the Company, the Global Agent and
DEG in relation to the DEG C Loan.
	 
	 	 	“DEG Loans” means the DEG A Loan, the DEG B Loan and the DEG C Loan.
	 
	 	 	“Derivative Transaction” means any swap agreement, cap agreement, collar agreement, futures
contract, forward contract or similar arrangement with respect to interest rates,
currencies or commodity prices.
	 
	 	 	“Direct Agreements” means, together, the PPA Direct Agreement, the Acknowledgement of the
Commissioner of Lands or any other document designated as such by the Company and the
Global Agent (acting on the instructions of the Lenders).
	 
	 	 	“Disbursement” means a disbursement of any Facility.
	 
	 	 	“Disbursement Date” means the date of a Disbursement, being the date on which the relevant
Loan is actually made.
	 
	 	 	“Disruption Event” means:






	 	(a)	 	a material disruption to the payment or communications systems or to the
financial markets which are required to operate in order for payments to be made (or
other transactions to be carried out) in connection with the




11









 






	 	 	 	transactions contemplated by the Finance Documents, which is not caused by, and is
beyond the control of, any of the Parties; or






	 	(b)	 	the occurrence of any other event which results in a disruption (of a
technical or systems-related nature) to the treasury or payments operations of a Party
preventing it, or any other Party from:






	 	(i)	 	performing its payment obligations under the Finance
Documents; or
	 
	 	(ii)	 	communicating with other Parties under the Finance Documents,






	 	 	 	and which is not caused by, and is beyond the control of, the Party whose
operations are disrupted.






	 	 	“Distribution” means any:






	 	(a)	 	dividends or other distribution (in cash or in kind) or any other payment by
way of return on capital of, or other investment in, the Company, or
	 
	 	(b)	 	participation in the income or profits of the Company; or
	 
	 	(c)	 	any cancellation, repayment, redemption (including redemption of Shares),
repurchase or return of the capital of the Company;
	 
	 	(d)	 	any payment by the Company of, or in respect of, the premium or other costs
and fees under the MIGA Equity Guarantee; or
	 
	 	(e)	 	such other investment, and any other payment (in cash or in kind) including
in respect of any Shareholder Debt to the Shareholder or any of its Affiliates except
as is specifically permitted under the Project Documents and which payment is
specifically allowed in priority to Debt Service Obligations under the terms of the
Finance Documents.






	 	 	“Distribution Date” means the date on which a transfer to the Equity Distribution Account
is, or as the context may require, is to be, made.
	 
	 	 	“Drawdown Request” means a notice delivered by the Company to the Global Agent and copied
to the Lenders substantially in the form set out in Schedule 16 (Form of Drawdown Request).
	 
	 	 	“DSRA Letter of Credit” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“EAIF” means The Emerging Africa Infrastructure Fund Limited, a company incorporated under
the laws of Mauritius with its registered office at 6th Floor, Medine Mews
Building, La Chausée Street, Port Louis, Mauritius.




12









 












	 	 	“Early Generation Facility” has the meaning given to such term in the Power Purchase
Agreement.
	 
	 	 	“Easements” means:






	 	(a)	 	Easement dated 23rd May, 2001 made between the GoK and the Company registered
in the Registry of Documents as Volume D1, Folio 980/2058, File D.XXIX in respect of
wellpads over part of Hells Gate National Park;
	 
	 	(b)	 	Easement dated 23rd May, 2001 made between the GoK and the Company registered
in the Registry of Documents as Volume D1, Folio 980/2057, File D.XXIX relating to
access over part of Hells Gate National Park; and
	 
	 	(c)	 	Easement dated 23rd May, 2001 made between the GoK and the Company registered
in the Registry of Documents as Volume D1, Folio 980/2056, File D.XXIX in respect of
an electric transmission line over part of Hells Gate National Park.






	 	 	“EBITDA” means at any time and in relation to any Calculation Period, Project Revenues
received during that Calculation Period as evidenced by the most recent financial
statements of the Company delivered under Clause 16 (Financial Reports) less Operating
Costs (and any other amounts which are payable in priority to any payments in respect of
the Loans in accordance with the Project Accounts Agreement) which were or fell due for
payment during that period (whether or not actually paid), as at the Calculation Date.
	 
	 	 	“Economic and Financial Assumptions” means those economic and financial assumptions in the
Financial Model and as set out in Schedule 6 (Economic and Financial Assumptions) as
amended in accordance with this Agreement.
	 
	 	 	“EFP” means European Financing Partners.
	 
	 	 	“EGF Distribution” has the meaning given to such term in Clause 25.1(b)(v) (Transfer to
Equity Distribution Account).
	 
	 	 	“EIB” means European Investment Bank.
	 
	 	 	“Energy Regulatory Commission” or “ERC” means the commission established pursuant to
section 4 of the Energy Act 2006 (and includes any successor body created to regulate the
electricity sector in the Republic of Kenya).
	 
	 	 	“English Reinsurance Assignment Agreement” means a security agreement creating a Lien over
any reinsurances placed internationally entered into by each Kenyan reinsurer in form and
substance satisfactory to the Global Agent (acting on the instructions of the Lenders).




13









 












	 	 	“English Security Agreement” means the English law governed security agreement dated on or
about the date of this Agreement between the Company and the Offshore Security Agent.
	 
	 	 	“English Security Documents” means:






	 	(a)	 	the English Security Agreement; and
	 
	 	(b)	 	each English Reinsurance Assignment Agreement.






	 	 	“Environmental and Social Management Plan” means the plan to be prepared by the Company
detailing the mitigation measures and monitoring to be undertaken so as to ensure effective
implementation of the Environmental and Social Requirements and the environmental and
social action plan as set out in Schedule 26 (Form of Environmental and Social Action Plan)
and the maintenance of an environmental/occupational health & safety/community management
system according to ISO 14001/OHSAS 18001.
	 
	 	 	“Environmental and Social Requirements” means:






	 	(a)	 	the IFC Performance Standards;
	 
	 	(b)	 	the Equator Principles;
	 
	 	(c)	 	the IFC Environmental, Health and Safety Guidelines;
	 
	 	(d)	 	the Environmental Laws;
	 
	 	(e)	 	the terms and standards as set out in any ILO convention signed and ratified
by Kenya, as well as ILO Core Labour Standards as set out in ILO Declaration on
Fundamental Principles and Rights at Work from 1998 and the Basic Terms and Conditions
of Employment;
	 
	 	(f)	 	any Authorisations pertaining to environmental, social, and occupational
health and safety aspects of the Project; and
	 
	 	(g)	 	any provisions of this Agreement relating to environmental, social and
occupational health and safety aspects of the Project.






	 	 	“Environmental Impact Assessment” means the environmental impact assessment in respect of
the Project dated 27 June 2007 as amended or supplemented in accordance with applicable
Environmental and Social Requirements.
	 
	 	 	“Environmental Laws” means all laws and regulations of any Kenyan Authority (including any
relevant international treaty obligations) relating to any of the following topics: air
emissions, discharges to surface or ground water, noise emissions, solid or liquid waste
disposal, the generation, use, handling treatment,




14









 






	 	 	storage, transportation or disposal of toxic or hazardous substances or wastes, nuisance,
the conservation or protection of the environment, ecosystems and living organisms,
cultural property, indigenous peoples, resettlement, child labor and forced labor, public
health and occupational health and safety.






	 	 	“EPC Contractor” means ORDA6, Inc., a Delaware corporation with its registered address at
6225 Neil Road, Reno, Nevada, USA.
	 
	 	 	“Equity Distribution Account” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Equity Distribution Transfer Certificate” has the meaning given to such term in Clause
25.1(b) (Transfers to Equity Distribution Account).
	 
	 	 	“Equity to Total Assets Ratio” means, on any date on which such ratio is to be calculated,
the ratio of:






	 	(a)	 	the Base Equity Amount including any net result of the profit and loss
account of the Company for the Calculation Period and deducting any amount in respect
of any Distribution transferred to the Equity Distribution Account; to
	 
	 	(b)	 	the total assets of the Company.






	 	 	“ERC Comfort Letter” means a letter dated on or about the date of this Agreement from the
Energy Regulatory Commission to the Global Agent substantially in the form set out in
Schedule 27 (Form of ERC Comfort Letter).
	 
	 	 	“Event of Default” means any event or circumstance specified as such in Clause 26.1 (Events
of Default).
	 
	 	 	“Exceptional Items” means any exceptional, one off, non-recurring or extraordinary items
including those arising on:






	 	(a)	 	the restructuring of the activities of an entity and reversals of any
provisions for the cost of restructuring;
	 
	 	(b)	 	disposals, revaluations or impairment of non-current assets; and
	 
	 	(c)	 	disposals of assets associated with discontinued operations.






	 	 	“Expert” means any expert who qualifies and is appointed as such in accordance with Clause
21 (Expert).
	 
	 	 	“Extraordinary Commercial Expenses” means, as applicable, any commission not referred to in
the Finance Documents or which does not result from a valid agreement entered into in
connection with the transactions contemplated by such Finance Documents, any commission
which does not cover an actual and




15









 






	 	 	legitimate service provided, any commission paid in a tax haven, any commission paid to a
beneficiary which is not clearly identified or to a company which could be considered as a
sham company or which is set up to disguise the ultimate beneficiary. For the avoidance of
doubt, payments made by or on behalf of the Company in or to the Cayman Islands (whether
originating in or outside the Cayman Islands) for the benefit of any third party as
compensation for legitimate services provided to the Company by such third party shall not
constitute “commission paid in a tax haven” (provided that such payment does not amount to
a Prohibited Act nor to drug trafficking, fraud related to the financial interests of the
European Union, corruption, bribery, organised crime, criminal activities or terrorism).






	 	 	“Facilities” means, together, the DEG “A” Facility, the Proparco “A” Facility, the DEG “B”
Facility and the DEG “C” Facility and each such facility being a “Facility”.
	 
	 	 	“Facility Office” means:






	 	(a)	 	in respect of an Original Lender, the office set out in Clause 34.2
(Addresses); or
	 
	 	(b)	 	the office notified by a Lender to the Global Agent by not less than seven
(7) days’ notice,






	 	 	as the office or offices through which it will perform its obligations under the Finance
Documents.
	 
	 	 	“Fee Letters” means any fee letter delivered pursuant to Clause 10 (Fees), together with
any other fee letter or other document entered or to be entered into between the Company
and any Finance Party, evidencing fees payable to any Finance Party in connection with the
Project.
	 
	 	 	“Final Repayment Date” means 15th December 2018.
	 
	 	 	“Final Termination Date” means the date on which all of the obligations of the Company
under all Finance Documents have been finally and indefeasibly discharged in full.
	 
	 	 	“Finance Documents” means:






	 	(a)	 	this Agreement;
	 
	 	(b)	 	each Loan Agreement;
	 
	 	(c)	 	each Direct Agreement;
	 
	 	(d)	 	the Security Trust and Intercreditor Deed;




16









 












	 	(e)	 	the Share Retention Agreement;
	 
	 	(f)	 	each Security Document;
	 
	 	(g)	 	each Fee Letter;
	 
	 	(h)	 	each Hedging Contract;
	 
	 	(i)	 	the Project Accounts Agreement;
	 
	 	(j)	 	the Claims Cooperation Agreement;
	 
	 	(k)	 	each Agent Deed of Adherence, and
	 
	 	(l)	 	the ERC Comfort Letter,






	 	 	together with any other documents, agreements or other contracts designated as such from
time to time by the Global Agent (acting on the instructions of the Lenders) and the
Company.
	 
	 	 	“Finance Parties” means each Lender, the Global Agent, each Hedging Bank, each Account Bank
and each Security Agent, and each such Party shall be a “Finance Party”.
	 
	 	 	“Financial Close” means the satisfaction (or waiver) in accordance with the terms of the
Finance Documents of all conditions to the making (or as the context may require, the
proposed making) of the first Disbursement of the DEG A Loan, DEG B Loan, DEG C Loan and
the Proparco Loan.
	 
	 	 	“Financial Model” means the financial model provided to the Global Agent by the Company and
audited by the Financial Model Auditor and as updated, amended, varied or supplemented from
time to time in accordance with Clause 20 (Financial Model) in respect of the Project and
including the Base Case.
	 
	 	 	“Financial Model Auditor” means Ernst & Young, London or another reputable international
auditors’ firm, appointed by or on behalf of the Lenders with the consent of the Company
(such consent not to be unreasonably withheld or delayed).
	 
	 	 	“Financial Plan” means the sources of financing for the Project as set out in Schedule 3
(Project Costs and Financial Plan).
	 
	 	 	“Financial Test” means any financial test prepared by the Company pursuant to Clause 19.3
(Preparation of Financial Tests).
	 
	 	 	“Financial Year” means the accounting year of the Company commencing each year on January 1
and ending on the following December 31, or such other period




17









 






	 	 	as the Company, with the consent of the Global Agent (acting on the instructions of the
Lenders), from time to time designates as its accounting year.






	 	 	“Financing Costs” means any of the following:






	 	(a)	 	interest, fees and any other costs or expenses payable under the Finance
Documents (excluding Shareholder Debt and any other Debt which is subordinated to the
Facilities);
	 
	 	(b)	 	any Hedging Costs; and
	 
	 	(c)	 	any Tax in respect of any of the above.






	 	 	“Financing Partners” means EIB and each of the relevant committing partners of EFP.
	 
	 	 	“Financing Principal” means principal amounts payable by the Company under the Finance
Documents.
	 
	 	 	“First Repayment Date” means 15th December 2009.
	 
	 	 	“Fixed Interest Rate” means, in relation to any Loan the rate determined by the Lenders for
a period up to the Final Repayment Date (as certified by the Global Agent acting on the
instructions of the Lenders in the applicable Fixed Rate Loan) on the Quotation Day for the
period of the Fixed Rate Loan as determined pursuant to Clause 9.4 (Fixed Rate Loans).
	 
	 	 	“Fixed Rate Break Costs” has the meaning given to such term in each Loan Agreement.
	 
	 	 	“Fixed Rate Loan” means a Loan on which the rate of interest is calculated in accordance
with Clause 9.4 (Fixed Rate Loans).
	 
	 	 	“FMO” means Nederlandse Financierings Maatschappij voor Ontwikkelingslanden N.V..
	 
	 	 	“Force Majeure Event” means, in respect of any referenced or relevant Project Document, an
event of force majeure (however defined) under such Project Document.
	 
	 	 	“Full Commercial Operation Date” is defined in the Power Purchase Agreement.
	 
	 	 	“GAAP” means the generally accepted accounting principles of the United States of America
from time to time.
	 
	 	 	“Generation Licence” means the electric power production licence granted to the Company on
24th November 2000.




18









 












	 	 	“Geothermal Licence” means the geothermal resources licence no. 1/99 granted to the Company
on 4th March 1999.
	 
	 	 	“Global Policy” has the meaning given to such term in Clause 2.3 (Global Policy Provisions)
of Schedule 12 (Insurance Requirements).
	 
	 	 	“GOK” means the Government of the Republic of Kenya.
	 
	 	 	“GOK Letter” means the letter issued by GOK to the Lenders, the Participants and the
Company dated 1 August 2008.
	 
	 	 	“Governmental Parties” means:






	 	(a)	 	the Offtaker in respect of the PPA, the PPA Direct Agreement, the KPLC
Security Agreement and the KPLC Letter of Credit;
	 
	 	(b)	 	the Energy Regulatory Commission in respect of the Generation Licence,
Geothermal Licence and ERC Comfort Letter;
	 
	 	(c)	 	the Department of Lands, Central Registry in respect of the Land Agreements;
	 
	 	(d)	 	the Commissioner of Lands in respect of the Acknowledgement of the Commission
of Lands; and
	 
	 	(e)	 	the Ministry of Energy in respect of the GOK Letter.






	 	 	“Grant” means Grant Number I.R. 85444 dated 8th February 2001 registered in the
Land Titles Registry at Nairobi as Number 85444/1 and relating to Land Reference Number
12881/3 being the land delineated and described on Land Survey Plan Number 233899 deposited
in the Survey Records Office at Nairobi (and annexed to the Grant).
	 
	 	 	“Hedging Bank” means, from time to time, any Person who becomes a party to the Security
Trust and Intercreditor Deed as a Hedging Bank.
	 
	 	 	“Hedging Contract” means any ISDA Master Agreements and related Schedules and Confirmations
or other hedging arrangement entered into between the Company and any Hedging Bank in
accordance with the Hedging Policy.
	 
	 	 	“Hedging Costs” means all payments, fees, commissions, costs and expenses (other than
Hedging Termination Costs) payable by the Company under any Hedging Contract.
	 
	 	 	“Hedging Policy” means the policy adopted by the Company, as approved by the Global Agent
(acting on the instructions of the Lenders), taking into account the investment and
operational plans and prospects of the Company, in respect of the Company’s interest rate
positions under the Finance Documents.




19









 












	 	 	“Hedging Proceeds” means, for any Calculation Period, the amounts received (or in respect
of a future Calculation Period, projected to be received) by the Company during that
Calculation Period pursuant to any Hedging Contract.
	 
	 	 	“Hedging Programme” means the programme agreed between the Company and the Global Agent
(acting on the instructions of the Lenders) for carrying out the Hedging Policy, as
reflected in the Hedging Contracts and the provisions of this Agreement.
	 
	 	 	“Hedging Termination Costs” means all costs payable under any Hedging Contract in
connection with the termination or close out (whether partial or total ) of that Hedging
Contract.
	 
	 	 	“Holding Company” means, in relation to a company or corporation, any other company or
corporation in respect of which such company or corporation is a Subsidiary.
	 
	 	 	“IFC” means the International Finance Corporation with its headquarters at 2121
Pennsylvania Avenue, NW Washington, DC 20433, USA.
	 
	 	 	“IFC Environmental, Health and Safety Guidelines” means the following guidelines issued by
IFC:






	 	(a)	 	the Environmental, Health and Safety Guidelines for Geothermal Power
Generation dated April 30, 2007; and
	 
	 	(b)	 	the General Environmental Health and Safety Guidelines dated April 30, 2007,






	 	 	copies of which have been delivered to, and receipt of which has been acknowledged by, the
Company and which are incorporated herein by reference.
	 
	 	 	“IFC Performance Standards” means those performance standards published by IFC on its
website (www.ifc.org) which define clients’ roles and responsibilities for managing their
projects, including requirements to disclose information.
	 
	 	 	“IFRS” means accounting principles and practices generally accepted internationally as
published by the International Accounting Standards Board consistently applied.
	 
	 	 	“ILO” means International Labour Organisation with its headquarters at 4 Route des
Morillions, CH-1211 Genève 33, Switzerland.
	 
	 	 	“ILO Core Labour Standards” means the core labour standards as set out in the ILO
Conventions 29 and 105 (on Forced Labour), ILO Conventions 138 (on Minimum Age) and 182 (on
Worst Forms of Child Labour), ILO Conventions 100 and 111 (on Non-Discrimination), and ILO
Conventions 87 and 98 (on Freedom of Association and Collective Bargaining.




20









 












	 	 	“Increased Costs” has the meaning given to such term in Clause 12.1(b) (Increased Costs).
	 
	 	 	“Information Memorandum” means the information memorandum relating to the Project prepared
by the Company dated June 2007.
	 
	 	 	“Initial Operating Budget” means the Operating Budget set out in Schedule 8 (Initial
Operating Budget).
	 
	 	 	“Insurance Advisor” means Moore-McNeil LLC or such other insurance advisor as the Global
Agent (acting on the instructions of the Lenders) may appoint with the consent of the
Company (such consent not to be unreasonably withheld or delayed).
	 
	 	 	“Insurance Proceeds” means all proceeds and amounts payable or paid to the Company in
respect of any claim relating to the Project under any insurances and reinsurances (whether
by way of claims, return of premia, ex gratia settlements or otherwise).
	 
	 	 	“Insurance Proceeds Accounts” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Insurance Report” means a report prepared by the Insurance Advisor concerning the
insurances to be maintained for the Project to be delivered pursuant to Paragraph 14(b) of
Part 1 (Conditions of First Disbursement) of Schedule 2 (Conditions of Disbursement).
	 
	 	 	“Insurance Review” means the review of insurances and reinsurances relating to the Project
to be prepared and delivered by the Company to the Global Agent and the Insurance Advisor
pursuant to Clause 3.2(a)(iii) (Reporting Requirements) of Schedule 12 (Insurance
Requirements) and substantially in the form attached hereto as Schedule 10 (Form of
Insurance Review) and in such detail as the Global Agent or Insurance Advisor may
reasonably require from time to time.
	 
	 	 	“Intellectual Property” means any patents, trade marks, service marks, designs, business
names, copyrights, design rights, moral rights, inventions, confidential information,
know-how and other intellectual property rights and interests, whether registered or
unregistered, the benefit of all applications and rights to use such assets and all Related
Rights.
	 
	 	 	“Interbank Market” means the London interbank market.
	 
	 	 	“Interest Payment Date” means 15th June and 15th December.
	 
	 	 	“Interest Period” in relation to a Facility has the meaning given to such term in the Loan
Agreement relating to such Facility.




21









 












	 	 	“Interim Financial Test” means a Financial Test prepared in accordance with Clause 19.5
(Calculation of Interim Financial Tests).
	 
	 	 	“Interim Proceedings” means any proceedings instituted or to be instituted by the Company
seeking interim measures to prevent the Lenders (directly or acting through the Global
Agent, Security Agent or any other agent) from enforcing the Security created pursuant to
the Security Documents. For the avoidance of doubt, interim measures means measures that
are not final.
	 
	 	 	“Kenya” means the Republic of Kenya.
	 
	 	 	“Kenyan Companies Act” means the Companies Act, Chapter 486 of the Laws of Kenya.
	 
	 	 	“Kenyan Debenture” means a debenture dated on or about the date of this Agreement governed
by Kenyan law creating security by way of fixed and floating charge over all the assets of
the Company.
	 
	 	 	“Kenyan Fixed Charge” means a fixed charge governed by Kenyan law created by way of
supplemental security to the Kenyan Debenture.
	 
	 	 	“Kenyan Reinsurance Assignment Agreement” means a security agreement creating a Lien over
any reinsurance placed in Kenya entered into by each Kenyan insurer in form and substance
satisfactory to the Global Agent (acting on the instructions of the Lenders).
	 
	 	 	“Kenyan Security Documents” means:






	 	(a)	 	the Kenyan Debenture;
	 
	 	(b)	 	the Kenyan Fixed Charge; and
	 
	 	(c)	 	each Kenyan Reinsurance Assignment Agreement.






	 	 	“KfW” means Kreditanstalt für Wiederaufbau, a public law institution (Anstalt des
Öffentlichen Rechts) having its seat at Palmengartenstrasse 5-9, 60325 Frankfurt am Main,
Germany.
	 
	 	 	“KfW Bankengruppe” means KfW, DEG, KfW IPEX-Bank GmbH and such further entities as listed
on the website of the KfW Bankengruppe (www.kfw.de).
	 
	 	 	“KPLC” means the Kenya Power & Lighting Company Ltd, a limited liability company
established under the Electricity Act of Kenya.
	 
	 	 	“KPLC Letter of Credit” means the irrevocable letter of credit issued to the Company
pursuant to Clause 2.1 of the KPLC Security Agreement substantially in the form required
thereunder.




22









 












	 	 	“KPLC Security Agreement” means the agreement called “Olkaria III Project Security
Agreement” dated 19 January 2007 between KPLC and the Company.
	 
	 	 	“Kyoto Protocol” means the protocol to the UNFCCC adopted at the Third Conference of the
Parties to the UNFCCC in Kyoto, Japan on 11 December 1997 as may be amended from time to
time.
	 
	 	 	“Land Agreements” means the Grant, the Site Agreement and the Easements.
	 
	 	 	“Legal Reservations” means any principles of law which are set out or described in the
legal opinions delivered to the Global Agent pursuant to Clause 4 (Conditions).
	 
	 	 	“Lender” means:






	 	(a)	 	any Original Lender; and
	 
	 	(b)	 	any bank or financial institution which has become a Party hereto and to any
Loan Agreement in accordance with Clause 27 (Changes to Lenders),






	 	 	and in each case which has not ceased to be a Party hereto in accordance with the terms of
the Finance Documents.
	 
	 	 	“Lender KPLC Confirmation” means the letter from the Global Agent (acting on the
instructions of the Lenders) substantially in the form of Schedule 28 (Form of Lender KPLC
Confirmation).
	 
	 	 	“Lenders’ Cayman Counsel” means Conyers, Dill & Pearman or such other legal counsel as the
Global Agent (acting on the instructions of the Lenders) may appoint with the consent of
the Company (such consent not to be unreasonably withheld or delayed).
	 
	 	 	“Lenders’ Engineer” means Stone & Webster Management Consultants, Inc. acting together with
GeothermEx or such other engineer or engineers as the Global Agent (acting on the
instructions of the Lenders) may appoint with the consent of the Company (such consent not
to be unreasonably withheld or delayed).
	 
	 	 	“Lenders’ Engineer Report” means the due diligence report prepared by the Lenders’ Engineer
in respect of the Project and to be delivered to the Global Agent as a condition of first
Disbursement in accordance with Paragraph 14(a) of Part 1 of Schedule 2 (Conditions of the
First Disbursement), confirming that, inter alia, the technical, commercial and cost
assumptions underlying the implementation of the Project and contained in the Base Case are
reasonable.
	 
	 	 	“Lenders’ External Advisers” means the Lenders’ Engineer, the Insurance Advisor, the Market
Consultant, the Financial Model Auditor, the Lenders’ Legal Counsel, the Lenders’ Kenyan
Counsel, the Lenders’ New York Counsel, the Tax




23









 






	 	 	Consultant, the Lenders’ Cayman Counsel and any other professional advisers appointed from
time to time by any of the Finance Parties in connection with the Project with the consent
of the Company (unless a Default has occurred and is continuing) (such consent not to be
unreasonably withheld or delayed).






	 	 	“Lenders’ Kenyan Counsel” means Walker Kontos or such other legal counsel as the Global
Agent (acting on the instructions of the Lenders) may appoint with the consent of the
Company (such consent not to be unreasonably withheld or delayed).
	 
	 	 	“Lenders’ Legal Counsel” means Trinity International LLP or such other legal counsel as the
Global Agent (acting on the instructions of the Lenders) may appoint with the consent of
the Company (such consent not to be unreasonably withheld or delayed).
	 
	 	 	“Lenders’ New York Counsel” means Becker, Glynn, Melamed & Muffly LLP or such other legal
counsel as the Global Agent (acting on the instructions of the Lenders) may appoint with
the consent of the Company (such consent not to be unreasonably withheld or delayed).
	 
	 	 	“Liability” means any loss, damage, cost, charge, claim, demand, expense, judgment, action,
proceeding or other liability whatsoever (including, without limitation, in respect of
Taxes).
	 
	 	 	“LIBOR” means in relation to any Loan:






	 	(a)	 	the applicable Screen Rate; or
	 
	 	(b)	 	(if no Screen Rate is available for the currency or Interest Period of that
Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as
supplied to the Global Agent at its request quoted by the Reference Banks to leading
banks in the London interbank market,






	 	 	as of the Specified Time on the Quotation Day for the offering of deposits in the currency
of that Loan and for a period comparable to the Interest Period for that Loan.
	 
	 	 	“Lien” means:






	 	(a)	 	with respect to any property of any Person, any mortgage, lien, deed of
trust, hypothecation, fiduciary transfer of title, assignment by way of security,
pledge, charge, sale and lease-back arrangement, trust arrangement, or security
interest or encumbrance of any kind in respect of such property, or any preferential
arrangement having the practical effect of constituting a security interest with
respect to the payment of any obligation with, or from the proceeds of, any property
of any kind (and a Person shall be deemed to own subject to a Lien any property that
it has acquired or holds subject to the interest of a vendor or lessor under any




24









 






	 	 	 	conditional sale agreement, capital lease or other title retention agreement
relating to such property);






	 	(b)	 	any arrangement under which money or claims to, or for the benefit of, a bank
or other account may be applied, set off or made subject to a combination of accounts
so as to effect discharge of any sum owed or payable to any Person; or
	 
	 	(c)	 	any other type of preferential arrangement having a similar effect.






	 	 	“Liquidated Damages” means all sums payable to or received by or on behalf of the Company
under or pursuant to any of the Project Documents as liquidated damages, together with all
other amounts (including by way of set off or draw on any bond, guarantee or other
performance security) payable to or received by the Company in lieu of such liquidated
damages.
	 
	 	 	“LMA” means the Loan Market Association.
	 
	 	 	“Loan” means a loan made or to be made under any Facility or, as the context may require,
the principal amount outstanding for the time being of that loan.
	 
	 	 	“Loan Agreements” means, together, the DEG A Loan Agreement, the DEG B Loan Agreement, the
DEG C Loan Agreement and the Proparco A Loan Agreement, and “Loan Agreement” means any one
of them.
	 
	 	 	“Loan Assignment and Security Agreement” means the loan assignment and security agreement
dated on or about the date of this Agreement between the Company, the Shareholder, the
Sponsor and the Offshore Security Agent.
	 
	 	 	“Long-term Debt” means that part of the Debt the final maturity of which, by its terms or
the terms of any agreement relating to it, falls due more than one year after the date of
its incurrence or measurement.
	 
	 	 	“Majority Lenders” means:






	 	(a)	 	if there are no Loans then outstanding, at least two Lenders whose
Commitments together aggregate more than 662/3%
 of the Total Commitments; or
	 
	 	(b)	 	at any other time, at least two Lenders whose participations in the Loans
then outstanding together aggregate more than 662/3%
 of all the Loans then outstanding.






	 	 	“Major Project Party” means any of the Company, the Sponsor, the Shareholder, the EPC
Contractor, the Standby Operator and the Governmental Parties.




25









 












	 	 	“Mandatory Cost” means the percentage rate per annum calculated by the Global Agent in
accordance with Schedule 21 (Calculation of the Mandatory Cost).
	 
	 	 	“Margin” means 4.0% per annum.
	 
	 	 	“Market Consultant” means Mr Witold Teplitz-Sembitzky.
	 
	 	 	“Market Disruption Event” means:






	 	(a)	 	at or about 11.00 am, London time, on the Quotation Day for the relevant
Interest Period the Screen Rate is not available and none or only one of the Reference
Banks supplies a rate to the Global Agent to determine LIBOR for US Dollars for the
relevant Interest Period; or
	 
	 	(b)	 	before close of business in London on the Quotation Day for the relevant
Interest Period, the Company receives notification from the Global Agent that the cost
to one or more Lenders of obtaining matching deposits in the London interbank market
would be in excess of LIBOR.






	 	 	“Material Adverse Effect” means the occurrence of any event or series of events which has
or might reasonably be expected to have a material adverse effect on:






	 	(a)	 	the condition (financial or otherwise), assets, operations, prospects or
business of the Company or the Sponsor;
	 
	 	(b)	 	the ability of the Company or the Sponsor to comply with any of its
obligations under the Principal Documents to which it is a party; or
	 
	 	(c)	 	the validity, legality, enforceability or effectiveness of any Finance
Document or the rights or remedies of any Finance Party under any Finance Document.






	 	 	“MIGA” means the Multilateral Investment Guarantee Agency, an international organisation
organised and existing by virtue of its Convention among its member countries, including
Kenya.
	 
	 	 	“MIGA Equity Guarantee” means a contract of guarantee dated 18 December 2007 (as it may be
amended from time to time) entered into by MIGA and the Shareholder in respect of certain
non-commercial risks relating to the Shareholders’ equity investment in the Company.
	 
	 	 	“MIGA Event” means any event which gives rise to a Claim (as defined in the Claims
Cooperation Agreement) pursuant to the MIGA Equity Guarantee.
	 
	 	 	“Month” means a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month, except that:




26









 












	 	(a)	 	if the numerically corresponding day is not a Business Day, that period shall
end on the next Business Day in that calendar month in which that period is to end if
there is one, or if there is not, on the immediately preceding Business Day (other
than in respect of the Final Repayment Date under any Facility which shall, if it
falls on the last day of a calendar month and such day is not a Business Day, end on
the previous Business Day in that calendar month); and
	 
	 	(b)	 	if there is no numerically corresponding day in the calendar month in which
that period is to end, that period shall end on the last Business Day in that calendar
month.






	 	 	“NEMA” means the National Environment Management Authority of the Republic of Kenya.
	 
	 	 	“New Lender” means any bank or financial institution to whom a Lender seeks to assign or
transfer by novation all or part of such Lender’s rights, benefits and obligations under
the Finance Documents in accordance with Clause 27 (Changes to Lenders).
	 
	 	 	“Non-Delay Liquidated Damages” means Liquidated Damages received by the Company under the
terms of the Project Documents in respect of a failure by the relevant counterparty to the
Project Document to perform rather than in respect of delay.
	 
	 	 	“Offshore Account Bank” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Offshore Insurance Proceeds Account” has the meaning given to such term in the Project
Accounts Agreement.
	 
	 	 	“Offshore Project Accounts” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Offshore Revenue Account” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Offtaker” means KPLC or the Successor Entity.
	 
	 	 	“Onshore Account Bank” means Barclays Bank of Kenya Limited or such other Kenyan bank as
the Company and the Global Agent may agree (acting on the instructions of the Lenders).
	 
	 	 	“Onshore Security Agent” means the Person agreed between the Company and the Lenders and
appointed by the Lenders to act as security trustee for and on behalf of the Finance
Parties which executes an Agent Deed of Accession and becomes a party to this Agreement.




27









 












	 	 	“Operating Budget” means, at any time, the then current operating budget, up-dated and/or
varied from time to time in accordance with the terms of this Agreement, and setting out
the operating budget and as reflected in the Financial Model.
	 
	 	 	“Operating Costs” means in relation to any period (without double counting):






	 	(a)	 	amounts actually or (where the context requires Operating Costs to be
calculated or determined on a projected basis) projected to be paid under any Project
Document;
	 
	 	(b)	 	insurance premiums in respect of insurances in respect of the Project (other
than any political risk insurances) actually or (where the context requires Operating
Costs to be calculated or determined on a projected basis) projected to be paid during
such period;
	 
	 	(c)	 	the costs of environmental monitoring actually or (where the context requires
Operating Costs to be calculated or determined on a projected basis) projected to be
paid pursuant to the Finance Documents during such period;
	 
	 	(d)	 	the Company’s administrative, accounting and professional costs actually or
(where the context requires Operating Costs to be calculated or determined on a
projected basis) projected to be paid during such period;
	 
	 	(e)	 	operating costs, fees and expenses set out in the Operating Budget;
	 
	 	(f)	 	other actual or (where the context requires Operating Costs to be calculated
or determined on a projected basis) projected costs, fees and expenses set out in the
current Financial Test in respect of such period (other than Debt Service Obligations
during such period);
	 
	 	(g)	 	actual or (where the context requires Operating Costs to be calculated or
determined on a projected basis) projected net amounts due from the Company under the
Hedging Programme during such period (if any) (whether or not actually paid);
	 
	 	(h)	 	other actual or (where the context requires Operating Costs to be calculated
or determined on a projected basis) projected amounts agreed between the Global Agent
(acting on the instructions of the Lenders) and the Company to constitute Operating
Costs during such period;
	 
	 	(i)	 	Taxes relating to any of the foregoing items excluding corporate income
taxes;
	 
	 	(j)	 	minus, for the purposes of calculating EBITDA for such period only, if an
amount was due to be paid by the Company in any other previous period




28









 






	 	 	 	but the Company failed to pay such amount and such amount remains unpaid, an amount
equal to the amount of such payment,






	 	 	but excluding:






	 	(k)	 	Financing Principal;
	 
	 	(l)	 	Financing Costs;
	 
	 	(m)	 	Hedging Termination Costs;
	 
	 	(n)	 	political risk insurance premium costs;
	 
	 	(o)	 	any Distribution; and
	 
	 	(p)	 	depreciation, non-cash charges, reserves, amortisation of intangibles and
similar book-keeping entries.






	 	 	“Operating Report” means the operating report to be prepared and delivered by the Company
to the Global Agent substantially in the form attached as Schedule 9 (Form of Operating
Report).
	 
	 	 	“Original Lender” means:






	 	(a)	 	in relation to the DEG “A” Facility, DEG;
	 
	 	(b)	 	in relation to the Proparco “A” Facility, Proparco;
	 
	 	(c)	 	in relation to the DEG “B” Facility, DEG; and
	 
	 	(d)	 	in relation to the DEG “C” Facility, DEG.






	 	 	“Original Participants” means FMO and EAIF.
	 
	 	 	“Oserian Contract” means the agreement dated 2 November 2005 between Oserian Development
Company Limited and the Company pursuant to which, amongst other things, the Company makes
a mixed flow of steam and/or non condensable gases available to Oserian Development Company
Limited.
	 
	 	 	“Participant” means any person who acquires a Participation.
	 
	 	 	“Participation” means the interest of any Participant in the DEG “B” Facility or the DEG
“C” Facility.
	 
	 	 	“Participation Agreement” means each agreement entitled “Participation Agreement” between
DEG and the Participants.
	 
	 	 	“Partnership Agreement” means the partnership agreement between the Members of the African,
Caribbean and Pacific Group of States, of the one part,




29









 






	 	 	and the European Community and its Member States, of the other party, signed in Cotonou,
Benin on 23 June 2000.






	 	 	“Party” means any Person who is or becomes a party to this Agreement.
	 
	 	 	“Permitted Investments” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Permitted Investors” means the Sponsor or any Subsidiary of the Sponsor which is wholly
owned by the Sponsor and which satisfies all applicable know your customer requirements of
the Finance Parties.
	 
	 	 	“Permitted Liens” means:






	 	(a)	 	the Security;
	 
	 	(b)	 	Liens for any Tax, either secured by a bond or other reasonable security or
not yet due or being contested in good faith and by appropriate proceedings, so long
as:






	 	(i)	 	such proceedings shall not involve any substantial danger of
the sale, forfeiture or loss of the Project, the Plant, the Site or any
easements that are material to the ownership, operation or maintenance of the
Project, as the case may be;
	 
	 	(ii)	 	title thereto or any interest therein and shall not interfere
in any material respect with the use of the Project, the Plant, the Site or
any easements that are material to the ownership, operation or maintenance of
the Project;
	 
	 	(iii)	 	a bond or other reasonable security has been posted or
provided in such manner and amount as to assure that any Taxes determined to
be due will be promptly paid in full when such contest is determined; and
	 
	 	(iv)	 	adequate reserves have been provided therefor to the extent
required by and in accordance with the Accounting Principles;






	 	(c)	 	material men’s, mechanics’, workers’, repairmen’s, employees’ or other like
Liens, arising in the ordinary course of business or in connection with the
development, construction, operation and/or maintenance of the Project, either for
amounts not yet due or for amounts being contested in good faith and by appropriate
proceedings so long as:






	 	(i)	 	the Company reasonably determines that such proceedings shall
not involve any substantial danger of the sale, forfeiture or loss of the
Project, the Plant, the Site or any easements that are material to




30









 






	 	 	 	the ownership, operation or maintenance of the Project, as the case may
be;






	 	(ii)	 	title thereto or any interest therein and shall not interfere
in any material respect with the use or disposition of the Project, the Plant,
the Site or any easements that are material to the ownership, operation or
maintenance of the Projects; and
	 
	 	(iii)	 	a bond or adequate cash reserves have been provided therefor
to the extent required by and in accordance with the Accounting Principles;






	 	(d)	 	Liens arising out of judgments or awards that would not otherwise constitute
a Default hereunder so long as enforcement of such Lien has been stayed and an appeal
or proceeding for review is being prosecuted in good faith and for the payment of
which adequate reserves, bonds or other reasonable security have been provided or are
fully covered by insurance;
	 
	 	(e)	 	Liens, deposits or pledges to secure statutory obligations;
	 
	 	(f)	 	servitudes, easements, rights-of-way, restrictions, minor defects or
irregularities in title and such other encumbrances or charges against real property
or interests therein as of a nature generally existing with respect to properties of
similar character and which do not in a material way interfere with the value or use
thereof or the Company’s business, the Project, the Plant or the Site;
	 
	 	(g)	 	any Liens arising under CER Documents; and
	 
	 	(h)	 	any title exceptions as reflected in the title report referred to in
paragraph 15 of Part 1 (Conditions of the First Disbursement) of Schedule 2
(Conditions of Disbursement).






	 	 	“Permitted Loans” means any loans or other indebtedness listed in paragraphs (i) to (vi) of
Clause 25.1(d) (Further Indebtedness).
	 
	 	 	“Person” means any natural person, corporation, partnership, firm, association, Authority
or any other entity, whether acting in an individual, fiduciary or other capacity and their
successors.
	 
	 	 	“Plant” means the 48 MW geothermal power plant, all related buildings, fixtures, plant,
machinery and other equipment and installations on or at the Site.
	 
	 	 	“Political Event” has the meaning given to that term in the GOK Letter.
	 
	 	 	“PPA” or “Power Purchase Agreement” means the amended and restated power purchase agreement
dated 19 January 2007 between the Company and the




31









 






	 	 	Offtaker whereby the Offtaker has agreed to purchase the capacity and net electrical output
of the Plant from the Company.






	 	 	“PPA Direct Agreement” means the direct agreement entered or to be entered into on or about
the date hereof among KPLC, the Company, the Global Agent and the Onshore Security Agent in
respect of the PPA substantially in the form set out in Schedule 24 (Form of PPA Direct
Agreement).
	 
	 	 	“Prepayment Premium” means in respect of any prepayment of the Available Facility (or part
thereof):






	 	(a)	 	if such prepayment is made before the date falling two (2) years following
the expiry of the Availability Period, an amount equal to 2% of the amount prepaid;
	 
	 	(b)	 	if such prepayment is made after the date referred to in paragraph (a) above
and before the date falling five (5) years following the expiry of the Availability
Period, an amount equal to 1% of the amount prepaid; and
	 
	 	(c)	 	if such prepayment is made after the date referred to in paragraph (b) above,
an amount equal to zero (0)% of the amount prepaid.






	 	 	“Principal Documents” means the Finance Documents and the Project Documents.
	 
	 	 	“Prohibited Acts” means:






	 	(a)	 	the offering, giving, receiving or soliciting of any improper advantage to
influence the action of any person holding a public office or function or a director
or employee of a public authority or public enterprise or a director or official of a
public international organisation in connection with any procurement process or in the
execution of any contract in connection with the Project; or
	 
	 	(b)	 	any act which improperly influences or aims improperly to influence the
procurement process or the implementation of the Project to the detriment of the
Company, including collusion between tenderers; or
	 
	 	(c)	 	to the extent not covered by paragraph (a) above, any act which constitutes
or would constitute a corrupt practice within the meaning of the OECD Convention of 17
December 1997 on the fight against corruption of foreign public officials.






	 	 	“Project” means the design, development, financing, construction, commissioning, ownership,
completion, insurance, operation and maintenance of the Plant, the construction of all
associated transmission and substation facilities and all related ancillary works on or off
the Site.




32









 












	 	 	“Project Accounts” has the meaning given to such term in the Project Accounts Agreement.
	 
	 	 	“Project Accounts Agreement” means the accounts agreement entered or to be entered into
among, inter alia, the Company, the Offshore Account Bank, the Offshore Security Agent,
Onshore Security Agent and the Global Agent, in respect of the administration, handling and
operation of the Project Accounts and the granting of security in respect of the Offshore
Project Accounts.
	 
	 	 	“Project Completion” means the occurrence of the Project Completion Date.
	 
	 	 	“Project Completion Date” means the date upon which all of the following conditions are
satisfied:






	 	(a)	 	the Full Commercial Operation Date has occurred under the PPA as notified to
the Offtaker pursuant to Clause 7.10 (Plant Commercial Operations Tests) of the PPA
and as certified by the Lenders’ Engineer;
	 
	 	(b)	 	testing and achievement of 90% of Contracted Plant Capacity (as defined in
the PPA) in accordance with paragraph 3(b)(ii) of part A of Schedule 4 of the PPA;
	 
	 	(c)	 	upon a testing of the Equity to Total Assets Ratio pursuant to Clause 19
(Financial Calculations), it is not less than 0.25;
	 
	 	(d)	 	the Company has entered into a deed of conveyance, pursuant to which the
Company shall have conveyed and transferred to KPLC all of its rights, title, and
interest in, to, and under the Transmission Interconnector (as defined in the PPA),
together with all technical drawings, data and material related to it and all
intellectual property rights (registered, unregistered or registrable) necessary for
KPLC to enjoy free and unencumbered use of it, free of charge and encumbrances, and
with the benefit of any designers’ and manufacturers’ warranties;
	 
	 	(e)	 	the Company has received a certificate in respect of the Transmission
Interconnector and other facilities specified in Part B of Schedule 2 of the PPA as
contemplated by clause 7.2 of the PPA;
	 
	 	(f)	 	the Construction Warranty Agreement remains in full force and effect;
	 
	 	(g)	 	no Default, Force Majeure Event, Political Event, MIGA Event or Material
Adverse Effect has occurred and is continuing;
	 
	 	(h)	 	all Authorisations necessary for the operation of the Project and the
fulfillment of the obligations of each Major Project Party (other than the
Governmental Parties) under each Principal Document to which it is a party are in
place and in full force and effect except those Authorisations which:




33









 












	 	(i)	 	the Company is not at such time required to have in relation
to the Project;
	 
	 	(ii)	 	the Company has no reason to believe will not be granted at
the time the Company will be required to have such Authorisation; and
	 
	 	(iii)	 	which would not result in a Material Adverse Effect if they
were not obtained;






	 	(i)	 	upon a testing of the Projected Debt Service Cover Ratio using an Interim
Financial Test prepared pursuant to Clause 19.5(a) (Calculation of Interim Financial
Tests) for the next two full Calculation Periods following the projected Project
Completion Date, the Projected Debt Service Cover Ratio for each such period is not
less than 1.3;
	 
	 	(j)	 	the Global Agent (acting on the instructions of the Lenders) is satisfied
(including, if required, after consultation with the Lenders’ Engineer) that all
actions required to complete the Project and to bring the Project into compliance with
all Environmental and Social Requirements have been completed, or in the event of any
non-compliance, either:






	 	(i)	 	the Global Agent (acting on the instructions of the Lenders)
has acknowledged that such non-compliance is not material; or
	 
	 	(ii)	 	the Company has prepared a written report detailing such
non-compliance and setting out the Company’s proposals for:






	 	(A)	 	appropriate corrective measures;
	 
	 	(B)	 	the timeframe for the implementation of
such corrective measures;
	 
	 	(C)	 	the costs of such;
	 
	 	(D)	 	the source of funding for such;
	 
	 	(E)	 	such report to be in form and substance
acceptable to the Global Agent (acting on the instructions of the
Lenders);






	 	(k)	 	all construction punch list items agreed with the Lenders’ Engineer have
either been resolved to the satisfaction of the Lenders’ Engineer, or the Company has
retained funds sufficient to complete such items; and
	 
	 	(l)	 	a certificate, duly executed by an Authorised Representative of the Company
has been delivered to the Global Agent by the Company which certifies that each of the
conditions referred to in paragraphs (a) through (n) above have occurred, and such
certificate has been countersigned by




34









 






	 	 	 	the Global Agent (acting on the instructions of the Lenders) and the Lender’s
Engineer.






	 	 	“Project Costs” means all costs incurred prior to Financial Close comprising:






	 	(a)	 	the design, engineering, equipment and construction costs of the Project,
including all amounts payable;
	 
	 	(b)	 	interest, fees, legal and other transaction costs and expenses relating to
the other items referred to in this definition, and other payments under any Hedging
Contract or other Finance Document prior to the date of first Disbursement payable by
the Company; and
	 
	 	(c)	 	Taxes relating to any of the foregoing costs,






	 	 	provided that:






	 	(i)	 	in respect of the Early Generation Facility and well drilling
equipment costs incurred before the extension of the Plant from 13MW to 48MW,
the costs referred to in paragraphs (a) to (c) (inclusive) above shall be
limited to an amount not exceeding the amount (depreciated where relevant)
identified in the latest (audited, if available) financial statements; and
	 
	 	(ii)	 	other than in respect of paragraph (i) above, the costs
referred to in paragraphs (a) to (c) (inclusive) shall be identified in the
Project Costs Report and shall, to the extent separately identified in the
financial statements, not exceed the relevant amount in the latest (audited,
if available) financial statements of the Company, other than in respect of
Financing Costs incurred between Project Completion Date and first
Disbursement Date,.






	 	 	“Project Costs Report” means the report of the Company substantially in the form set out in
Schedule 23 (Form of Project Costs Report).
	 
	 	 	“Project Documents” means:






	 	(a)	 	the PPA;
	 
	 	(b)	 	the KPLC Security Agreement;
	 
	 	(c)	 	the Land Agreements;
	 
	 	(d)	 	the Standby O&M Agreement;
	 
	 	(e)	 	the Geothermal Licence;
	 
	 	(f)	 	the GOK Letter;




35









 












	 	(g)	 	the Generation Licence;
	 
	 	(h)	 	the Construction Warranty Agreement;
	 
	 	(i)	 	the KPLC Letter of Credit,






	 	 	together with any other documents, agreements or other contracts designated as Project
Documents by the Company and the Global Agent (acting on the instructions of the Lenders).
	 
	 	 	“Projected Cashflow Available for Debt Service” means at any time and in respect of any
Calculation Period, the Cashflow Available for Debt Service forecast to be available during
that Calculation Period as evidenced by the then current Financial Test delivered pursuant
to Clause 19 (Financial Calculations).
	 
	 	 	“Projected Debt Service Cover Ratio” means at any time and in respect of any Calculation
Period, the ratio obtained by dividing:






	 	(a)	 	Projected Cashflow Available for Debt Service in respect of that period; by
	 
	 	(b)	 	the aggregate of all Debt Service Requirements relating to all Facilities and
all amounts payable in respect of all other Debt (excluding Shareholder Debt and any
other Debt which is subordinated to the Facilities) which fall due during that
Calculation Period,






	 	 	where, for the purposes of sub-paragraph (b) above, for the computation of interest payable
during any period for which the applicable rate is not yet determined by the Global Agent
in accordance with the Finance Documents, that interest shall be computed at the rate in
effect at the time of the relevant date of calculation.
	 
	 	 	“Projected EBITDA” means at any time and in respect of any Calculation Period, Project
Revenues forecast to be received during that Calculation Period less Operating Costs (and
any other amounts which are payable in priority to any payments in respect of the Loans in
accordance with the Project Accounts Agreement) which will or which are forecast to be or
to fall due for payment during that period, as evidenced by the then current Financial Test
delivered pursuant to Clause 19 (Financial Calculations).
	 
	 	 	“Project Reports” means, together, the Insurance Review, the Operating Report, the Annual
Environmental and Social Monitoring Report and the Project Costs Report.
	 
	 	 	“Project Revenues” means, in relation to any period, all amounts received or (where the
context requires Project Revenues to be calculated or determined on a projected basis)
projected to be received by the Company during such period (on




36









 






	 	 	a cash basis or projected to be received in cash and without any duplication in counting)
by way of:






	 	(a)	 	all payments from the Offtaker pursuant to the PPA;
	 
	 	(b)	 	interest, including, without limitation, interest on the Project Accounts;
	 
	 	(c)	 	Insurance Proceeds arising from business interruption, loss of profit or loss
of revenue;
	 
	 	(d)	 	net amounts due to the Company under the Hedging Programme;
	 
	 	(e)	 	amounts received as revenue from the sale of Certified Emission Reduction
Certificates or other carbon credits in respect of the Project pursuant to any CER
Documents;
	 
	 	(f)	 	other amounts of whatsoever nature which would be accepted by an auditor to
be revenues attributable to the Project;
	 
	 	(g)	 	amounts received by the Company upon a disposal of assets of the Company;
	 
	 	(h)	 	other amounts agreed between the Global Agent (acting on the instructions of
the Lenders) and the Company to constitute Project Revenues; and
	 
	 	(i)	 	amounts available to be released from the Debt Service Reserve Account on the
Final Repayment Date for each Facility,






	 	 	provided that Project Revenues shall not include:






	 	(i)	 	any amount otherwise projected to be received from any Person
if, at the time such projection is made, such Person is in default of any
payment obligation to the Company, unless the Global Agent (acting on the
instructions of the Lenders) shall have otherwise agreed;
	 
	 	(ii)	 	Compensation Proceeds;
	 
	 	(iii)	 	Insurance Proceeds (except to the extent included under
paragraph (c) above);
	 
	 	(iv)	 	interest or other investment income derived from funds held
in the Equity Distribution Account; and
	 
	 	(v)	 	the proceeds of Disbursements under the Loan Agreements.






	 	 	“Proparco” means Société de Promotion et de Participation pour la Coopération Economique.




37









 












	 	 	“Proparco “A” Facility” means the “A” loan facility to be made available to the Company
under the Proparco A Loan Agreement.
	 
	 	 	“Proparco “A” Lender” means:






	 	(a)	 	the Original Lender under the Proparco “A” Facility; and
	 
	 	(b)	 	any New Lender under the Proparco “A” Facility,






	 	 	and in each case which has not ceased to be a Party hereto in accordance with the terms of
the Finance Documents.
	 
	 	 	“Proparco A Loan Agreement” means the loan agreement between the Company, the Global Agent
and Proparco in relation to the Proparco Loans.
	 
	 	 	“Proparco Loan” means a Loan made by Proparco under the Proparco “A” Facility.
	 
	 	 	“Pro Rata Share” means:






	 	(a)	 	the proportion which a Lender’s share of the Loans (if any) bears to all the
Loans;
	 
	 	(b)	 	if there is no Loan outstanding on that date, the proportion which its
Commitment bears to the Total Commitments on that date; or
	 
	 	(c)	 	if the Total Commitments have been cancelled, the proportion which its
Commitments bore to the Total Commitments immediately before being cancelled.






	 	 	“Prudent Electrical Practice” has the meaning given to such term in the Construction
Warranty Agreement.
	 
	 	 	“Prudent Operating Practice” has the meaning given to such term in the PPA.
	 
	 	 	“Prudent Utility Practices” means Prudent Operating Practice and Prudent Electrical
Practice.
	 
	 	 	“Quotation Day” means, in relation to any period for which an interest rate is to be
determined two Business Days before the first day of that period, unless market practice
differs in the London interbank market for a currency, in which case the Quotation Day for
that currency will be determined by the Global Agent in accordance with market practice in
the London interbank market (and if quotations would normally be given by leading banks in
the London interbank market on more than one day, the Quotation Day will be the last of
those days).
	 
	 	 	“Reference Banks” means, in relation to LIBOR and Mandatory Cost the principal London
offices of Deutsche Bank, HSBC Bank Plc and Barclays Bank




38









 






	 	 	Plc or such other banks as may be appointed by the Global Agent (acting on the instructions
of all the Lenders) in consultation with the Company.






	 	 	“Reinsurance Assignment Agreement” means an English Reinsurance Assignment Agreement or
Kenyan Reinsurance Assignment Agreement as the case may be.
	 
	 	 	“Related Rights” means, in relation to any asset,






	 	(a)	 	the proceeds of sale of any part of that asset;
	 
	 	(b)	 	all rights under any easement, right of way, licence, agreement for sale or
agreement for lease in respect of that asset;
	 
	 	(c)	 	all rights, benefits, claims, contracts, warranties, remedies, security,
indemnities or covenants for title in respect of that asset; and
	 
	 	(d)	 	any moneys and proceeds paid or payable in respect of that asset.






	 	 	“Relevant Insurance Proceeds” has the meaning given to such term in Clause 8.2 (Mandatory
Prepayment of Insurance Proceeds and Compensation Proceeds).
	 
	 	 	“Repayment Date” means any date upon which the Company shall be obligated to make any
scheduled repayment of principal under any Facility in accordance with the repayment
schedule set out in the relevant Loan Agreement, commencing with the First Repayment Date
and on each subsequent Interest Payment Date, it being the intention that Interest Payment
Dates and Repayment Dates should coincide commencing with the First Repayment Date.
	 
	 	 	“Required Debt Service Reserve Amount” means in respect of a Calculation Date:






	 	(a)	 	100% of the Debt Service Requirement in respect of all Facilities falling due
on the next Interest Payment Date; plus
	 
	 	(b)	 	50% of the Debt Service Requirement in respect of all Facilities falling due
on the Interest Payment Date immediately subsequent to the Interest Payment Date
referred to in paragraph (a) above.






	 	 	“Required Well Drilling Reserve Amount” has the meaning given to such term in the Project
Accounts Agreement.
	 
	 	 	“Revenue Accounts” means, together, the Offshore Revenue Account and the Onshore Revenue
Account.
	 
	 	 	“Screen Rate” means the British Bankers Association Interest Settlement Rate for the
relevant currency and period displayed on the appropriate page of the Reuters screen. If
the agreed page is replaced or service ceases to be available,




39









 






	 	 	the Global Agent may specify another page or service displaying the appropriate rate after
consultation with the Company and the Lenders.






	 	 	“Security” means the security interests from time to time constituted by or pursuant to, or
evidenced by the Security Documents.
	 
	 	 	“Security Agent” means either the Offshore Security Agent or the Onshore Security Agent and
“Security Agents” means both such Persons.
	 
	 	 	“Security Documents” means:






	 	(a)	 	the Kenyan Security Documents;
	 
	 	(b)	 	the English Security Documents;
	 
	 	(c)	 	the Cayman Share Charge;
	 
	 	(d)	 	the Loan Assignment and Security Agreement;
	 
	 	(e)	 	the Project Accounts Agreement; and
	 
	 	(f)	 	any other documents, agreements or other contracts which constitute security
for the Debt Service Obligations or any other obligations owed by the Company to the
Finance Parties from time to time.






	 	 	“Security Trust and Intercreditor Deed” means the agreement so titled among the Company,
the Security Agents, the Global Agent, DEG, Proparco, the Shareholder, the Sponsor, the
Account Banks, and each Hedging Bank pursuant to which, amongst other things, the Security
Agents are appointed as trustees of the Finance Parties to hold the benefit of the Security
on trust for the Finance Parties.
	 
	 	 	“Share” means any share in the capital of the Company of whatever class (including ordinary
shares and preference shares, and any other form of legal, beneficial or economic ownership
interest) to the extent such class of shares or such interest is permitted by the Company’s
constitutive documents as of the date hereof.
	 
	 	 	“Shareholder” means Ormat Holding Corp. or any other holder of the Shares.
	 
	 	 	“Shareholder Debt” means any loan or equity investment in the Company by the Shareholder or
the Sponsor which shall be subordinated to the Facilities pursuant to the Security Trust
and Intercreditor Deed or otherwise on terms satisfactory to the Global Agent (acting on
the instructions of all the Lenders).
	 
	 	 	“Share Retention Agreement” means the share retention agreement entered into or to be
entered into by, amongst others, the Company, the Sponsor, Ormat Technologies Inc., the
Global Agent and Lenders.




40









 












	 	 	“Shillings” or “K.Sh” means the lawful currency from time to time of the Republic of Kenya.
	 
	 	 	“Short-term Debt” means all Debt other than Long-term Debt.
	 
	 	 	“Site” means the site on which the Plant is located as shown on the plan in Schedule 22
(Site Plan).
	 
	 	 	“Site Agreement” means the site agreement for Olkaria III Geothermal Project dated
5th November 1998 between GOK and the Company.
	 
	 	 	“Sponsor” means Ormat International Inc. in its capacity as the indirect controlling
shareholder of the Company.
	 
	 	 	“Standby O&M Agreement” means the agreement entered into by the Global Agent, the Company
and the Standby Operator dated on or about the date of this Agreement.
	 
	 	 	“Standby Operator” means the Sponsor or other Person agreed by the Global Agent (acting on
the instructions of the Lenders) which provides the operation and maintenance services
pursuant to the Standby O&M Agreement.
	 
	 	 	“Subsidiary” means with respect to any Person, any entity:






	 	(a)	 	over fifty per cent (50%) of whose capital is owned, directly or indirectly,
by that Person;
	 
	 	(b)	 	for which that Person may nominate or appoint a majority of the members of
the board of directors or such other body performing similar functions; or
	 
	 	(c)	 	which is otherwise effectively under the Control of that Person;
	 
	 	(d)	 	and, for these purposes, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct its
affairs and/or to Control the composition of its board of directors or equivalent
body, whether through the ownership of voting securities, by contract or otherwise.






	 	 	“Substitute Standby Operator” has the meaning given to such term in Clause 26.1(c) (Cross
Default).
	 
	 	 	“Successor Entity” means any entity that either:






	 	(a)	 	becomes a successor to the KPLC; or
	 
	 	(b)	 	assumes any or all of the obligations of the Offtaker as a result of any
corporate restructuring.




41









 












	 	 	“Tax” means any tax, levy, impost, duty, contribution, contribution, fee, fine or other
charge or withholding of a similar nature (including any related penalty or interest).
	 
	 	 	“Tax Consultant” means Price Waterhouse Coopers, Kenya, or such other accountancy firm
acceptable to the Global Agent (acting on the instructions of the Lenders).
	 
	 	 	“Tax Credit” means a credit against any Tax or any relief or remission for Tax (or its
repayment).
	 
	 	 	“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment
under a Finance Document.
	 
	 	 	“Tax Payment” means a payment made by the Company to a Finance Party in any way relating to
a Tax Deduction or under any indemnity given by the Company in respect of Tax under any
Finance Document.
	 
	 	 	“Technical Assumptions” means the technical assumptions in the Financial Model and as set
out in Schedule 7 (Technical Assumptions) as amended in accordance with this Agreement.
	 
	 	 	“Termination Payments” means any payment made to the Company in respect of the termination
of the PPA and/or the purchase of the Plant in accordance with the GOK Letter.
	 
	 	 	“Total Commitments” means, at any time, the aggregate of all Available Commitments of all
Lenders under this Agreement and the Loan Agreements.
	 
	 	 	“Transfer” means any withdrawal, payment or transfer from one Project Account to another or
to a Person in accordance with the Project Accounts Agreement.
	 
	 	 	“Transfer Certificate” means a certificate substantially in the form set out in Schedule 4
(Form of Transfer Certificate) or any other form agreed among the Global Agent (acting on
the instructions of the Lenders), the Company and, as applicable in relation to each Loan
Agreement, the DEG “A” Lenders, the DEG “B” Lenders, the DEG “C” Lenders or the Proparco
“A” Lenders as the case may be.
	 
	 	 	“Transfer Date” means, in relation to a transfer of any Lender’s rights or obligations
under a Facility, the later of:






	 	(a)	 	the proposed Transfer Date specified in the Transfer Certificate; and
	 
	 	(b)	 	the date on which the Global Agent executes the Transfer Certificate.






	 	 	“True-Up Amount” has the meaning given to that term in Clause 5.5 (True-Up Disbursements).






42











 






	 	 	“True-Up Disbursement” means a Disbursement made pursuant to Clause 5.5 (True-Up
Disbursements).
	 
	 	 	“UNFCCC” means the United Nations Framework Convention on Climate Change.
	 
	 	 	“Unpaid Sum” means any sum due and payable but unpaid by the Company under the Finance
Documents.
	 
	 	 	“US$” or “US Dollars” means the lawful currency of the United States of America from time
to time.
	 
	 	 	“VAT” means value-added tax as provided for in the Kenyan Added Tax Statute, and any other
tax of a similar nature whether of the Republic of Kenya or elsewhere.
	 
	 	 	“Well Drilling Reserve Account” has the meaning given to such term in the Project Accounts
Agreement.
	 
	 	 	“Working Capital” means, on any date, the Company’s Current Assets less its Current
Liabilities.
	 
	1.2	 	Construction






	 	(a)	 	Any reference in this Agreement to:






	 	(i)	 	a document being in “agreed form” means that document in the
form initialed by the Global Agent (acting on the instructions of the Lenders)
and the Company prior to the date of the first Drawdown Request issued
hereunder;
	 
	 	(ii)	 	“assets” includes present and future properties, revenues and
rights of every description;
	 
	 	(iii)	 	“disposal” shall be construed as any sale, transfer,
conveyance, assignment, grant, lease, licence, declaration of trust or other
disposal whether voluntary or involuntary and “dispose” and “disposal” shall
be construed accordingly;
	 
	 	(iv)	 	the “equivalent” on any date in one currency (the “first
currency”) of an amount denominated in another currency (the “second
currency”) is a reference to the amount of the first currency which could be
purchased with the amount of the second currency at the average of the spot
rates of exchange quoted by the Reference Banks to the Global Agent at or
about 11.00 a.m. Frankfurt time on such date for the purchase of the first
currency with the second currency;




43









 












	 	(v)	 	a “Principal Document” or any other agreement, document or
instrument is a reference to that Principal Document or other agreement,
document or instrument as amended, varied, novated, replaced or supplemented
from time to time in accordance with the terms of the Finance Documents or as
may otherwise have been amended prior to the date of this Agreement;
	 
	 	(vi)	 	“including” shall be construed as including, without
limitation;
	 
	 	(vii)	 	a “law” shall be construed as any law (including common or
customary law), statute, constitution, decree, judgment, treaty, regulation,
directive, bye-law, order or any other legislative measure of any government,
supranational, local government, statutory or regulatory body or court;
	 
	 	(viii)	 	a “regulation” includes any regulation, rule, official directive, request or
guideline (in respect of Increased Costs, whether or not having the force of
law but otherwise being of a type which any Person to which it applies is
required (or chooses) to comply) of any governmental, intergovernmental or
supranational body, agency, department or regulatory, self-regulatory or other
authority or organization;
	 
	 	(ix)	 	the “winding-up”, “dissolution” or “administration” of a
company or corporation shall be construed so as to include any equivalent or
analogous proceedings under the law of the jurisdiction in which such company
or corporation is incorporated or any jurisdiction in which such company or
corporation carries on business including the seeking of liquidation,
winding-up, reorganisation, dissolution, administration, arrangement,
adjustment, protection or relief of debtors;
	 
	 	(x)	 	a Party or other Person includes its successors in title,
permitted assigns and permitted transferees;
	 
	 	(xi)	 	a provision of law is a reference to that provision as
amended or re-enacted from time to time; and
	 
	 	(xii)	 	a Project Account includes any sub-accounts into which such
Project Account may be divided in accordance with any Finance Document and any
accounts (and sub-accounts) opened by any successor Account Bank, in each case
as each such Project Account may be renewed, redesignated or renumbered from
time to time.






	 	(b)	 	Clause and Schedule headings are for ease of reference only.




44









 












	 	(c)	 	Unless a contrary indication appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance Document has
the same meaning in that Finance Document or notice as in this Agreement.
	 
	 	(d)	 	A Default other than an Event of Default will be deemed to be “continuing” if
it has not been remedied (or a course of remedial action (if any) agreed with the
Global Agent (acting on the instructions of the Lenders) is being undertaken as
agreed) or waived and an Event of Default will be deemed to be “continuing” if it has
not been waived.
	 
	 	(e)	 	In the case of any conflict between the terms of this Agreement and the terms
of any other Finance Document, the terms of this Agreement shall prevail.






	1.3	 	Financial Calculations






	 	(a)	 	All financial calculations to be made under, or for the purposes of, this
Agreement and any other Finance Document shall be determined in accordance with the
Accounting Principles and, except as otherwise required to conform to any provision of
this Agreement, shall be calculated from the then most recently issued quarterly
financial statements which the Company is obligated to furnish to the Global Agent
under Clause 16.1(a) (Quarterly Information).
	 
	 	(b)	 	Where quarterly financial statements are used for the purpose of making
certain financial calculations and those statements are with respect to the last
quarter of a Financial Year then those calculations may instead be made from the
audited financial statements for the relevant Financial Year delivered to the Global
Agent in accordance with Clause 16.1(b) (Annual Information).
	 
	 	(c)	 	If any Material Adverse Effect has occurred with respect to the Company’s
financial condition after the end of the period covered by the financial statements
used to make the relevant financial calculations, including those contained in
Financial Tests, that Material Adverse Effect shall, to the extent reasonably
practicable, also be taken into account in calculating the relevant figures.




45









 












	1.4	 	Third Party Rights
	 
	 	 	Unless the contrary intention appears:






	 	(a)	 	Unless expressly provided to the contrary in a Finance Document, a person who
is not a party to a Finance Document may not enforce any of its terms under the
Contracts (Rights of Third Parties) Act 1999 and no consent of any third party is
required for any amendment (including any release or compromise of any liability) or
termination of any Finance Document; and
	 
	 	(b)	 	a reference to a Party will not include that Party if it has ceased to be a
Party under this Agreement.






	2	 	FACILITIES
	 
	2.1	 	General
	 
	 	 	12.698% of the proposed financing will be provided by EIB acting on behalf of the European
Community from the investment facility resources made available by the European Community
under the Partnership Agreement.
	 
	2.2	 	Finance Parties’ Rights and Obligations






	 	(a)	 	The obligations of each Finance Party under the Finance Documents are
several. Failure by a Finance Party to perform its obligations under the Finance
Documents does not affect the obligations of any other Party under the Finance
Documents. No Finance Party is responsible for the obligations of any other Finance
Party under the Finance Documents.
	 
	 	(b)	 	The rights of each Finance Party under or in connection with the Finance
Documents are separate and independent rights and any debt arising under the Finance
Documents to a Finance Party from the Company shall be a separate and independent
debt.






	3	 	PURPOSE
	 
	3.1	 	Purpose
	 
	 	 	Subject to the terms and conditions of each Loan Agreement and this Agreement, the Company
shall apply all amounts borrowed by it under any Facility as follows:






	 	(a)	 	towards payment of any Project Costs; and
	 
	 	(b)	 	towards the repayment or refinancing of Project Costs, in accordance with
Clause 5.5 (True-up Disbursements).




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	3.2	 	Monitoring
	 
	 	 	No Finance Party is bound to monitor or verify the application of any amount borrowed
pursuant to any Finance Document.
	 
	4	 	CONDITIONS
	 
	4.1	 	Conditions of First Disbursement






	 	(a)	 	The Company may not deliver the first Drawdown Request unless each of the
Lenders and Participants has notified the Global Agent that:






	 	(i)	 	all of the documents listed in Part 1 of Schedule 2
(Conditions of the First Disbursement) have been delivered to the Global Agent
in form and substance satisfactory to the Lenders and Participants; and
	 
	 	(ii)	 	all other conditions of Disbursement in Part 1 of Schedule 2
(Conditions of the First Disbursement) have been fulfilled to the satisfaction
of the Lenders and Participants, (in consultation with any of the Lenders’
External Advisors, as the case may be) or such conditions have been waived
pursuant to Clause 4.4 (Waiver of Conditions of Disbursement).






	 	(b)	 	Each Lender and Participant shall give each such notification referred to in
Clause 4.1(a)(i) (Conditions of First Disbursement) and Clause 4.1(a)(ii) (Conditions
of First Disbursement) above to the Global Agent as soon as reasonably practicable
after its determination of satisfaction or its issuance of a waiver pursuant to Clause
4.1(a)(i) (Conditions of First Disbursement) or Clause 4.1(a)(ii) (Conditions of First
Disbursement) above (as the case may be), and the Global Agent shall promptly
thereafter notify the Company and each other Lender of such notification.






	4.2	 	Conditions of Each Disbursement






	 	(a)	 	The obligation of each Lender to make or participate in each Disbursement
under any Facility is subject to the further conditions precedent that, on the date of
the relevant Drawdown Request and on the proposed Disbursement Date, the conditions
listed in Part 2 of Schedule 2 (Conditions of All Disbursements) have been:






	 	(i)	 	satisfied in form and substance satisfactory to each Lender
and each Participant (as notified to the Global Agent by each Lender and each
Participant), in consultation with any of the Lenders’ External Advisors, as
the case may be; or




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	 	(ii)	 	waived pursuant to Clause 4.4 (Waiver of Conditions of
Disbursement).






	 	(b)	 	Each Lender and Participant shall give each such notification referred to in
Clause 4.2(a) (Conditions of Each Disbursement) above to the Global Agent as soon as
reasonably practicable after its determination of satisfaction or its issuance of a
waiver pursuant to Clause 4.2(a)(ii) (Conditions of Each Disbursement) above, and the
Global Agent shall promptly thereafter notify the Company and each other Lender of
such notification.






	4.3	 	Conditions of Second Disbursement






	 	(a)	 	In addition to the conditions set out in Clause 4.2 (Conditions of Each
Disbursement), the Company may not deliver the second Drawdown Request unless the
Global Agent shall have received in form and substance satisfactory to the Lenders and
the Participants:






	 	(i)	 	financial statements and other information for the Company
for its Financial Year ended 31 December 2008 in accordance with Clauses
16.1(b) (Annual Information) and 16.2 (Requirements as to Financial
Statements); and
	 
	 	(ii)	 	a Project Costs Report in respect of Project Costs incurred
in the period up to Financial Close countersigned by the Lenders’ Engineer in
the form set out therein, in relation to Project Costs.






	 	(b)	 	Each Lender and Participant shall notify the Global Agent as soon as
reasonably practicable of its determination of satisfaction under Clause 4.3(a)
(Conditions of Second Disbursement).






	4.4	 	Waiver of Conditions of Disbursement






	 	(a)	 	Any waiver of any condition of Disbursement under Clause 4.1 (Conditions of
First Disbursement), Clause 4.2 (Conditions of Each Disbursement) or Clause 4.3
(Conditions of Second Disbursement) shall only be binding on the Company and all of
the Lenders if approved in writing by all of the Lenders and the Participants.
	 
	 	(b)	 	If any condition of Disbursement set out in Schedule 2 (Conditions of
Disbursement) is requested to be waived in respect of any Drawdown Request, the Global
Agent shall, promptly upon receiving such a request, inform each of the Lenders of
such a request and each Lender and each Participant shall, promptly following the
receipt of such notice, notify the Global Agent in writing whether or not it consents
to the waiver of such condition of Disbursement.




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	 	(c)	 	The Global Agent shall promptly inform each Lender and the Company of any
waiver agreed to by any Lender or Participant under this Clause 4.4 (Waiver of
Conditions of Disbursement).






	4.5	 	Suspension or Cancellation by Lenders






	 	(a)	 	The Global Agent (acting on the instructions of the Lenders) may, by notice
to the Company, with a copy to each Lender, suspend or cancel the right of the Company
to request Disbursements from all Lenders (including pending Disbursements from all
Lenders) or suspend or cancel the whole or any part (provided such partial suspension
or cancellation is made pro rata to the Available Commitment under each of the
Facilities) of the undisbursed portion of all Loans requested by the Company to be
made under the Loan Agreements:






	 	(i)	 	in connection with Financial Close, if the Global Agent has
not received a valid Drawdown Request in respect of which all conditions of
Disbursement have been satisfied by the end of the Availability Period (or
such other later date as the Global Agent (acting on the instructions of the
Lenders) agrees);
	 
	 	(ii)	 	if at any time any Event of Default has occurred and is
continuing or if the Event of Default specified in Clause 26.1(h)
(Expropriation) is, in the reasonable opinion of the Global Agent (acting on
the instructions of the Lenders), imminent; or
	 
	 	(iii)	 	if a Material Adverse Effect has occurred,






	 	 	 	provided that






	 	(A)	 	the undisbursed portion of any Facility may
not be cancelled upon less than five (5) days’ prior notice to the
Company in respect of the occurrences under paragraph (a)(ii) or upon
less than ninety (90) days’ notice in respect of the occurrences
under paragraph (a)(iii) above, unless in the opinion of the Global
Agent (acting on the instructions of the Lenders), the Finance
Parties’ rights or interests under the applicable Loan Agreement
would be jeopardized or prejudiced by such delay; and
	 
	 	(B)	 	the right of the Company to request a
Disbursement may be suspended immediately upon the occurrence of the
events listed in paragraph (a)(i) to (iii) (inclusive) above.






	 	(b)	 	Upon the giving of any such notice, the right of the Company to request any
further Disbursement or receive the undisbursed portion of any Loan requested to be
made shall be suspended or cancelled, as the case may be. The exercise by the Global
Agent (acting on the instructions of all




49









 












	 	 	 	Lenders) of its right of suspension shall not preclude the Global Agent (acting on
the instructions of all Lenders) from exercising its right of cancellation, either
for the same or any other reason specified in this Clause 4.5 (Suspension or
Cancellation by Lenders), and any suspension under this Clause 4.5 (Suspension or
Cancellation by Lenders) shall not limit any other provision of this Agreement.
	 
	 	(c)	 	Upon any cancellation of the right to request Disbursements or the
undisbursed portion of all Loans (or part thereof), the Company shall pay to the
relevant Lender or the Lenders all fees and other amounts accrued (whether or not then
due and payable) under this Agreement and the other Finance Documents (for the
avoidance of doubt, other than principal and interest outstanding on any disbursed
Loan which is not then otherwise due and payable) up to the date of that cancellation
and the Available Commitments of the Lenders under the relevant Loan Agreement shall
be cancelled accordingly.
	 
	 	(d)	 	Any undisbursed portion of a Loan that is cancelled under this Clause 4.5
(Suspension or Cancellation by Lenders) may not be reborrowed.
	 
	 	(e)	 	In the case of partial cancellation of a Loan pursuant to paragraph (a)
above, interest on the amount of the Loan which remains outstanding shall be payable
as provided in the relevant Loan Agreement.
	 
	 	(f)	 	Any undisbursed amount under any Facility shall, for the avoidance of doubt,
be cancelled if not disbursed by the last day of the Availability Period.






	4.6	 	Participation Agreement
	 
	 	 	Notwithstanding any other provision of this Agreement, no DEG B Lender and no DEG C Lender
are obliged to make any Disbursement under the DEG “B” Facility or DEG “C” Facility
respectively, except to the extent that the DEG B Lenders and DEG C Lenders shall have
received from the Participants, in immediately available funds, funds for that Disbursement
in accordance with the Participation Agreements.
	 
	5	 	DISBURSEMENT
	 
	5.1	 	Delivery of a Drawdown Request
	 
	 	 	Subject to Clause 4 (Conditions), the Company may utilise the Facilities by delivery to the
Global Agent of a duly completed and executed Drawdown Request (and any related
documentation required under the terms of this Agreement or the relevant Loan Agreement) by
no later than 11:00 a.m. (Frankfurt time) no later than fifteen (15) Business Days prior to
the proposed Disbursement Date for the Loans.




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	5.2	 	Completion of a Drawdown Request






	 	(a)	 	Each Drawdown Request is irrevocable and will not be regarded as having been
duly delivered, completed and executed unless:






	 	(i)	 	the proposed Disbursement Date under each such Drawdown
Request is the same day for each Facility and is a Business Day within the
Availability Period relating to each such Facility, provided that if such day
is not a Business Day, the relevant Disbursement Date shall be the next
Business Day within the Availability Period;
	 
	 	(ii)	 	in respect of the first Drawdown Request only, the proposed
total aggregate amount of all Disbursements requested under the Drawdown
Request is no more than ninety million US Dollars (US$90,000,000);
	 
	 	(iii)	 	the amount of the Disbursement under each of the Facilities
requested in a Drawdown Request shall be pro rata to the Available Commitment
under each of the other Facilities.






	 	(b)	 	Only one Loan per Facility may be requested in each Drawdown Request (and in
the case of the DEG Loans, consisting of a DEG “A” Loan, a DEG “B” Loan and a DEG “C”
Loan, as applicable).






	5.3	 	Making of Loans
	 
	 	 	If the conditions set out in Clause 4 (Conditions) have been met, each Lender shall make
its Loan or, as applicable, its participation therein, available on the proposed
Disbursement Date in accordance with the relevant Loan Agreement and pro rata to the
Available Commitment under each of the other Facilities; provided that, for the avoidance
of doubt, in the event that the Global Agent (acting on the instructions of the Lenders)
issues a notice of suspension or cancellation with respect to any Disbursement or any Loan
under Clause 4.5 (Suspension or Cancellation by Lenders) then each Lender shall not be
required to make any Disbursement in respect of which a Drawdown Request has been issued.
	 
	5.4	 	Delay of Loan
	 
	 	 	No Finance Party shall be responsible for any delay in the making of any Loan as a result
of the request of the Global Agent (acting on the instructions of the Lenders) or any
Lender’s request for any information and/or clarification it requires in confirming that
the Company has satisfied any condition for the making of a Disbursement set out in Clause
4 (Conditions) in respect of any Drawdown Request.




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	5.5	 	True-up Disbursement






	 	(a)	 	Subject to the terms of this Clause 5.5 (True-up Disbursement), in respect of
any Drawdown Request, the Company may apply the proceeds of the requested Loans to
repay or refinance that amount of Project Costs incurred prior to the Project
Completion Date (the “True Up Amount”) and evidenced by a Project Costs Report
(“Evidenced Project Costs”) either by way of:






	 	(i)	 	payment to the Shareholder as a Distribution of an amount no
greater than the True-up Amount; and/or
	 
	 	(ii)	 	a refund or repayment to the Shareholder in cash of an amount
no greater than the True-up Amount in respect of Evidenced Project Costs
incurred by the Shareholder,






	 	(b)	 	The Company may only submit a Drawdown Request in respect of a Distribution,
refund or repayment under paragraph (a) above provided that:






	 	(i)	 	the relevant conditions in Clause 4 (Conditions) are
satisfied in accordance with Clause 4 (Conditions); and
	 
	 	(ii)	 	it prepares and delivers an Interim Financial Test in
accordance with Clause 19.4 (Interim Financial Tests) and using the
Assumptions projected forward as necessary which demonstrates that on the
proposed Disbursement Date after paying the True Up Amount by way of a
Distribution, refund or repayment, the Debt to Equity Ratio will not exceed
3.0:1 and the Equity to Total Assets Ratio will not be less than 0.25;






	 	(c)	 	The Financial Test delivered pursuant to Clause 5.5(b) (True-up Disbursement)
above shall be subject to review by the Global Agent (acting on the instructions of
the Lenders) in accordance with the provisions of Clauses 19.6 (Changes Required by
Lenders) and 19.7 (Revised Financial Test) and, if the Global Agent (acting on the
instructions of the Lenders) requires any change to be made to such updated Financial
Test, the Company shall not request that any Transfer to the Equity Distribution
Account is made unless and until such matter has been finally resolved in accordance
with Clauses 19.6 (Changes Required by Lenders) and 19.7 (Revised Financial Test).
	 
	 	(d)	 	Following the final determination of the Financial Test pursuant to Clause
5.5(c) (True-up Disbursement) above (provided such Financial Test demonstrates
satisfaction with the ratios referred in Clause 5.5(b)(ii) (True-up Disbursement), the
Company may request a Transfer to the Equity Distribution Account of the Transfer
Amount (or such smaller




52









 












	 	 	 	amount as is evidenced by the Financial Test) to be made on
the
Distribution Date only if the Company on the proposed Distribution Date, certifies
to the Global Agent in writing that no Default has occurred and is continuing or
will occur as a result of the proposed Transfer.






	6	 	REPAYMENT
	 
	6.1	 	Repayment of Loans
	 
	 	 	The Company shall repay the Loans in accordance with the repayment schedule set out in
Schedule 11 (Repayment Schedule) on each Repayment Date, the first principal payment of
which shall be due on the First Repayment Date, with a final installment of the remaining
balance under each Loan to be paid no later than the Final Repayment Date.
	 
	6.2	 	Reborrowing
	 
	 	 	The Company may not reborrow any part of any Facility which is repaid or prepaid.
	 
	6.3	 	Other Debt Service Obligations
	 
	 	 	Debt other than the Loans shall be paid at the times, in the manner and on the terms
provided in the respective agreement governing such other Debt subject to compliance with
the terms of this Agreement and the other Finance Documents.
	 
	7	 	VOLUNTARY PREPAYMENT AND CANCELLATION
	 
	7.1	 	Voluntary Cancellation






	 	(a)	 	The Company may, prior to the end of the Availability Period, if it gives the
Global Agent not less than 42 days’ prior notice (or such shorter period as the Global
Agent (acting on the instructions of the Lenders) may agree), cancel the whole or any
part of the Available Facility under each of the Loan Agreements.
	 
	 	(b)	 	Except for any cancellation made under Clause 7.3 (Right of Repayment and
Cancellation in Relation to a Single Lender) or Clause 8.1 (Mandatory Prepayment due
to Illegality) any cancellation under this Clause 7.1 shall reduce the relevant
Available Commitments of each of the Lenders under the Facilities pro rata.
	 
	 	(c)	 	Any cancellation made pursuant to this Clause 7.1 (Voluntary Cancellation)
shall be subject to a cancellation fee equal to 1% of the amount cancelled payable on
the next occurring Interest Payment Date unless such cancellation is in respect of
that part of the Available Facility which exceeds the aggregate amount of Project
Costs which are financed




53









 












	 		 	or refinanced in accordance with Clause 3.1 (Purpose) and
Clause 5.5
(True-up Disbursements) and which represent the total cost of the Project included
up to Project Completion Date.






	7.2	 	Voluntary Prepayment






	 	(a)	 	Subject to Clause 7.4 (Restrictions), the Company may, if it gives the Global
Agent not less than thirty (30) days’ prior notice (or such shorter period as the
Global Agent (acting on the instructions of the Lenders) may agree), prepay on an
Interest Payment Date the whole or any part of the Loans; provided that if the
prepayment constitutes only part of the Loans, such prepayment shall be in a minimum
amount of ten million US Dollars (US$10,000,000) in the aggregate for all of the
Loans.
	 
	 	(b)	 	Except for any prepayment made under Clause 7.3 (Right of Repayment and
Cancellation in relation to a single Lender) and Clause 8.1 (Mandatory Prepayment due
to Illegality) any prepayment under this Clause 7.2 shall be applied against each of
the Loans pro rata to the respective principal amounts outstanding and shall satisfy
the obligations of the Company under Clause 6.1 (Repayment of Loans) in respect of
each Loan on a pro rata basis.






	7.3	 	Right of Repayment and Cancellation in Relation to a Single Lender






	 	(a)	 	If:






	 	(i)	 	any sum payable to a Lender is required to be increased under
Clause 11.1 (Gross-up); or
	 
	 	(ii)	 	the Company is required to make a Tax Payment or Tax
Deduction; or
	 
	 	(iii)	 	any Lender claims indemnification from the Company under
Clause 12.1 (Increased Costs) or Clause 11.2 (Tax Indemnity),






	 	 	 	the Company may, whilst the circumstance giving rise to the requirement for
indemnification continues, give the Global Agent thirty (30) days’ notice of:






	 	(A)	 	its intention to procure the repayment of,
as applicable:






	 	(I)	 	that Lender’s Loans; or
	 
	 	(II)	 	that Lender’s participation
in the relevant Loans; or
	 
	 	(III)	 	that portion of the Loans
(or a participant’s share in the Loans) to which the Tax
Payment, Tax Deduction or claim for indemnification relates;
and




54









 












	 	(B)	 	cancellation of, as applicable:






	 	(I)	 	if the repayment is
pursuant to Clause 7.3(a)(A)(I) (Right of Repayment and
Cancellation in Relation to a Single Lender) above, the
relevant Commitment of the Lender; or
	 
	 	(II)	 	if the repayment is
pursuant to Clause 7.3(a)(A)(II) or 7.3(a)(A)(III) (Right of
Repayment and Cancellation in Relation to a Single Lender)
above, that proportion of the Commitment which is equal to
the proportion which the repaid amount bears to the Lender’s
total outstanding Loans (or a participant’s share in the
Loans) immediately before the date of repayment.






	 	(b)	 	On receipt of a notice referred to in paragraph (a) above:






	 	(i)	 	if the repayment is pursuant to Clause 7.3(a)(A)(I) (Right of
Repayment and Cancellation in Relation to a Single Lender) above, the relevant
Commitment of the Lender shall be immediately reduced to zero; or
	 
	 	(ii)	 	if the repayment is pursuant to Clauses 7.3(a)(A)(II) or
7.3(a)(A)(III) (Right of Repayment and Cancellation in Relation to a Single
Lender) above, that proportion of the Lender’s Commitment which is equal to
the proportion which the repaid amount bears to that Lender’s total
outstanding Loans immediately before the date of repayment shall be cancelled
and such proportion shall be immediately reduced to zero.






	 	(c)	 	On the Interest Payment Date which follows the Interest Period in which the
Company has given notice under Clause 7.3(a) (Right of Repayment and Cancellation in
Relation to a Single Lender) above, the Company shall repay as applicable:






	 	(i)	 	that Lender’s Loans; or
	 
	 	(ii)	 	that Lender’s participation in the relevant Loans; or
	 
	 	(iii)	 	that portion of the Loans (or a participant’s share in the
Loans) to which the Tax Payment, Tax Deduction or claim for indemnification
relates.






	 	(d)	 	Subject to paragraph (e) below, any prepayment under this Clause 7.3 (Right
of Repayment and Cancellation in Relation to a Single Lender) will be subject to the
payment of Break Costs (if any) and Fixed Rate Break Costs (if any) but otherwise
without premium or penalty.




55









 












	 	(e)	 	If any Tax Payment or Tax Deduction referred to in Clause 7.3(a)(i) or
7.3(a)(iii) (Right of Repayment and Cancellation in Relation to a Single Lender) is
made or required to be made in relation to payments made or due to the Original
Participants (or either of them), the prepayment and cancellation referred to in
Clause 7.3(a) (Right of Repayment and Cancellation in Relation to a Single Lender)
will not be required to satisfy the conditions set out in Clauses 7.1 (Voluntary
Cancellation) and 7.2 (Voluntary Prepayment) but shall be subject to the payment of
the Prepayment Premium, Break Costs (if any) and Fixed Rate Break Costs (if any).






	7.4	 	Restrictions






	 	(a)	 	Any notice of cancellation or prepayment given by the Company under this
Clause 7 (Voluntary Prepayment and Cancellation) shall be irrevocable, shall be made
no later than thirty (30) days before an Interest Payment Date and, unless a contrary
indication appears in this Agreement, shall specify the amount of that cancellation or
prepayment.
	 
	 	(b)	 	Subject to Clause 7.3 (Right of Prepayment and Cancellation in Relation to a
Single Lender), any prepayment made under this Clause 7 (Voluntary Prepayment and
Cancellation) shall be made together with accrued interest on the amount prepaid and
any applicable Break Costs, any applicable Fixed Rate Break Costs, any Prepayment
Premium and any other amounts which may be due to the relevant Lender under the
relevant Finance Documents.
	 
	 	(c)	 	The Company may not reborrow any part of any Facility which is prepaid and
may not reinstate any amount of any Facility cancelled pursuant to this Clause 7
(Voluntary Prepayment and Cancellation).
	 
	 	(d)	 	The Company shall not repay or prepay all or any part of the Loans or cancel
all or any part of the Commitments except at the times and in the manner expressly
provided for in this Agreement and the relevant Loan Agreement.






	8	 	MANDATORY PREPAYMENTS
	 
	8.1	 	Mandatory Prepayment due to Illegality
	 
	 	 	If it becomes unlawful in any jurisdiction for a Lender (or any participant in that
Lender’s Facility) to perform any of its obligations under any Facility or to fund any
Loan, or as applicable, its share or participation in any Loan:






	 	(a)	 	the relevant Lender shall promptly notify the Global Agent and the Company
upon becoming aware of that event;




56









 












	 	(b)	 	upon the relevant Lender notifying the Company of such event, in accordance
with paragraph (a) above, the Commitment of that Lender (or the participant’s
participation) will be immediately cancelled; and
	 
	 	(c)	 	the Company shall repay or prepay the share of that Lender (or the relevant
participant’s) share or participation in the Loans, together with any accrued
interest, fees, costs, expenses and Taxes thereon and any Break Costs and Fixed Rate
Break Costs occurring in accordance with Clause 9.2 (Break Costs), as soon as
practicable following the Lender notifying the Company of such event in accordance
with paragraph (a) above, and in any event on the Interest Payment Date following the
current Interest Period or, if earlier, the date specified by the Lender in the notice
delivered to the Global Agent (being no earlier than the last day of any applicable
grace period permitted by law).






	8.2	 	Mandatory Prepayment of Insurance Proceeds and Compensation Proceeds






	 	(a)	 	The Company shall procure, subject to paragraphs (b) and (c) below, that (1)
any Insurance Proceeds (other than the proceeds of any delay in start-up, business
interruption or liability insurance) or (2) any Compensation Proceeds received by the
Company in respect of the Project are applied in repayment of the Loans in accordance
with Clause 8.5 (Application of Prepayments), save that in each case:






	 	(i)	 	if any such Insurance Proceeds relating to any event or
series of events resulting in a physical loss or damage to any part of the
Project are not more than two million US Dollars (US$2,000,000) (or its
equivalent in any other currency) in aggregate in any year, the Company may
apply those Insurance Proceeds to the reinstatement, repair or restoration of
the relevant asset or making good the relevant loss.
	 
	 	(ii)	 	if such Insurance Proceeds relating to any event or series of
events resulting in a physical loss or damage to or expropriation of any part
of the Project are more than two million US Dollars (US$2,000,000) but less
than ten million US Dollars (US$10,000,000) (or its equivalent in any other
currency) in aggregate in any year, the Company may apply those Insurance
Proceeds to repairing or making good the loss, or the reinstatement, repair or
replacement of any part or asset of the Project provided that






	 	(A)	 	the Company promptly submits to the Global
Agent its proposals for the reinstatement, repair or restoration of
the asset or making good the loss, together with the time periods
within which such proposals are to be implemented; and




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	 	(B)	 	no Default has occurred and is continuing;
and
	 
	 	(C)	 	the Lenders’ Engineer is satisfied with the
technical and financial viability of the repair or rebuilding of the
affected assets;






	 	(iii)	 	any such Compensation Proceeds shall be paid on the date of
receipt into the Offshore Compensation Account pursuant to the Project
Accounts Agreement and the Loans shall be prepaid in an amount equal to the
Compensation Proceeds so received unless the Company has demonstrated to the
satisfaction of the Lenders within a period of 45 days from that date that:






	 	(A)	 	such Compensation Proceeds are to be used
for the replacement of the expropriated asset; and
	 
	 	(B)	 	no Material Adverse Effect or Event of
Default (other than the Event of Default in respect of which the
Compensation Proceeds were paid) results from the expropriation
and/or the replacement of such asset.






	 	(b)	 	In the event that the Company receives Insurance Proceeds which are paid to
meet a third party claim under any third party liability, employer’s liability or
automobile liability insurance in respect of the Project, such Insurance Proceeds may
be applied by the Company in meeting such claim.
	 
	 	(c)	 	If any Insurance Proceeds or Compensation Proceeds are permitted to be
applied in the reinstatement, repair or replacement of any of the Project’s assets or
making good a loss in accordance with paragraph (a) above, then the Company shall
procure that such proceeds are so applied as promptly as possible.
	 
	 	(d)	 	If any such Insurance Proceeds or Compensation Proceeds are not applied in
such repair, replacement or reinstatement in accordance with the proposals and time
periods proposed under paragraph (a) above or in accordance with paragraph (c) above,
unless otherwise approved by the Global Agent, and in consultation with the Lenders’
Engineer, such Insurance Proceeds or Compensation Proceeds shall be applied on the
earlier of the next Interest Payment Date or Repayment Date in repayment of the Loans
in accordance with Clause 8.5 (Application of Prepayments).
	 
	 	(e)	 	If the Company receives Insurance Proceeds or Compensation Proceeds which are
to be applied in mandatory prepayment of the Facilities in accordance with this Clause
8.2 (Mandatory Prepayment of Insurance Proceeds and Compensation Proceeds) on any day
other than an Interest Payment Date or Repayment Date, the Company shall procure that,
when such proceeds are received by the Company, they are credited as promptly




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	 	 	 	as possible to the Offshore Insurance Proceeds Account (if Insurance Proceeds) or
the Offshore Compensation Account (if Compensation Proceeds), pending their
application in accordance with Clause 8.5 (Application of Prepayments).






	8.3	 	Mandatory Prepayment of Non-Delay Liquidated Damages
	 
	 	 	The Company shall ensure that any Non-Delay Liquidated Damages received by the Company are
paid upon receipt into the Offshore Compensation Account and are applied in repayment of
the Loans, in accordance with Clause 8.5 (Application of Prepayments).
	 
	8.4	 	Mandatory Prepayment of Termination Payment
	 
	 	 	The Company shall procure that any Termination Payment received by the Company is paid upon
receipt into the Offshore Compensation Account and is applied in repayment of the Loans in
accordance with Clause 8.5 (Application of Prepayments).
	 
	8.5	 	Application of Prepayments
	 
	 	 	Subject to Clause 8.1 (Mandatory Prepayment due to Illegality) and Clause 7.3 (Right of
Repayment and Cancellation in Relation to a Single Lender), any other amounts to be applied
in mandatory prepayment of the Facilities pursuant to Clause 8 (Mandatory Prepayments)
shall be applied on the next Interest Payment Date or Repayment Date against each of the
Loans pro rata and in the case of any Fixed Rate Loans, in inverse order of maturity based
on the respective principal amounts outstanding thereunder in accordance with the Finance
Documents, shall be subject to the payment of Break Costs (if any) and Fixed Rate Break
Costs (if any) but shall not be subject to the payment of the Prepayment Premium. Any
amount so prepaid may not be redrawn.
	 
	9	 	INTEREST AND BREAK COSTS
	 
	9.1	 	Interest
	 
	 	 	The Company shall pay interest and any other amounts due under each Facility in accordance
with the terms of the relevant Loan Agreement.
	 
	9.2	 	Break Costs






	 	(a)	 	The Company shall, as soon as practicable following a notice under Clause
8.1(a) (Mandatory Prepayment due to Illegality) or, if earlier, the date specified by
the relevant Finance Party (in accordance with Clause 8.1(a) (Mandatory Prepayment due
to Illegality) or otherwise in accordance with the Finance Documents and in any event
on the Interest




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	 	 	 	Payment Date following the current Interest Period, pay to that Finance Party:






	 	(i)	 	its Break Costs attributable to all or any part of a Loan or
Unpaid Sum being paid or prepaid otherwise than on the relevant Interest
Payment Date; and
	 
	 	(ii)	 	in respect of a Fixed Rate Loan, its Fixed Rate Break Costs.






	 	(b)	 	Each Finance Party shall, as soon as reasonably practicable but in any event
not later than ten (10) days after a demand by the Global Agent or the Company,
provide a certificate confirming the amount of its Break Costs or Fixed Rate Break
Costs as the case may be.






	9.3	 	Default Interest






	 	(a)	 	If the Company fails to pay any amount payable by it under a Finance Document
(other than any Hedging Contract) on its due date, interest shall accrue on the Unpaid
Sum from the due date up to the date of actual payment (both before and after
judgment) at a rate which, subject to paragraph (b) below, is two per cent (2%) per
annum higher than the rate which would have been payable if the Unpaid Sum had, during
the period of non-payment, constituted a Loan for successive Interest Periods. Any
interest accruing under this Clause 9.3 (Default Interest) shall be immediately
payable by the Company on demand by the Global Agent.
	 
	 	(b)	 	If any Unpaid Sum consists of all or part of a Loan which became due on a day
which was not the last day of an Interest Period relating to that Loan:






	 	(i)	 	the first Interest Period for that Unpaid Sum shall have a
duration equal to the unexpired portion of the current Interest Period
relating to that Loan; and
	 
	 	(ii)	 	the rate of interest applying to the Unpaid Sum during that
first Interest Period shall be two per cent. (2%) per annum higher than the
rate which would have applied if the Unpaid Sum had not become due.






	 	(c)	 	Default interest (if unpaid) arising on an Unpaid Sum will be compounded with
the overdue amount at the end of each Interest Period applicable to that Undue Sum but
will remain immediately due and payable.






	9.4	 	Fixed Rate Loans






	 	(a)	 	Subject to Clause 9.4(d) (Fixed Rate Loans), the Company and the Global Agent
(acting on the instructions of the Lenders) may on one occasion only agree to convert
the interest rate agreed in respect of all Loans pursuant to Clause 9.1 (Interest) to
a fixed interest rate (the “Fixed




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	 	 	 	Interest Rate”) provided that such conversion is in respect of all Loans under each
Facility. The Company and the Global Agent may exercise such right by no later
than one (1) month prior to the end of an Interest Period, and not earlier than the
last Disbursement Date whereby the Facilities are drawn down in full, and such
conversion shall take effect on the next occurring Interest Payment Date.
	 
	 	(b)	 	The Company shall pay the Fixed Interest Rate as determined in accordance
with Clause 9.5 (Fixed Rate Basis) for each Interest Period following the conversion
to the Fixed Interest Rate in accordance with Clause 9.4(a) (Fixed Rate Loans).
	 
	 	(c)	 	The Company shall on the date of the conversion pursuant to Clause 9.4(a)
(Fixed Rate Loans) pay to the Global Agent for the account of each Lender a fee
computed at a rate of 0.25% of the amount of that Lender’s Loans which have been
converted into Fixed Rate Loans.
	 
	 	(d)	 	If the Company and the DEG B Lenders are unable to agree to convert the
interest rate in respect of the DEG B Loans to a Fixed Interest Rate, the conversion
to the Fixed Interest Rate in accordance with Clause 9.4(a) (Fixed Rate Loans) shall
take effect in respect of all Loans other than the DEG B Loans.






	9.5	 	Fixed Rate Basis
	 
	 	 	The rate of interest on the participation of each Lender in a Fixed Rate Loan for each
interest period commencing after the date of fixing in accordance with Clause 9.4 (Fixed
Rate Loans) above, and continuing for a period up to the Final Repayment Date, shall be the
rate determined by the Global Agent (instructed by the Lenders) to be the aggregate of:






	 	(a)	 	the Margin;
	 
	 	(b)	 	the applicable Fixed Interest Rate; and
	 
	 	(c)	 	the Mandatory Cost, if any, applicable to the Lender’s participation in the
Fixed Rate Loan.






	9.6	 	Absence of quotations
	 
	 	 	Subject to Clause 9.7 (Market disruption), if LIBOR is to be determined by reference to the
Reference Banks but a Reference Bank does not supply a quotation by 11:00 am London time on
the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations
for obtaining funding of the remaining Reference Banks.




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	9.7	 	Market disruption






	 	(a)	 	If a Market Disruption Event occurs in relation to a Loan for any Interest
Period, then the rate of interest on a Lender’s share of that Loan for the Interest
Period shall be the percentage rate per annum which is the sum of:






	 	(i)	 	the Margin;
	 
	 	(ii)	 	the rate notified to the Global Agent by that Lender as soon
as practicable and in any event before interest is due to be paid in respect
of that Interest Period, to be that which expresses as a percentage rate per
annum the cost to the Lender of funding its participation in that Loan from
whatever source it may reasonably select; and
	 
	 	(iii)	 	the Mandatory Cost, if any, applicable to the Lender’s
participation in the Loan.






	9.8	 	Alternative basis of interest or funding






	 	(a)	 	If a Market Disruption Event occurs and the Global Agent (acting on the
instructions of the Lenders) or the Company so requires, the Global Agent (acting on
the instructions of the Lenders) and the Company shall enter into negotiations (for a
period of not more than thirty (30) days) with a view to agreeing on a substitute
basis for determining the rate of interest.
	 
	 	(b)	 	Any alternative basis agreed pursuant to paragraph (a) above shall, with the
prior consent of the Global Agent and the Company, be binding on all Parties.






	10	 	FEES
	 
	10.1	 	Global Agency Fee
	 
	 	 	The Company shall pay to the Global Agent (for its own account) a fee in the amount and at
the times agreed in the Fee Letter entered or to be entered into between the Company and
the Global Agent.
	 
	10.2	 	Front-end Fees
	 
	 	 	The Company shall pay to the Global Agent (for the account of each of the Lenders) a
front-end fee in the amount and at the times agreed in the relevant Loan Agreement between
the Company and the relevant Lender.




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	10.3	 	Commitment Fees
	 
	 	 	The Company shall pay to the Global Agent (for the account of each of the Lenders), the
commitment fees due from the Company under each of the Facilities in accordance with the
relevant Loan Agreement.
	 
	10.4	 	Security Agents’ Fees
	 
	 	 	The Company shall pay to each of the Offshore Security Agent and the Onshore Security Agent
a fee in the amount and at the times agreed in the Fee Letters entered or to be entered
into between the Company and the Offshore Security Agent and the Onshore Security Agent
respectively.
	 
	10.5	 	Account Banks’ Fees
	 
	 	 	The Company shall pay to the Offshore Account Bank a fee in the amount and at the times
agreed in the Fee Letters entered or to be entered into between the Company and the
Offshore Account Bank.
	 
	10.6	 	Monitoring Fees
	 
	 	 	The Company shall pay to the Global Agent for the account of the DEG A Lender, the DEG B
Lender, the DEG C Lender and the Proparco A Lender a fee equal to US$10,000 per annum in
arrears for each such Lender payable on the second Interest Payment Date in each year.
	 
	11	 	TAXES
	 
	11.1	 	Gross-up






	 	(a)	 	All payments by the Company under the Finance Documents shall be made free
and clear of and without any Tax Deduction, except to the extent that a Tax Deduction
is required by law.
	 
	 	(b)	 	The Company shall promptly upon becoming aware that it must make a Tax
Deduction (or that there is a change in the rate or the basis of any Tax Deduction)
notify the Global Agent accordingly. Similarly, a Lender shall promptly notify the
Global Agent on becoming so aware in respect of a payment payable to that Lender. If
the Global Agent receives such notification from a Lender it shall promptly notify the
Company and the other Lenders.
	 
	 	(c)	 	If any Tax Deduction is required by law to be made by the Company or the
Global Agent the Company shall pay such additional amounts as may be necessary to
ensure that the relevant Lender receives a net amount equal to the full amount which
it would have received had payment no Tax Deduction been required.




63









 












	 	(d)	 	If the Company is required to make a Tax Deduction, it must make the minimum
Tax Deduction allowed by law and must make any payment required in connection with
that Tax Deduction within the time allowed by law.
	 
	 	(e)	 	Within thirty (30) days of making either a Tax Deduction or a Tax Payment
required in connection with a Tax Deduction, the Company must deliver to the Global
Agent for the relevant Finance Party evidence satisfactory to that Finance Party
(acting reasonably) that the Tax Deduction has been made or (as applicable) the
appropriate payment has been paid to the relevant taxing authority.






	11.2	 	Tax indemnity






	 	(a)	 	Except as provided below, the Company must indemnify a Finance Party against
any Liability which that Finance Party determines will be or has been suffered
(directly or indirectly) by that Finance Party for or on account of Tax in relation to
a payment received or receivable or any payment deemed to be received or recoverable
under a Finance Document provided that the Finance Party provides documentary evidence
of the same to the extent such evidence is reasonably available.
	 
	 	(b)	 	Paragraph (a) above does not apply with respect to any Tax assessed on a
Finance Party under the laws of the jurisdiction in which:






	 	(i)	 	that Finance Party is incorporated or, if different, the
jurisdiction (or jurisdictions) in which that Finance Party is treated as
resident for tax purposes; or
	 
	 	(ii)	 	that Finance Party’s Facility Office is located in respect of
amounts received or receivable in that jurisdiction,






	 	 	 	if that Tax is imposed on or calculated by reference to the net income received or
receivable by that Finance Party. However, any payment deemed to be received or
receivable, including any amount treated as income but not actually received by the
Finance Party, such as a Tax Deduction, will not be treated as net income received
or receivable for this purpose.
	 
	 	(c)	 	Paragraph (a) above does not apply to the extent a Liability:






	 	(i)	 	is compensated for by an increased payment under Clause 11.1
(Gross-up); or
	 
	 	(ii)	 	is otherwise compensated for under another clause to this
Agreement.






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	 	(d)	 	A Finance Party making, or intending to make, a claim under paragraph (a)
above must promptly notify the Company of the event which will give, or has given,
rise to the claim.
	 
	 	(e)	 	A Finance Party must, on receiving a payment from the Company under this
Clause 11.2 (Tax Indemnity) notify the Global Agent.






	11.3	 	Tax Credit
	 
	 	 	If the Company makes a Tax Payment and the relevant Finance Party determines that:






	 	(a)	 	a Tax Credit is attributable either to an increased payment of which that Tax
Payment forms part, or to that Tax Payment; and
	 
	 	(b)	 	it has obtained, used and retained that Tax Credit,
	 
	 	(c)	 	the Finance Party must pay an amount to the Company which that Finance Party
determines will leave it (after that payment) in the same after-Tax position as it
would have been in if the Tax Payment had not been required to be made by the Company.






	11.4	 	Stamp taxes
	 
	 	 	The Company must pay and indemnify each Finance Party within ten (10) days of demand
against any Liability that Finance Party incurs in relation to all stamp duty, stamp duty
land tax, registration or other similar Tax payable in connection with the entry into,
performance or enforcement of any Finance Document, except for any such Tax payable in
connection with the entry into of a Transfer Certificate.
	 
	11.5	 	Value added taxes






	 	(a)	 	All amounts set out, or expressed to be payable under a Finance Document by
any Party to a Finance Party which (in whole or in part) constitute the consideration
for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that
supply, and accordingly, subject to paragraph (c) below, if VAT is chargeable on any
supply made by any Finance Party to any Party under a Finance Document, that Party
must pay to the Finance Party (in addition to and at the same time as paying the
consideration) an amount equal to the amount of the VAT (and such Finance Party must
promptly provide an appropriate VAT invoice to that Party).
	 
	 	(b)	 	If VAT is chargeable by reference to any supply made by any Finance Party
(the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance
Document, and any Party (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the




65









 












	 	 	 	consideration for
that supply to the Supplier (rather than being required to reimburse the Recipient
in respect of that consideration), the relevant Party must also pay to the Supplier
(in addition to and at the same time as paying that amount) an amount equal to the
amount of VAT. The Recipient must promptly pay to the Relevant Party an amount
equal to any credit or repayment from the relevant tax authority which it
reasonably determines relates to the VAT chargeable on that supply.
	 
	 	(c)	 	Where a Finance Document requires any Party to reimburse a Finance Party for
any costs or expenses, that Party must also at the same time pay and indemnify the
Finance Party against all VAT incurred by the Finance Party in respect of those costs
or expenses but only to the extent that the relevant Finance Party (acting reasonably)
determines that neither it nor any member of any group of which it is a member for VAT
purposes is entitled to credit or repayment from the relevant tax authority in respect
of the VAT.






	12	 	INCREASED COSTS
	 
	12.1	 	Increased Costs






	 	(a)	 	Subject to Clause 12.3 (Exceptions) the Company shall, within ten (10) days
of a demand by the Global Agent (acting on the instructions of the Lenders), pay for
the account of a Finance Party the amount of any Increased Costs incurred by that
Finance Party or any Affiliate of such Finance Party as a result of:






	 	(i)	 	the introduction of or any change in (or in the
interpretation, administration or application of) any law or regulation; or
	 
	 	(ii)	 	compliance with any law or regulation made after the date of
this Agreement.






	 	(b)	 	In this Agreement, “Increased Costs” means:






	 	(i)	 	a reduction in the rate of return from the relevant Facility
or on a Finance Party’s (or its Affiliate’s) overall capital;
	 
	 	(ii)	 	an additional or increased cost; or
	 
	 	(iii)	 	a reduction of any amount due and payable under any Finance
Document,






	 	 	 	which is incurred or suffered by a Finance Party or its Affiliates to the extent
that it is attributable to that Finance Party having entered into its
Commitment or funding or performing its obligations under any Finance Document.




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	12.2	 	Increased Cost Claims






	 	(a)	 	A Finance Party intending to make a claim pursuant to Clause 12 (Increased
Costs) shall notify the Company and the Global Agent of the event giving rise to the
claim, setting out in reasonable detail the basis for such claims. Upon receipt of
such notification, the Global Agent shall notify all of the Lenders of such claim.
	 
	 	(b)	 	Each Finance Party shall, as soon as practicable but in any event within no
more than ten (10) days after a demand by the Global Agent or the Company, provide a
certificate confirming the amount of its Increased Costs, together with all the
supporting information as the Company or the Global Agent may reasonably require.






	12.3	 	Exceptions
	 
	 	 	Clause 12.1 (Increased Costs) does not apply to the extent any Increased Cost is:






	 	(a)	 	compensated for by a Tax Payment;
	 
	 	(b)	 	attributable to a Tax Deduction required by law to be made by the Company;
	 
	 	(c)	 	attributable to the breach of any law by the relevant Finance Party;
	 
	 	(d)	 	compensated for by the payment of a Mandatory Cost; or
	 
	 	(e)	 	attributable to the willful breach by the relevant Finance Party or its
affiliates of any law or regulation.






	13	 	OTHER INDEMNITIES
	 
	13.1	 	Currency Indemnity






	 	(a)	 	If any sum due from the Company under the Finance Documents (a “Sum”), or any
order, judgment or award given or made in relation to a Sum, has to be converted from
the currency (the “First Currency”) in which that Sum is payable into another currency
(the “Second Currency”) for the purpose of:






	 	(i)	 	making or filing a claim or proof against the Company; or
	 
	 	(ii)	 	obtaining or enforcing an order, judgment or award in
relation to any litigation or arbitration proceedings,






	 	 	 	the Company shall as an independent obligation, within ten (10) days of demand by
the Global Agent or any Finance Party, indemnify each





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	 	 	 	Finance Party to whom that
Sum is due against any Liability arising out of or as a result of the conversion
including any discrepancy between:






	 	(A)	 	the rate of exchange used to convert that
Sum from the First Currency into the Second Currency; and
	 
	 	(B)	 	the rate or rates of exchange available to
that Person at the time of its receipt of that Sum.






	 	(b)	 	The Company waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency or currency unit other than that in
which it is expressed to be payable.






	13.2	 	Other Indemnities






	 	(a)	 	The Company shall, within ten (10) days of the first demand of the Global
Agent or any Finance Party, indemnify each Finance Party against any documented and
evidenced Liability incurred by that Finance Party as a direct result of:






	 	(i)	 	the occurrence of any Default and any costs incurred by any
of the Finance Parties in investigating or attending any meetings to consider
any Default;
	 
	 	(ii)	 	a failure by the Company to pay any amount due under a
Finance Document on its due date, or any amounts payable to the Global Agent,
a Security Agent or an Account Bank, by any Finance Party on the Company’s
behalf where the Company has failed to pay such premiums, fees or other
amounts;
	 
	 	(iii)	 	funding, or making arrangements to fund, a Loan or, as
applicable, its participation therein requested by a Company in a Drawdown
Request but not made by reason of the operation of any one or more of the
provisions of the Finance Documents (other than by reason of default or
negligence by that Finance Party alone);
	 
	 	(iv)	 	a Loan (or part of a Loan) not being prepaid in accordance
with a notice of prepayment given by the Company; or
	 
	 	(v)	 	any environmental and social claim in respect of the Company
or the Project.






	 	(b)	 	The Company must indemnify the Global Agent against any documented and
evidenced Liability incurred by the Global Agent as a result of:






	 	(i)	 	investigating any event which the Global Agent reasonably
believes to be a Default; or




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	 	(ii)	 	acting or relying on any notice which the Global Agent
reasonably believes to be genuine, correct and appropriately authorised.






	13.3	 	Additional Indemnities in Favour of Global Agent and the Security Agents






	 	(a)	 	The Company shall (promptly upon the written demand of such Person) pay to
the Global Agent or either of the Security Agents, an amount equal to the Liability
which has or will be suffered for or on account of any Tax payable by that Person in
connection with the Finance Documents.
	 
	 	(b)	 	Where any payments are due under any of the Finance Documents to the Global
Agent or either of the Security Agents, the Company shall make all such payments
without any Tax Deduction, unless such Tax Deduction is required by law and if such a
Tax Deduction is required by law to be made by the Company:






	 	(i)	 	the Company shall promptly upon becoming aware that it is
required to make such a Tax Deduction, notify the relevant Person accordingly;
	 
	 	(ii)	 	the amount due from the Company shall be increased to an
amount which (after making any Tax Deduction) leaves an amount equal to the
payment which would have been due if no Tax Deduction had been required;
	 
	 	(iii)	 	the Company shall make that Tax Deduction and any payment
required in connection with that Tax Deduction within the time allowed and in
the minimum amount required by law; and
	 
	 	(iv)	 	within thirty (30) days of making such a Tax Deduction, the
Company shall deliver to the Person entitled to the payment evidence
reasonably satisfactory to that Person that the Tax Deduction has been made or
(as applicable) any appropriate payment paid to the relevant taxing authority.






	14	 	MITIGATION BY THE FINANCE PARTIES
	 
	14.1	 	Mitigation






	 	(a)	 	Each Finance Party shall, in consultation with the Company, take reasonable
steps to mitigate any circumstances which arise and which result or would result in:






	 	(i)	 	any Tax Payment or Increased Cost being payable to that
Finance Party;




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	 	(ii)	 	any amount becoming payable under or pursuant to, or
cancelled pursuant to Clause 8.1 (Mandatory prepayment due to Illegality); or
	 
	 	(iii)	 	that Finance Party incurring any costs of complying with the
minimum reserve requirements of the European Central Bank,






	 	 	 	including transferring its rights and obligations under the Finance Documents to an
Affiliate or changing its Facility Office.
	 
	 	(b)	 	Paragraph (a) above does not in any way limit the obligations of the Company
under the Finance Documents.






	14.2	 	Limitation of Liability






	 	(a)	 	The Company shall indemnify each Finance Party for all costs and expenses
incurred by that Finance Party as a result of steps taken by it under this Clause 14
(Mitigation by the Finance Parties).
	 
	 	(b)	 	A Finance Party is not obliged to take any steps under this Clause 14
(Mitigation by the Finance Parties) if, in the opinion of that Finance Party (acting
reasonably), to do so might be prejudicial to it.






	15	 	COSTS AND EXPENSES
	 
	15.1	 	Transaction Expenses
	 
	 	 	The Company shall, promptly following receipt of an invoice for such amount, along with
reasonable details as to the nature and calculations of such amount, pay to any Finance
Party the amount of all costs, fees and expenses (including, without limitation,
out-of-pocket expenses (including any incurred by any participant) and all fees and
expenses of the Lenders’ External Advisers (subject to any fee arrangements pursuant to the
respective terms of engagement)) reasonably incurred by any of them in connection with the
negotiation, preparation, printing, and execution of:






	 	(a)	 	this Agreement and any other documents referred to in this Agreement; and
	 
	 	(b)	 	any other Finance Documents executed prior to, on or after the date of this
Agreement.






	15.2	 	Amendment Costs
	 
	 	 	If the Company requests any amendment or waiver of any of the terms of any Finance
Document, or any consent thereunder, the Company shall, promptly, following receipt of an
invoice for such amount from the Global Agent or any Finance Party, along with reasonable
details as to the nature and calculations of




70









 












	 	 	such amount, reimburse each Finance Party for the amount of all costs and expenses
(including, without limitation, out-of-pocket expenses and all fees and expenses of the
Lenders’ External Advisers (subject to any fee arrangements pursuant to the respective
terms of engagement)) reasonably incurred by any Finance Party in responding to,
evaluating, negotiating or complying with that request or requirement.
	 
	15.3	 	Enforcement Costs
	 
	 	 	The Company shall on first demand, following receipt of an invoice for such amount, along
with reasonable details as to the nature and calculations of such amount, pay to each
Finance Party the amount of all costs and expenses (including, without limitation,
out-of-pocket expenses and all fees and expenses of the Lenders’ External Advisers)
incurred by that Finance Party in connection with the enforcement of, or the preservation
of any rights under, any Finance Document.
	 
	15.4	 	Advisors
	 
	 	 	The Company shall promptly, following receipt of an invoice for such amount, along with
reasonable details as to the nature and calculations of such amount, and subject, in each
case, to any specific fee arrangement agreed by the Global Agent (acting on the
instructions of the Lenders) with the Company in respect thereof, pay to such Person the
amount of all costs, fees and expenses owed to each of the Lenders’ External Advisers and
to the extent that any Finance Party has paid any such costs, fees or expenses, promptly on
demand following receipt of an invoice for such amount, along with reasonable details as to
the nature and calculations of such amount, reimburse such Finance Party for the same.
	 
	16	 	FINANCIAL REPORTS
	 
	16.1	 	Financial Information
	 
	 	 	The Company shall:






	 	(a)	 	Quarterly Information: as soon as available, but in any event within forty
five (45) days after the end of each quarter of each Financial Year, deliver to the
Global Agent:






	 	(i)	 	a copy of the complete unaudited financial statements for
such quarter for the Company substantially in the form set out in Schedule 19
(Form of Financial Statements);
	 
	 	(ii)	 	a statement of all transactions (other than transactions
specifically contemplated under the Principal Documents) between the Company
and any Affiliate, and a certification by the chief




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	 	 	 	financial officer of the Company that those transactions were on no worse
terms as could be achieved on an arm’s-length basis;
	 
	 	(iii)	 	a report on any internal or external factors materially
affecting or which might materially affect the Company’s business and
operations or its financial condition; and
	 
	 	(iv)	 	in respect of the second and fourth quarters in each
Financial Year only, a Compliance Certificate certifying the ratios at the
latest Calculation Date and stating the amount in the Debt Service Reserve
Account and the Well Drilling Reserve Account.






	 	(b)	 	Annual Information: as soon as available, but in any event within one
hundred and twenty (120) days after the end of each Financial Year deliver to the
Global Agent a copy of its complete and audited financial statements together with the
Auditors’ audit report on them (and a copy of any management letter to the extent
delivered by the Auditors and/or other communication from the Auditors) for that
Financial Year:






	 	(i)	 	commenting, with respect to that Financial Year, on, among
other things, the adequacy of the Company’s financial control procedures,
accounting systems and management information system; and
	 
	 	(ii)	 	a report from the Auditors certifying that, on the basis of
its audit of such financial statements, the Company was in compliance with the
covenants contained in Clauses 24.1(r) (Ratios) as of the end of that
Financial Year or, as the case may be, detailing any non-compliance.






	16.2	 	Requirements as to Financial Statements
	 
	 	 	The Company shall ensure that:






	 	(a)	 	each set of financial statements delivered pursuant to Clause 16.1(a)
(Financial Information) shall be:






	 	(i)	 	substantially in the form set out in Schedule 19 (Form of
Financial Statements);
	 
	 	(ii)	 	prepared in accordance with the Accounting Principles
consistently applied subject to customary year end adjustments and absence of
footnotes; and
	 
	 	(iii)	 	certified by an Authorised Representative of the Company as
giving a true and fair view of its financial condition as at the end of the
period to which those financial statements relate and of the results of its
operations during such period;




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	 	(b)	 	each set of financial statements delivered pursuant to Clause 16.1(b)
(Financial Information), provides separately for the Kenyan branch of the Company and
has been audited by the Auditors or another internationally recognised firm of
independent auditors acceptable to the Global Agent (acting on the instructions of the
Lenders); and
	 
	 	(c)	 	each set of financial statements or information and other information
delivered pursuant to paragraphs (a) or (b) of Clause 16.1 (Financial Information) is
prepared in the English language or is accompanied by an English translation certified
by an Authorised Representative of the Person making or delivering the same as being a
true and accurate translation thereof.






	16.3	 	Change to Accounting Policies






	 	(a)	 	If at any time (and whether or not as a result of any change in law or
accounting practice) the Company changes or proposes to change (which change is not
manifestly immaterial) the accounting policies upon which its financial statements are
prepared, then:






	 	(i)	 	the Company shall, as soon as reasonably practicable, notify
the Global Agent of such change or proposed change;
	 
	 	(ii)	 	the Company and the Global Agent (acting on the instructions
of all the Lenders) shall enter into negotiations in good faith with a view to
agreeing:






	 	(A)	 	whether or not such change or proposed
change to such accounting policies could reasonably be expected to
result in any material alteration in the commercial effect of any of
the terms of the Finance Documents; and
	 
	 	(B)	 	if so, any amendments to the Finance
Documents which may be necessary in order to ensure that such change
or proposed change to the accounting policies does not result in any
material alteration in the commercial effect of such terms,






	 	 	 	and, if any such amendments are agreed and approved by the Company and the
Global Agent (acting on the instructions of all the Lenders), they shall
take effect and be binding upon each of the parties hereto in accordance
with their terms; and
	 
	 	(iii)	 	unless and until the Company and the Global Agent (acting on
the instructions of all the Lenders) reach agreement in accordance with
paragraph (b) above, the Company shall use all reasonable endeavours to ensure
that all financial statements delivered pursuant to Clause 16.1 (Financial
Information) shall contain a




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	 	 	 	description of such change and the adjustments which would be required to
be made to such financial statements so that such financial statements
reflect the accounting policies before such change or proposed change was
made.






	 	(b)	 	A change from GAAP to IFRS is hereby agreed by the Finance Parties provided
that the Company shall in the Financial Year in which such change occurs provide
financial statements pursuant to Clause 16.1 (Financial Information) which contain a
description of such change and the adjustments which would be required to be made to
such financial statements so that such financial statements reflect the accounting
policies before such change or proposed change was made.






	17	 	REPORTING REQUIREMENTS
	 
	17.1	 	Reporting Requirements
	 
	 	 	The Company shall:






	 	(a)	 	Operating Report:






	 	(i)	 	during the Defects Liability Period no later than thirty (30)
days after the end of each quarter, deliver an Operating Report to the Global
Agent with a copy to the Lenders’ Engineer (in respect of which the Lenders’
Engineer will provide his comments to the Global Agent) ; and
	 
	 	(ii)	 	following the Defects Liability Period, no later than thirty
(30) days after the end of each Interest Payment Date deliver an Operating
Report to the Global Agent.






	 	(b)	 	Annual Environmental and Social Monitoring Report: on an annual basis, but
in no event later than thirty (30) days after the end of each Financial Year, deliver
to the Global Agent an Annual Environmental and Social Monitoring Report confirming
compliance with the Environmental and Social Requirements or, as the case may be,
detailing any non-compliance and setting out the action being taken to ensure
compliance.
	 
	 	(c)	 	Accidents: as soon as possible, but no later than five (5) days after
becoming aware of its occurrence, notify the Global Agent of any incident or accident
which has occurred in connection with any aspect of the Project and which has or may
reasonably be expected to have an adverse effect on the environment, health or safety,
including explosions, spills or workplace accidents which result in death, serious
injury or major pollution, specifying, in each case the nature of the incident or
accident, to the extent available or known at that time, the impacts on or off the
Site arising or likely to arise therefrom and the measures the Company is




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	 	 	 	taking or plans to take to address those impacts; and keep the Global Agent
informed of the on-going implementation of those measures.
	 
	 	(d)	 	Shareholders’ Meetings: give notice to the Global Agent, concurrently with
the Company’s notification to the Shareholder(s), of any meeting of the Shareholders
(if any), such notice to include the agenda of the meeting; and, as soon as available,
deliver to the Global Agent a copy of:






	 	(i)	 	all notices, reports and other communications of the Company
to the Shareholder(s), whether any such communication has been made on an
individual basis or by way of publication in a newspaper or other
communication medium; and
	 
	 	(ii)	 	the minutes of all Shareholders meetings (if any).






	 	(e)	 	Material change: promptly notify the Global Agent of any proposed material
change by a Major Project Party in its obligations under any Principal Document, in
the nature or scope of the Project or the business or operations of the Company.
	 
	 	(f)	 	Litigation or proceedings: promptly upon becoming aware of any litigation or
administrative proceedings commenced or threatened against the Company before any
Authority or arbitral body which has resulted in or may reasonably be expected to
result in a Material Adverse Effect, notify the Global Agent of that event specifying
the nature of that litigation or those proceedings and the steps the Company is taking
or proposes to take with respect thereto.
	 
	 	(g)	 	Notification of Default: promptly, upon the occurrence of a Default, notify:






	 	(i)	 	the Global Agent; and
	 
	 	(ii)	 	each of the Security Agents,






	 	 	 	in each case specifying the nature of that Default and any steps the Company is
taking to remedy it.






	 	(h)	 	Insurance Information: at the times required under Schedule 12 (Insurance
Requirements), provide to the Global Agent copies of the insurance certificates and
other information referred to in Schedule 12 (Insurance Requirements).
	 
	 	(i)	 	Project Information: promptly provide to the Global Agent:






	 	(i)	 	details of any Force Majeure Event under any of the Project
Documents or Change in Law (as defined in the PPA) or any Political Event or
any claim by any party thereto alleging that a




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	 	 	 	Force Majeure Event or Change in Law thereunder has occurred (together
with detailed supporting statements as to the status of any Force Majeure
Event or Change in Law claims, including compensation payable or other
relief therefrom);
	 
	 	(ii)	 	copies of any material notices given to or received from, and
any other material communications with, any party to any of the Principal
Documents with respect to that document including the Planned Maintenance
Programme (as defined in the PPA); and
	 
	 	(iii)	 	any material deviation from the conditions of applicable
Authorisations.






	 	(j)	 	Other Information: promptly provide any other information as the Global
Agent (acting on the instructions of the Lenders, acting reasonably) from time to time
requests about the Company, its assets and the Project.
	 
	 	(k)	 	KYC: if any change in any law or regulation, any change in the status of the
Company, or a proposed assignment or transfer by a Lender of any of its rights and
obligations under the Finance Documents to a party that is not a Lender prior to such
assignment or transfer, obliges any Lender to comply with “know your customer” or
similar identification procedures in circumstances where the necessary information is
not already available to it, the Company shall as soon as reasonably practical upon
the request of any Lender supply such documentation and other evidence (including that
relating to the Shareholder or the Sponsor) as is requested.
	 
	 	(l)	 	Amendments to the Environmental Impact Assessment and Environmental and
Social Management Plan: provide copies of any any amendment or supplement to the
Environmental Impact Assessment or any part of the Environmental and Social Management
Plan amended or supplemented in accordance with Clause 25.1(x) (Amendments to the
Environmental Impact Assessment and Environmental and Social Management Plan).






	17.2	 	Form of Reports
	 
	 	 	Each of the reports and reviews provided under paragraphs (a) to (k) of Clause 17.1
(Reporting Requirements) shall be substantially in the form of the relevant Schedule or, if
not provided in a Schedule, in a form satisfactory to the Global Agent (acting on the
instructions of the Lenders, acting reasonably).
	 
	17.3	 	Accuracy and Completeness
	 
	 	 	If the Global Agent (acting on the instruction of the Lenders (acting reasonably)), or a
Lender or the Insurance Advisor (acting reasonably), as the case may be, is of the opinion
that a Project Report provided pursuant to Clause 17.1 (Reporting Requirements) is not
correct, complete, accurate and up-to-date, the Global Agent




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	 	 	(acting on the instruction of the Lenders (acting reasonably)), a Lender or the Insurance
Advisor (acting reasonably), as the case may be, may request all such further information
as it reasonably requires to satisfy itself as to such Project Report and shall also be
entitled to re-submit such Project Report to the Company for amendment in accordance with
the instructions of the Global Agent (acting on the instruction of the Lenders (acting
reasonably)), a Lender (acting reasonably) or the Insurance Advisor (acting reasonably), as
the case may be. If the Company does not agree with the analysis of the Global Agent
(acting on the instruction of the Lenders (acting reasonably)), a Lender or the Insurance
Advisor, as the case may be, the Company and the Global Agent (acting on the instructions
of the Lenders) shall discuss such amendments in good faith for fourteen (14) days from the
notification by the Global Agent (acting on the instruction of the Lenders), a Lender or
Insurance Advisor as the case may be, after which period either the Company or the Global
Agent (acting on the instructions of the Lenders) may refer the same to the determination
of the Expert in accordance with the provisions of Clause 21 (Expert).
	 
	18	 	OPERATING BUDGETS
	 
	18.1	 	Operating Budgets
	 
	 	 	The Company shall deliver to the Global Agent no later than sixty (60) days before the
beginning of each Financial Year, its Operating Budget for the next Financial Year, which
Operating Budget shall include:






	 	(a)	 	details of major or extraordinary maintenance forecasted to be required in
the Financial Year;
	 
	 	(b)	 	a comparison of the proposed Operating Budget against:






	 	(i)	 	in respect of the second Operating Budget only, the Initial
Operating Budget;
	 
	 	(ii) 	 	the immediately preceding Financial Year (if any); and
	 
	 	(iii) 	 	the Base Case projections.






	18.2	 	Increase in Operating Budget






	 	(a)	 	The Operating Budget for any Financial Year will become effective
automatically if the aggregate expense amount reflected in the Operating Budget for
any Financial Year does not exceed by more than ten percent (10%) the budgeted
aggregate Operating Cost reflected in the Base Case for such year, such amount to be
adjusted for the actual inflation rate to date; provided, however, that the aggregate
cumulative increase in the Operating Budget over the life of the Project (excluding
the projected




77









 












	 	 	 	escalation in the Base Case as adjusted for actual inflation) shall not exceed 110%
of the Initial Operating Budget.
	 
	 	(b)	 	Any increase in the Operating Budget in excess of the amount permitted
pursuant to Clause 18.2(a) (Increase in Operating Budget) shall be subject to the
consent of the Global Agent (acting on the instructions of the Lenders, acting
reasonably and following consultation with the Lenders’ Engineer if required) and any
failure to agree such Operating Budget within fourteen (14) days shall be submitted to
an Expert for determination in accordance with Clause 21 (Expert).






	19	 	FINANCIAL CALCULATIONS
	 
	19.1	 	Economic and Financial Assumptions






	 	(a)	 	Unless the Company shall, no later than twenty-one (21) days prior to each
Calculation Date, deliver to the Global Agent for approval by the Lenders a notice
specifying any changes to the Economic and Financial Assumptions for each Calculation
Period to be used in any Financial Test to be prepared hereunder with respect to such
Calculation Date, the prevailing Economic and Financial Assumptions shall continue to
apply.
	 
	 	(b)	 	If any Economic and Financial Assumptions are changed under paragraph (a),
the Company shall update the Financial Model to reflect such changes.






	19.2	 	Technical Assumptions






	 	(a)	 	Unless the Company shall, no later than twenty-one (21) days prior to each
Calculation Date, deliver to the Global Agent for approval by the Global Agent (acting
on the instructions of the Lenders in consultation with the Lenders’ Engineer) a
notice specifying any changes to the Technical Assumptions for each Calculation Period
to be used in any Financial Test to be prepared hereunder with respect to such
Calculation Date, the prevailing Technical Assumptions shall continue to apply.
	 
	 	(b)	 	If any Technical Assumptions are changed under paragraph (a), the Company
shall update the Financial Model to reflect such changes.






	19.3	 	Preparation of Financial Test
	 
	 	 	Each Financial Test shall be delivered to the Global Agent no later than five (5) days
after the Calculation Date in respect of each Calculation Period and shall:






	 	(a)	 	be prepared by the Company using the Financial Model on the basis of:






	 	(i)	 	either:




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	 	(A)	 	the Economic and Financial Assumptions
included in the Financial Model; or
	 
	 	(B)	 	any new Economic and Financial Assumptions
specified by the Company pursuant to Clause 19.1 (Economic and
Financial Assumptions) and agreed with the Global Agent (acting on
the instructions of the Lenders, acting reasonably) relating to such
Financial Test and applicable in respect of each Calculation Period;






	 	(ii)	 	either:






	 	(A)	 	the Technical Assumptions included in the
Financial Model; or
	 
	 	(B)	 	any Technical Assumptions provided by the
Company pursuant to Clause 19.2 (Technical Assumptions) and agreed
with the Global Agent (acting on the instructions of the Lenders in
consultation with the Lenders’ Engineer, acting reasonably) relating
to such Financial Test; and






	 	(iii)	 	such other assumptions as may be agreed by the Global Agent
(acting on the instructions of the Lenders) and the Company from time to time;






	 	(b)	 	set out a summary or a projection, as applicable, for each relevant
Calculation Period, of:






	 	(i)	 	Project Revenues actually received during the relevant
Calculation Period or forecasted to be received during the following two
Calculation Periods;
	 
	 	(ii)	 	Operating Costs actually paid during the relevant Calculation
Period or forecasted to fall due during the following two Calculation Periods;






	 	(c)	 	set out a projection of the amount of the Current Debt Service Amount which
will be outstanding at the end of each Calculation Period and the amount of any
credit balance in each of the Project Accounts at the commencement of each Calculation
Period;
	 
	 	(d)	 	set out a calculation of:






	 	(i)	 	the Debt Service Cover Ratios for the current Calculation
Period and for the Calculation Period immediately preceding the current
Calculation Period; and




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	 	(ii)	 	the Projected Debt Service Cover Ratio for the following two
(2) Calculation Periods; and
	 
	 	(iii)	 	the Equity to Total Assets Ratio on the Calculation Date;
and
	 
	 	(iv)	 	the Debt to Equity Ratio on the Calculation Date; and






	 	(e)	 	be accompanied by a Compliance Certificate.






	19.4	 	Interim Financial Tests
	 
	 	 	At any time that a Drawdown Request is submitted under Clause 5.5 (True-Up Disbursement) or
if the Global Agent has reason to believe that a Default has occurred and is continuing,
the Global Agent may request the Company to prepare a Financial Test (an “Interim Financial
Test”) on a date falling not less than twenty-one (21) days after the delivery of such
request to the Company, in the manner set out in Clause 19.5 (Calculation of Interim
Financial Tests).
	 
	19.5	 	Calculation of Interim Financial Tests






	 	(a)	 	Each Interim Financial Test shall be prepared by the Company using the
Financial Model on the basis of the Assumptions used for the calculation of the most
recent Financial Test, updated as may be necessary to reflect conditions prevailing at
the time of calculation as agreed by the Company and the Global Agent (acting on the
instructions of the Lenders (and if not agreed, as determined by an Expert pursuant to
Clause 21 (Expert) not less than seven (7) days before the date on which the Company
prepares the relevant Interim Financial Test and for such purpose only,






	 	(i)	 	“Financial Test” shall be construed as the Interim Financial
Test,
	 
	 	(ii)	 	the Calculation Period for the current Interim Financial Test
shall start on the previous Calculation Date and end on the date on which the
Interim Financial Test is conducted; and (iii)
the next Calculation Period
shall commence on the date on which the Interim Financial Test is conducted
and end on the next Calculation Date,






	 	 	 	the Company will provide Economic and Financial Assumptions in accordance with
Clause 19.1 (Economic and Financial Assumptions) and the Company will provide
Technical Assumptions in accordance with Clause 19.2 (Technical Assumptions).
	 
	 	(b)	 	Each Interim Financial Test prepared in accordance with paragraph (a) above
shall set out the information referred to in paragraphs (b), (c) and (d) of Clause
19.3 (Preparation of Financial Tests).










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	19.6	 	Changes Required by Lenders
	 
	 	 	If in relation to the preparation of a Financial Test, the Global Agent (acting on the
instructions of the Lenders, acting reasonably) disagrees with any calculation or any data
used or rejects the Company’s application of any Assumptions or any change is required by
the Global Agent (acting on the instructions of the Lenders acting reasonably and in
relation to any Technical Assumptions, after consultation with, and if so notified by the
Global Agent through, the Lenders’ Engineer), it shall promptly so notify the Company and
the Lenders’ Engineer together with reasonable details as to the basis of its objection.
If the Company agrees such changes within seven (7) days of receipt thereof, the Company
will prepare a revised proposed Financial Test (which shall then become the Financial Test
for the relevant Calculation Period) and deliver a copy of the same to the Global Agent.
The Parties shall use reasonable endeavours to agree to such changes amicably, but in the
event such changes are not agreed within seven (7) days of receipt by the Company of such a
notice of objection, then such changes may be referred by the Company or the Global Agent
(acting on the instructions of the Lenders) to an Expert in accordance with Clause 21
(Expert).
	 
	19.7	 	Revised Financial Test
	 
	 	 	In the event that any dispute is referred to an Expert, the Company shall prepare a revised
Financial Test for the relevant Calculation Period following determination by the Expert
incorporating the determination by the Expert and such revised forecast shall become the
Financial Test for the relevant Calculation Period.
	 
	19.8	 	Prevailing Assumptions
	 
	 	 	In the event that any dispute relating to the preparation of a Financial Test or the
Assumptions relating thereto is referred to an Expert, the Assumptions shall prevail until
the dispute is resolved in accordance with Clause 21 (Expert) and shall, if required, be
the basis for the relevant Financial Test.
	 
	19.9	 	Equity Cure






	 	(a)	 	If the Debt Service Cover Ratio and/or Projected Debt Service Ratio for a
Calculation Period required under Clause 24.1(r) (Ratios) (the “Relevant Financial
Covenants”) are not met, the Company may elect to treat any Cure Amount received
either during the relevant Calculation Period it is received by it or on or prior to
the date falling twenty-one (21) days after the date on which the Financial Test is
conducted, as included in Cashflow Available for Debt Service or Projected Cashflow
Available for Debt Service (as the case may be) (without double counting) for the
purposes of calculating the Relevant Financial Covenants. If, after including the Cure
Amount and its application in the calculations, the requirements of the Relevant
Financial Covenants are met, there shall be deemed to have been




81









 












	 	 	 	no breach of the Relevant Financial Covenants and any resulting Default shall be
deemed remedied and waived for that relevant Calculation Period.
	 
	 	(b)	 	Any Cure Amount where elected under Clause 19.9(a) (Equity Cure) shall be
paid by the Shareholder or Sponsor as Shareholder Debt into the Offshore Revenue
Account, treated as, and included in, Cashflow Available for Debt Service or Projected
Cashflow Available for Debt Service (as the case may be) for each relevant Calculation
Period.
	 
	 	(c)	 	The Company may not exercise the right to cure under Clause 19.9(a) (Equity
Cure) on more than 2 occasions in any period of 6 consecutive Calculation Periods.
	 
	 	(d)	 	Unless otherwise provided pursuant to this Agreement, prior to electing to
treat a Cure Amount as Cashflow Available for Debt Service or Projected Cashflow
Available for Debt Service (as the case may be), the Company shall deliver to the
Global Agent a certificate signed by an Authorised Representative of the Company)
setting out the reasons for the breach of any Relevant Financial Covenant and the
nature of the remedial action being taken, confirming that on the basis of the
Company’s current financial projections (taking into account the Cure Amount) the
Relevant Financial Covenants will be complied with and including a revised Financial
Test demonstrating such compliance.






	20	 	FINANCIAL MODEL
	 
	20.1	 	Amendments to the Financial Model






	 	(a)	 	Except as required under Clause 19.1 (Economic and Financial Assumptions) or
19.2 (Technical Assumptions), the Company shall not make any changes to the Financial
Model except with the consent of the Global Agent (acting on the instructions of the
Lenders) or where the Company is obligated to re-test the Financial Model on each
Calculation Date. The Global Agent (acting on the instructions of the Lenders, acting
reasonably) may make proposals with regard to amendments to the Financial Model which
it believes in good faith are required for the purpose of:






	 	(i)	 	correcting any manifest error in the form or structure of the
Financial Model; or
	 
	 	(ii)	 	taking into account further Assumptions which it reasonably
considers should be incorporated into the Financial Model so that the accuracy
of any Financial Test may be improved or maintained.




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	 	(b)	 	Following any changes under Clause 20.1(a) (Amendments to the Financing
Model) to the Financial Model, the Global Agent may (on the instructions of the Global
Agent) request an audit of the Financial Model by the Financial Model Auditor.






	20.2	 	Resolution of Disputes
	 
	 	 	If the Global Agent (acting on the instructions of the Lenders, acting reasonably) and the
Company are unable to agree on the required changes to the Financial Model within fourteen
(14) days from the date on which such changes were proposed, then either the Company or the
Global Agent (acting on the instructions of the Lenders) may thereafter refer the same to
determination by the Expert in accordance with the provisions of Clause 21 (Expert).
	 
	20.3	 	Custody of the Financial Model
	 
	 	 	Each of the Global Agent and the Company will hold a copy of the Financial Model and
undertake to ensure that any amendments to the Financial Model agreed pursuant to Clause
20.1 (Amendments to the Financial Model) are reflected in the Financial Model in their
custody as soon as reasonably practicable.
	 
	20.4	 	Conflict
	 
	 	 	Unless the Company and the Global Agent (acting on the instructions of the Lenders)
otherwise agree, where the manner of preparing any Financial Test or determining any
calculation to be included therein under the Financial Model differs from the provisions of
this Agreement, this Agreement will prevail.
	 
	21	 	EXPERT
	 
	21.1	 	Appointment of Expert
	 
	 	 	Where any provision of this Agreement provides for the resolution of a dispute by the
Expert, the Expert means:






	 	(a)	 	in respect of Technical Assumptions, Stone & Webster Management Consultants,
Inc and /or GeothermEx as applicable;
	 
	 	(b)	 	in respect of Assumptions relating to Tax, PriceWaterhouseCoopers, Kenya; and
	 
	 	(c)	 	in respect of the Financial Model, Ernst & Young, London,






		 	or, in each other case, means a Person having appropriate expertise with respect to, but no
interest in the outcome of, the matter referred to him and who shall be nominated by the
Global Agent (acting on the instructions of the Lenders) and the Company or, if the Global
Agent (acting on the instructions of the Lenders) and




83









 






	 	 	the Company fail to agree within seven (7) days, the Expert shall be nominated and
appointed by the Appointing Body.
	 
	21.2	 	Conflicting Interest
	 
	 	 	Any Person appointed as an Expert under Clause 21.1 (Appointment of Expert) shall, prior to
the date of such appointment, have provided in writing to the Company and the Global Agent
the following:






	 	(a)	 	a confirmation (such confirmation to be in form and substance satisfactory to
the Global Agent (acting on the instructions of the Lenders)) and the Company that the
Expert has not acted for any Party or an Affiliate thereof during the prior three (3)
years as an expert (unless each of the Company and the Global Agent (acting on the
instructions of the Lenders) waives this requirement);
	 
	 	(b)	 	either:






	 	(i)	 	a confirmation (such confirmation to be in form and substance
satisfactory to the Global Agent (acting on the instructions of the Lenders))
that such Person has no conflict in acting as an Expert; or
	 
	 	(ii)	 	disclosure of any interest or duty he has or may have which
conflicts or may conflict with his function under such appointment;






	 	(c)	 	a confirmation (such confirmation to be in form and substance satisfactory to
the Global Agent (acting on the instructions of the Lenders)) and the Company that
such Person has no interest in the outcome of the matter referred to the Expert and
that the Expert will remain neutral and impartial at all times when considering such
referral; and
	 
	 	(d)	 	an undertaking to disclose any interest or duty which may be subsequently
incurred prior to the date of its determination which may give rise to a conflict with
its acting as an Expert in such matter.






	21.3	 	Expert’s Terms of Reference
	 
	 	 	The Expert shall be given terms of reference by the Global Agent (acting on the
instructions of the Lenders), the Lenders’ Engineer and the Company stating the reason for
which the relevant referral is being made to him. The Company and the Global Agent (acting
on the instructions of the Lenders) may provide the Expert with whatever supporting
evidence they think appropriate and shall provide the Expert with such supporting evidence
as is requested by the Expert. All information and data submitted by a Party (or its
agents or representatives, including the Lenders’ Engineer) as confidential shall be
treated as such by the Expert and the other Parties involved in the dispute.






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	21.4	 	Determination by Expert
	 
	 	 	The Expert shall not be bound to choose either any proposal made by the Company or any made
by the Global Agent but shall be free to make his own reasonable determination of the point
referred to him.
	 
	21.5	 	Expert not Arbitrator
	 
	 	 	The Expert shall act as an expert in determining the matter referred to him and not as an
arbitrator and any law relating to arbitration shall not apply to such Expert or its
determination or the procedure by which the Expert makes its determination.
	 
	21.6	 	Expert’s Decision






	 	(a)	 	The Expert will be required to give his decision as soon as practicable and,
in any event, by the date which is twenty-one (21) days after the date of receipt of
his terms of reference referred to in Clause 21.3 (Expert’s Terms of Reference).
	 
	 	(b)	 	The determination of the Expert shall be made in writing setting out the
reasons for such determination.
	 
	 	(c)	 	The Expert’s decision shall be on the basis that (i) in the case of a
Financial Test, the Assumptions are reasonable taking into account the nature of the
financing and the obligations of the Company under the Principal Documents and (ii) in
the case of the Financial Model, that model incorporates data, projections and
assumptions which are reasonable taking into account the right and obligations of the
Company under the Principal Documents.
	 
	 	(d)	 	The Expert’s determination shall (save in the case of manifest error, fraud
or failure by the Expert to disclose any relevant conflict of interest pursuant to
Clause 21.2 (Conflicting Interest)) be final and binding on all the Parties hereto and
shall be used, as relevant, in the Financial Model, Financial Test, Project Reports
and Operating Budgets.






	21.7	 	Revised Financial Test/Operating Budget
	 
	 	 	Once the Expert has reached a decision, the Company will if necessary prepare, as
applicable, a revised Financial Test, Project Report, Financial Model or Operating Budget
(including the Expert’s determination of any disputed Assumptions).
	 
	21.8	 	Costs
	 
	 	 	The costs of any reference to the Expert and the costs incurred in giving effect to any
agreed revisions to, as the case may be, any Financial Test, the Financial Model, Project
Reports and Operating Budgets will be borne by the Company.




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	22	 	INSURANCES
	 
	22.1	 	Insurance Requirements
	 
	 	 	The Company shall obtain and maintain, or cause to be obtained and maintained at all times
until the Final Termination Date, insurance and/or reinsurance in respect of the Project
that complies with the requirements of Schedule 12 (Insurance Requirements) and otherwise
complies with its obligations under Schedule 12 (Insurance Requirements).
	 
	23	 	REPRESENTATIONS AND WARRANTIES
	 
	23.1	 	Representations and Warranties
	 
	 	 	Except as otherwise disclosed by the Company in writing and acknowledged by the Global
Agent on or prior to the date hereof, the Company represents and warrants to each of the
Finance Parties on the date of this Agreement that:






	 	(a)	 	Incorporation: the Company is a company limited by shares and duly
incorporated and validly existing under the laws of the Cayman Islands and duly
registered as a foreign company having a place of business in the Republic of Kenya in
accordance with Part X of the Kenyan Companies Act and has the corporate power to own
its assets, conduct its business as presently conducted or proposed to be conducted
and to enter into, and comply with its obligations under, the Principal Documents to
which it is a party or will, in the case of any Principal Document to which it is a
party not executed as at the date of this Agreement, when that Principal Document is
executed, have the corporate power to enter into, and comply with its obligations
under, that Principal Document;
	 
	 	(b)	 	Binding Obligation: subject to the Legal Reservations, each Principal
Document to which the Company is a party has been, or will be, duly authorised and
executed by the Company and the obligations expressed to be assumed by it thereunder
constitutes, or will, when executed, constitute, a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganisation, moratorium,
liquidation, winding-up or other similar laws of general applicability affecting the
enforcement of creditors’ rights generally;
	 
	 	(c)	 	No Conflict: neither the making of any Principal Document to which the
Company is a party nor the compliance with its terms:






	 	(i)	 	will conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default or require any consent
under, any indenture, mortgage, agreement or other 




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	 	 	 	instrument or arrangement
to which the Company is a party or by which it is bound; or
	 
	 	(ii)	 	will violate any of the terms or provisions of the Company’s
Charter Documents or laws applicable to the Company; or
	 
	 	(iii)	 	will violate any Authorisation or other rule or regulation
applicable to the Company,






	 		 	other than to the extent that, in respect of paragraphs (i) and (iii) only, no
Material Adverse Effect results or would be reasonably likely to result;
	 
	 	(d)	 	Authorisations:






	 	(i)	 	the Authorisations listed in Schedule 15 (Authorisations)
represent all the Authorisations needed by the Company to conduct its
business, carry out the Project and execute, and comply with its obligations
under, this Agreement and each of the other Principal Documents to which it is
a party;
	 
	 	(ii)	 	all Authorisations specified in Schedule 15 (Authorisations)
have been obtained and are in full force and effect other than any
Authorisation not currently required by law or under the Principal Documents;






	 	(e)	 	Assets and Intellectual Property: it has good title to, or freedom to use in
accordance with applicable law:






	 	(i)	 	the Site;
	 
	 	(ii)	 	all other assets (including, without limitation, all material
Intellectual Property) necessary from time to time to build and operate (or
will have such assets at any time before they are necessary to build and
operate) the Project in accordance with the Project Documents,






	 	 	 	free from any Lien other than Permitted Liens;
	 
	 	(f)	 	Charter Documents: the Company’s Charter Documents have not been amended
since the date of those provided pursuant to Clause 4 (Conditions);
	 
	 	(g)	 	No Immunity: neither the Company nor any of its property enjoys any right of
immunity from set-off, suit, execution attachment or other legal process with respect
to its assets or itself;
	 
	 	(h)	 	Governing Law and Judgments: subject to the Legal Reservations, in any
proceedings taken in its jurisdiction of incorporation in relation to any 




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	 	 	 	of the
Principal Documents expressed to be governed by English law, the choice of English law
as the governing law of those Principal Documents and any judgment obtained in England
will be recognised and enforced;
	 
	 	(i)	 	No Material Adverse Effect: to the best of the Company’s knowledge and
belief, after due enquiry, since the date of this Agreement no event or circumstance
has occurred which has resulted in a Material Adverse Effect which is continuing;
	 
	 	(j)	 	Other Obligations of Company: the Company has not undertaken or agreed to
undertake any substantial obligation other than its obligations under the Principal
Documents to which it is a party;
	 
	 	(k)	 	Financial Statements: the most recent financial statements of the Company
delivered to the Global Agent pursuant to the provisions of this Agreement (if any)
have been prepared in accordance with the Accounting Principles, and give a true and
fair view of the financial condition of the Company as of the date as of which they
were prepared and the results of the Company’s operations during the period then
ended;
	 
	 	(l)	 	No Other Contracts: the Company is not a party to, or committed to enter
into, any contract other than the Principal Documents to which it is party or other
contracts permitted under Clause 25.1(q) (Contracts);
	 
	 	(m)	 	No Liens: the Company has no outstanding Lien on any of its assets other than
Permitted Liens, and no contracts or arrangements, conditional or unconditional, exist
for the creation by the Company of any Lien, except for Permitted Liens;
	 
	 	(n)	 	Taxes: all Tax returns and reports of the Company required by law to be filed
have been duly filed and all Taxes, obligations, fees and other governmental charges
upon the Company, or its properties, or its income or assets, which are due and
payable or to be withheld, have been paid or withheld, other than those presently
payable without penalty or interest or which are being contested in good faith and in
respect of which appropriate reserves have been made in accordance with the Accounting
Principles to the extent required;
	 
	 	(o)	 	No Litigation: the Company is not engaged in nor, to the best of its
knowledge after due enquiry, threatened in writing by, any litigation, arbitration or
administrative proceedings which, if determined in a manner adverse to the Company by
a final non-appealable judgment or decision of a court, arbitral tribunal or
administrative or other body would result in or could reasonably be expected to result
in a Material Adverse Effect;
	 
	 	(p)	 	No Violation: to the best of its knowledge and belief, the Company is not in
violation of any applicable law or regulation;





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	 	(q)	 	No Adverse Judgment: no judgment or order has been issued which has resulted,
or would result, in a Material Adverse Effect;
	 
	 	(r)	 	Environmental and Social:






	 	(i)	 	to the best of its knowledge, after due enquiry, the baseline
assumptions contained in the Environmental Impact Assessment accurately
reflects the baseline environmental and social conditions at the Site and any
surrounding areas which the Environmental Impact Assessment may impact;
	 
	 	(ii)	 	to the best of its knowledge, after due enquiry, the
Environmental and Social Management Plan contains all measures and actions to
achieve ongoing compliance with the Environmental and Social Requirements;
	 
	 	(iii)	 	to the best of its knowledge, after due enquiry, the Company
is in compliance with:






	 	(A)	 	all Environmental Laws;
	 
	 	(B)	 	the Environmental and Social Management
Plan; and
	 
	 	(C)	 	in all material respects with the remaining
Environmental and Social Requirements in accordance with Clause
24.1(h) (Compliance with Environmental and Social Requirements);






	 	(iv)	 	the Company has not received nor is aware of any existing or
threatened complaint, order, directive, claim, citation or notice from any
Authority or any material written communication from any person with respect
to its non-compliance with any aspect of the Environmental and Social
Requirements nor is it aware of any facts, circumstances or occurrences that
could reasonably be expected to give rise to such claims or communications;
	 
	 	(v)	 	to the best of its knowledge and belief, after due inquiry,
there is not now, and has not since the date of the Company’s occupation of
the Site, any:






	 	(A)	 	toxic or hazardous waste or substances
generated, used, treated, released, stored, recycled or disposed of
(other than as is required in order to carry out a geothermal power
project such as the Project in accordance with Prudent Utility
Practices);
	 
	 	(B)	 	evidence of soil or groundwater
contamination;





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	 	(C)	 	underground storage tanks;
	 
	 	(D)	 	asbestos;
	 
	 	(E)	 	polychlorinated biphenyls; or
	 
	 	(F)	 	persistent organic pollutants listed under
the Stockholm Convention;






	 	(s)	 	Plant Performance: the Plant to the best of the Company’s knowledge and
belief after due enquiry, is capable of fulfilling the Technical Assumptions contained
in the Base Case provided that no representation or warranty is made or given as to
the quality, quantity, sufficiency or adequacy of the geothermal resource, steam or
otherwise, for any purpose whatsoever;
	 
	 	(t)	 	No Change in Taxes: since the date of the report provided to the Global Agent
by the Auditors and Company’s Kenyan Counsel pursuant to Clause 4 (Conditions) and as
described in Part 1 of Schedule 2 (Conditions of the First Disbursement), there has
been no change in the Tax treatment of the Company, which has resulted in or may
reasonably be expected to result in any Material Adverse Effect;
	 
	 	(u)	 	Ownership and Capitalisation: as at the date of this Agreement, the
authorised share capital of the Company is US$50,000 divided into 50,000 shares of par
value of US$1.00 each and one hundred per cent (100%) of the issued share capital of
the Company is legally and beneficially owned by the Shareholder;
	 
	 	(v)	 	Formalities: under the laws of Kenya or the Cayman Islands it is not required
for any purpose that any Principal Document be filed, recorded, or enrolled with any
court or other authority in Kenya or the Cayman Islands (subject to the completion of
any registration procedures in relation to the Security Documents within the permitted
periods for registration (which have not expired));
	 
	 	(w)	 	Pari Passu Ranking: the payment obligations of the Company under the Finance
Documents will rank at least pari passu with the claims of all its other unsecured
payment obligations except for obligations mandatorily preferred by law applying to
companies generally;
	 
	 	(x)	 	Stamp and Other Duties: as at the date of this Agreement, except for:






	 	(i)	 	registration fees payable (in respect of the Kenyan Security
Documents); and
	 
	 	(ii)	 	stamp duty in respect of:




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	 	(A)	 	the Kenyan Debenture at a rate as of the
date of this Agreement of 0.2% of the principal amount secured;
	 
	 	(B)	 	each other Kenyan Security Document with
fixed duty, as of the date of this Agreement, of K.Sh 5;
	 
	 	(C)	 	each of the other Principal Documents
executed as a deed, with fixed duty as of the date of this Agreement
of K.Sh 200; and
	 
	 	(D)	 	each of the other Project Documents and
this Agreement with fixed duty as of the date of this Agreement of
K.Sh 100,






	 	 	 	no stamp or registration duty or similar Tax or charge is payable in its
jurisdiction of incorporation or Kenya in respect of any Principal Document.
	 
	 	(y)	 	No Deduction or Withholding: under the laws of Kenya or the Cayman Islands as
are in force at Financial Close it will not be required to make any deduction or
withholding, for or on account of Tax or otherwise, from any payment it may make in
relation to the Loans;
	 
	 	(z)	 	No Default: no Default has occurred and is continuing or will result from the
entry into, or the performance of any transaction contemplated by, any Finance
Document;
	 
	 	(aa)	 	Security: upon execution of the Security Documents and proper registration
thereof, the Security will constitute valid, fully perfected first-priority security
over the assets, rights and revenues which are the subject of the Security as security
for the obligation(s) expressed to be thereby secured and ranking ahead of all other
claims other than Permitted Liens and other than obligations mandatorily preferred by
law applying to companies generally;
	 
	 	(bb)	 	Insurances: all insurances and reinsurances which are required to be in place
in accordance with Schedule 12 (Insurance Requirements) or by the terms of any
Principal Document are in place and are in full force and effect;
	 
	 	(cc)	 	Project Documents:






	 	(i)	 	the Project Documents are each in full force and effect and
there is no default (howsoever described) or Political Event existing
thereunder, except for defaults which could not result in a Material Adverse
Effect;




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	 	(ii)	 	the copies of the Project Documents provided to the Global
Agent pursuant to Clause 4 (Conditions) are accurate and complete copies of
the executed originals thereof; and
	 
	 	(iii)	 	there have been no changes or amendments to the Project
Documents other than those permitted pursuant to Clause 25.1(t) (Project
Documents);






	 	(dd)	 	Base Case and Financial Model: the Assumptions used in the preparation of the
Base Case and the Financial Model were made in good faith and were reasonable at the
time made;
	 
	 	(ee)	 	Information Memorandum: the Information Memorandum relating to the Company
and the Project was true and accurate in all material respects and did not contain any
information which is misleading in any material respect nor did it omit any
information the omission of which made the information contained in it misleading in
any material respect except that no representation is made with respect to any
projections and other forward-looking statements contained in the Information
Memorandum other than that they were prepared in good faith and which the Company
believes to be reasonable;
	 
	 	(ff)	 	Corporate Structure: as at the date of this Agreement, the structure of all
shareholdings in the Shareholder and all Shareholdings in the Company is as set out in
the Corporate Structure Chart;
	 
	 	(gg)	 	Prohibited Acts: the Company has not committed, and no person to its present
knowledge has committed, any Prohibited Act. For the purposes of this paragraph (hh),
the knowledge of any member of the board of directors of the Company shall be deemed
the knowledge of the Company;
	 
	 	(hh)	 	No illicit origin of funds:






	 	(i)	 	neither its shareholder capital nor any other funds for the
financing of the Project are of illicit origins with regard to the domestic
law of the Company’s nation state or French law and, in particular, this list
being non-exhaustive, is not related to drug trafficking, fraud related to the
financial interests of the European Union, corruption, bribery, organised
crime, criminal activities or terrorism; and
	 
	 	(ii)	 	the negotiation, signing and execution of the Finance
Documents have not and will not give rise to any Extraordinary Commercial
Costs.






	 	(ii)	 	Utilities: utilities services will be available for start-up of the Plant;
	 
	 	(jj)	 	Use of Proceeds: the proceeds of each Disbursement have been and shall be
used in accordance with Clause 3.1 (Purpose);




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	 	(kk)	 	No Other Assets: the Company has no material assets in a jurisdiction other
than Kenya (other than the Offshore Project Accounts); and
	 
	 	(ll)	 	No Omission: to the best of the Company’s knowledge and belief, having made
due enquiry, none of the representations and warranties in this Clause 23.1
(Representations and Warranties) omits any matter the omission of which makes any of
such representations and warranties misleading.






	23.2	 	Lenders’ Reliance
	 
	 	 	The Company acknowledges that it makes the representations and warranties in Clause 23.1
(Representations and Warranties) with the intention of inducing each of the Finance Parties
(and each participant in any Facility) to enter into this Agreement and the other Finance
Documents and that each of the Finance Parties (and each participant in any Facility)
enters into this Agreement and the other Finance Documents on the basis of, and in full
reliance on, each of such representations and warranties.
	 
	23.3	 	Repetition
	 
	 	 	Save in respect of matters notified in writing to and approved by the Global Agent (acting
on the instructions of the Lenders) and except as provided in paragraph (b) below, each
representation is made on the date of this Agreement and shall be deemed to be repeated (by
reference to the facts and circumstances then subsisting except where express reference is
made to matters subsisting on a particular date) on:






	 	(a)	 	the date of each Drawdown Request;
	 
	 	(b)	 	each Disbursement Date both before and after giving effect to the relevant
Disbursement; and
	 
	 	(c)	 	the first day of each Interest Period,






	 	 	provided, however, that the representations set out in paragraphs (s) (Plant Performance),
(v) (Formalities), (x) (Stamp and Other Duties), (y) (No Deduction or Withholding), (aa)
(Security), (dd) (Base Case and Financial Model), (ee) (Information Memorandum) and (ii)
(Utilities) of this Clause 23.1 (Representations and Warranties) shall only be made on the
date of this Agreement and shall not be, and shall not be deemed to be, repeated on any of
the dates referred to in paragraphs (a), (b) or (c) of this Clause 23.3 (Repetition).




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	24	 	AFFIRMATIVE COVENANTS
	 
	24.1	 	Affirmative Covenants
	 
	 	 	The Company undertakes to each Finance Party that it shall comply with the following
affirmative covenants at all times prior to the Final Termination Date, other than with the
consent of the Lenders:






	 	(a)	 	Preservation of rights: take all actions necessary to preserve its existence
and its corporate rights, franchises, licences and patents;
	 
	 	(b)	 	Conduct of Business: carry out the Project and conduct its business with due
diligence and efficiency and in accordance with:






	 	(i)	 	all applicable laws;
	 
	 	(ii)	 	Prudent Utility Practices;
	 
	 	(iii)	 	sound engineering, financial and business practices;
	 
	 	(iv)	 	the then current Operating Budget; and
	 
	 	(v)	 	the Principal Documents;






	 	(c)	 	Application of Financing: cause the financing specified in the Financial Plan
to be applied exclusively as permitted by Clause 3.1 (Purpose);
	 
	 	(d)	 	Accounting Systems: install prior to Financial Close and thereafter maintain
an accounting and cost 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 conformity
with the Accounting Principles;
	 
	 	(e)	 	Auditors: appoint and maintain at all times a reputable international firm of
internationally recognised independent public accountants acceptable to the Global
Agent (acting on the instructions of the Lenders) as the Auditors;
	 
	 	(f)	 	Communication with Auditors:






	 	(i)	 	irrevocably authorise the Auditors (whose fees and expenses
shall be for the account of the Company) to:






	 	(A)	 	respond directly to communications (oral or
written) from the Global Agent at any time regarding the Company’s
accounts and operations; and





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	 	(B)	 	allow each of the Finance Parties to rely
on all audits of any financial statements prepared by it which the
Company is
required to provide copies of to the Global Agent pursuant any of
the Finance Documents,






	 	 	 	provided that the Global Agent shall provide the Company with copies of
its communications to the Auditors, including notices and requests for
information (or in the case of oral communications, confirmation as to the
nature of such communications), and will provide the Company with the
opportunity to participate in discussions or meetings except where, in the
reasonable opinion of the Global Agent (acting on the instructions of the
Lenders) (as the case may be), timing does not so permit or its rights or
interests are prejudiced or placed in jeopardy by permitting such
participation; and
	 
	 	(ii)	 	provide to the Global Agent a copy of that authorisation,
and, no later than thirty (30) days after any change in Auditors, issue a
similar authorisation to the new Auditors and provide a copy thereof to the
Global Agent; and
	 
	 	(iii)	 	procure that the Auditors provide an acknowledgement to the
Global Agent of their acceptance of the terms of such authorisation in a form
acceptable to the Global Agent (acting on the instructions of the Lenders) and
addressed to the Global Agent;






	 	(g)	 	Access and Inspection:






	 	(i)	 	permit a maximum of two (2) representatives of each Lender
(who may be accompanied by representatives of any competent body of the
European Community) and, in respect of paragraph (A) below only, any
representatives of the shareholders of each Lender or Participant (provided
the costs and expenses of such representatives of the shareholders are for the
account of the Lender or Participant) at reasonable times and on reasonable
prior written notice (and provide the representatives with all necessary
assistance) to:






	 	(A)	 	visit the Site, installations and works
comprising the Project;
	 
	 	(B)	 	conduct such checks as they may reasonably
wish;
	 
	 	(C)	 	in the case of the representatives of the
Lenders only, have access to the Company’s books of account,
technical and statistical data, records and other data (and to take
copies of any such material); and





95









 





	 	(D)	 	in the case of the representatives of the
Lenders only, have access to those employees, contractors and agents
of the
Company who have or may have knowledge of matters with respect to
the Project and as to which the Lenders seek information,






	 	(ii)	 	permit the Lenders’ Engineer prior to the end of the Defects
Liability Period to visit the Site, installations and works comprising the
Project in order to carry out appropriate inspections to ascertain whether
there is any potential claim to be made against the Contractor under the
Construction Warranty Agreement,
	 
	 	 	 	subject in all cases under paragraphs (i) and (ii) above to compliance by
the Lenders and any other visitors accompanying the Lenders during such
site visits with all applicable social and environmental, health and
safety rules and regulations and all applicable Company policies and
procedures (including in respect of confidentiality).






	 	(h)	 	Compliance with Environmental and Social Requirements: through its
employees, agents, contractors and subcontractors, operate, maintain, implement and
monitor the Project in compliance with all Environmental and Social Requirements and
the Environmental and Social Management Plan, provided that if there is a material
change in the IFC Performance Standards after the date of this Agreement, the Company
and the Lenders shall meet and negotiate in good faith whether and how the Company
will be required to comply with such change (if there is no agreement, no Default
shall occur in respect of this paragraph if the Company fails to comply with the
relevant change).
	 
	 	(i)	 	Authorisations:






	 	(i)	 	obtain and maintain, or cause to be obtained and maintained,
in full force and effect (or where appropriate, promptly renew in a timely
manner) all necessary Authorisations, including the Authorisations specified
in Schedule 15 (Authorisations), required with respect to:






	 	(A)	 	the then current stage of implementation of
the Project;
	 
	 	(B)	 	the due authorisation, execution, delivery
and performance of any Principal Document;
	 
	 	(C)	 	the continuing legality, validity, binding
effect or enforceability of any Principal Document; and
	 
	 	(D)	 	the Company’s business and operations,
including all requisite governmental and Central Bank Authorisations
necessary to assure the availability and offshore remittance 




96









 






	 	 	 	of
foreign currency to enable the Company to perform all of its
obligations under the Project Accounts Agreement
and other Principal Documents in accordance with their respective
terms, and






	 	(ii)	 	perform and observe all the conditions and instructions
contained in or imposed by any such Authorisations;






	 	(j)	 	Further Assurance: from time to time, execute, acknowledge and deliver or
cause to be executed, acknowledged and delivered such further instruments as may
reasonably be requested by the Global Agent for perfecting or maintaining in full
force and effect the Security (including security in respect of the CER Documents) or
for re-registering the Security in respect of after acquired property or otherwise
complying with the Company’s obligations in respect of the Security;
	 
	 	(k)	 	Project Documents:






	 	(i)	 	perform its obligations under the Principal Documents and in
relation to the Site;
	 
	 	(ii)	 	enforce all warranties, guarantees and indemnities and
exercise all rights and remedies available to it under or in connection with
the Principal Documents (including the Construction Warranty Agreement) with
due diligence and in accordance with prudent practices including making any
claim pursuant to the KPLC Letter of Credit promptly and, in any event, within
the 30-day period provided to make such a claim in accordance with the PPA,






	 	 	 	each in accordance with Prudent Utility Practices.
	 
	 	(l)	 	Insurances: obtain and maintain the insurances and reinsurances in accordance
with Schedule 12 (Insurance Requirements);
	 
	 	(m)	 	Hedging:






	 	(i)	 	comply at all times with the Hedging Policy and Hedging
Programme.
	 
	 	(ii)	 	Any Hedging Contracts must at all times:






	 	(A)	 	be with a counterparty selected in
accordance with the Hedging Policy), who has acceded to the Security
Trust and Intercreditor Deed;
	 
	 	(B)	 	be in compliance with the Hedging Policy;




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	 	(C)	 	provide for “two way payments” (under the
1992 Standard ISDA Agreement) or payments under the “second method”
(under the 2002 Standard ISDA Agreement) on a termination of a
hedging transaction;
	 
	 	(D)	 	be based on either the 1992 or 2002
standard ISDA Agreement; and
	 
	 	(E)	 	be assigned to or otherwise secured in
favour of, and in a manner acceptable to, the Global Agent (acting on
the instructions of the Lenders).






	 	(iii)	 	If, at any time, the notional principal amount of the
Hedging Contracts, exceeds 100% of the aggregate amount of the Loans at that
time, the Company must, at the request of the Global Agent (acting on the
instructions of the Lenders), reduce the notional principal amount of the
Hedging Contracts by an amount and in a manner satisfactory to the Majority
Lenders to reflect the aggregate amount of Loans then outstanding.
	 
	 	(iv)	 	The Company must comply with the terms of the Hedging
Contracts and must not, without the consent of the Global Agent (acting on the
instructions of the Lenders), materially amend, change or waive the terms or
agree to any assignment or transfer of all or any part of any Hedging Contract
other than in accordance with the Hedging Policy.
	 
	 	(v)	 	The Company may only terminate or close out all or any part
of any Hedging Contract:






	 	(A)	 	if after such termination or close out it
would be in compliance with paragraph (iii) above;
	 
	 	(B)	 	if it becomes illegal for it to continue to
comply with its obligations under that Hedging Contract;
	 
	 	(C)	 	if the Loans and all other amounts
outstanding under the Finance Documents have been unconditionally and
irrevocably paid and discharged in full; or
	 
	 	(D)	 	with the consent of the Global Agent
(acting on the instructions of the Lenders).






	 	(n)	 	Retention of Records: retain, in a single location, for inspection by or on
behalf of the Lenders:






	 	(i)	 	during six (6) years from the conclusion of each contract
financed by means of the Loans, the full terms of the contract itself, as well




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	 	 	 	as all material documents pertaining to the procurement process and to the
execution of the contract, and
	 
	 	(ii)	 	the contractual documents that the EPC Contractor is obliged
to retain; and
	 
	 	(iii)	 	until at least one (1) year after the Project Completion
Date all records (including payroll records, invoices, bills and receipts)
evidencing expenditure on account of the Project;






	 	(o)	 	Site Property:






	 	(i)	 	obtain and maintain all rights needed for the Project with
respect to the Site; and
	 
	 	(ii)	 	obtain and maintain all other necessary easements, rights of
way, way-leaves, rights and utilities in relation to the Site which are or
become necessary for the carrying out of the Project;






	 	(p)	 	Operation of the Plant: operate and maintain the Plant:






	 	(i)	 	in accordance with Environmental and Social Requirements;
	 
	 	(ii)	 	in a safe and efficient manner;
	 
	 	(iii)	 	in accordance with the requirements of the Project
Documents; and
	 
	 	(iv)	 	in accordance with Prudent Utility Practices;






	 	(q)	 	PPA Default: if so required by the Global Agent (acting on the instructions
of the Lenders):






	 	(i)	 	give a notice to the Offtaker under Clause 16.4 (Remedial
Procedures) of the PPA or Clause 16.5 (Termination) of the PPA of the
occurrence of an Offtaker default pursuant to the provisions of the PPA; or
	 
	 	(ii)	 	give a Political Event Notice (as defined in the GOK Letter)
to GOK under paragraph 10(b) (Political Events) of the GOK Letter of the
occurrence of a Political Event;






	 	(r)	 	Ratios:






	 	(i)	 	subject to Clause 19.9 (Equity Cure), maintain for each
Calculation Period:






	 	(A)	 	a Debt Service Cover Ratio; and
	 
	 	(B)	 	a Projected Debt Service Cover Ratio,





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	 	 	 	in each case of not less than 1.15;






	 	(ii)	 	maintain a Debt to Equity Ratio which does not exceed 3.0:1;
and
	 
	 	(iii)	 	maintain an Equity to Total Assets Ratio of not less than
0.25;






	 	(s)	 	Pari Passu Ranking: procure that its payment obligations under the Finance
Documents do and will rank at least pari passu with all its other present and future
unsecured payment obligations, except for the obligations mandatorily preferred by law
applying to companies generally;
	 
	 	(t)	 	Cooperation with Advisers: cooperate and provide each of the Lenders’
External Advisers with all such support and assistance as is reasonably necessary in
order to enable such Person to diligently perform its duties;
	 
	 	(u)	 	Project Accounts: promptly establish and maintain at all times all Project
Accounts in accordance with the Project Accounts Agreement;
	 
	 	(v)	 	Compliance with Laws: comply with all laws and regulations;
	 
	 	(w)	 	Intellectual Property Rights: obtain and maintain all material Intellectual
Property required by the Company in relation to the Project and renew or replace (on
reasonable commercial terms) any such material Intellectual Property which has
expired, lapsed or been terminated within thirty (30) days of becoming aware of such
expiry, lapse or termination;
	 
	 	(x)	 	Payment of Taxes: promptly pay all Taxes when due (or within any applicable
grace period prescribed by law), except when such Taxes are being contested in good
faith by the Company and the Company has set aside reserves for such Taxes as and to
the extent required by the Accounting Principles;
	 
	 	(y)	 	Prohibited Acts:






	 	(i)	 	take such action as the Global Agent (acting on the
instructions of the Lenders) shall reasonably request to:






	 	(A)	 	investigate and/or terminate any alleged or
suspected Prohibited Act;
	 
	 	(B)	 	if applicable, inform the Global Agent of
the measures taken to seek damages from the Person(s) responsible for
any material loss resulting from any such Prohibited Act, and
	 
	 	(C)	 	reasonably facilitate any investigation
that the Lenders may make concerning any such Prohibited Act;




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	 	(ii)	 	inform the Global Agent if it should become aware of any fact
or information suggestive of the committing of any Prohibited Act;






	 	(z)	 	Anti money laundering:






	 	(i)	 	inform the Global Agent:






	 	(A)	 	of all amendments to its statutes,
memorandum, articles or other constitutional documents which the law
stipulates must be published;
	 
	 	(B)	 	of all transactions which would entail a
change in ownership relating to 5% or more of its capital or a change
in its Control, either directly or indirectly;
	 
	 	(C)	 	without undue delay if the Company obtains
information which gives rise to suspicions regarding the illicit
nature, with regard to the domestic law of the Company or French law,
of funds used in the acquisition of its shareholder capital and, in
particular but without limitation, if such funds could relate to drug
trafficking, fraud related to the financial interests of the European
Union, corruption, bribery, organised crime, criminal activities or
terrorism; and






	 	(ii)	 	request from the bank charged with carrying out the transfers
that the bank correctly records the following information in any funds
transfer messages:






	 	(A)	 	the instructing party’s name, address and
account numbers (IBAN and SWIFT);
	 
	 	(B)	 	bank and bank address of the instructing
party; and
	 
	 	(C)	 	Project name and agreement number for the
payment,






	 	 	 	it being agreed by the Parties that the provisions of the Project Accounts
Agreement and any standing instructions given to the Offshore Accounts
Bank and/or the Onshore Accounts Bank thereunder shall constitute
satisfaction of this paragraph (z).






	 	(aa)	 	Structure chart: if there are any changes to the shareholdings which
represent a change of 5% or more in the shareholding of the companies shown in the
Corporate Structure Chart after the date hereof (provided that no such change shall
occur unless permitted under the Finance Documents) it shall within thirty (30) days
of such change in shareholding, notify the Global Agent and within a further thirty
(30) days provide to the Global Agent an amended version of the Corporate Structure
Chart;




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	 	(bb)	 	No illicit origin of funds: ensure that:






	 	(i)	 	neither its shareholder capital or the funds financing the
Project are of illicit origins with regard to the domestic law of the
Company’s nation state or French law and, in particular, this list being
non-exhaustive, are not related to drug trafficking, fraud related to the
financial interests of the European Union, corruption, bribery, organised
crime, criminal activities or terrorism; and
	 
	 	(ii)	 	the negotiation, signing and execution of the Finance
Documents have not and will not give rise to any Extraordinary Commercial
Expenses;






	 	(cc)	 	HIV Protective Measures: implement workplace policies and guidelines in
accordance with Schedule 14 (HIV Protective Measures); and
	 
	 	(dd)	 	CER Documents: ensure that all revenues generated under any CER Documents are
paid to the Company into the Offshore Revenue Account in accordance with the Project
Accounts Agreement.






	25	 	NEGATIVE COVENANTS
	 
	25.1	 	Negative Covenants
	 
	 	 	The Company undertakes to each Finance Party that it will not, prior to the Final
Termination Date, other than with the consent of the Global Agent (acting on the
instructions of the Lenders):






	 	(a)	 	Distributions: declare or pay any Distribution except with monies standing to
the credit of the Equity Distribution Account on or after the relevant Repayment Date
in accordance with the Project Accounts Agreement;
	 
	 	(b)	 	Transfers to Equity Distribution Account: request any Transfer to be made to
the Equity Distribution Account, make any such Transfer or permit any such Transfer to
be made unless:






	 	(i)	 	subject to Clause 25.1(b)(v) (Transfer to Equity Distribution
Account), the proposed Transfer occurs after the First Repayment Date;
	 
	 	(ii)	 	the Company, on the proposed Distribution Date, certifies to
the Global Agent in writing, in the form attached as Schedule 13 (Form of
Equity Distribution Transfer Certificate) (“Equity Distribution Transfer
Certificate”), that:






	 	(A)	 	other than in respect of a Transfer
pursuant to paragraph (v) below, the proposed Distribution Date is on
or follows a 




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	 	 	 	Repayment Date (or such later date in the event that a
Transfer to the Equity Distribution Account is delayed pursuant to
paragraph (ii)(B) below);
	 
	 	(B)	 	no Default has occurred and is continuing
or will occur as a result of the proposed Transfer; and
	 
	 	(C)	 	Financial Test delivered pursuant to
paragraph (iv) below has been finally determined and agreed;






	 	(iii)	 	the Global Agent (acting on the instructions of the Lenders)
has confirmed in writing that no Default has occurred and is continuing or
will occur as a result of the proposed Transfer provided that if no such
notice is received by the Company within seven (7) Business Days, the Global
Agent and the Lenders shall be deemed to have consented to such Transfer
(subject to the satisfaction of the remaining provisions of this Clause
25.1(b) (Transfers to Equity Distribution Account));
	 
	 	(iv)	 	in accordance with Clause 19 (Financial Calculations), the
Company delivers to the Global Agent a Financial Test (in respect of the
Calculation Date on or after which such proposed Distribution Date will fall),
prepared in accordance with Clause 19 (Financial Tests), which demonstrates
that, as at the proposed Distribution Date:






	 	(A)	 	the Debt Service Cover Ratio in respect of
the Calculation Period immediately preceding such proposed
Distribution Date will not be less than 1.3 and after making the
proposed Transfer to the Equity Distribution Account will not be less
than 1.15;
	 
	 	(B)	 	the Projected Debt Service Cover Ratio in
respect of the two (2) Calculation Periods immediately following such
proposed Distribution Date, calculated before and after making the
proposed Transfer to the Equity Distribution Account, will not be
less than 1.3;
	 
	 	(C)	 	the Equity to Total Assets Ratio in respect
of the Calculation Period immediately preceding such proposed
Distribution Date, calculated before and after making the proposed
Transfer to the Equity Distribution Account, will not be less than
0.25 and the two (2) Calculation Periods immediately following such
proposed Distribution Date will not be less than 0.25;




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	 	(D)	 	the Debt to Equity Ratio, calculated before
and after making the proposed Transfer to the Equity Distribution
Account, will not exceed 3.0:1;






	 	 	 	provided that if the Financial Test demonstrates compliance with the
above, the Company may then Transfer such amount to the Equity
Distribution Account which (as demonstrated by the above Financial Test
and evidenced by the relevant Equity Distribution Transfer Certificate),
after making such Transfer, would result in a Debt Service Cover Ratio
under paragraph (A) above of no less than 1.15 (and otherwise satisfy
paragraphs (B), (C) and (D)).
	 
	 	(v)	 	in respect of any proposed Distribution, such Transfer may be
made for an amount equal to 13/48 of the amount
otherwise available for Distribution (such portion of the Distribution being
an “EGF Distribution”) prior to the First Repayment Date provided that:






	 	(A)	 	the provisions of paragraphs (ii) to (iv)
(inclusive) are satisfied; and
	 
	 	(B)	 	the Transfer is only made in respect of the
amount of the EGF Distribution.






	 	(c)	 	Expenditure: in any Financial Year incur expenditures or commitments for
expenditure other than in accordance with the Operating Budget except:






	 	(i)	 	expenditures or commitments for expenditures for fixed or
non-current assets; and/or
	 
	 	(ii)	 	in respect of community and/or educational projects,






	 	 	 	up to an aggregate of five hundred thousand US Dollars (US$500,000);
	 
	 	(d)	 	Further Indebtedness: incur, assume or permit to exist any Debt except:






	 	(i)	 	the Loans;
	 
	 	(ii)	 	indebtedness arising from the Hedging Programme other than
Hedging Termination Costs;
	 
	 	(iii)	 	Short-term Debt incurred in the ordinary course of business
which is not secured with Project assets and which would not exceed at any one
time outstanding the equivalent of five hundred thousand US Dollars
(US$500,000);





104









 





	 	(iv)	 	indebtedness provided by way of vendor financing or supplier
credit of no more than 90 days in tenor up to a maximum outstanding at any one
time of one million US Dollars (US$1,000,000);
	 
	 	(v)	 	indebtedness provided in the ordinary course of business by
way of vendor financing or supplier credit of no more than six Months in tenor
up to a maximum outstanding at any one time of two hundred and fifty thousand
US Dollars (US$250,000); and
	 
	 	(vi)	 	indebtedness provided by way of Shareholder Debt;






	 	(e)	 	Leases: enter into any agreement or arrangement to lease the use of any
property or equipment of any kind, except:






	 	(i)	 	the Land Agreements; and
	 
	 	(ii)	 	leases for equipment or other property with respect to which
the aggregate lease payments do not exceed the equivalent of five hundred
thousand US Dollars (US$500,000) in any Financial Year;






	 	(f)	 	Derivative Transactions: enter into any Derivative Transaction or assume the
obligations of any party to any Derivative Transaction other than the Hedging
Contracts in accordance with the Hedging Programme or pursuant to any CER Documents;
	 
	 	(g)	 	Guarantees: enter into any agreement or arrangement to guarantee or, in any
way or under any condition, assume or become obligated for all or any part of any
financial or other obligation of another Person except pursuant to any CER Documents;
	 
	 	(h)	 	Liens: create or permit to exist any Lien on any property, revenues or other
immovable and movable assets (including receivables), present or future, of the
Company, except for Permitted Liens.
	 
	 	(i)	 	Commercial Transactions: enter into any transaction except in the ordinary
course of business on the basis of arm’s-length arrangements (including transactions
whereby the Company might pay more than the ordinary commercial price for any purchase
or might receive less than the full commercial price (subject to normal trade
discounts) for its products);
	 
	 	(j)	 	Income Sharing: form, acquire, organise or establish any partnerships, joint
ventures, cooperatives, profit-sharing or royalty arrangements or other similar
arrangement whereby the Company’s income or profits are, or might be, shared with any
other Person other than pursuant to a Project Document or the Oserian Contract;
	 
	 	(k)	 	No Subsidiaries: form, acquire, organise or establish any Subsidiary;





105









 





	 	(l)	 	Management Contracts: enter into any management contract or similar
arrangement whereby its business or operations are managed by any other person (except
as contemplated by the Principal Documents);
	 
	 	(m)	 	Loans and Investments: make or permit to exist loans or advances to, or
deposits with other Persons or investments in any Person in excess of an aggregate
amount equivalent to five hundred thousand US Dollars (US$500,000) outstanding at any
one time except deposits made with the Account Banks in accordance with the Project
Accounts Agreement and except any Permitted Investments;
	 
	 	(n)	 	Change to Charter Documents: change (and shall procure that no other Person
shall change) its Charter Documents in any material respect or in a manner that might
impair or prejudice its ability to perform its obligations under this Agreement and
any other Principal Document to which it is a party;
	 
	 	(o)	 	Financial Year: change its Financial Year unless required by applicable law;
	 
	 	(p)	 	Change in Project or Business: change the nature or scope of the Project or
change the nature of its business or operations;
	 
	 	(q)	 	Contracts: enter into (or permit the entry into force of) any contract
except:






	 	(i)	 	the Principal Documents;
	 
	 	(ii)	 	any contracts required or permitted under the Principal
Documents; or
	 
	 	(iii)	 	any other contracts entered into in relation to the Project:






	 	(A)	 	in the ordinary course of business;
	 
	 	(B)	 	on terms that are at least as favourable to
the Company as those available on the basis of arm’s-length
arrangements;
	 
	 	(C)	 	which do not require expenditure in excess
of the applicable Annual Operating Budget or dedicated reserves; and
	 
	 	(D)	 	do not expose the Company to a Liability in
excess of that contemplated by the applicable Annual Operating
Budget; or






	 	(iv)	 	any CER Document; or




106









 






	 	(v)	 	any power purchase agreement in form and substance
satisfactory to the Global Agent (acting on the instructions of all the
Lenders) provided that the Company also enters into appropriate Security
Documents and a Direct Agreement in respect of such power purchase
agreement;






	 	(r)	 	Disposal of Assets: sell, transfer, lease or otherwise dispose of all or a
substantial part of its assets (whether voluntarily or involuntarily and in a single
transaction or in a series of transactions, related or otherwise) other than:






	 	(i)	 	assets having a value less than two hundred and fifty US
Dollars (US$250,000) in aggregate;
	 
	 	(ii)	 	in the ordinary course of business;
	 
	 	(iii)	 	the disposal of surplus or obsolete assets;
	 
	 	(iv)	 	the sale of Certified Emission Reduction Certificates under
any CER Documents;
	 
	 	(v)	 	sales of capacity and electricity in accordance with the PPA;
or
	 
	 	(vi)	 	Transfers of cash to or from the Project Accounts in
accordance with this Agreement and the Project Accounts Agreement;






	 	(s)	 	Merger; Reorganisation: undertake or permit any mergers, consolidations,
amalgamations, demergers, spin-offs or reorganisations of any kind;
	 
	 	(t)	 	Project Documents: terminate, amend or grant any waiver in respect of any
provision of any Project Document to which it is a party except where the effect of
such an amendment or a grant of any waiver would have only an immaterial impact upon
the Company and the Project, provided, however, that:






	 	(i)	 	the Company shall provide reasonable advance notice to the
Global Agent of any such amendment or grant of a waiver; and
	 
	 	(ii)	 	notwithstanding the foregoing, no modification, waiver or
amendment shall be made to the provisions under the PPA relating to the
calculation or payment of the Capacity Payments or the Energy Charges (or
anything relating thereto);






	 	(u)	 	Accounts:






	 	(i)	 	either open or maintain any bank accounts other than the
Project Accounts; or




107









 






	 	(ii)	 	either open or maintain any accounts in Kenya other than with
the Onshore Account Bank; or
	 
	 	(iii)	 	Transfer any funds out of any Project Account except in
accordance with the Project Accounts Agreement;






	 	(v)	 	Assignment and Transfer: assign or transfer any of its rights and obligations
under, or consent to the assignment or transfer of any rights and obligations of any
other party to, any Project Document, other than as part of the Security or in respect
of any assignment or transfer by KPLC to the Successor Entity;
	 
	 	(w)	 	Prohibited Acts: commit (or authorise or permit any Affiliate, Shareholder or
any other Person acting on its behalf, with its consent or prior knowledge to commit)
with respect to the Project or any Principal Document or any transaction contemplated
thereunder, any Prohibited Act;
	 
	 	(x)	 	Amendments to the Environmental Impact Assessment and Environmental and
Social Management Plan: approve any amendment or supplement to the Environmental
Impact Assessment or any part of the Environmental and Social Management Plan, unless
the amendment is made in accordance with the Environmental and Social Requirements;
	 
	 	(y)	 	Abandonment: abandon or agree to abandon the Project or commit any action or
inaction which would give rise to an abandonment of the Project pursuant to the PPA;
	 
	 	(z)	 	Blocked persons and embargoes:






	 	(i)	 	enter into business relationships with specially designated
nationals and blocked persons or entities maintained on the relevant lists by
the United Nations, the European Union, Germany or France in relation to
embargoes or the fight against terrorism; or
	 
	 	(ii)	 	use any proceeds of any Loan or equity including the Base
Equity Amount (or other funds), or otherwise enter into business, in relation
to any sector or equipment under such embargoes; and






	 	(aa)	 	Excluded Activities: make or permit the engagement in any of the activities
referred to in Schedule 20 (Excluded Activities).






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	26	 	EVENTS OF DEFAULT






	26.1	 	Events of Default






It shall be an Event of Default if any of the following occur (unless waived by the Global
Agent with the consent of the Majority Lenders or of all of the Lenders, as the case may
be, in accordance with Clause 37 (Amendments and Waivers)):




	 	(a)	 	Failure to Pay: the Company fails to pay when due any part of the principal,
or of the interest on, any of the Loans or any other monies falling due under any of
the Finance Documents when due unless:






	 	(i)	 	its failure to pay is caused by:






	 	(A)	 	administrative or technical error; or
	 
	 	(B)	 	a Disruption Event; and






	 	(ii)	 	payment is made within three (3) Business Days of its due
date;






	 	(b)	 	Other Failure to Pay:






	 	(i)	 	the Offtaker fails to pay any amounts due under the PPA or
fails to renew or replenish the KPLC Letter of Credit in the time and to the
amount as required pursuant to the KPLC Security Agreement to the extent that
the cash available from a draw under such KPLC Letter of Credit prior to its
termination is no longer available in full; or
	 
	 	(ii)	 	GOK fails to pay any amounts due under the GOK Letter; or
	 
	 	(iii)	 	the Sponsor fails to pay any amounts due under the
Construction Warranty Agreement; or
	 
	 	(iv)	 	the Standby Operator fails to pay any amounts due under the
Standby O&M Agreement (if any),






unless such failure to pay is remedied by the GOK or the Offtaker or the Sponsor
within the applicable grace periods provided in the PPA or the GOK Letter or the
Construction Warranty Agreement as applicable;




	 	(c)	 	Cross Default: the Company, the Standby Operator or the Sponsor fails to pay
any indebtedness in an aggregate amount of one hundred thousand US Dollars
(US$100,000) in respect of the Company and ten million US Dollars (US$10,000,000) in
respect of the Standby Operator or the Sponsor (other than the Loans), and any such
failure continues for more than any applicable period of grace or any such
indebtedness becomes





109









 











prematurely due and payable (other than as a result of any voluntary prepayment or
mandatory prepayment that is not as a result of an Event of Default) or is placed
on demand; provided, however, that it shall not be a Default or Event of Default
under this Clause 26.1 (c) (Cross Default) in respect of the Standby Operator so
long as an alternative entity acceptable to the Global Agent (acting on the
instructions of the Lenders, acting reasonably) within the Control of Ormat
Technologies and with technical and financial capability no worse than the Standby
Operator (the “Substitute Standby Operator”) has assumed the obligations and
liabilities of the Standby Operator under the Standby O&M Agreement within thirty
(30) days of the relevant failure to pay (in which case this paragraph (c) shall
apply to such Substitute Standby Operator).




	 	(d)	 	Compliance with Obligations by the Company:






	 	(i)	 	subject to paragraph (ii) and (iii) and Clause
26.3 (Expropriation or Bankruptcy) below, the Company fails to comply with any
of its obligations under this Agreement or any other Finance Document (other
than for the payment of the principal of, or interest on, the Loans or any
other loan from any of the Lenders to the Company or in respect of the making
(actual or deemed) of any representation or warranty) and any such failure
continues:






	 	(A)	 	subject to paragraph (B) and (C) below, for
a period of thirty (30) days after the date of that failure provided
that such thirty (30)-day period shall be extended by an additional
thirty (30) days if:






	 	(I)	 	the Company commenced
remedial action as soon as reasonably practicable after such
failure;
	 
	 	(II)	 	the Company has continued
to pursue a remedy properly and diligently to the
satisfaction of the Global Agent (acting on the instructions
of the Lenders); and
	 
	 	(III)	 	such remedy is reasonably
likely to be effective within such additional thirty (30) day
period; or






	 	(B)	 	in respect of its obligations under Clause
24.1(u) (Project Accounts) and Clause 25.1(a) (Distributions), for a
period of five (5) days after the date of such failure; or
	 
	 	(C)	 	in the case of the Company’s failure to
perform or observe any term, covenant or agreement which expressly
requires that any Finance Party be satisfied with such performance or
observance or otherwise exercise its discretion, for a period of
thirty (30) days (or such longer period agreed by





110









 











the Global Agent (acting on the instructions of the Lenders))
after notice by a Finance Party of any failure by the Company to
so perform or observe provided that such thirty (30)-day period
shall be extended by an additional thirty (30) days if:




	 	(I)	 	the Company commenced
remedial action as soon as reasonably practicable after such
failure;
	 
	 	(II)	 	the Company has continued
to pursue a remedy properly and diligently to the
satisfaction of the Global Agent (acting on the instructions
of the Lenders); and
	 
	 	(III)	 	such remedy is reasonably
likely to be effective within such additional thirty (30) day
period;






	 	(ii)	 	the Company fails to comply with its obligations under Clause
24.1(a) (Preservation of rights), Clause 24.1(c) (Application of Financing),
Clause 24.1(y) (Prohibited Acts), Clause 24.1(z) (Anti money laundering),
Clause 24.1(aa) (Structure Chart) or Clause 24.1(bb) (No illicit origin of
funds), Clause 25.1(w) (Prohibited Acts) or Clause 25.1(z) (Blocked Persons
and Embargoes); and
	 
	 	(iii)	 	the Company fails to comply with its obligations under
Clause 24.1(r) (Ratios) subject to the right to cure such failure in
accordance with Clause 19.9 (Equity Cure);






	 	(e)	 	Compliance with Obligations by a Major Project Party:






	 	(i)	 	any Major Project Party fails to comply with any obligations
not otherwise provided for or referred to in this Clause 26 (Events of
Default) (including payment obligations) under any of the Principal Documents
to which it is a party and such non-compliance has or could reasonably be
expected to have a Material Adverse Effect; or
	 
	 	(ii)	 	Ormat Technologies Inc. fails to comply with any obligations
under any Finance Document to which it is party,






and such non-compliance has or could reasonably be expected to have a Material
Adverse Effect unless such non-compliance is remedied within any grace or cure
period under the applicable Principal Document;




	 	(f)	 	Misrepresentation: a representation, warranty or statement made or repeated
pursuant to Clause 23 (Representations and Warranties) or in connection with any
Finance Document (or in any document delivered by or on behalf of the Company,
including any Drawdown Request, or by or





111









 











on behalf of the Sponsor or the Shareholder, under or in connection with any
Finance Document), is incorrect in any material respect when made or deemed to be
made or repeated and, except in relation to Clause 23(gg) (Prohibited Acts) and
Clause 23(hh) (No illicit origin of funds) or where such misrepresentation results
from fraud, wilful default or negligence, has a Material Adverse Effect at the time
of discovery or publication;




	 	(g)	 	Ownership:






	 	(i)	 	the Sponsor fails to maintain, directly or indirectly at
least 51% of the legal and beneficial ownership interest of the Company and/or
fails to Control the Company;
	 
	 	(ii)	 	the Shareholder fails to maintain, directly or indirectly no
less than 100% of the Shares and the legal and beneficial ownership interest
of the Company and/or fails to Control the Company provided that the
Shareholder may transfer Shares and the legal and beneficial ownership
interest to a Permitted Investor in accordance with the Finance Documents;
	 
	 	(iii)	 	Ormat Technologies Inc fails to Control the Company; or
	 
	 	(iv)	 	 






	 	(A)	 	any Shares are issued, redeemed,
transferred, encumbered in any way or otherwise disposed of; or
	 
	 	(B)	 	the Charter Documents of the Company are
amended,






in each case in a manner not permitted by the Finance Documents;




	 	(h)	 	Expropriation: any Authority condemns, nationalises, seizes, or otherwise
expropriates all or any substantial part of the property, Shares or other assets of
the Company, or shall have assumed custody or control of such property or other assets
or of the business or operations of the Company, or shall have taken any action for
the dissolution or disestablishment of the Company, or any action that would prevent
the Company or its officers from carrying on its business or operations or prevent any
of the parties to any of the Principal Documents from performing their respective
obligations thereunder;






	 	(i)	 	Judgment entered: there shall have been entered against the Company a final
judgment, decree or order for the payment of money in excess of one hundred thousand
US Dollars (US$100,000), which judgment shall remain unpaid for thirty (30) days after
it shall have become final and non-appealable;




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	 	(j)	 	Attachments: any attachment (whether in aid of execution or otherwise) shall
be made on any of the Company’s assets with a value in excess of one hundred thousand
US Dollars (US$100,000) and the same shall not be released or bonded within thirty
(30) days after the date on which the attachment is made;






	 	(k)	 	Insolvency: any of the Company, the Shareholder, the Sponsor, the Standby
Operator or the Offtaker:






	 	(i)	 	takes any step (including petition, giving notice to convene
or convening a meeting) for the purpose of making, or proposes or enters into,
any arrangement, assignment or composition with or for the benefit of its
creditors;
	 
	 	(ii)	 	ceases or threatens to cease to carry on its business or any
substantial part of its business; or
	 
	 	(iii)	 	is unable to pay its debts as they fall due or otherwise
becomes insolvent,






save that no Event of Default will occur under this paragraph (k) in respect of the
Standby Operator if the Standby Operator’s obligations and liabilities under the
Standby O&M have been assumed by the Substitute Standby Operator within thirty (30)
days (in which case this paragraph (k) shall apply to such Substitute Standby
Operator).




	 	(l)	 	Winding Up: an order is made or an effective resolution passed or analogous
proceedings taken for the winding up, bankruptcy or dissolution of any of the Company,
the Shareholder, the Sponsor, the Standby Operator or the Offtaker or a petition is
presented or analogous proceedings taken for the winding up or dissolution of the
Company, the Standby Operator, the Shareholder, the Offtaker, the Sponsor, by any
Person and is not withdrawn or dismissed within sixty (60) days of the date of filing
thereof save that no Event of Default will occur under this paragraph (l) in respect
of the Standby Operator if the Standby Operator’s obligations and liabilities under
the Standby O&M have been assumed by the Substitute Standby Operator within thirty
(30) days (in which case this paragraph (l) shall apply to such Substitute Standby
Operator);
	 
	 	(m)	 	Appointment of Officer: any encumbrancer lawfully takes possession, or a
liquidator, judicial custodian, receiver, administrative receiver or trustee or any
analogous officer is appointed, of the whole or any material part of the undertaking
or assets of any of the Company, the Sponsor, the Shareholder, the Standby Operator or
the Offtaker save that no Event of Default will occur under this paragraph (m) in
respect of the Standby Operator if the Standby Operator’s obligations and liabilities
under the Standby O&M have been assumed by the Substitute Standby Operator




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within thirty (30) days (in which case this paragraph (m) shall apply to such
Substitute Standby Operator);




	 	(n)	 	Analogous Events: any other event occurs which under any applicable law would
have an effect analogous to any of those events listed in Clause 26.1(k) (Insolvency),
Clause 26.1(l) (Winding Up) and Clause 26.1(m) (Appointment of Officer) save that no
Event of Default will occur under this paragraph (n) in respect of the Standby
Operator if the Standby Operator’s obligations and liabilities under the Standby O&M
have been assumed by the Substitute Standby Operator within thirty (30) days (in which
case this paragraph (n) shall apply to such Substitute Standby Operator);






	 	(o)	 	Authorisations: any Authorisation necessary for the Company to perform and
observe its obligations under any Principal Document:






	 	(i)	 	is not obtained when required or is amended (without the
Lenders’ consent) and such failure to obtain or such amendment has or is
reasonably likely to have a Material Adverse Effect; or
	 
	 	(ii)	 	in respect of the remittance to the Lenders or their
respective assigns in US Dollars of any amount payable under any Finance
Document, is rescinded, terminated, lapses or otherwise ceases to be in full
force and effect, and is not restored or reinstated within thirty (30) days of
notice by the Global Agent to the Company requiring that restoration or
reinstatement; or
	 
	 	(iii)	 	subject to paragraph (ii) above, is rescinded, terminated,
lapses or otherwise ceases to be in full force and effect, and is not restored
or reinstated within thirty (30) days of notice by the Global Agent to the
Company requiring that restoration or reinstatement and such failure to
restore or reinstate has or is reasonably likely to have a Material Adverse
Effect;






	 	(p)	 	Security Documents: any Security Document, any of their respective provisions
or the Security:






	 	(i)	 	is revoked, terminated or ceases to be in full force and
effect or ceases or fails to provide the Security or the priority of security
intended or the Security was not validly created as intended under the
relevant Security Document;
	 
	 	(ii)	 	becomes unlawful or is declared void; or
	 
	 	(iii)	 	is repudiated or its validity or the enforceability of any
of its provisions is at any time challenged by any Person and any such
repudiation or challenge continues for a period of thirty (30) days,





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provided such period shall terminate if and when such repudiation or
challenge becomes effective,




unless, in each case, the Company can satisfy the Global Agent (acting on the
instructions of the Lenders) within ten (10) days of such occurrence that such
occurrence has not resulted in a Material Adverse Effect;




	 	(q)	 	Principal Documents: without prejudice to Clause 26.1(e) (Compliance with
Obligations by a Major Project Party) or the rights of the Lenders under Clause
24.1(q) (PPA Default) and without prejudice to Clause 26.1(p) (Security Documents):






	 	(i)	 	the termination, amendment or grant of any waiver in respect
of any material provision of any of the Principal Documents to which it is a
party other than as is permitted pursuant to the Finance Documents; or
	 
	 	(ii)	 	the performance of the obligations under any Principal
Document becomes unlawful or any Principal Document is repudiated; or
	 
	 	(iii)	 	the validity or the enforceability of any of the provisions
of the Principal Documents is at any time challenged by any Person and any
such challenge continues for a period of thirty (30) days, provided such
period shall terminate if and when such challenge becomes effective,






unless, in each case, the Company can satisfy the Global Agent (acting on the
instructions of the Lenders) within ten (10) days of such occurrence that such
occurrence has not resulted in a Material Adverse Effect;




	 	(r)	 	Currency and Project Accounts: the Company loses the legal right to purchase
US Dollars or to remit such currency outside of Kenya or the Cayman Islands to pay
amounts due under the Finance Documents or any other Principal Document;
	 
	 	(s)	 	Abandonment:






	 	(i)	 	the Company abandons the Project; or
	 
	 	(ii)	 	ceases to perform its operations and maintenance services in
respect of the Plant for a continuous period in excess of thirty (30) days in
any year other than as a result of a Force Majeure Event or for periods which
in aggregate exceed sixty (60) days other than as a result of a Force Majeure
Event;






	 	(t)	 	Insurances: subject to the terms of Schedule 12 (Insurance Requirements), any
of the insurances or reinsurances is not maintained,




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avoided or an insurer is entitled to avoid liability under a policy relating to any
Insurances or Reinsurances;




	 	(u)	 	Loss of Project: the Plant is damaged or destroyed such that a total loss
occurs and, within one hundred and eighty (180) days, the Insurance Proceeds are not
applied to reinstatement or repair in accordance with Clause 8.2 (Mandatory Prepayment
of Insurance Proceeds and Compensation Proceeds) or have not been applied to
prepayment in accordance with Clause 8.2 (Mandatory prepayment of Insurance Proceeds
and Compensation Proceeds).
	 
	 	(v)	 	Material Adverse Effect: any event or circumstance occurs or series of events
occur which has a Material Adverse Effect;
	 
	 	(w)	 	Prohibited Acts: the Company commits (or authorises or permits any Affiliate,
Shareholder or any other person acting on its behalf to commit) with respect to the
Project or any transaction contemplated by the Project Documents, any Prohibited Act;
	 
	 	(x)	 	Anti-money Laundering: the Company is in default in the due performance of
any of its obligations under Clause 24.1(y) (Prohibited Acts), Clause 24(z) (Anti
money laundering), Clause 24(bb) (No illicit origin of funds) or Clause 25(z) (Blocked
persons and embargoes);
	 
	 	(y)	 	Required Balances: failure to fund the Debt Service Reserve Account or the
Well Drilling Reserve Account or to maintain the Required Debt Service Reserve Amount
or the Required Well Drilling Reserve Amount in accordance with the Project Accounts
Agreement; and
	 
	 	(z)	 	Certain Events: the occurrence of a Political Event or Force Majeure Event
which has a Material Adverse Effect or a MIGA Event.






	26.2	 	Remedies on an Event of Default






Upon the occurrence of and during the continuance of an Event of Default, the Majority
Lenders may declare an Event of Default and accelerate the Loans, and exercise any or all
remedies set out under the Finance Documents, including the following:




	 	(a)	 	cancel or suspend the commitments of the Lender or Lenders under the
applicable Loan Agreements and this Agreement;
	 
	 	(b)	 	declare the principal amount of the Loans together with accrued interest
thereon and any other outstanding amounts under the relevant Loan Agreements and this
Agreement to be immediately due and payable or repayable on demand;
	 
	 	(c)	 	cancel or suspend further Disbursements;




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	 	(d)	 	exercise, or cause either Security Agent to exercise, any and all rights of a
secured creditor (subject to the Security Trust and Intercreditor Deed) with respect
to the Project, the Company, the Sponsor and any other relevant party under the
Finance Documents and the Security Documents; or
	 
	 	(e)	 	exercise all other rights available to any of the Finance Parties under the
Finance Documents;






	26.3	 	Expropriation or Bankruptcy






Upon the occurrence of an Event of Default of the type described in Clauses 26.1(h)
(Expropriation), 26.1(k) (Insolvency), 26.1(l) (Winding-Up), 26.1(m) (Appointment of
Officer) or 26.1(n) (Analogous Events), the Loans, all interest accrued on them and any
other amounts payable under this Agreement or the Loan Agreements will become immediately
due and payable without any presentment, demand, protest or notice of any kind, all of
which the Company waives.




	27	 	CHANGES TO LENDERS






	27.1	 	Assignments and Transfers by the Lenders






Subject to the provisions of the relevant Loan Agreement, a Lender may:




	 	(a)	 	assign any of its rights;
	 
	 	(b)	 	transfer by novation any of its rights and obligations; or
	 
	 	(c)	 	participate or sub-participate any of its Available Commitment or its share
of any outstanding Loans,






to another bank or financial institution (in the case of assignments and transfers by
novation, such bank or financial institution being the “New Lender”), in each case,
provided that such transfer, assignment, participation or sub-participation of any portion
of the Lender’s Available Commitment or its share of the outstanding Loans under any
Facility shall be made in accordance with the provisions of:




	 	(i)	 	the Security Trust and Intercreditor Deed;
	 
	 	(ii)	 	the relevant Loan Agreement; and
	 
	 	(iii)	 	this Clause 27 (Changes to Lenders).






	27.2	 	Procedure for Assignment or Transfer






	 	(a)	 	Subject to Clause 27.1 (Assignments and Transfers by the Lenders) and the
conditions of the Security Trust and Intercreditor Deed and the relevant Loan
Agreement, an assignment will only be effective on receipt




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by the Global Agent of written confirmation from the New Lender, such confirmation
to be in the form set out in Schedule 5 (Form of Accession Letter), that the New
Lender will be bound by the obligations of the Finance Documents and will assume
the same obligations to the other Finance Parties as it would have been under if it
were an Original Lender.




	 	(b)	 	Subject to Clause 27.1 (Assignments and Transfers by the Lenders) and the
conditions of the Security Trust and Intercreditor Deed and the relevant Loan
Agreement, a transfer will only be effective on:






	 	(i)	 	receipt by the Global Agent of a Transfer Certificate,
together with duly executed accession documents, pursuant to which the New
Lender has acceded to the Security Trust and Intercreditor Deed and such other
documents as are necessary to enable the New Lender to assume all of the
rights and obligations of the Lender under the Finance Documents;
	 
	 	(ii)	 	execution by the Global Agent of the Transfer Certificate,
which it shall execute as soon as reasonably practicable after receipt of a
duly completed Transfer Certificate appearing on its face to comply with the
terms of this Agreement and delivered in accordance with the terms of this
Agreement; and
	 
	 	(iii)	 	receipt of the consent of the Company for an assignment or
transfer by a Lender, unless the assignment or transfer is to another existing
Lender or an Affiliate of a Lender or a Default has occurred and is continuing
and provided that:






	 	(A)	 	the consent of the Company to an assignment
or transfer must not be unreasonably withheld or delayed;
	 
	 	(B)	 	the Company will be deemed to have given
its consent seven (7) days after the Lender has requested it unless
consent is expressly refused by the Company within that time; and
	 
	 	(C)	 	the consent of the Company to an assignment
or transfer must not be withheld solely because the assignment or
transfer may result in an increase to the Mandatory Cost.






	 	(c)	 	If:






	 	(i)	 	a Lender assigns or transfers any of its rights or
obligations under the Finance Documents or changes its Facility Office; and
	 
	 	(ii)	 	as a result of circumstances existing at the date the
assignment, transfer or change occurs, the Company would be obliged to make a
payment to the New Lender or Lender acting through its new




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Facility Office under Clause 11.1 (Gross-up) or Clause 11.2 (Tax
Indemnity) or Clause 12 (Increased Costs),




then the New Lender or Lender acting through its new Facility Office is only
entitled to receive payment under those Clauses to the same extent as the Lender or
Lender acting through its previous Facility Office would have been if the
assignment, transfer or change had not occurred.




	 	(d)	 	On the Transfer Date:






	 	(i)	 	to the extent that in the Transfer Certificate the Lender
transfers by novation any of its rights and obligations under the Finance
Documents, the Company and the Lender shall be released from further
obligations towards one another in respect of such rights and obligations
under the Finance Documents and their respective rights against one another
shall be cancelled (being the “Discharged Rights and Obligations”);
	 
	 	(ii)	 	the Company and the New Lender shall assume obligations
towards one another and/or acquire rights against one another which differ
from the Discharged Rights and Obligations only insofar as the Company and the
New Lender have assumed and/or acquired the same in place of the Company and
the Lender;
	 
	 	(iii)	 	the New Lender and the other Finance Parties shall acquire
the same rights and assume the same obligations between themselves as they
would have acquired and assumed had the New Lender been an Original Lender
with the rights and/or obligations acquired or assumed by it as a result of
the transfer and to that extent the Lender and the other Parties hereto shall
each be released from further obligations to each other under this Agreement;
and
	 
	 	(iv)	 	the New Lender shall become a Party as a “Lender”.






	27.3	 	Copy of Transfer Certificate to Company






The Global Agent shall, as soon as reasonably practicable after it has executed a Transfer
Certificate, send to the Company a copy of that Transfer Certificate.




	27.4	 	Limitation of Responsibility of Lenders






	 	(a)	 	Unless expressly agreed to the contrary, a Lender makes no representation or
warranty and assumes no responsibility to a New Lender for:






	 	(i)	 	the legality, validity, effectiveness, adequacy or
enforceability of the Principal Documents or any other documents;
	 
	 	(ii)	 	the financial condition of any Major Project Party;




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	 	(iii)	 	the performance and observance by any Major Project Party of
its obligations under the Principal Documents; or
	 
	 	(iv)	 	the accuracy of any statements (whether written or oral) made
in or in connection with any Principal Documents,






and any representations or warranties implied by law are excluded.




	 	(b)	 	Each New Lender confirms to the Lender and the other Finance Parties that it:






	 	(i)	 	has made (and shall continue to make) its own independent
investigation and assessment of the financial condition and affairs of each
Major Project Party and its related entities in connection with its
participation in the Principal Documents and has not relied exclusively on any
information provided to it by the Lender in connection with any Principal
Documents; and
	 
	 	(ii)	 	will continue to make its own independent appraisal of the
creditworthiness of each Major Project Party and its related entities whilst
any amount is or may be outstanding under the Finance Documents or any
Available Commitment under any Loan Agreement is in force.






	 	(c)	 	Nothing in any Finance Document obliges a Lender to:






	 	(i)	 	accept a re-transfer from a New Lender of any of the rights
and obligations assigned or transferred under this Clause 27 (Changes to the
Lenders); or
	 
	 	(ii)	 	support any losses directly or indirectly incurred by the New
Lender by reason of the non-performance by any Major Project Party of its
obligations under the Principal Documents or otherwise.






	27.5	 	Assignment or transfer fee






The New Lender shall (unless such New Lender is an Original Participant), on the date upon
which an assignment or transfer takes effect, pay to the Global Agent (for its own account)
a fee of two thousand five hundred US Dollars (US$2,500).




	28	 	ASSIGNMENTS AND TRANSFERS BY THE PARTIES






No Party may assign any of its rights or transfer any of its rights or obligations under
the Finance Documents other than as expressly permitted herein or therein.



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	29	 	AGENCY PROVISIONS






	29.1	 	Appointment and Duties of the Global Agent






	 	(a)	 	Each of the other Finance Parties appoints the Global Agent to act as its
agent under and in accordance with the terms of the Finance Documents for the purposes
set out in the Finance Documents and to enter into the Finance Documents to which it
will be a party in such capacity and irrevocably authorise it on their behalf to
perform the duties and to exercise the rights and powers that are specifically
delegated to it under or in connection with the Finance Documents, together with any
other incidental rights and powers.
	 
	 	(b)	 	The Global Agent may not begin any legal action or proceeding in the name of
a Finance Party (other than itself) without that Finance Party’s consent.
	 
	 	(c)	 	The Global Agent has only those duties which are expressly specified in the
Finance Documents.
	 
	 	(d)	 	The Global Agent’s duties under the Finance Documents are solely mechanical
and administrative in nature.






	29.2	 	Relationship






	 	(a)	 	The relationship between the Global Agent and the Finance Parties is that of
principal and agent only. Nothing in this Agreement makes the Global Agent a trustee
or fiduciary for any other Person and the Global Agent need not hold in trust any
moneys paid to it for a Person or be liable to account for interest on those moneys
except to the extent expressly stated in the Finance Documents.
	 
	 	(b)	 	The Global Agent shall not in any respect be the agent of the Company by
virtue of this Agreement and the Global Agent shall not be bound to account to any
Finance Party or the Company for any sum or the profit element of any sum received by
it for its own account.
	 
	 	(c)	 	The Global Agent shall not be liable to the Company for any breach by any
other Finance Party of any Finance Documents or be liable to any other Finance Party
for any breach by the Company of the Finance Documents.






	29.3	 	Delegation






The Global Agent may act through its personnel and through agents selected with due care.



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	29.4	 	Directions






	 	(a)	 	Where the terms of a Finance Document require the Global Agent or “the Global
Agent (acting on behalf of the Lenders)” or “Global Agent (acting on the instructions
of the Lenders)” to give its consent or approval to any event, matter or thing or to
make any determination or to exercise any duty, right, power or discretion, then:






	 	(i)	 	subject to paragraph (ii) below, if the relevant Finance
Document specifies that the Global Agent is required to give its consent or
approval to that event, matter or thing, then the Global Agent will give its
consent or approval to that event, matter or thing only if the Majority
Lenders instruct the Global Agent that they are satisfied that those specified
conditions have been satisfied;
	 
	 	(ii)	 	if the relevant consent or approval to that event, matter or
thing or determination or exercise of duty, right, power or discretion is in
respect of an amendment or waiver under Clause 37.2 (Exceptions), then the
Global Agent will give its consent or approval to that event, matter or thing
in accordance with Clause 37.2 (Exceptions),






provided that the Global Agent may at all times, whether or not so directed, take
such action in respect of any right, power or discretion which is personal to the
Global Agent or is to preserve or protect the Global Agent’s position or is of a
purely administrative nature.




	 	(b)	 	The Global Agent is fully protected and shall incur no Liability if it acts
on the instructions of the Majority Lenders or, where required all of the Lenders, in
the exercise of any right, power or discretion or any matter not expressly provided
for in the Finance Documents. Any such instructions given by the Majority Lenders
will be binding on all the Lenders. The Global Agent shall be entitled to seek
clarification from the Majority Lenders with regard to such instructions where the
Global Agent reasonably determines that clarification is required and may in its
discretion elect not to act pending receipt of such clarification to its satisfaction
from the Majority Lenders.
	 
	 	(c)	 	In the absence of instructions, the Global Agent shall not be obliged to act
(and shall have no Liability for any failure to act) but may act or refrain from
acting as it considers to be in the best interests of all the Lenders.
	 
	 	(d)	 	The Global Agent may refrain from acting (and shall incur no Liability) in
accordance with the instructions of the Majority Lenders (or, if appropriate, all of
the Lenders) until it has received security satisfactory to it, whether by way of
payment in advance or otherwise, against any Liability which it may incur in complying
with those instructions.




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	 	(e)	 	The Global Agent is not authorised to act on behalf of a Lender (without
first obtaining that Lender’s consent) in any legal or arbitration proceedings in
connection with any Finance Document, unless the legal or arbitration proceedings
relate to:






	 	(i)	 	the perfection, preservation or protection of rights under
the Security Documents; or
	 
	 	(ii)	 	the enforcement of any Security Document.






	29.5	 	Business with the Group






The Global Agent may accept deposits from, lend money to and generally engage in any kind
of banking or other business with any Major Project Party.




	29.6	 	Default






	 	(a)	 	The Global Agent may assume (unless it has received notice to the contrary in
its capacity as such) that:






	 	(i)	 	no Default or Material Adverse Effect has occurred; and
	 
	 	(ii)	 	any right, power, authority or discretion vested in any
Finance Party has not been exercised.






	 	(b)	 	The Global Agent is not obliged to monitor or enquire whether a Default has
occurred. The Global Agent is not deemed to have knowledge of the occurrence of a
Default.
	 
	 	(c)	 	If the Global Agent:






	 	(i)	 	receives notice from a Party referring to this Agreement,
describing a Default and stating that the event is a Default;
	 
	 	(ii)	 	receives notice from a Party of a Force Majeure Event; or
	 
	 	(iii)	 	is aware of the non-payment of any principal, interest or
any fee payable to a Finance Party (other than the Global Agent) or the
Arranger) under this Agreement,






it must promptly, within 3 days, notify the other Finance Parties.




	29.7	 	Responsibility






	 	(a)	 	No Administrative Party is responsible for the adequacy, accuracy or
completeness of any statement or information (whether written or oral) made in or
supplied in connection with any Finance Document.




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	 	(b)	 	No Administrative Party is responsible for the legality, validity,
effectiveness, adequacy, completeness or enforceability of any Finance Document or any
other document.
	 
	 	(c)	 	Without affecting the responsibility of the Company for information supplied
by it or on its behalf in connection with any Finance Document, each Lender confirms
that it:






	 	(i)	 	has made, and will continue to make, its own independent
appraisal of all risks arising under or in connection with the Finance
Documents including:






	 	(A)	 	the financial condition, status and nature
of each Major Project Party;
	 
	 	(B)	 	the legality, validity, effectiveness,
adequacy or enforceability of any Principal Document and any other
agreement, arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Principal Document;
	 
	 	(C)	 	whether that Finance Party has recourse,
and the nature and extent of that recourse, against any Party or any
of its respective assets under or in connection with any Principal
Document, the transactions contemplated by the Principal Documents or
any other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any
Principal Document; and
	 
	 	(D)	 	the adequacy, accuracy and/or completeness
of the Information Memorandum and any other information provided by
any Agent, any Party or by any other person under or in connection
with any Principal Document, the transactions contemplated by the
Principal Documents or any other agreement, arrangement or document
entered into, made or executed in anticipation of, under or in
connection with any Principal Document.






	 	(ii)	 	has not relied exclusively on any information provided to it
by any Administrative Party in connection with any Finance Document or
agreement entered into in anticipation of or in connection with any Finance
Document.






	 	(d)	 	No Administrative Party is responsible for:






	 	(i)	 	the right or title of any person in or to, or the value of,
or sufficiency of any part of the security created by the Security Documents;




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	 	(ii)	 	the priority of any security created by the Security
Documents; or
	 
	 	(iii)	 	the existence of any other Security Interest affecting any
asset secured under a Security Document.






	29.8	 	Information






	 	(a)	 	If the Global Agent receives an original or copy document on behalf of
another Person pursuant to the Finance Documents, it must promptly forward to the
relevant Person that original or copy document provided that in respect of any Equity
Distribution Transfer Certificate, the Global Agent must forward such Equity
Distribution Transfer Certificate to the Lenders on the Business Day following receipt
or the second Business Day following receipt if the Equity Distribution Transfer
Certificate was received after normal business hours.
	 
	 	(b)	 	The Global Agent is not obliged to review or check the adequacy, accuracy or
completeness of any document it forwards to another Party.
	 
	 	(c)	 	Except as provided above, the Global Agent has no duty:






	 	(i)	 	either initially or on a continuing basis to provide any
Lender with any credit or other information concerning the risks arising under
or in connection with the Finance Documents (including any information
relating to the financial condition or affairs of any Major Project Party or
its related entities or the nature or extent of recourse against any Party or
its assets) whether coming into its possession before, on or after the date of
this Agreement;
	 
	 	(ii)	 	unless specifically requested to do so by a Lender in
accordance with a Finance Document, to request any certificate or other
document from any Major Project Party; or
	 
	 	(iii)	 	to monitor or supervise or make any investigation of the
performance or observance by any party to a Finance Document of such party’s
obligations under any Finance Documents.






	 	(d)	 	In acting as the Global Agent, the Global Agent will be regarded as acting
through its agency division which will be treated as a separate entity from its other
divisions and departments. Any information acquired by the Global Agent which, in its
sole opinion and its absolute discretion, is acquired by another division or
department or otherwise than in its capacity as the Global Agent may be treated as
confidential by the Global Agent (in accordance with any applicable law, regulation,
confidentiality undertaking or applicable internal confidentiality requirements of the
Global Agent) and will not be treated as information possessed by the Global Agent in
its capacity as such.




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	 	(e)	 	The Global Agent is not obliged to disclose to any person any confidential
information supplied to it by or on behalf of the Company solely for the purpose of
evaluating whether any waiver or amendment is required in respect of any term of the
Finance Documents.
	 
	 	(f)	 	The Company irrevocably authorises the Global Agent to disclose to the other
Finance Parties any information which, in its opinion, is received by it in its
capacity as the Global Agent.






	29.9	 	Reliance






The Global Agent may:




	 	(a)	 	rely and act on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the proper Person;
	 
	 	(b)	 	rely and act on any statement made by any person regarding any matters which
may reasonably be assumed to be within his knowledge or within his power to verify;
	 
	 	(c)	 	assume, unless the context otherwise requires, that any communication made by
the Company is made on behalf of and with the consent and knowledge of the Company;
and
	 
	 	(d)	 	engage, pay for (to be reimbursed pursuant to Clause 15.4 (Advisors), Clause
13 (Other Indemnities) or Clause 29.14 (Lenders’ Indemnity to the Global Agent) and
rely and act on the opinion or advice of professional advisors selected by it with due
care (including Lenders’ External Advisers or other professional advisers representing
a Party other than the Global Agent).






	29.10	 	Exclusion of Liability






	 	(a)	 	Without limiting paragraph (b) below, the Global Agent will incur no
Liability for any action taken by it under or in connection with any Principal
Document, unless directly caused by its gross negligence or willful misconduct.
	 
	 	(b)	 	No Party (other than the relevant Administrative Party) may take any
proceedings against any officer, employee or agent of an Administrative Party in
respect of any claim it might have against an Administrative Party or in respect of
any act or omission of any kind by that officer, employee or agent in relation to any
Finance Document and any officer, employee or agent of an Administrative Party may
rely on this Clause 29 (Agency Provisions) and enforce its terms under the Contracts
(Rights of Third Parties) Act 1999.




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	 	(c)	 	The Global Agent will not be liable for any delay (or any related
consequences) in crediting an account with an amount required under the Finance
Documents to be paid by the Global Agent if the Global Agent has taken all necessary
steps as soon as reasonably practicable to comply with the regulations or operating
procedures of any recognised clearing or settlement system used by the Global Agent
for that purpose.
	 
	 	(d)	 	Nothing in this Agreement will oblige any Administrative Party to satisfy any
know your customer requirement in relation to the identity of any person on behalf of
any Finance Party.
	 
	 	(e)	 	Each Finance Party confirms to each Administrative Party that it is solely
responsible for any know your customer requirements it is required to carry out and
that it may not rely on any statement in relation to those requirements made by any
other person.






	29.11	 	Compliance






Each Administrative Party may refrain from doing anything (including disclosing any
information) which might, in its opinion:




	 	(a)	 	constitute a breach of any law or regulation or be otherwise actionable at
the suit of any person, and may do anything which, in its opinion, is necessary or
desirable to comply with any law or regulation; or
	 
	 	(b)	 	cause it to expend or risk its own funds if it has reasonable grounds for
believing the repayment of such funds or adequate indemnity in respect thereof is not
assured to it.






	29.12	 	Relationship with Lenders






	 	(a)	 	The Global Agent may treat each Lender as a Lender, entitled to payments
under this Agreement and any relevant Loan Agreement and as acting through its
Facility Office(s) until it has received not less than seven (7) days’ prior notice
from that Lender to the contrary.
	 
	 	(b)	 	The Global Agent may at any time, and must if requested to do so by the
Majority Lenders, convene a meeting of the Lenders.
	 
	 	(c)	 	The Global Agent must keep a record of all the Parties to this Agreement (and
each Loan Agreement) and supply any other Party to this Agreement with a copy of the
record on request. The record will include each Lender’s Facility Office(s) and
contact details for the purposes of this Agreement.





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	29.13	 	Individual position of an Administrative Party






	 	(a)	 	If it is also a Lender, each Administrative Party has the same rights and
powers under the Finance Documents as any other Lender and may exercise those rights
and powers as though it were not an Administrative Party.
	 
	 	(b)	 	Each Administrative Party may:






	 	(i)	 	carry on any business with any Major Project Party or its
related entities (including acting as an agent or a trustee for any other
financing); and
	 
	 	(ii)	 	retain any profits or remuneration it receives under the
Finance Documents or in relation to any other business it carries on with any
Major Project Party or its related entities.






	29.14	 	Lenders’ Indemnity to the Global Agent






	 	(a)	 	Without limiting the liability of the Company under any Finance Document,
each Lender shall indemnify the Global Agent, within ten (10) days of demand, for that
Lender’s Pro Rata Share of any Liability incurred by the Global Agent (other than by
reason of the Global Agent’s gross negligence or willful misconduct) in acting as the
Global Agent under the Finance Documents (unless the Global Agent has been reimbursed
in full by the Company pursuant to a Finance Document).
	 
	 	(b)	 	If a Finance Party owes an amount to the Global Agent under the Finance
Documents, the Global Agent may after giving notice to that Finance Party:






	 	(i)	 	deduct from any amount received by it for that Finance Party
any amount due to the Global Agent from that Finance Party under a Finance
Document but unpaid; and
	 
	 	(ii)	 	apply that amount in or towards satisfaction of the owed
amount,






and that Finance Party will be regarded as having received the amount so deducted.




	 	(c)	 	The provisions of this Clause 29.14 (Lenders’ Indemnity to the Global Agent)
shall continue in full force and effect not withstanding termination of this Agreement
or the retirement or removal of the Global Agent in accordance with Clause 30.3(a)
(Rights and Obligations).





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	29.15	 	Notice period






Where this Agreement specifies a minimum period of notice to be given to the Global Agent,
the Global Agent may, following consultation with all the Lenders, accept a shorter notice
period.




	30	 	RESIGNATION AND REMOVAL OF AGENTS






	30.1	 	Resignation and Removal of the Global Agent






The Global Agent may resign its appointment under the Finance Documents at any time without
assigning any reason therefor and the Majority Lenders may remove the Global Agent by
giving not less than thirty (30) days’ prior notice to that effect to each of the other
Parties hereto provided that no such resignation or, as the case may be, removal shall be
effective until:




	 	(a)	 	a successor for the Global Agent is appointed in accordance with the
succeeding provisions of this Clause 30.1 (Resignation and Removal of the Global
Agent) and Clause 30.2 (Replacement of Global Agent);
	 
	 	(b)	 	the resigning Global Agent has transferred to its successor all of the rights
and obligations in its capacity as Global Agent under the Finance Documents; and
	 
	 	(c)	 	the successor for such Global Agent has executed and delivered to each of the
other Agents and the Company, an Accession Letter in the form, or substantially in the
form, set out in Schedule 5 (Form of Accession Letter) and has executed and delivered
a deed of accession to the Security Trust and Intercreditor Deed.






	30.2	 	Replacement of the Global Agent






If the Global Agent gives notice of its resignation, or if the Majority Lenders give to the
Global Agent notice of removal pursuant to Clause 30.1 (Resignation and Removal of Global
Agent), then any reputable and experienced bank or other financial institution which is an
internationally recognised institution experienced in acting in a similar capacity and
which is approved by the Majority Lenders and the Company (such approval not to be
unreasonably withheld or delayed) may be appointed as a successor to the Global Agent by
the Majority Lenders, during the period of such notice but, if no such successor is so
appointed, then the Global Agent may appoint such a successor itself provided such
successor meets the criteria set out in this Clause 30.2 (Replacement of the Global Agent).



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	30.3	 	Rights and Obligations






If a successor to any Global Agent is appointed under the provisions of Clause 30.1
(Resignation and Removal of the Global Agent) or Clause 30.2 (Replacement of the Global
Agent) then:




	 	(a)	 	the retiring Global Agent shall be discharged from any further obligation
hereunder (without prejudice to any accrued Liabilities) but with the benefit of this
Clause 30.3 (Rights and Obligations) and Clause 29.14 (Lenders’ Indemnity to the
Global Agent);
	 
	 	(b)	 	its successor and each of the other parties to the Finance Documents shall
have the same rights and obligations amongst themselves as they would have had if such
successor had been an original party thereto; and
	 
	 	(c)	 	the resigning Global Agent shall, at the cost of the Company, make available
or deliver to the successor Agent all papers and records relating to its role as
Global Agent under the Finance Documents.






	31	 	DISCLOSURE OF INFORMATION






	31.1	 	Disclosure by Finance Parties






	 	(a)	 	Each of the Finance Parties shall have the right, but not the obligation, to
disclose any Principal Documents or any records or information about such Principal
Documents or about the Company, any Major Project Party or the Project:






	 	(i)	 	to any other Finance Party or any employees, officers, fund
managers, directors or agents thereof;
	 
	 	(ii)	 	to any Person to whom information may be required to be
disclosed by any applicable law or regulation;
	 
	 	(iii)	 	in connection with any legal or arbitration proceedings;
	 
	 	(iv)	 	which is publicly available, other than as a result of a
breach by that Finance Party of this Clause;
	 
	 	(v)	 	to any rating agency;
	 
	 	(vi)	 	to any member of the KfW Bankengruppe, employees, officers,
fund managers, directors, bodies or agents thereof subject to the
confidentiality agreement with the Company dated 5 December 2008;




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	 	(vii)	 	if such Finance Party is a member of AFD, to AFD subject to
the confidentiality letter from Proparco to the Sponsor dated 29 August 2007;
	 
	 	(viii)	 	any of its professional advisers or any professional adviser to any Person
specified in paragraphs (i) to (vii) above (including, without limitation, any
legal adviser, insurance adviser, auditor, financial adviser, technical
adviser or other Project adviser) that is appointed with consent of the
Company and subject to a Confidentiality Undertaking (unless confidentiality
is implied by law or regulation);
	 
	 	(ix)	 	in the case of DEG, it may disclose all and any information
relating the Company and the Project to the Financing Partners and their
respective representatives, fund managers and advisers subject to the
confidentiality agreement with the Company dated 13 August 2007 (the “DEG
Letter”) (and this Clause 31 (Disclosure of Information) shall be an authority
to disclose under paragraph 5(d) of the DEG Letter);
	 
	 	(x)	 	subject to the DEG Letter, DEG may disclose all and any
information relating to the Company and the Project to the relevant
Participants and the Participants may disclose such information to their
respective employees, officers, directors, representatives, fund managers and
advisers and, in respect of EAIF only, EAIF may disclose such information to
any existing or potential lender to, or investor in, EAIF provided a
Confidentiality Undertaking is entered into;
	 
	 	(xi)	 	to the extent allowed under paragraph (b) below and in
accordance therewith; or
	 
	 	(xii)	 	to any other Person with the prior written consent of the
Company.






	 	(b)	 	Notwithstanding paragraph (a) above, any Lender may disclose to any of its
Affiliates and any other Person:






	 	(i)	 	to (or through) whom that Lender assigns or transfers (or may
potentially assign or transfer) all or any of its rights and obligations under
this Agreement;
	 
	 	(ii)	 	with (or through) whom that Lender enters into (or may
potentially enter into) any sub-participation in relation to, or any other
transaction under which payments are to be made by reference to, this
Agreement or the Company,






any information about the Company and the Principal Documents as that Lender shall
consider appropriate if, in relation to paragraphs (i) and (ii)



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above, the person to whom the information is to be given has entered into a
Confidentiality Undertaking.




	 	(c)	 	With reference to the above information under paragraphs (a) and (b), the
Company hereby consents to the transfer of such information by any members of the KfW
Bankengruppe:






	 	(i)	 	for the purposes of central corporate risk management and
standardised controlling and, to such extent, expressly release DEG from
banking secrecy rules, the provisions of the Federal Data Protection Law
(“Bundesdatensschutzgesetz”) and any separately concluded confidentiality
agreement as between members of the KfW Bankengruppe; and
	 
	 	(ii) 	 	as a result of any legal, judicial or regulatory requirements; and
	 
	 	(iii) 	 	to the government of the Federal Republic of Germany.






	31.2	 	Disclosure by the Company






The Company will keep the terms and conditions of the Finance Documents confidential and
shall not, without the prior written consent of the Global Agent (acting on the
instructions of the Lenders, acting reasonably), disclose any of such terms and conditions,
except as required by:




	 	(a)	 	law or regulation, including, without limitation, securities laws and the
rules and regulations of any stock exchange on which securities of any Affiliate of
the Company are listed;
	 
	 	(b)	 	order or decision of any court having jurisdiction over the Company or any of
its Affiliates; or
	 
	 	(c)	 	as may be required by any Authority having authority over the Company or any
of its Affiliates.






	32	 	CONDUCT OF BUSINESS BY THE FINANCE PARTIES






No provision of any Finance Document will:




	 	(a)	 	interfere with the right of any Finance Party to arrange its affairs (Tax or
otherwise) in whatever manner it thinks fit;
	 
	 	(b)	 	oblige any Finance Party to investigate or claim any credit, relief,
remission or repayment available to it or the extent, order and manner of any claim;
or
	 
	 	(c)	 	oblige any Finance Party to disclose any information relating to its affairs
(Tax or otherwise) or any computations in respect of Tax.






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	33	 	PAYMENT MECHANICS






	33.1	 	Payments to Lenders and the Company
	 
	 	 	On each date on which the Company or a Lender is required to make a payment under a Finance
Document, the Company or the Lender, as the case may be, shall make the same available to
the Global Agent (unless a contrary indication appears in a Finance Document) for value on
the due date at the time and in such funds specified by such Person as being customary at
the time for settlement of transactions in the relevant currency in the place of payment.






	33.2	 	Distributions by the Global Agent
	 
	 	 	Each payment received by the Global Agent under the Finance Documents for another Party
shall, subject to Clause 33.3 (Clawback), be made available as soon as practicable after
receipt by the Global Agent to the Party entitled to receive payment in accordance with the
Finance Documents (in the case of a Lender, for the account of its Facility Office), to
such account as that Party may notify to the Global Agent by not less than seven (7) days
notice.






	33.3	 	Clawback






	 	(a)	 	Where a sum is to be paid to a Global Agent under the relevant Finance
Documents for the account of another Lender, Participant or KfW, the Global Agent is
not obliged to pay that sum to that Person (or to enter into or perform any related
exchange contract) until it has been able to establish to its satisfaction that it has
actually received that sum.
	 
	 	(b)	 	If the Global Agent pays an amount to such Person and it proves to be the
case that the Global Agent had not actually received that amount, then such Person to
whom that amount (or the proceeds of any related exchange contract) was paid by the
Global Agent shall on demand refund the same to the Global Agent together with
interest on that amount from the date of payment to the date of receipt by the Global
Agent, calculated by the Global Agent to reflect its cost of funds.






	33.4	 	No Set-Off by the Company






	 	(a)	 	All payments to be made by the Company under the Finance Documents shall be
calculated and be made without (and free and clear of any deduction for) set-off or
counterclaim.
	 
	 	(b)	 	Paragraph (a) above does not apply to any payment netting provisions
contained in a Hedging Contract entered into in accordance with this Agreement.




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	33.5	 	Business Days






	 	(a)	 	Any payment which is due to be made on a day that is not a Business Day shall
be made on the next Business Day in the same month (if there is one) or the
immediately preceding Business Day (if there is not) except for any payment due on the
Final Repayment Date under any Facility which, if such date is not a Business Day,
shall always be payable on the preceding Business Day.
	 
	 	(b)	 	During any extension of the due date for payment of any principal or an
Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at
the rate payable on the original due date.






	33.6	 	Currency of Account






	 	(a)	 	Subject to paragraph (b) below, US Dollars are the currency of account and
payment for any sum due from the Company under any Finance Document.
	 
	 	(b)	 	Each payment in respect of costs, expenses or Taxes shall be made in the
currency in which the costs, expenses or Taxes are incurred.






	33.7	 	Change of Currency






	 	(a)	 	Unless otherwise prohibited by law, if more than one currency or currency
unit are at the same time recognised by the central bank of any country as the lawful
currency of that country, then:






	 	(i)	 	any reference in the Finance Documents to, and any
obligations arising under the Finance Documents in, the currency of that
country shall be translated into, or paid in, the currency or currency unit of
that country designated by the Global Agent (after consultation with the
Company and any affected Finance Party); and
	 
	 	(ii)	 	any translation from one currency or currency unit to another
shall be at the official rate of exchange recognised by the central bank for
the conversion of that currency or currency unit into the other, rounded up or
down by the Global Agent (acting reasonably).






	 	(b)	 	If a change in any currency of a country occurs, this Agreement will, to the
extent the Global Agent (acting on the instructions of the Lenders) specifies to be
necessary, be amended to comply with any generally accepted conventions and market
practice in the relevant interbank market and otherwise to reflect the change in
currency.




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	33.8	 	Partial payments






	 	(a)	 	If the Global Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Company under the Finance Documents, the Global
Agent must apply that payment towards the obligations of the Company under the Finance
Documents in the following order:






	 	(i)	 	first, in or towards payment pro rata of any unpaid fees,
costs and expenses of the Administrative Parties under the Finance Documents;
	 
	 	(ii)	 	second, in or towards payment pro rata of any accrued
interest or fees due but unpaid under this Agreement;
	 
	 	(iii)	 	third, in or towards payment pro rata of any principal
amount due but unpaid under this Agreement; and
	 
	 	(iv)	 	fourth, in or towards payment pro rata of any other sum due
but unpaid under the Finance Documents.






	 	(b)	 	The Global Agent must, if so directed by the Lenders, vary the order set out
in paragraphs (a)(ii) to (iv) above.
	 
	 	(c)	 	This Clause 33.8 (Partial payments) will override any appropriation made by
the Company.






	33.9	 	Disruption to payment systems






	 	(a)	 	If the Global Agent (acting on the instructions of the Lenders) determines
that a Disruption Event has occurred or the Company notifies the Global Agent that a
Disruption Event has occurred, the Global Agent:






	 	(i)	 	may, and must if requested by the Company, enter into
discussions with the Company for a period of not more than five (5) days with
a view to agreeing any changes to the operation or administration of the
Facilities (“changes”) as the Global Agent (acting on the instructions of the
Lenders) may decide is necessary;
	 
	 	(ii)	 	is not obliged to enter into discussions with the Company in
relation to any changes if, in its opinion, it is not practicable so to do and
has no obligation to agree to any changes;
	 
	 	(iii)	 	may consult with the Finance Parties in relation to any
changes but is not obliged so to do if, in its opinion, it is not practicable
in the circumstances; and




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	 	(iv)	 	must notify the Finance Parties of any changes agreed under
this Clause 33.9 (Disruption to payment systems).






	 	(b)	 	Any agreement between the Global Agent (acting on the instructions of the
Lenders) and the Company will be, (whether or not it is finally determined that a
Disruption Event has occurred), binding on the Parties notwithstanding the provisions
of Clause 37 (Amendments and Waivers).
	 
	 	(c)	 	If the Global Agent makes any payment to any person in respect of a Liability
incurred as a result of taking or not taking any action under this Clause 33.9
(Disruption to payment systems), the amount of that payment is an amount in respect of
which each Lender must indemnify the Global Agent for that Lender’s Pro Rata Share of
any Liability incurred by the Global Agent under this Clause 33.9 (Disruption to
payment systems) (unless the Global Agent has been reimbursed by the Company under a
Finance Document) unless such payment was made as a result of the Global Agent’s
fraud, gross negligence or willful misconduct.






	33.10	 	Timing of payments
	 
	 	 	If a Finance Document does not provide for when a particular payment is due, that payment
will be due within three (3) Business Days of demand by the relevant Finance Party.






	34	 	NOTICES






	34.1	 	Communications in Writing






	 	(a)	 	Any notifications or other communication to be made under or in connection
with the Finance Documents shall be made in writing and, unless otherwise stated, may
be made by fax or letter or to the extent agreed by the Parties making and receiving
the communications, by email or any other electronic communication.
	 
	 	(b)	 	Unless otherwise provided herein or in any other Finance Document, notices,
reports and other written communications to be given to the Global Agent and/or the
Lenders, shall be given and made available in such number of copies as the Global
Agent has previously notified (including by written standing instructions) to the
issuing Party to be sufficient in respect of such notice, report or other written
communication, provided that in the absence of such previous notification by the
Global Agent or the Lenders, one copy shall be deemed to be sufficient.
	 
	 	(c)	 	For the purposes of the Finance Documents, an electronic communication will
be treated as communication in writing provided the Parties making and receiving the
electronic communication have agreed to use such communication under paragraph (a)
above.




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	 	(d)	 	In no event shall the Global Agent or the Security Agents be liable for any
Liability arising from it receiving or transmitting any instruction from any party via
any non-secure method of transmission or communication, such as, but without
limitation, by facsimile or e-mail. The Finance Parties accept that some methods of
communication are not secure and the Global Agent and the Security Agents shall incur
no Liability for receiving instructions, notices or communications via any such
non-secure method. Each of the Global Agent and the Security Agents are authorised to
comply with and rely upon any such notice, instruction or other communications
believed by it to have been sent to given by the relevant party.






	34.2	 	Addresses
	 
	 	 	The address and fax number (and the department or officer, if any, for whose attention the
communication is to be made) of each Party for any communication or document to be made or
delivered under or in connection with the Finance Documents is provided below.






	 	(a)	 	The contact details of the Company for this purpose are:
	 
	 	 	 	Address: Off Moi South Lake Road, Hellsgate National Park, P.O. Box 1566-20117,
Naivasha, Kenya.
	 
	 	 	 	Fax: +254 (0) 50 50668
	 
	 	 	 	Attention: Mr. Earnest Sayi Mabwa
	 
	 	 	 	With a copy to: OrPower4 Inc. c/o Ormat Nevada Inc., 6225 Neil Road, Reno, Nevada.
	 
	 	 	 	Attention: President
	 
	 	 	 	Fax: +1 775 356 9039






	 	(b)	 	The contact details of the Global Agent for this purpose are:
	 
	 	 	 	Address: DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH, Kämmergasse
22, 50676 Köln, Germany.
	 
	 	 	 	Fax: +49 221 4986 1106
	 
	 	 	 	Attention: Portfolio Management, Africa
	 
	 	(c)	 	The contact details of the Onshore Security Agent for this purpose are as set
out in the relevant Agent Deed of Accession entered into pursuant to paragraph 23
(Accession of Offshore and Onshore Security Agents) of Part 1 of Schedule 2
(Conditions of Disbursement).




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	 	(d)	 	The contact details of the Offshore Security Agent for this purpose are:
	 
	 	 	 	Address: One Canada Square, London, E14 5AL.
	 
	 	 	 	Fax: +44 207 964 2533
	 
	 	 	 	Attention: Trustee Administration Manager
	 
	 	(e)	 	The contact details of the DEG “A” Lender for this purpose are:
	 
	 	 	 	Address: DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH, Kämmergasse
22, 50676 Köln, Germany.
	 
	 	 	 	Fax: +49 221 4986 1106
	 
	 	 	 	Attention: Portfolio Management, Africa
	 
	 	(f)	 	The contact details of the DEG “B” Lender for this purpose are:
	 
	 	 	 	Address: DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH, Kämmergasse
22, 50676 Köln, Germany.
	 
	 	 	 	Fax: +49 221 4986 1106
	 
	 	 	 	Attention: Portfolio Management, Africa
	 
	 	(g)	 	The contact details of the DEG “C” Lender for this purpose are:
	 
	 	 	 	Address: DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH, Kämmergasse
22, 50676 Köln, Germany.
	 
	 	 	 	Fax: +49 221 4986 1106
	 
	 	 	 	Attention: Portfolio Management, Africa
	 
	 	(h)	 	The contact details of the Proparco “A” Lender for this purpose are:
	 
	 	 	 	Address: Proparco, 5, rue Roland Barthes, 75598 Paris Cedex 12, France
	 
	 	 	 	Fax: +33 1 53 44 42 94
	 
	 	 	 	Attention: Direction des Engagements, M. Guillaume Barberousse.






	34.3	 	Delivery






	 	(a)	 	Any communication or document made or delivered by one person to another
under or in connection with the Finance Documents will only be effective:




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	 	(i)	 	if by way of fax, when a fax confirmation is received; or
	 
	 	(ii)	 	if by email or any other electronic communication, when
received in legible form; or
	 
	 	(iii)	 	if delivered in person, at the time of delivery; or
	 
	 	(iv)	 	if by way of letter, when it has been left at the relevant
address or seven (7) days after being sent by international courier prepaid in
an envelope addressed to it at that address;






	 	 	 	and, if a particular department or officer is specified as part of its address
details provided under Clause 34.2 (Addresses), if addressed to that department or
officer.
	 
	 	(b)	 	Any communication or document to be made or delivered to any Agent will be
effective only when actually received by that Agent and then only if it is expressly
marked for the attention of the department or officer or that Agent identified in
Clause 34.2 (Addresses) (or any substitute department or officer as that Agent shall
specify for this purpose).
	 
	 	(c)	 	All notices from or to the Company shall be sent through the Global Agent
(except where the contrary is expressly set out herein).






	34.4	 	Use of websites






	 	(a)	 	Except as provided below, either the Company or the Global Agent may deliver
any information under this Agreement to any other Party or Lender by posting it on to
an electronic website if:






	 	(i)	 	the Global Agent and the Lenders agree;
	 
	 	(ii)	 	an electronic website is designated for this purpose;
	 
	 	(iii)	 	each other Party for whom the website is intended is
notified of the address of and password for the website; and
	 
	 	(iv)	 	the information posted is in a format agreed between the
Company and the Global Agent (acting on the instructions of the Lenders).






	 	(b)	 	The Company shall, promptly upon becoming aware of its occurrence, notify the
Global Agent if:






	 	(i)	 	the website cannot be accessed;
	 
	 	(ii)	 	the website or any information on the website is infected by
any electronic virus or similar software;
	 
	 	(iii)	 	the password for the website is changed; or




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	 	(iv)	 	any information to be supplied under this Agreement is posted
on the website or amended after being posted.






	 	 	If the circumstances in paragraphs (c)(i) or (ii) above occur, the Company shall supply any
information required under this Agreement in paper form until the Global Agent is satisfied
that the circumstances giving rise to the notification are no longer continuing.






	34.5	 	Notification of Address, Fax number






	 	(a)	 	Any Party may change its contact details by giving seven (7) days written
notice to the Global Agent or (in the case of the Global Agent) to the other Parties.
	 
	 	(b)	 	Promptly upon receipt of notification of an address and fax number or change
of address or fax number pursuant to paragraph (a) above or changing its own address
or fax number, the Global Agent shall notify the other Parties.






	34.6	 	English Language






	 	(a)	 	Any notice given under or in connection with any Finance Document must be in
English.
	 
	 	(b)	 	All other documents provided under or in connection with any Finance Document
must be:






	 	(i)	 	in English; or
	 
	 	(ii)	 	if not in English, and if so required by the Global Agent,
accompanied by a certified English translation and, in this case, the English
translation will prevail unless the document is a constitutional, statutory or
other official document.






	35	 	CALCULATIONS AND CERTIFICATES






	35.1	 	Accounts
	 
	 	 	In any litigation or arbitration proceedings arising out of or in connection with a Finance
Document, the entries made in the accounts maintained by a Finance Party are prima facie
evidence of the matters to which they relate.






	35.2	 	Certificates and Determinations
	 
	 	 	Any certification or determination by a Finance Party of a rate or amount under any Finance
Document is, in the absence of manifest error, conclusive evidence of the matters to which
it relates.




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	35.3	 	Day Count Convention
	 
	 	 	Any interest, commission or fee accruing under a Finance Document will accrue from day to
day and is calculated on the basis of the actual number of days elapsed and a year of three
hundred and sixty (360) days.






	36	 	PARTIAL INVALIDITY
	 
	 	 	If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or
unenforceable in any respect under any law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will in any way be
affected or impaired.






	37	 	AMENDMENTS AND WAIVERS






	37.1	 	Procedure






	 	(a)	 	Except as provided in this Clause, any term of the Finance Documents (other
than any Hedging Contract) may be amended or waived with the agreement of the Company
and the Majority Lenders. The Global Agent may or, in the case of an amendment or
waiver of a Finance Document, a Security Agent shall (if instructed to do so by the
Global Agent (acting on the instructions of the Lenders)), effect, on behalf of any
Finance Party, an amendment or waiver allowed under this Clause.
	 
	 	(b)	 	The Global Agent must promptly notify the other Finance Parties of any
amendment or waiver effected by it or a Security Agent under paragraph (a) above. Any
such amendment or waiver is binding on all the Finance Parties.






	37.2	 	Exceptions






	 	(a)	 	An amendment or waiver which relates to:






	 	(i)	 	the definitions of Majority Lenders in Clause 1.1
(Definitions);
	 
	 	(ii)	 	the purpose for which the Loans may be used;
	 
	 	(iii)	 	an extension of the date of payment of any amount to a
Lender under the Finance Documents;
	 
	 	(iv)	 	a reduction in the interest rate or a reduction in the amount
of any payment of principal, interest, fee or other amount payable to a Lender
under the Finance Documents;




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	 	(v)	 	an increase in, or an extension of, a Commitment or the Total
Commitments;
	 
	 	(vi)	 	a release of the Company or any other Major Project Party;
	 
	 	(vii)	 	a release of any security created under or pursuant to any
Security Document;
	 
	 	(viii)	 	a term of a Finance Document which expressly requires the consent of each
Lender;
	 
	 	(ix)	 	the right of a Lender to assign or transfer its rights or
obligations under the Finance Documents;
	 
	 	(x)	 	the definition of Environmental and Social Requirements and
any provision relating thereto;
	 
	 	(xi)	 	the definition of Reference Banks;
	 
	 	(xii)	 	the definition of Project Completion Date;
	 
	 	(xiii)	 	the Direct Agreements;
	 
	 	(xiv)	 	the Accounting Principles;
	 
	 	(xv)	 	Clause 23.1(gg) (Prohibited Acts);
	 
	 	(xvi)	 	Clause 23.1(hh) (No illicit origin of funds);
	 
	 	(xvii)	 	Clause 24.1(y) (Prohibited Acts);
	 
	 	(xviii)	 	Clause 24.1(z) (Anti-money laundering);
	 
	 	(xix)	 	Clause 24.1(bb) (No illicit origin of funds);
	 
	 	(xx)	 	Clause 24.1(cc) (HIV Protective Measures);
	 
	 	(xxi)	 	Clause 25.1(b) (Transfers to Equity Distribution Account);
	 
	 	(xxii)	 	Clause 25.1 (x) (Amendments to the Environmental Impact Assessment and
Environmental and Social Management Plan);
	 
	 	(xxiii)	 	Clause 25.1(w) (Prohibited Acts);
	 
	 	(xxiv)	 	Clause 25.1(z) (Blocked Person and Embargoes);
	 
	 	(xxv)	 	Clause 26.1(u) (Loss of Project);
	 
	 	(xxvi)	 	Clause 26.1(w) (Prohibited Acts);




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	 	(xxvii)	 	Clause 26.1(x) (Anti-money laundering);
	 
	 	(xxviii)	 	this Clause,






	 	 	 	may only be made with the consent of all the Lenders.
	 
	 	(b)	 	An amendment or waiver which relates to the rights or obligations of an
Administrative Party may only be made with the consent of that Administrative Party.
	 
	 	(c)	 	A Fee Letter may be amended or waived with the agreement of the
Administrative Party that is a party to that Fee Letter and the Company.






	37.3	 	Waivers and remedies cumulative






	 	(a)	 	The rights of each Finance Party under the Finance Documents:






	 	(i)	 	may be exercised as often as necessary;
	 
	 	(ii)	 	are cumulative and not exclusive of its rights under the
general law; and
	 
	 	(iii)	 	may be waived only in writing and specifically.






	 	(b)	 	No course of dealing, nor failure to exercise, nor any delay in exercising,
on the part of any Finance Party, any right or remedy under the Finance Documents
shall operate as a waiver.






	38	 	TERMINATION
	 
	 	 	This Agreement shall be in full force and effect from the date hereof until the Final
Termination Date.






	39	 	COUNTERPARTS
	 
	 	 	Each Finance Document may be executed in any number of counterparts, and this has the same
effect as if the signatures on the counterparts were on a single copy of the Finance
Document.






	40	 	GOVERNING LAW
	 
	 	 	This Agreement and any non-contractual rights arising out of or in connection with this
Agreement shall be governed by English law.




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	41	 	ENFORCEMENT
	 
	41.1	 	Jurisdiction






	 	(a)	 	Except as otherwise provided in any of the Security Documents and subject to
the Company’s right to propose arbitration pursuant to Clause 41.2 (Arbitration) and
the Lenders’ option to agree to such proposal, or to initiate arbitration pursuant to
Clause 41.2 (Arbitration), the Parties agree that the courts of England shall have
exclusive jurisdiction to resolve any dispute arising out of or in connection with the
Finance Documents (including a dispute regarding the existence, breach, validity or
termination of this Agreement or any of the Finance Documents) (a “Dispute”).
	 
	 	(b)	 	The Parties agree that English law shall govern the determination of any
Dispute regardless of the jurisdiction in which the Dispute is heard.






	41.2	 	Arbitration






	 	(a)	 	Prior to the commencement of any legal proceedings by the Company (other than
Interim Proceedings) in the courts of England in respect of a Dispute the Company
shall give prior notice to the Lenders, and the Lenders acting unanimously shall
indicate to the Company in writing within fifteen (15) days of receipt of such notice
from the Company, whether that Dispute shall instead be resolved by arbitration
pursuant to this Clause 41.2 (Arbitration), provided that this Clause 41.2
(Arbitration) shall not prejudice the right of the Lenders to commence arbitration in
respect of a Dispute by giving prior notice to the Company. If the Lenders notify the
Company that the Dispute is to be resolved by arbitration, to which the Company shall
not object, the following provisions shall apply. For the avoidance of doubt, the
Company shall not be required to give notice pursuant to this Clause prior to the
commencement of Interim Proceedings.
	 
	 	(b)	 	Any arbitration commenced in respect of a Dispute shall be resolved in
accordance with the rules of the United Nations Commission on International Trade Law
(“UNCITRAL”), which rules are deemed to be incorporated by reference into this Clause
save as modified by this Agreement. In any such arbitration:






	 	(i)	 	the appointing authority shall be the London Court of
International Arbitration (the “LCIA”);
	 
	 	(ii)	 	the language to be used in the arbitration shall be English;
	 
	 	(iii)	 	the place and seat of the arbitration shall be London,
England; and




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	 	(iv)	 	the number of arbitrators shall be three. For the purpose of
Article 7 of the UNCITRAL Rules, where there are multiple parties, whether as
claimant or as respondent, the claimants shall act and be treated, jointly, as
‘a party’ and the respondents shall act and be treated, jointly, as ‘a party’.






	 	(c)	 	In any arbitration commenced pursuant to this Clause 41.2 (Arbitration):






	 	(i)	 	the Parties hereby waive any rights under the Arbitration Act
1996 (UK) to seek determination of a preliminary point of law by the courts of
England; and
	 
	 	(ii)	 	subject to the terms of any arbitration agreement agreed
between the Parties and the provisions of the UNCITRAL Arbitration Rules, the
Company shall be entitled to seek only from the Arbitral Tribunal, but not
from any judicial authority, any interim measures of protection or pre-award
relief (other than any relief sought through Interim Proceedings) against any
of the Finance Parties. Until the Arbitral Tribunal has been constituted, the
Company shall be entitled to institute Interim Proceedings in the courts of
England.






	 	(d)	 	In any arbitral proceeding, the certificate of a Finance Party as to any
amount due to that Finance Party under any Finance Document shall be prima facie
evidence of such amount.






	41.3	 	Service of Process
	 
	 	 	Without prejudice to any other mode of service allowed under any relevant law, the Company:






	 	(a)	 	irrevocably appoints Chadbourne & Parke MNP of Regis House, 45 King William
Street, London EC4R 9AN as its agent for service of process in relation to any
proceedings before the English courts in connection with any Finance Document;
	 
	 	(b)	 	agrees that failure by a process agent to notify the Company of the process
will not invalidate the proceedings concerned;
	 
	 	(c)	 	undertakes that as long as any of the Finance Documents remains in force, the
Company shall maintain a duly appointed and authorised agent to receive for and on its
behalf service of the writ of summons or other legal process in any action, suit or
proceeding brought by any Finance Party in the courts of England with respect to each
of the Finance Documents and shall keep the Global Agent advised of the identity and
location of such agent; and




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	 	(d)	 	irrevocably consents, if for any reason the Company’s authorized agent for
service of process of summons, complaint and other legal process in any action, suit
or proceeding is not present in England, to service of such papers being made out of
those courts by mailing copies of the papers by registered air mail, postage prepaid,
to the Company at its address specified pursuant to Clause 34 (Notices). In such a
case, any Finance Party shall also send by facsimile, or have sent by facsimile, a
copy of the papers to the Company.






	41.4	 	Waiver






	 	(a)	 	To the extent that the Company may be entitled in any jurisdiction to claim
for itself or its assets immunity with respect to its obligations under this Agreement
or any other Finance Document from any suit, execution, attachment (whether
provisional or final, in aid of execution, before judgment or otherwise) or other
legal process or to the extent that in any jurisdiction that immunity (whether or not
claimed), may be attributed to it or its assets, the Company irrevocably agrees not to
claim and irrevocably waives such immunity to the fullest extent now or in the future
permitted by the laws of such jurisdiction.
	 
	 	(b)	 	To the extent that the Company may, in any suit, action or proceeding brought
in any of the courts referred to in Clause 41.1 (Jurisdiction) or a court of Kenya,
Cayman Islands or elsewhere arising out of or in connection with this Agreement or any
other Finance Document to which the Company is a party, be entitled to the benefit of
any provision of law requiring any Finance Party in such suit, action or proceeding to
post security for the costs of the Company, or to post a bond or to take similar
action, the Company hereby irrevocably waives such benefit, in each case to the
fullest extent now or in the future permitted under the laws of England, Cayman
Islands or Kenya or, as the case may be, the jurisdiction in which such court is
located.
	 
	 	(c)	 	Each Party waives any right it may have to a jury trial of any claim or cause
of action in connection with any Finance Documents or any transaction contemplated by
any Finance Document. This Agreement may be filed as a written consent to trial by
court.






	42	 	ENTIRE AGREEMENT
	 
	 	 	This Agreement, together with the other Finance Documents to which some or all of the
Parties are party, constitutes the entire agreement between the Parties and all prior
responsibilities, negotiations and undertakings shall be excluded from any construction of
this Agreement.




IN WITNESS WHEREOF, the Parties have entered into this Agreement on the date stated at the
beginning of this Agreement.





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SCHEDULE 1

The Original Lenders




	 	 	 	 	 	 	 	 	 
	Facility	 	Original Lender	 	 	Commitment (US$)
	DEG “A” Facility:
	 	DEG- Deutsche Investitions- und

Entwicklungsgesellschaft mbH	 	 	60,000,000	 
	 
	 	 	 	 	 	 	 	 
	DEG “B” Facility:
	 	DEG- Deutsche Investitions- und

Entwicklungsgesellschaft mbH	 	 	15,000,000	 
	 
	 	 	 	 	 	 	 	 
	DEG “C” Facility:
	 	DEG- Deutsche Investitions- und

Entwicklungsgesellschaft mbH	 	 	15,000,000	 
	 
	 	 	 	 	 	 	 	 
	Proparco “A” Facility:
	 	Société de Promotion et de Participation pour la

Coopération Economique	 	 	15,000,000	 






The Participants and EFP




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount of
	 	 	 	 	 	 	Participation (US$)
	 	 	 	 	 	 	as at date of
	Facility	 	Party as at date of Agreement	 	Agreement
	DEG “A” Facility:
	 	KfW	 	 	20,000,000	 
	 
	 	 	 	 	 	 	 	 
	DEG “A” Facility
	 	EFP	 	 	20,000,000	 
	 
	 	 	 	 	 	 	 	 
	DEG “B” Facility:
	 	Emerging Africa Infrastructure Fund Limited	 	 	15,000,000	 
	 
	 	 	 	 	 	 	 	 
	DEG “C” Facility:
	 	Nederlandse Financierings Maatschappij voor

Ontwikkelingslanden N.V.	 	 	15,000,000	 






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SCHEDULE 2

Conditions of Disbursement




Part 1

Conditions of the First Disbursement





	1	 	Corporate Authority






	 	(a)	 	In relation to each of the Company, the Sponsor, the Shareholder, the Standby
Operator and the Offtaker (the “Relevant Parties”), copies of the most recent Charter
Documents of each such Person and any other evidence that it is duly incorporated,
validly existing, qualified and duly licensed to do business in its jurisdiction
(where qualification and/or licensing is necessary) along with a certification by an
Authorised Representative of such Person that such are true, complete and accurate
copies and that such Charter Documents and other evidence (if any) are in full force
and effect;
	 
	 	(b)	 	In relation to each Relevant Party:






	 	(i)	 	copies, certified as true, complete and accurate copies by an
Authorised Representative of such Person, of the resolutions of the board or
unanimous written consents of the Directors, or such other corporate
authorisation or resolution of each such Person, as is necessary in that
Person’s jurisdiction of incorporation to approve its execution, delivery and
performance of each of the Principal Documents to which it is expressed to be
a party and (in each case) authorising a named Person or Persons to execute
and deliver each such document and any documents to be delivered by it
pursuant thereto; and
	 
	 	(ii)	 	a Certificate of Incumbency for each Person named in the
relevant resolutions and authorisations referred to in (i) above (which shall
include a specimen signature of such named Person); and






	 	(c)	 	In relation to the Company, a certificate stating that borrowing the Total
Commitments would not cause any borrowing or similar limit to be exceeded and that all
conditions to disbursement have been satisfied.






	2	 	Finance Documents and Security Documents






	 	(a)	 	A duly executed original of each of the Finance Documents;
	 
	 	(b)	 	Evidence that each of the Security Documents which are required to be filed,
recorded, stamped and/or registered in order to fully perfect the





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	 	 	 	Security created thereunder has been duly filed, recorded, stamped and/or
registered, as applicable;
	 
	 	(c)	 	Evidence that the Security has been duly created and perfected as first
priority security interests as contemplated and intended under the Security Documents
in all assets and rights of the Company and in any other assets or rights of any other
Persons which are expressed to be subject to the Security Documents (subject to
Permitted Liens and exceptions or limitations acceptable to the Global Agent (acting
on the instructions of the Lenders) as set out in the legal opinions required pursuant
to Paragraph 8 below);
	 
	 	(d)	 	Certified copies of acknowledgements of the assignment effected under the
Offshore Debenture and the Onshore Debenture from all of the Company’s
counter-parties under the Project Documents or the assignments effected pursuant to
the Reinsurance Assignment Agreement;
	 
	 	(e)	 	Evidence that:






	 	(i)	 	all conditions to the effectiveness of such Finance Documents
have been satisfied (except for the condition that this Agreement shall have
become unconditional and fully effective, if that is a condition of any of
those agreements);
	 
	 	(ii)	 	all share certificates (if any) in respect of the Charged
Shares shall have been delivered to the Offshore Security Agent pursuant to
the Cayman Share Charge, together with executed and undated share transfer
forms or stock powers with the relevant holder of the Charged Shares’
signature thereon duly verified;
	 
	 	(iii)	 	evidence that the restrictions imposed on each of the
Company, the Shareholder and the Sponsor under Clause 3 (Share Retention) of
the Share Retention Agreement have been recorded in the register of
shareholders of each of the Company, Ormat Technologies Inc and the Sponsor
and noted on the share certificates issued by it to the relevant shareholder;
and
	 
	 	(iv)	 	all Taxes, fees and stamp duty payable in connection with the
execution, delivery, filing and registration of each of the Security Documents
has been paid.






	3	 	Project Documents






	 	(a)	 	A copy, certified as a true, complete and accurate copy by an Authorised
Representative of the Company of each Project Document, executed by all parties
thereto, and evidence that any Project Document or interest created or arising
thereunder required to be filed, recorded, stamped and/or registered in order for such
Project Document to enter into full force and




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	 	 	 	effect has been duly filed, recorded, stamped and/or registered, as applicable;
	 
	 	(b)	 	A certification from an Authorised Representative of the Company that all
conditions precedent to the effectiveness of each Project Document have been satisfied
(and not waived by the parties thereto), other than any condition precedent to any
Project Document requiring that this Agreement or any Loan Agreement is in full force
and effect;
	 
	 	(c)	 	A certification from an Authorised Representative of the Company that each
Principal Document is in full force and effect and that the Company is not, and to the
best of its knowledge after due enquiry, no other party to such Principal Document is
or, but for the passage of time or giving of notice or both will be, in material
breach or default of any obligation thereunder.






	4	 	Project Costs
	 
	 	 	A Project Costs Report countersigned by the Lenders’ Engineer in the form set out in
Schedule 23 (Form of Project Costs Report) in respect of Project Costs incurred up to the
Financial Close, which have either:






	 	(a)	 	been capitalised into equity (as part of the Base Equity Amount); or
	 
	 	(b)	 	are otherwise reflected in the Project Costs Report proposed to be repaid or
refunded with the proceeds of the first Disbursement pursuant to Clause 5.5 (True-up
Disbursement);






	5	 	Authorisations






	 	(a)	 	All Authorisations listed in Schedule 15 (Authorisations) other than any
Authorisation not required by law or under the Principal Documents as at the proposed
Disbursement Date; and
	 
	 	(b)	 	Any other Authorisations and approvals necessary for the transfer and
remittance to the Lenders or their respective assignees in US Dollars of all monies
payable in respect of the Finance Documents at the times and in the manner
contemplated therein,






	 	 	each certified as true, complete and accurate by an Authorised Representative of the
Company, which Authorisations shall be in full force and effect, final and non-appealable.






	6	 	Financial Model and Base Case






	 	(a)	 	A copy of the Financial Model on computer disc;




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	 	(b)	 	The Base Case prepared utilising the Financial Model, agreed between the
Company and the Global Agent (acting on the instructions of the Lenders),
demonstrating a Projected Debt Service Cover Ratio in respect of each Calculation
Period of not less than 1.3, a Debt to Equity Ratio which does not exceed 3.0:1 and an
Equity to Total Assets Ratio of not less than 0.25; and
	 
	 	(c)	 	An audit report from the Financial Model Auditor addressed to the Company and
the Finance Parties, regarding the Financial Model.






	7	 	Project Accounts






	 	(a)	 	Each of the Project Accounts has been opened with the relevant Account Bank
and, to the extent required under the terms of any Finance Document, the Required Debt
Service Reserve Amount and the Required Well Drilling Reserve Amount has been
maintained;
	 
	 	(b)	 	To the extent not included in the Project Accounts Agreement, irrevocable
instructions shall have been given by the Company to each of the Account Banks,
instructing each such Person to operate each of the Project Accounts opened with them
in accordance with the requirements of the Project Accounts Agreement, respectively;
	 
	 	(c)	 	Copy of the operating procedures (if any) for the Project Accounts as
referred to in Clause 2.5(b) (Operation of Project Accounts) of the Project Accounts
Agreement.






	8	 	Legal Opinions
	 
	 	 	The following legal opinions addressed to the Finance Parties (with a reliance letter for
the benefit of each Participant and KfW):






	 	(a)	 	from Company’s Legal Counsel, in relation to the Finance Documents governed
by English law;
	 
	 	(b)	 	from Cayman legal advisers to the Company and the Shareholder, in relation
to, inter alia, the following matters:






	 	(i)	 	the organisation, existence and corporate structure of the
Company (including the Company’s authorised share capital upon or subsequent
to the making of the True-Up Disbursement) and the Shareholder;
	 
	 	(ii)	 	that, subject to the Legal Reservations, the Principal
Documents to which the Company or the Shareholder (or both) is party were duly
authorised and validly executed and the obligations of the Company or the
Shareholder (as the case may be) created thereunder constitute the legal,
valid, binding and enforceable




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	 	 	 	obligations of the Company or the Shareholder (as the case may be);






	 	(c)	 	from Lenders’ Cayman Counsel in relation to the Finance Documents governed by
Cayman law;
	 
	 	(d)	 	from Lenders’ Kenyan Counsel in relation to the Kenyan legal aspects of the
Principal Documents governed by Kenyan law and a separate concurring opinion by the
Company’s Kenyan Counsel or other Kenyan legal counsel acceptable to the Global Agent
(acting on the instructions of the Lenders) in relation to, inter alia, the following
matters:






	 	(i)	 	the organisation, existence and corporate structure of the
Company (including the Company’s authorised share capital upon or subsequent
to the making of the True-Up Disbursement) and KPLC;
	 
	 	(ii)	 	that the Principal Documents to which the Company, KPLC or
GOK is a party were duly authorised and validly executed and the obligations
of the Company, KPLC or GOK created thereunder constitute the legal, valid,
binding and enforceable obligations of the Company, KPLC or GOK;
	 
	 	(iii)	 	that if each of the Principal Documents currently governed
by a law other than Kenya (including the Hedging Contracts) were validly
expressed to be governed by Kenyan law or if the laws of Kenya were validly
held by a court to be the governing law of such documents, then such documents
would constitute the legal, valid, and binding obligations of the Company
enforceable in accordance with their respective terms under the laws of Kenya;







	 	(e)	 	from Lenders’ Legal Counsel, in relation to the English law aspects of the
Finance Documents governed by English law;
	 
	 	(f)	 	from Lenders’ New York Counsel, in relation to the New York law aspects of
the Finance Documents governed by New York law;
	 
	 	(g)	 	from the Company’s Kenyan Counsel, regarding the tax assumptions contained in
the Financial Model, depreciation of fixed assets and amortisation of assets in Kenya;
and
	 
	 	(h)	 	from such other counsel to Major Project Parties (other than the Governmental
Parties), concerning the execution and validity of Principal Documents to which they
are party and the binding and enforceable nature of obligations thereunder, as the
Global Agent (acting on the instructions of the Lenders) may reasonably require.





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	9	 	Appointment of Process Agent
	 
	 	 	Arrangements for the appointment of (and acceptance of such appointment by) a Person or
Persons acceptable to each of the Lenders to act as the agent of each of the parties (other
than any Finance Party) to any Finance Document for the service of process in England,
Kenya, and such other jurisdictions as the Global Agent (acting on the instructions of the
Lenders) may reasonably require, in connection with the Finance Documents.






	10	 	Insurances
	 
	 	 	Evidence that the following shall have taken place:






	 	(a)	 	The Offshore Security Agent will be named as sole loss payee with respect to
the insurances and any reinsurances, and, with respect to any Global Policies only,
first loss payee as their interests may appear with respect to these assets and each
of the Lenders, the Global Agent and the Security Agents will be named as additional
insureds with respect to the Company’s liability insurance policies;
	 
	 	(b)	 	Each of the Lenders shall have received confirmation that all of the
insurances and reinsurances, if any required to be in place prior to the Full
Commercial Operation Date have been arranged and are in place and the Global Agent
shall have received certified copies of the insurance policies of such insurances or
reinsurances (as applicable), including a letter from the Company’s insurance broker
substantially in the form of Exhibit C of Schedule 12 (Insurance Requirements)
confirming that such insurances or reinsurances (as applicable) are in full force and
effect and all premiums then due and payable under those insurances or reinsurances
(as applicable) have been paid or are not in arrears.






	11	 	Environmental






	 	(a)	 	The Environmental Impact Assessment.
	 
	 	(b)	 	The Environmental and Social Management Plan.
	 
	 	(c)	 	A certificate from the Company certifying that appropriate management
measures and other actions necessary to ensure that the Company, its employees,
agents, contractors and subcontractors will perform work related to the site property
in compliance with the Environmental and Social Requirements.






	12	 	Auditors; Accounting System; Financial Reports






	 	(a)	 	Evidence that arrangements have been implemented for:




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	 	(i)	 	the installation of accounting, management information and
cost control systems for the Company in accordance with Clause 24.1(d)
(Accounting Systems); and
	 
	 	(ii)	 	the appointment of the Auditors (whose fees and expenses
shall be for the account of the Company) in accordance with Clause 24.1(e)
(Auditors).






	 	(b)	 	A copy of the authorisation to the Auditors and the acknowledgement by the
Auditors to the Global Agent, in each case as referred to in Clause 24.1(f)
(Communication with Auditors);
	 
	 	(c)	 	Audited annual financial statements for the Company (both the Cayman Islands
and for the Kenyan branch) for 2007 and up to 30 June 2008 and unaudited quarterly
financial statements for the Company for all completed quarters following 30 June 2008
and prior to the date of the Financial Close, together with a certificate of an
Authorised Representative of the Company certifying that no Material Adverse Effect
has occurred since the date of the last audited financial statements; and
	 
	 	(d)	 	A letter pursuant to which the Sponsor and Ormat Technologies Inc each agrees
to provide to the Global Agent its audited annual financial statements for each of
2005, 2006 and 2007 and the unaudited quarterly financial statements for the Sponsor
for all completed quarters of 2008.






	13	 	Project Completion
	 
	 	 	A certificate from the Company confirming it has achieved the Project Completion Date and
the Lenders’ Engineer shall have counter-signed the certificate to confirm their agreement.






	14	 	Reports






	 	(a)	 	A report from the Lenders’ Engineer, regarding, inter alia, technical
feasibility, the design specifications and milestones, the performance tests and
completion undertakings, a detailed breakdown of Project Costs and the construction
budget (including an opinion that these are reasonable for the Project), the
payment/disbursement schedules, the operating performance assumptions, the Standby O&M
Agreement, the interconnection and transmission facilities, geothermal assumptions and
steam reservoir, the condition of the Plant;
	 
	 	(b)	 	A report from the Insurance Advisor regarding the insurances and
reinsurances;
	 
	 	(c)	 	A tax opinion from PricewaterhouseCoopers, Kenya, or another firm of
accountants licensed to practice in Kenya and acceptable to each of the Lenders,
regarding the tax assumptions contained in the Financial Model,




154









 






	 	 	 	depreciation of fixed assets and amortisation of assets in Kenya, withholding tax
payable on interest and application of interest payable on the Loans with the funds
being applied under this Agreement being deemed to be advanced to a branch of the
borrower in Kenya, and any other matters requested by any of the Lenders; and
	 
	 	(d)	 	A report from the Market Consultant.






	15	 	Land
	 
	 	 	A title report, extract from the relevant register or such other documentation as is
necessary to ensure that the Company has valid title, or other valid and subsisting rights,
to the Site entitling the Company to quiet enjoyment and use of such area (for the purpose
of performing its obligations under the Project Documents), free and clear of any material
adverse rights.






	16	 	Payment of fees
	 
	 	 	The Company shall have paid all front-end fees and other fees then due and payable
(including any outstanding mandate fees due to any Lender) and other amounts owed to the
Lenders, including, without limitation, the fees and expenses then owing in relation to the
Lenders’ External Advisers.






	17	 	Hedging Policy
	 
	 	 	A copy of the Hedging Policy.






	18	 	Participation Agreements






	 	(a)	 	DEG shall have entered into a risk participation agreement with KfW in form
and substance satisfactory to KfW.
	 
	 	(b)	 	DEG shall have entered into Participation Agreements with Participants for
the acquisition by them of Participations in an aggregate amount equal to the full
amount of the DEG “B” Facility and the DEG “C” Facility and those Participation
Agreements are in full force and effect.






	19	 	Operating Budget
	 
	 	 	The Initial Operating Budget for the first year following the Project Completion Date in
form and substance satisfactory to the Lenders’ Engineer acting reasonably.






	20	 	MIGA contract
	 
	 	 	The Contract of Guarantee dated 18 December 18 2007 between MIGA and the Shareholder
against certain non-commercial risks relating to the Shareholder’s equity investment in the
Company.




155









 












	21	 	Powers of Attorney
	 
	 	 	Registration of a power of attorney granted by each signatory to this Agreement and the
Kenyan Debenture at the Registry of Documents in Nairobi, Kenya in accordance with the
Registration of Documents Act.






	22	 	Equity






	 	(a)	 	Copies of all shareholder and inter-company loan documents between the
Company and any Affiliate thereof; and
	 
	 	(b)	 	Evidence that all funds advanced to the Company by an Affiliate have been
capitalised into shares or shareholder/inter-company debt.






	23	 	Accession of Offshore and Onshore Security Agents






	 	(a)	 	Accession to this Agreement by the Onshore Security Agent by execution of an
Agent Deed of Adherence;
	 
	 	(b)	 	Any amendments requested by the Onshore Security Agent prior to accession in
accordance with paragraph (a) above and agreed with the Company and the Lenders are
made to this Agreement by way of an amendment agreement (or other document) in form
and substance satisfactory to the Global Agent (acting on the instructions of the
Lenders); and
	 
	 	(c)	 	Registration of a power of attorney granted by the Onshore Security Agent in
respect of this Agreement, the Agent Deed of Accession and the Kenyan Debenture at the
Registry of Documents in Nairobi, Kenya in accordance with the Registration of
Documents Act.






156









 








Part 2

Conditions of All Disbursements





	1	 	Proceeds of Disbursement
	 
	 	 	A certificate from an Authorised Representative of the Company certifying that the proceeds
of Disbursement are:






	 	(a)	 	for a purpose permitted under Clause 3.1 (Purpose); and
	 
	 	(b)	 	intended to be used by the next Disbursement Date or within ninety (90) days
of the Disbursement Date, whichever is the earlier.






	2	 	No violation
	 
	 	 	After giving effect to that Disbursement, the Company would not be in violation of:






	 	(a)	 	its Charter Documents;
	 
	 	(b)	 	any material provision contained in any Principal Document; or
	 
	 	(c)	 	any law, rule, regulation, Authorisation or agreement or other document
binding on the Company directly or indirectly limiting or otherwise restricting the
Company’s borrowing power or authority or its ability to borrow.






	3	 	No Default
	 
	 	 	No Default is continuing or would result from the making of any proposed Disbursements.






	4	 	No Material Adverse Effect
	 
	 	 	No Material Adverse Effect has occurred and the Company has provided a certificate of an
Authorised Representative to this effect.






	5	 	No other events






	 	(a)	 	No Political Event, MIGA Event or Force Majeure Event has occurred and is
continuing or would result from the making of any proposed Disbursements.
	 
	 	(b)	 	Any amounts owing from the Offtaker have been paid in full and there are no
invoice or payment disputes outstanding.
	 
	 	(c)	 	The Lender KPLC Confirmation duly signed by the Global Agent.




157









 












	6	 	Representations
	 
	 	 	The representations set out in Clause 23 (Representations and Warranties) and deemed
repeated by the Company pursuant to Clause 23.3 (Repetition) are true in all material
respects when made or deemed repeated (except for those representations which by their
terms are expressed to relate only to a particular Disbursement or Disbursements or a
particular date or dates, in which case such representation shall be true as to the
relevant Disbursement(s) or as of such particular date(s)).






	7	 	No notice of suspension of cancellation
	 
	 	 	No Lender or the Global Agent has issued a notice of suspension or cancellation in respect
of a Loan or any Disbursement under Clause 4.5 (Suspension or Cancellation by Lenders).






	8	 	Reports and Budgets
	 
	 	 	Any Project Reports or Operating Budgets or other information or certifications which are
required to have been provided at the time of such Disbursement under the provisions of the
Finance Documents have been provided to the relevant Persons.






	9	 	Authorisations
	 
	 	 	All Authorisations (including those listed in Schedule 15 (Authorisations)) necessary for
the then current stage of implementation of the Project shall have been obtained and shall
be in full force and effect.






	10	 	Legal Opinions
	 
	 	 	If reasonably requested by a Lender, legal opinion(s) on matters specific to that
Disbursement shall have been rendered, in form and substance satisfactory to the Global
Agent (acting on the instructions of the Lenders).






	11	 	Fees
	 
	 	 	The Company shall have paid (or subject to the agreement of any Finance Party to whom any
of the following amounts is then due and payable, each such Finance Party is satisfied that
payment will be made from the first Disbursement of the Facilities or, if such amounts
become due and payable subsequent to the first Disbursement, from the relevant Disbursement
in respect of which such amounts become due and payable) all front-end fees and other fees
then due and payable to any Finance Party and other amounts owed to any Finance Party,
including the fees and expenses then owing in relation to any of the Lenders’ External
Advisers.




158









 












	12	 	Cotonou Agreement
	 
	 	 	The Company and the Project remain eligible for financing (under the Operational Guidelines
of EFP) for the purposes of the Cotonou Agreement.






	13	 	Project Accounts
	 
	 	 	The Debt Service Reserve Account and the Well Drilling Reserve Account are each funded to
the extent then required pursuant to the Project Accounts Agreement.






	14	 	Project Costs Report
	 
	 	 	To the extent that the proceeds of Disbursement are to be applied to a True-Up
Disbursement, a Project Costs Report countersigned by the Lenders’ Engineer in the form set
out in the Project Costs Report, which relates to the Project Costs incurred prior to
Financial Close proposed to be capitalised into equity in the Company or repaid with the
proceeds of that Disbursement in accordance with Clause 5.5 (True-up Disbursements). In
respect of the first Disbursement and the Second Disbursement, this condition shall be
satisfied by paragraph 4 of Part 1 of Schedule 2 and Clause 4.3(b) (Conditions of Second
Disbursement) respectively.




159









 











SCHEDULE 3

Project Costs and Financial Plan





	1	 	PROJECT COSTS
	 
	 	 	The estimated eligible cost of the Project is US$157.911 million, comprising Project Costs
and fees, EPC costs, other construction and start-up related costs, contingencies, interest
during construction and financing charges, as shown below:





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	% of
	Cost Components	 	US$ thousand	 	Project Cost
	Project Administration and Development
(incl. Contingencies)
	 	 	3,605	 	 	 	2.3	 
	8MW Power Plant EPC
	 	 	17,685	 	 	 	11.2	 
	EPC of
Early Generation Additional Unit
	 	 	6,680	 	 	 	4.2	 
	Appraisal
Program
	 	 	8,500	 	 	 	5.4	 
	Phase II EPC
(including escalation)
	 	 	97,000	 	 	 	61.4	 
	Spare Parts
& Special Tools
	 	 	1,100	 	 	 	0.7	 
	Financing Fees, Stamp Taxes, Etc.
	 	 	4,025	 	 	 	2.5	 
	Reimbursement of Interest During
Construction on Sponsor advances prior to
funding
	 	 	3,816	 	 	 	2.4	 
	Initial Debt Service Reserve Account
	 	 	13,500	 	 	 	8.6	 
	Initial Working Capital
	 	 	2,000	 	 	 	1.3	 
	 
	 	 	 	 	 	 	 	 
	TOTAL USES
	 	 	157,911	 	 	 	100.0	 






160









 







	2	 	FINANCIAL PLAN
	 
	 	 	The Project is expected to be financed in accordance with the following plan (the
“Financial Plan”):





	 	 	 	 	 	 	 	 	 
	 	 	US$ thousand	 	 
	Equity and SHL:
	 	 	 	 	 	 	 	 
	Equity, subordinated shareholders’ loans and
project cashflow expected post financing of
both disbursements
	 	 	52,911	 	 	 	 	 
	Total Equity and SHL
	 	 	52,911	 	 	 	 	 
	 
	 	 	 	 	 	 	% of
	 	 	 	 	 	 	Senior Debt
	Senior Debt:
	 	 	 	 	 	 	 	 
	A Loan: DEG
	 	 	60	 	 	 	58	 
	A Loan: Proparco
	 	 	15	 	 	 	14	 
	B Loan: DEG
	 	 	15	 	 	 	14	 
	C Loan: DEG
	 	 	15	 	 	 	14	 
	Total Senior Debt
	 	 	105,000	 	 	 	100	 






161









 






SCHEDULE 4

Form of Transfer Certificate





	To:	 	DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH,
as Global Agent
	 
	From:	 	[The Existing Lender] (the “Existing Lender”) and [The New Lender]
(the “New Lender”)
	 
	Dated:	 	




RE: [Insert details relating to the relevant Loan Agreement] dated [               ] and
the Common Terms Agreement dated [               ] between, inter alia, OrPower4 Inc. as
Company, DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH and Société de Promotion et de
Participation pour la Coopération Economique as Lenders and DEG-Deutsche Investitions- und
Entwicklungsgesellschaft mbH as Global Agent (the “Common Terms Agreement”)





	1	 	Capitalised terms have the meaning given to such terms in the Common Terms Agreement unless
otherwise defined herein.
	 
	2	 	We refer to Clause 27.2 (Procedure for Assignment or Transfer) of the Common Terms Agreement:






	 	(a)	 	This is a Transfer Certificate.
	 
	 	(b)	 	The Existing Lender transfers by novation all or part of the Existing
Lender’s Commitment, rights and obligations referred to in the Schedule in accordance
with the terms of the Common Terms Agreement.
	 
	 	(c)	 	The proposed Transfer Date is [     ].
	 
	 	(d)	 	On the Transfer Date the New Lender becomes:






	 	(i)	 	party to the [relevant Loan Agreement] and the Common Terms
Agreement as Lender; and
	 
	 	(ii)	 	party to the Security Trust and Intercreditor Deed.






	 	(e)	 	The Facility Office and address, fax number and attention details for notices
of the New Lender for the purposes of Clause 34.2 (Addresses) of the Common Terms
Agreement are set out in the New Lender Schedule.






	3	 	The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations
set out in Clause 27.4 (Limitation of Responsibility of Existing Lenders) of the Common Terms
Agreement.




162









 












	4	 	This Transfer Certificate may be executed in any number of counterparts and this has the same
effect as if the signatures on the counterparts were on a single copy of the Transfer
Certificate.
	 
	5	 	This Transfer Certificate is governed by English law.





THE SCHEDULE




Commitment, Rights and Obligations to be Transferred




[insert relevant details]



[Facility Office address, fax number and attention details for notices and account details for
payments]




	 	 	 	 	 	 	 	 	 
	[Existing Lender]	 	[New Lender]
	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 
	 	 

	 	 





This Transfer Certificate is countersigned by the Global Agent and the Transfer Date is confirmed
as [          ].




	 	 	 	 	 
	DEG — Deutsche Investitions- und
Entwicklungsgesellschaft mbH
as Global Agent

 	 	 
	By:  	 	 	 
	 	 	 	 
	 	 	 	 



163









 






	 	 	 	 	 



SCHEDULE 5

Form of Accession Letter





	To:	 	DEG — Deutsche Investitions- und Entwicklungsgesellschaft mbH, as Global Agent
	 
	From:	 	[               ]
	 
	Dated:	 	






Dear Sirs




This Agreement dated [     ] is supplemental to a Common Terms Agreement dated [     ]
between, inter alia, OrPower4 Inc. as Company, DEG-Deutsche Investitions- und
Entwicklungsgesellschaft mbH and Société de Promotion et de Participation pour la Coopération
Economique as Lenders and DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH as Global
Agent (the “Common Terms Agreement”).



Words and expressions defined in the Common Terms Agreement have the same meaning when used in this
Agreement.



[Name of New Lender] hereby agrees with each other Person who is or who becomes a Party to the
Common Terms Agreement that with effect on and from the date hereof it will be bound by the
obligations of and will benefit from, the Finance Documents as [state capacity of relevant New
Party] as if it had been an Original Lender and Party to the Finance Documents in that capacity.




Address for notice of [Name of
New Lender] for the purposes of Clause 34 (Notices) of the Common
Terms Agreement is:




[     ]



This Agreement is governed by English law.



IN WITNESS WHEREOF, this agreement has been executed as a deed and is intended to be and is hereby
delivered on the date first above written.




	 	 	 	 
	EXECUTED as a Deed
	 	)	 
	 
	 	 	 
	by [Name of New Party]
	 	)	 
	 
	 	 	 
	acting by [     ]
	 	)	 
	 
	 	 	 
	in the presence of:
	 	)	 
	 
	 	 	 
	Name:
	 	 	 






164









 






	 	 	 
	Address:
	 	 





Agreed and accepted by the Global Agent




	 	 	 	 	 
	DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH

 	 	 
	by  	 	 	 
	 	Authorised Signatory 	 	 
	 	 	 	 



Address:




Fax No:




Attention:





165











 





SCHEDULE 6

Economic and Financial Assumptions



The Economic and Financial Assumptions are as set out in the Financial Model.




166









 








SCHEDULE 7

Technical Assumptions



The Technical Assumptions are as set out in the Financial Model.




167









 








SCHEDULE 8

Initial Operating Budget




	 	 	 
	From : January 1st 2009

	 	To: December 31st 2009






	 	 	 	 	 	 	 
	(In US$ thousands)	 	 	 	 
	 	 	Annual	 	Comments
	 
	 	 	 	 	 	 
	1. Operation & Maintenance Budget
	 	 	 	 	 	 
	1.1 Local salaries, outsourced labor and related benefits
	 	 	550	 	 	 
	1.2 Expatriates presence and HQ support
	 	 	270	 	 	 
	1.3 Spare Parts & Consumables PP and wellfield
	 	 	500	 	 	(*) lower than running rate during warranty
	1.4 Other / Misc.
	 	 	 	 	 	 
	 
	Total O&M
	 	 	1,320	 	 	 
	 
	 
	 	 	 	 	 	 
	2. General and Administration Budget
	 	 	 	 	 	 
	2.1 G&A and staff housing
	 	 	400	 	 	 
	2.2 Insurance: property, vehicles, BI and other non-PRI
	 	 	700	 	 	 
	2.3 Local Taxes
	 	 	0	 	 	inc. in G&A
	2.4 Other / Misc. G&A
	 	 	350	 	 	inc. fees and expenses to lenders, IE, etc.
	 
	Total G&A Budget
	 	 	1,450	 	 	 
	 
	 
	 	 	 	 	 	 
	3. Annual Capital Expenditure	 	(excluding draw on reserves)
	3.1 Improvements to operators’ village
	 	 	60	 	 	 
	3.2 Vehicles
	 	 	45	 	 	 
	3.3 Monitoring and compliance equip.
	 	 	70	 	 	 
	3.4 Misc.
	 	 	15	 	 	 
	 
	Total Annual Capex Budget
	 	 	130	 	 	 
	 
	 
	 	 	 	 	 	 
	4. General / Misc.
	 	 	 	 	 	 
	 
	4.1 General / Misc.
	 	 	400	 	 	 
	 
	 
	 	 	 	 	 	 
	5. TOTAL OPERATING BUDGET FOR PERIOD(*)
	 	 	3,300	 	 	 
	 
	 	 	 	 	 	 
	Comparison data 1: Operating Budget for Previous Year
	 	 	N/A	 	 	(incomparable — phase I only)
	Comparison data 2: annualized performance for Previous
Year
	 	 	N/A	 	 	(incomparable — phase I only)








 




			
	(*)	 	Excluding: deposits to well maintenance fund, political risk insurance premiums, royalty charges on revenue to KPLC,
interest on debitory accounts (if any), hedging costs (if any) and CDM compliance if registered.





rev1 16Dec08




168









 








SCHEDULE 9

Form of Operating Report



Report Date:



Subject: Operating report for the period between [     ] and [     ]




Operating Report



The Company shall provide promptly to the Global Agent, not later than forty-five (45) days after
the end of each quarter after the Project Completion Date, an Operating Report in respect of such
period in line with the form below.





	1	 	Generation Summary





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Accumulated or Average
	Item	 	For the period	 	During Calendar Year [ ]
	Energy Sales (kWh)
	 	 	 	 	 	 	 	 
	Avg. Daily Generation
(MW)
	 	 	 	 	 	 	 	 
	Availability (%)
	 	 	 	 	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Operation al Hours	 	Periodical KWh	 	 	 	 	 	 	 	 
	OEC	 	during Period	 	Generation	 	Periodical kW	 	YTD hr	 	YTD kWh	 	YTD kW
	OEC-1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC-2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC-3
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC-4
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC-5
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC-6
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






169









 






Production Wells:




	 	 	 	 	 	 	 	 	 
	 	 	Avg. Flow	 	Working Time
	Well	 	(Ton/hr)	 	(Hr)
	OW-301
	 	 	 	 	 	 	 	 
	A1
	 	 	 	 	 	 	 	 
	A2
	 	 	 	 	 	 	 	 
	A4
	 	 	 	 	 	 	 	 
	A5
	 	 	 	 	 	 	 	 
	B1
	 	 	 	 	 	 	 	 
	B7
	 	 	 	 	 	 	 	 
	B9
	 	 	 	 	 	 	 	 
	C2
	 	 	 	 	 	 	 	 






Injection Wells:




	 	 	 	 	 	 	 	 	 
	 	 	Working Time	 	Valve Open
	Well	 	(Hr)	 	(%)
	B1
	 	 	 	 	 	 	 	 
	OW-307
	 	 	 	 	 	 	 	 
	OW-401
	 	 	 	 	 	 	 	 






170









 






Summary of Power Generation:




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	During Reporting	 	Accumulated during
	Indicator	 	Units	 	Period	 	Calendar Year
	Power Plant Gross Generation
	 	kWh	 	 	—	 	 	 	—	 
	Aux. Load
	 	 	 	 	—	 	 	 	—	 
	Net Energy Sales
	 	 	 	 	—	 	 	 	—	 
	Average Power Delivered
	 	MW	 	 	 	 	 	 	 	 
	Capacity Factor __ MW
	 	%	 	 	—	 	 	 	—	 
	Availability Factor all OECs
	 	 	 	 	—	 	 	 	—	 
	Average Ambient Temperature
	 	°C	 	 	 	 	 	 	 	 







	2	 	Maintenance Summary
	 
	2.1	 	OEC Down Time
	 
	 	 	Definition: OEC is forced to stop while geothermal source flow and 220kV grid voltage are
available.






	 	•	 	Maintenance Hours:





	 	 	 
	Preventive (     hrs. total)

	 	___ Hrs. down time registered
	Corrective (     hrs. total)

	 	___ Hrs. down time registered







	2.2	 	Preventative Maintenance
	 
	 	 	Planned activities; done during forced down time from geothermal or grid conditions.
	 
	 	 	Total time of preventative maintenance: ___ Hrs.






171











 






	2.3	 	Corrective Maintenance





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Duration	 	 	Total	 	 	Down	 
	 	 	Date	 	 	Corrective Maintenance Events	 	 	Hrs	 	 	Hrs	 	 	Time	 
	Balance of Plant
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 3
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 4
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 5
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 6
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







	2.4	 	Maintenance Activities/Events Summary:
	 
	 	 	Power Grid:
	 
	 	 	Balance of Plant:
	 
	 	 	Wellfield and Gathering System:
	 
	 	 	Ongoing Upgrade/Improvement Projects:
	 
	 	 	OEC Units:




172









 












	3	 	Environmental Compliance Status
	 
	 	 	[List here abnormal environmental parameters]
	 
	4	 	Power Plant Safety Monthly Status
	 
	 	 	[List here accidents resulting downtime, damage to property or injuries]





	 	 	 	 	 
	Event	 	Date	 
	Last Annual Fire Fighting Course
	 	 	 	 
	Last CPR and first aid course
	 	 	 	 
	Last safety emergency response plan review
	 	 	 	 
	Last Safety meeting held
	 	 	 	 






	 
	Contracted Plant Capacity (MW)

	Date of Last Contracted Capacity Test







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Jan	 	 	Feb	 	 	Mar	 	 	Apr	 	 	May	 	 	Jun	 	 	Jul	 	 	Aug	 	 	Sep	 	 	Oct	 	 	Nov	 	 	Dec	 	 	YTD	 
	OEC 1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 3
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 4
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 5
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OEC 6
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






173









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Jan	 	 	Feb	 	 	Mar	 	 	Apr	 	 	May	 	 	Jun	 	 	Jul	 	 	Aug	 	 	Sep	 	 	Oct	 	 	Nov	 	 	Dec	 	 	YTD	 
	Gross Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Plant
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Auxiliary Use (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Energy Sales (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Scheduled Maintenance
(kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Unscheduled Maintenance
(kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Maximum Load (kW)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum Load (kW)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average Load (kW)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Plant Scheduled
Maintenance Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Plant
Unscheduled
Maintenance Hours
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Production (MWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Calculated Steam Usage
(Ton)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average Steam
Temperature
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average Steam Pressure
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Brine Usage (Ton)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average Brine
Temperature
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average Brine Pressure
(bar g)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Injection
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Injected (Ton)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average Injectate
Pressure (bar g)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average Injectate
Temperature
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Average Ambient
Temperature
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






174









 






Quarter Ending (end date)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Production Wells	 	Quarterly Data	 	Typical Monthly Values — Month 1 (month, year)
	 	 	Hours	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	operated	 	 	 	 	 	 	 	 	 	Cumulative	 	Wellhead	 	 	 	 	 	 	 	 	 	 
	 	 	this	 	 	 	 	 	 	 	 	 	total	 	pressure	 	Valve	 	 	 	 	 	 	 	 
	Well	 	quarter	 	 	 	 	 	 	 	 	 	mass (Ton/Hr)	 	(barg)	 	open (%)	 	 	 	 	 	 	 	 
	OW-301
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A1	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A2	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A3	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A4	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A5	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	B1	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	B7	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	B9	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	C2	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	new well	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	new well	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 
	Injection Wells	 	Quarterly Data	 	Typical Monthly Values — Month 1 (month, year)
	 	 	 	 	Cumulative total	 	 	 	 	 	 
	 	 	Hours operated this	 	mass injected	 	Average Injection	 	Wellhead pressure	 	 
	Well	 	quarter	 	(Ton/Hr)	 	rate (Ton/Hr)	 	(barg)	 	Valve open (%)
	B1	 	 	 	 	 	 	 	 	 	 
	OW-307	 	 	 	 	 	 	 	 	 	 
	OW-401	 	 	 	 	 	 	 	 	 	 
	new well	 	 	 	 	 	 	 	 	 	 
	new well	 	 	 	 	 	 	 	 	 	 






Chemical Sampling




	 	 	 
	Well	 	Date and type of analyses
	OW-301
	 	 
	A1
	 	 
	A2
	 	 
	A3
	 	 
	A4
	 	 
	A5
	 	 
	B1
	 	 
	B7
	 	 
	B9
	 	 
	C2
	 	 
	new well
	 	 
	new well
	 	 
	production header
	 	 






175









 






	 	 	 
	Well	 	Date and type of analyses
	other location
	 	 
	B1
	 	 
	OW-307
	 	 
	OW-401
	 	 
	new well name
	 	 
	new well name
	 	 
	injection header
	 	 
	other location
	 	 






TPS (and other) logs




	 	 	 
	Well	 	Date and type of log
	OW-301
	 	 
	A1
	 	 
	A2
	 	 
	A3
	 	 
	A4
	 	 
	A5
	 	 
	B1
	 	 
	B7
	 	 
	B9
	 	 
	C2
	 	 
	new well name
	 	 
	new well name
	 	 
	B1
	 	 
	OW-307
	 	 
	OW-401
	 	 
	new well name
	 	 
	new well name
	 	 






176









 






Enthalpy Test logs




	 	 	 
	Well	 	Date and type of log
	OW-301
	 	 
	A1
	 	 
	A2
	 	 
	A3
	 	 
	A4
	 	 
	A5
	 	 
	B1
	 	 
	B7
	 	 
	B9
	 	 
	C2
	 	 
	new well name
	 	 
	new well name
	 	 
	B1
	 	 
	OW-307
	 	 
	OW-401
	 	 
	new well name
	 	 
	new well name
	 	 






Remedial Well Work




	 	 	 
	Well	 	Date and description of operation
	OW-301
	 	 
	A1
	 	 
	A2
	 	 
	A3
	 	 
	A4
	 	 
	A5
	 	 
	B1
	 	 
	B7
	 	 
	B9
	 	 
	C2
	 	 
	new well name
	 	 
	new well name
	 	 
	B1
	 	 
	OW-307
	 	 
	OW-401
	 	 
	new well name
	 	 
	new well name
	 	 







	5	 	Comparison Between Operating Budget and Actual Financial Performance
	 
	 	 	[Financial results for the Project to be compared to the Operating Budget in the form set
out in the form below]




177









 











	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Actual	 	 	Budget	 
	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Total	 	 	Total	 
	1. Operation & Maintenance Budget
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1.1 Local salaries, outsourced labor and
related benefits
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	550	 
	1.2 Expatriates presence and HQ support
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	200	 
	1.3 Spare Parts & Consumables PP and wellfield
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	500	 
	1.4 Other / Misc.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total O&M
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,150	 
	 
	2. General and Administration Budget
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2.1 G&A and staff housing
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	400	 
	2.2 Insurance: property, vehicles, BI and
other non-PRI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	700	 
	2.3 Local Taxes
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 
	2.4 Other / Misc.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	350	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total G&A Budget
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,450	 
	 
	3. Annual Capital Expenditure (excluding draw
on reserves)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3.1 Improvements to operators’ village
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	60	 
	3.2 Vehicles
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	45	 
	3.3 Monitoring and compliance equip.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	70	 
	3.4 Misc.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	15	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Annual Capex Budget
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	130	 
	 
	4. Annual Contingency
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4.1 Annual Contingency
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	400	 
	 
	5. TOTAL
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,300	 
	 







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Generation and Revenue	 	1st Qtr	 	2nd Qtr	 	3rd Qtr	 	4th Qtr	 	Total
	Budgeted Net Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Actual Net Generation (kWh)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Budgeted Revenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Invoiced Amounts
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






178









 






SCHEDULE 10

Form of Insurance Review




Part A

Changes



[Company to describe any material change in the risk exposure of the Project, the Company, its
business or assets.]




Part B

Additional Insurances



[Company to provide copies of additional insurances or reinsurances as a result of changes
described in Part A.]




Part C

Changes to Monetary Limits/Deductibles (if any)



[Company to describe any changes to existing insurances and reinsurances as a result of changes
described in Part A.]




Part D

Other Relevant Information



[Company to provide any other relevant information it may deem necessary regarding the insurances
and reinsurances, or as may reasonably be requested by the Global Agent (acting on the instructions
of the Lenders) as a result of the relevant material changes.]




179









 








SCHEDULE 11

Repayment Schedule




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	DEG “A” Facility	 	 	DEG “B” Facility	 	 	DEG “C” Facility	 	 	Proparco “A”	 	 	Total	 
	Instalment	 	Repayment Date	 	 	(US$)	 	 	(US$)	 	 	(US$)	 	 	Facility (US$)	 	 	(US$)	 
	1
	 	 	15/12/09	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	2
	 	 	15/06/10	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	3
	 	 	15/12/10	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	4
	 	 	15/06/11	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	5
	 	 	15/12/11	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	6
	 	 	15/06/12	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	7
	 	 	15/12/12	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	8
	 	 	15/06/13	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	9
	 	 	15/12/13	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	10
	 	 	15/06/14	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	11
	 	 	15/12/14	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	12
	 	 	15/06/15	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	13
	 	 	15/12/15	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	14
	 	 	15/06/16	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	15
	 	 	15/12/16	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	16
	 	 	15/06/17	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	17
	 	 	15/12/17	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	18
	 	 	15/06/18	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 
	19
	 	 	15/12/18	 	 	 	3,157,894.74	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	789,473.68	 	 	 	5,526,316	 






180









 






SCHEDULE 12

Insurance Requirements




GENERAL



References in this Schedule to clauses, paragraphs and Exhibits shall be construed as references to
the clauses of this Schedule and to paragraphs of, and Exhibits to, this Schedule unless the
context otherwise requires.





	1	 	INSURANCES TO BE EFFECTED
	 
	1.1	 	Insurances
	 
	 	 	Until the Final Termination Date, the Company shall effect and maintain, or cause to be
effected and maintained, insurances in respect of the risks and in the amounts and with
such other provisions specified in Exhibit A (Insurances). All such insurances (including
any Global Policy) shall comply with the requirements of this Schedule.
	 
	1.2	 	Other Insurances
	 
	 	 	Without prejudice to the other provisions of this Schedule, until the Final Termination
Date, the Company shall effect and maintain, or cause to be effected and maintained, any
additional insurance not specified in Exhibit A which:






	 	(a)	 	it is required to maintain by any applicable law or by the terms of the
Project Documents; and
	 
	 	(b)	 	is required pursuant to Clause 4.1 (Additional Insurances) of this Schedule.






	2	 	ADDITIONAL REQUIREMENTS RELATING TO INSURANCES
	 
	2.1	 	General Requirements






	 	(a)	 	The Company shall procure that all insurances shall at all times:






	 	(i)	 	be purchased by or on behalf of the Company and through
agents approved in writing by the Global Agent (acting on the instructions of
the Lenders), the approval of which shall not be unreasonably withheld or
delayed) (for the avoidance of doubt, the Company’s agent as at the date of
this Agreement (Chesterfield) and Beecher Carlson is hereby approved by the
Global Agent (acting on the instructions of the Lenders));




181









 












	 	(ii)	 	be placed and maintained with financially sound and reputable
insurers and, where applicable, reinsurers, who, at all times, maintain an
“A-X” rating by AM Best or “A-” rating by Standard & Poor’s Rating Services,
or any other insurer and, where applicable, reinsurer, acceptable to the
Global Agent (acting on the instructions of the Lenders), whose approval shall
not be unreasonably withheld or delayed); provided, however, that the minimum
ratings required above shall not apply to any local insurer or, if applicable
local reinsurer;
	 
	 	(iii)	 	insure each of:






	 	(A)	 	the Company;
	 
	 	(B)	 	the Finance Parties; and
	 
	 	(C)	 	in respect of third party liability, the
directors, officers, employees and agents of the Finance Parties,







	 	 	 	in respect of their respective interests in the insured assets to the
intent that the risks borne by the additional insured parties and required
to be insured under the insurances should be transferred to the insurers
thereof;
	 
	 	(iv)	 	have attached the endorsements specified in Exhibit B
(Insurance Policy Endorsements);
	 
	 	(v)	 	at all times comply with the requirements and specifications
of this Schedule or as otherwise agreed by the Global Agent.






	 	(b)	 	The Company shall procure that no insurance is subject to any coverage
exclusion or exception unless such exclusion or exception:






	 	(i)	 	is specified within Exhibit A or otherwise in this Schedule
as a permitted coverage exclusion or exception; or
	 
	 	(ii)	 	is a necessary standard exclusion or exception within the
insurance industry for that type or size of risk covered by that insurance;
	 
	 	(iii)	 	previously approved in writing by the Global Agent (acting
on the instructions of the Lenders) whose approval shall not be unreasonably
withheld or delayed) (for the avoidance of doubt, the insurance specified in
Exhibit A (Insurances), including the coverages, exclusions and exceptions
thereto are hereby approved by the Global Agent acting on the instructions of
the Lenders).




182









 












	 	(c)	 	The Company acknowledges that it is solely responsible to ensure that every
material circumstance which ought to be disclosed at any time to any insurer is fully
and fairly disclosed to them without misrepresentation.
	 
	 	(d)	 	The Company shall not be obliged to procure or maintain, or cause the
procurement or maintenance of, any insurance or reinsurance if it is not available on
reasonable commercial terms (including reasonable premium) having regard to the type
or size of risk covered by that insurance or reinsurance (the reasonableness of such
terms and premiums to be confirmed by the Insurance Advisor). If not so available, the
Company will seek to reduce hazard and minimise risk to the Project, promptly effect
and maintain insurances on alternative terms approved in writing by the Global Agent
(acting on the instructions of the Lenders, acting reasonably and following
consultation with the Insurance Advisor, if necessary), provide the Global Agent with
information on the position in the insurance market and, if so required by the Global
Agent (acting on the instructions of the Lenders following consultation with the
Insurance Advisor, if necessary), promptly effect revised insurances and reinsurances
to include such terms as have become available on reasonable commercial terms
(including reasonable premiums) having regard to the type or size of risk covered by
that insurance or reinsurance (the reasonableness of such terms and premiums to be
confirmed by the Insurance Advisor).






	2.2	 	Policy Provisions
	 
	 	 	Each of the insurances and, where applicable, reinsurances required to be obtained pursuant
to this Schedule 12 (Insurance Requirements) shall be in the English language and contain
provisions to the effect that:






	 	(a)	 	no policy can expire or be varied, cancelled or suspended by the Company or
the insurer or the reinsurer (as applicable) for any reason (including failure to
renew the policy or to pay the premium or any other amount) unless the relevant
Security Agent and the Global Agent and, in the case of expiration or if cancellation
or suspension is initiated by the insurer or the reinsurer (as applicable), the
Company, receive at least twenty (20) days’ written notice in respect of non-payment
or otherwise at least sixty (60) days’ written notice (or such lesser period as the
Global Agent (acting on the instructions of the Lenders) may agree with respect to
cancellation, suspension or termination in the event of war and kindred peril) prior
to the effective date of termination, cancellation or suspension;
	 
	 	(b)	 	where relevant, all policy provisions (except those relating to limits of
liability) shall operate as if they were a separate policy covering each insured
party;




183









 












	 	(c)	 	on every property insurance policy on the Company’s assets which are the
subject of the Security and on every insurance policy for business interruption, the
Onshore Security Agent is named as loss payee for any single claim in an amount
equivalent to one million US Dollars (US$1,000,000) or more, or any series of claims
arising with respect to the same event whose aggregate amount is the equivalent of one
million US Dollars (US$1,000,000) or more;
	 
	 	(d)	 	where relevant, the insurers or the reinsurers (as applicable) waive all
rights of recourse or subrogation, howsoever arising, against the Company and/or the
Finance Parties and otherwise in accordance with the requirements of the Project
Documents;
	 
	 	(e)	 	all provisions of each of the insurances and, where applicable, reinsurances
conferring any right, protection or benefit to any Finance Party (including, without
limitation, sole loss payee (as its interests may appear) and additional insured
provisions, notice requirements, etc.) shall at all times remain in full force and in
effect notwithstanding any act (including misrepresentation and non-disclosure) or
failure to act on the part of the Company, its agents or employees; and
	 
	 	(f)	 	each of the insurances and, where applicable, reinsurances, other than the
Global Policy, shall be assignable to the Offshore Security Agent for the benefit of
the Finance Parties;






	 	 	provided that none of the policies required pursuant to this Schedule 12 (Insurance
Requirements) shall include any provision for self-insurance or any self-insured retention
except to the extent of the deductibles specified in this Schedule 12 (Insurance
Requirements) or the Global Agent (acting on the instructions of the Lenders) otherwise
approves from time to time (which approval shall not be unreasonably withheld or delayed).
	 
	2.3	 	Global Policy Provisions






	 	(a)	 	Any insurance that is listed in Exhibit A (Insurances) as a “Global Policy”
(a “Global Policy”) shall comply with the requirements of this Schedule 12 and shall
constitute either:






	 	(i)	 	direct primary insurance for the Project, or
	 
	 	(ii)	 	become direct primary insurance for the Project upon the
occurrence of any insurable event covered by such policy and the insolvency of
the local insurer that is otherwise providing direct and primary insurance for
such insurable event.




184









 












	 	(b)	 	If for any reason the Company does not effect or maintain any insurance
policy that is currently listed in Exhibit A (Insurances) as a Global Policy,
the Company shall effect and maintain, or cause to be effected and maintained,
reinsurance of its direct and primary local insurances with any reinsurer that
meets the requirements of Clause 2.1(a) of this Schedule under a reinsurance policy
that meets the applicable requirements of this Schedule 12.
	 
	 	(c)	 	The Company will assign its rights, benefits and interests in the Global
Policy under the English Security Agreement.
	 
	 	(d)	 	Following the occurrence of an Event of Default:






	 	(i)	 	the Company shall procure that any Global Policy then in
place shall be replaced no later than the next renewal date of such Global
Policy by an international reinsurance or reinsurances which meet the
requirements of this Schedule 12; and
	 
	 	(ii)	 	no Global Policy shall be permitted to be in place without
the consent of the Global Agent (acting on the instructions of the Lenders,
following consultation with the Insurance Advisor, if required).






	2.4	 	Reinsurances






	 	(a)	 	To the extent required by Kenyan law, but not otherwise, the Company shall
place and maintain insurances with a Kenyan insurer which (i) is authorised from time
to time under Kenyan law to underwrite such risks, and (ii) is approved for the
purpose by the Global Agent (acting on the instructions of the Lenders, the approval
of which shall not be unreasonably withheld or delayed).
	 
	 	(b)	 	To the extent required to procure contracts of reinsurance in Kenya, but not
otherwise, the company shall procure that any insurances underwritten by Kenyan
insurers shall be reinsured with a Kenyan reinsurer which:






	 	(i)	 	is authorised from time to time under Kenyan law to reinsure
such risks, and
	 
	 	(ii)	 	is approved for the purpose by the Global Agent (acting on
the instructions of the Lenders the approval of which shall not be
unreasonably withheld or delayed),






	 	 	(each reinsurance so placed, a “Local Reinsurance”).




185









 












	 	 	 	The Local Reinsurances shall reinsure not less than such percentage as is required
by law of each risk insured on an “as original” and fully back to back basis, shall
contain provisions or an endorsement in the form set out
in Part 2 of Exhibit B (Insurance Policy Endorsements), and shall otherwise comply
with all applicable requirements of this Schedule.
	 
	 	(c)	 	Unless there is a Global Policy in full force and effect in accordance with
Clause 2.3 (Global Policy Provisions) of this Schedule in respect of the risks insured
by:






	 	(i)	 	any insurance in Kenya (other than any risks reinsured under
Local Reinsurance); and
	 
	 	(ii)	 	any Local Reinsurance,






	 	 	 	the Company shall procure one or more project specific contract or reinsurance of
those insurances and Local Reinsurances (the “Offshore Reinsurances”) is purchased
and maintained in full force and effect throughout the period that the insurances
are required by this Schedule to be maintained. The Offshore Reinsurances shall
reinsure not less than (x) 95% of any risk under any insurance (other than any
risks insured under Local Reinsurance and (y) 95% of each risk reinsured under the
Local Reinsurances on an “as original” and fully back to back basis, shall contain
provisions or an endorsement in the form set out in Part 3 of Exhibit B (Insurance
Policy Endorsements), and shall comply with all requirements of this Schedule.






	 	(d)	 	The Company shall procure that:






	 	(i)	 	a Kenyan Reinsurance Assignment Agreement is entered into by
each local insurer; and
	 
	 	(ii)	 	an English Reinsurance Assignment Agreement is entered into
by each Kenyan reinsurer under the Offshore Reinsurances of any risk referred
to in Clause 2.4(c) (Reinsurances),






	 	 	 	and in each case also by the Company and the relevant Security Agent.






	 	(e)	 	Under the relevant Reinsurance Assignment Agreement each local insurer will
assign all its rights, benefits and interests in the Local Reinsurances and each local
reinsurer will assign its rights, benefits and interests in the Offshore Reinsurances,
in each case as specified in the relevant Reinsurance Assignment Agreement. The
Company shall procure that notice of assignment in the form specified in the
Reinsurance Assignment Agreement shall be given promptly to every reinsurer and
acknowledged by those reinsurers as specified therein.




186









 






	 	(f)	 	The Company shall assign in favour of the Finance Parties, the Company’s
rights, title and interest in the Reinsurance Assignment Agreement.






	3	 	ADDITIONAL UNDERTAKINGS






	3.1	 	General Undertakings
	 
	 	 	The Company undertakes to:






	 	(a)	 	pay or procure the payment on a timely basis of all premiums as required by
the terms of the insurances;
	 
	 	(b)	 	evidence promptly by the provision of original or true copy documents at the
reasonable request of the Global Agent that the Company is in compliance with the
requirements of this Schedule;
	 
	 	(c)	 	promptly provide to the Global Agent copies of all cover notes and policies
(including endorsements) issued from time to time in relation to the insurances, and
of all changes requested or effected thereto and, if so requested by the Global Agent,
of placing slips and all documents disclosed or disclosable to the insurers of the
insurances in respect of the placement and maintenance of the insurances and relating
to claims notified or notifiable to insurers or the insurance brokers;
	 
	 	(d)	 	comply or procure compliance at all times with the terms and conditions of
all insurances and to take all action within its power to procure that nothing is at
any time done or suffered to be done whereby any insurance required to be maintained
hereunder or under any Project Document may be impaired, suspended or rendered void or
voidable in whole or in part, or any Insurance Proceeds become uncollectable in full;
	 
	 	(e)	 	procure that all insurances, and the procurement thereof, comply at all times
with all applicable laws and regulations, and that all authorisations, consents and
approvals required for the purchase and maintenance of the insurances on the basis
provided in this Agreement are obtained and remain valid and applicable;
	 
	 	(f)	 	procure that no person shall have the benefit of any rights under or to
enforce any insurance, except for persons identified as insured or additional named
insured in Exhibit A and that no person other than the insurer(s) referred to in
Clause 2.4(a) (Reinsurances) of this Schedule, and the Company and the relevant
Security Agent shall have the benefit of any rights under or to enforce any
Reinsurance;
	 
	 	(g)	 	forthwith notify the Insurers and the Global Agent of any increase or
material change in any risk insured under any insurance;




187









 












	 	(h)	 	not do or permit to be done anything in relation to the insurances which is
likely adversely to affect the rights of the Finance Parties under the insurances or
their interests (including security interests) in them;
	 
	 	(i)	 	notify the Global Agent immediately of any fact event or circumstance which
has caused or may cause the Company to be in breach of any provision of this Schedule;
	 
	 	(j)	 	procure that each insurer under all of the insurances:






	 	(i)	 	is promptly notified, in the case of the insurances, in the
form of the notice of assignment set out in the Kenyan Debenture of the
security interests created in favour of the Onshore Security Agent for the
benefit of the Finance Parties under the Security in the Company’s title to,
and rights, interest and benefits under, such policies and issues a notice of
confirmation and acknowledgement or assignment, in the form set out in the
Kenyan Debenture Debenture;
	 
	 	(ii)	 	notes on each such policy by way of endorsement the relevant
Security Agent’s and the Finance Parties’ interest in that policy under the
Security, such endorsement to be in form and substance satisfactory to the
Global Agent (acting on the instructions of the Lenders); and
	 
	 	(iii)	 	acknowledges that no Finance Parties (as lenders and/or
beneficiaries) under the relevant policy and the Security will be liable to
the insurers or reinsurers for the payment of any insurance or reinsurance
premiums nor for any other obligations of the Company; and






	 	(k)	 	use its best efforts to ascertain that payments of reinsurance premiums under
the reinsurances, if any, required to be maintained by the Company are paid in a
timely manner and promptly inform the Global Agent and the Offshore Security Agent
when it becomes aware that any such premiums have not been paid.






	3.2	 	Reporting Requirements






	 	(a)	 	The Company shall provide to the Global Agent the following:






	 	(i)	 	as soon as possible after its occurrence, notice of any one
event which entitles the insured parties to claim for an aggregate amount
exceeding the equivalent of one million US Dollars (US$1,000,000) under any
one or more insurance policies;




188









 






	 	(ii)	 	within thirty (30) days after any insurance policy is issued
to the Company or amended, a copy of that policy incorporating any loss payee
or additional insured provisions required hereunder (unless that policy has
already been provided to the Global Agent pursuant
to Clause 4 (Conditions)) or Clause 3.1(b) or (c) (General Undertakings)
of this Schedule;






	 	(iii)	 	if there is any material change in the risk exposure of the
Project, the Company, its business or assets within thirty (30) days of such
change of which the Company is aware (or notice of such change from the Global
Agent (acting on the instructions of the Lenders, acting reasonably) to the
Company) the Company shall provide an Insurance Review together with a copy of
any additional insurance obtained, or modification of any existing policy made
as a result of that material change;
	 
	 	(iv)	 	not less than fourteen (14) days prior to the expiry date of
any of the insurances or reinsurances (or, for insurance with multiple renewal
dates, not less than ten (10) days prior to the expiry date of the policy on
the principal asset), a certificate of renewal from the insurer, reinsurer,
insurance broker or agent confirming the renewal of that policy and the
renewal period, the premium, the amounts insured for each asset or item and
any changes in terms or conditions from the policy’s issue date or last
renewal, and confirmation from the insurer or reinsurer that provisions naming
the relevant Finance Party or Finance Parties as loss payee or additional
named insured, as applicable, remain in effect;
	 
	 	(v)	 	within thirty (30) days after the end of each Financial Year
submit to the Global Agent a certificate from the Company’s insurers and/or
insurance brokers (if any), confirming that all insurances and reinsurances
are in full force and effect indicating the properties insured, amounts and
risks covered, names of the beneficiaries, names of the insurers and any
special features of the insurance policies in effect on the date of the
relevant certificate; and
	 
	 	(vi)	 	such evidence of premium payment as the Global Agent may from
time to time reasonably request.






	3.3	 	Broker Undertaking Letter
	 
	 	 	The Company will procure that every insurance and reinsurance broker who effects any
insurance writes a letter to the Global Agent in respect thereof in the form set out in
Exhibit C (Broker’s Letter of Confirmation and Undertaking).




189









 












	3.4	 	Files
	 
	 	 	The Company shall maintain intact its files (including all documents disclosed and
correspondence in connection with the placement of the insurances and claims thereunder)
until the Final Termination Date and (in the case of
insurances) for any run off period specified in Part 3 of Exhibit A (Insurances), and shall
give to the Global Agent all such information relating to the insurances as the Global
Agent may reasonably request in writing.






	4	 	CHANGES IN THE INSURANCES






	4.1	 	Additional Insurances
	 
	 	 	Subject to Clause 2.1(d) (General Requirements) of this Schedule, the Company undertakes to
purchase and maintain such additional insurance or wider cover and higher limits of cover
under existing insurances that a prudent developer, owner or operator of the Project, its
site and facilities would purchase and maintain, or as the Finance Parties may reasonably
require in order to protect their own interests in relation to the Project, if such
additional or wider cover at any time is or becomes available in the international
insurance or reinsurance market on reasonable commercial terms, if there is (in the
reasonable opinion of the Company or the Lenders) a material change in or material increase
in the insurable risks relating to the Project. In determining whether a prudent
developer, owner or operator of the Project would purchase such additional insurance regard
shall be had to the scope of such insurance and its cost in the context of the finances of
the Project.
	 
	4.2	 	Material variations in Cover
	 
	 	 	If any variation is proposed to be made to the terms of any insurance the Company shall
give (or cause to be given) at least forty-five (45) days’ prior written notice thereof to
the Global Agent. No variation to any insurance shall be effected or agreed by the Company
until the Global Agent (acting on the instructions of the Lenders) notifies the Company in
writing either that the variation is not prejudicial to the Finance Parties or is otherwise
agreeable to the Global Agent (acting on the instructions of the Lenders). The Global
Agent (acting on the instructions of the Lenders) will not unreasonably withhold or delay
its agreement after obtaining any advice that it deems appropriate in considering the
Company’s request.
	 
	 	 	For the purpose of this clause a variation includes (without limitation):






	 	(a)	 	reduction to limits of cover or increase in deductible or an increase in
excess or self insurance arrangements of ten percent (10%) or more from those set out
herein;




190









 












	 	(b)	 	adverse changes to risks insured, to coverage terms, and the inclusion of new
exclusions or exceptions;
	 
	 	(c)	 	any cancellation, discontinuance, non-renewal or avoidance of any cover
provided under any insurance;
	 
	 	(d)	 	any change which might have the effect of causing a breach by the Company of
any obligation under this Agreement or a material breach under any other Principal
Document.






	5	 	NON COMPLIANCE WITH INSURANCE PROVISIONS






	5.1	 	Global Agent Power to Insure
	 
	 	 	Subject to Clause 2.1(d) (General Requirements) of this Schedule, and any other exceptions
provided in this Schedule, if at any time and for any reason any insurance is not in full
force and effect on the terms or for the insured values required under this Schedule, then
(without prejudice to any of the rights of any of the Finance Parties under the Finance
Documents) the Global Agent (acting on the instructions of the Lenders) shall forthwith be
entitled, at the cost and expense of the Company, to procure and pay for such insurance and
reinsurance as the Company should have effected or procured pursuant to the terms hereof or
at any time whilst such failure is continuing.






	5.2	 	Minimising Hazard
	 
	 	 	If any required insurance is for any reason at any time not in force, the Company shall
(without prejudice to any other obligations of the Company hereunder or under the Finance
Documents) take or procure the taking of all such steps to minimise hazard which are within
its power and which a prudent person in the position of the Company would take in the
circumstances.
	 
	6	 	CLAIMS
	 
	6.1	 	Pursuing Claims against Insurers
	 
	 	 	The Company shall promptly notify to insurers any matter for which it may be entitled to
claim under the insurances, and shall diligently pursue any claim.
	 
	6.2	 	Claims Conduct and Reporting
	 
	 	 	Subject to Clauses 6.3 (Larger Claims) of this Schedule and 6.4 (Rights following Event of
Default) of this Schedule the Company shall have the sole conduct of its claims under the
insurances arising out of any loss, but shall keep the Global Agent informed at semi-annual
intervals of the notification and progress of any claim relating to a loss in excess of one
million US Dollars (US$1,000,000)




191









 












	 	 	(before any deductible or excess) and the application of the resulting Insurance Proceeds. That information shall identify for each claim under
each insurance the type of claim, the Company’s claim reserve, the current status of that
claim, and such further information relating to that claim as the Global Agent (acting on
the instructions of the Lenders) may reasonably request.
	 
	6.3	 	Larger Claims
	 
	 	 	In respect of any loss where the actual or estimated totality of its claims arising is one
million US Dollars (US$1,000,000) or more (before any deductible or excess) (other than
with respect to third party liability) the Company shall not negotiate, compromise or
settle any claim with respect to such loss without the written consent of the Global Agent
(acting on the instructions of the Lenders), such consent not to be unreasonably withheld
or delayed.
	 
	6.4	 	Rights following Event of Default
	 
	 	 	Notwithstanding any other provisions of Clauses 6 (Claims) of this Schedule and 7
(Insurance Proceeds) of this Schedule, in relation to claims under the insurances (other
than as provided in Clause 7.2 (Pursuing Liability Claims) of this Schedule), if an Event
of Default has occurred and is outstanding:






	 	(a)	 	the Global Agent (acting on the instructions of the Lenders) shall have the
right to take over sole conduct of the Company’s claims; and
	 
	 	(b)	 	the Global Agent (acting on the instructions of the Lenders) shall be
entitled to require all Insurance Proceeds (including funds in the Insurance Proceeds
Account) not required to be applied in accordance with the PPA, to be applied by the
Company in accordance with the terms of the Finance Documents.






	7	 	INSURANCE PROCEEDS
	 
	7.1	 	Insurance Proceeds Account
	 
	 	 	Save as otherwise provided in this Clause 7 (Insurance Proceeds) all Insurance Proceeds
shall be paid into the Insurance Proceeds Account (as defined in the Project Accounts
Agreement) except for the proceeds of business interruption insurance which shall be paid
into the Offshore Revenue Account.
	 
	7.2	 	Pursuing Liability Claims
	 
	 	 	Clause 7.1 (Insurance Proceeds Account) does not apply to Insurance Proceeds paid in
respect of liabilities of the Company for third party claims insured under the insurances
to the extent that those Insurance Proceeds are applied directly to make payment to a third
party.




192









 












	7.3	 	Application of Insurance Proceeds
	 
	 	 	Subject to Clauses 6.4 (Rights following Event of Default) of this Schedule, the Company
may withdraw Insurance Proceeds paid into the Insurance Proceeds Account in accordance with
Clause 8.2 (Mandatory Prepayment of Insurance Proceeds and Compensation Proceeds) of this
Agreement and the Project Accounts Agreement.






193











 





EXHIBIT A

INSURANCES




ALL-RISK PROPERTY DAMAGE & BUSINESS

INTERRUPTION- LOCAL POLICY




	 	 	 
	Local Carrier:

	 	REAL Insurance Company Limited (Local Insurance Policy)
	 
	 	 
	A. M. Best rating:

	 	None
	 
	 	 
	Policy Number:

	 	BO 70406
	 
	 	 
	Coverage Term:

	 	May 30, 2008 to May 30, 2009
	 
	 	 
	Limits of Insurance:

	 	Property Damage: Amount equal to the replacement value of the
Plant (US$114,000,000) less 50% of the amount standing to the
credit of the Debt Service Reserve Account.
	 
	 	 
	 

	 	Business Interruption: Kshs equivalent of US$35.5m:
	 
	 	 
	 

	 	Machinery Breakdown: Amount equal to the replacement value of
the Plant (US$114,000,000) less 50% of the amount standing to
the credit of the Debt Service Reserve Account:
	 
	 	 
	 

	 	Machinery Breakdown Loss of Profits: Kshs equivalent of $35.5m:
	 
	 	 
	Time Element 

Indemnity Period:

	 	12 months





	 	 	 	 	 
	Deductibles:

	 	Kshs 3,500,000
	 	Property Damage
	 

	 	60 days
	 	Business Interruption
	 

	 	Kshs 750,000
	 	Machinery Breakdown
	 

	 	60 days
	 	Machinery Breakdown Loss of Profits






	 	 	 
	Named Insured:

	 	OrPower4 and/or associated and/or affiliated and./or
subsidiary and/or parent companies or corporations, and/or
KPLC and /or Finance Parties for their respective rights
	 
	 	 
	Additional Insureds:
	 	 
	 
	 	 
	Loss Payees:

	 	Finance Parties to be Sole Loss Payee
	 
	 	 
	Cancellation:

	 	60 days
	 
	 	 
	Key Exclusions:

	 	Terrorism and Sabotage
	 
	 	 
	Subrogation:

	 	Waived in favor of the Finance Parties
	 
	 	 
	Valuation:

	 	Policy requires replacement value






ALL-RISK PROPERTY DAMAGE & BUSINESS

INTERRUPTION- GLOBAL POLICY




	 	 	 
	Carrier:

	 	Assicurazioni Generali S.P.A.- DIC/DIL and also, the
primary insurance for certain perils that are not required
to be included in the local insurance policy but which the
Company insures.






194









 






	 	 	 
	A. M. Best rating:

	 	A+, XV
	 
	 	 
	Policy Number:

	 	BO 70034
	 
	 	 
	Coverage Term:

	 	May 30, 2008 to May 30, 2009
	 
	 	 
	Limits of Insurance:

	 	Property Damage : Amount equal to the replacement value of
the Plant (US$114,000,000) less 50% of the amount standing
to the credit of the Debt Service Reserve Account:
	 
	 	 
	 

	 	Business Interruption: US$35.5m:
	 
	 	 
	Kenya:

	 	Claims made in respect of assets other than the Olkaria III
project in Kenya shall not reduce the insurance limits
available for the Olkaria III project.
	 
	 	 
	Key Sublimits:

	 	Suppliers/customers/public utilities and denial of access
for US$7,500,000
	 
	 	 
	 

	 	Included Terrorism and Sabotage $10,000,000

	 
	 	 
	 

	 	
Earthquake/Flood/Wind/Volcanic Eruption to total value of
the assets (with $100M sublimit, excluding assets in CA and
HI)
	 
	 	 
	Time Element 

Indemnity Period:

	 	12 months






	 	 	 	 	 
	Deductibles:

	 	US$150,000
	 	Physical Damage, except
	 

	 	US$225,000
	 	Machinery Breakdown
	 

	 	US$100,000
	 	Terrorism
	 

	 	5% of loss
	 	Earthquake, Flood, Wind and Volcanic Eruption
	 

	 	(US$250,000 minimum)
	 

	 	21 days
	 	Business Interruption, except
	 

	 	40 days
	 	Machinery Breakdown Business Interruption
	 

	 	14 days
	 	Terrorism Business Interruption






	 	 	 
	Named Insured:

	 	Ormat Industries, Ltd., and/or associated and/or affiliated
and./or subsidiary and/or parent companies or corporations
	 
	 	 
	Additional Insureds:

	 	Included as per contractual agreement
	 
	 	 
	Loss Payees:

	 	Finance Parties to be First Loss Payee as respects their
interests in this asset
	 
	 	 
	Cancellation:

	 	60 days
	 
	 	 
	Key Endorsements:

	 	None
	 
	 	 
	Key Exclusions and
Restrictions:

	 	None apart from usual market practice policy exclusions
	 
	 	 
	Key Extensions:

	 	None
	 
	 	 
	Subrogation:

	 	Carrier agrees to waiver rights of subrogation in line with
Insured’s contractual position
	 
	 	 
	Misrepresentation & Fraud:

	 	None included as per usual market practice policy exclusions
	 
	 	 
	Errors or Omissions:

	 	None included as per usual market practice policy exclusions
	 
	 	 
	Other Insurance:

	 	This policy serves as a difference in conditions cover for
differences in limits/values where the local policy is more
restrictive.
	 
	 	 
	Valuation:

	 	Policy requires replacement value






195









 






CONTROL OF WELL- GLOBAL POLICY




	 	 	 
	Carrier:

	 	Several Lloyds Syndicates (Leader: Catlin Syndicate)-
Corporate Insurance Policy which is not required to
be written on local insurance paper)
	 
	 	 
	A. M. Best rating:

	 	A XV
	 
	 	 
	Policy Number:

	 	MB003407
	 
	 	 
	Coverage Term:

	 	March 1, 2008 effective date- March 1 2009
	 
	 	 
	Limits of Insurance:

	 	US$20,000,000   combined single limit

US$1,000,000     care, custody and control per occurrence






LIABILITY INSURANCE- LOCAL POLICY




	 	 	 
	Carrier:

	 	REAL Insurance Company Limited- Local Insurance Policy/Insurer
	 
	 	 
	A. M. Best rating:

	 	None
	 
	 	 
	Policy Number:

	 	BO 70406
	 
	 	 
	Coverage Term:

	 	May 30, 2008 to May 30, 2009
	 
	 	 
	Limits of Liability:

	 	Kshs equivalent of US$4,225,000 per occurrence but in the
aggregate for Products Liability
	 
	 	 
	Deductibles:

	 	Kshs equivalent of US$125 or 10% of each claim,
Nothing for bodily injury
	 
	 	 
	Named Insured:

	 	OrPower4 and/or associated and/or affiliated and./or
subsidiary and/or parent companies or corporations, and/or
KPLC and /or Finance Parties for their respective rights
	 
	 	 
	Cancellation:

	 	60 Days






LIABILITY INSURANCE- GLOBAL POLICY




	 	 	 
	Carrier:

	 	Asicurazioni Generali- (Corporate Insurance Program, not
required to be written on local insurance paper.)
	 
	 	 
	A. M. Best rating:

	 	A+, XV
	 
	 	 
	Policy Number:

	 	06FL00899000
	 
	 	 
	Coverage Term:

	 	30th May 2008 to 30th May 2009
	 
	 	 
	Limits of Liability:

	 	US$15,000,000
	 
	 	 
	Self-Insured Retention:

	 	US$25,000
	 
	 	 
	Underlying Insurance:

	 	Continental Casualty Company.
	 
	 	 
	Named Insured:

	 	Ormat Technologies Inc &/or Subsidiary &/or Associated Companies.
	 
	 	 
	Cancellation:

	 	90 Days.
	 
	 	 
	Key Exclusions:

	 	As per wording






196









 






	 	 	 
	Coverage:

	 	Public Liability, Products, Pollution, Completed Operations,
Advertising Liability plus Excess Auto Liability and Excess
Employers Liability.






EXCESS TERRORISM- PROJECT SPECIFIC




	 	 	 
	Carrier:

	 	Lloyd’s of London
	 
	 	 
	A. M. Best rating:

	 	A, XV
	 
	 	 
	Policy Number:

	 	TBA
	 
	 	 
	Coverage Term:

	 	17th June 2008-17th June 2009
	 
	 	 
	Limits of Liability:

	 	US$10,000,000
	 
	 	 
	Self-Insured Retention:

	 	Excess of US$10,000,000 per occurrence and in the aggregate
	 
	 	 
	Underlying Deductibles

	 	US$100,000 PD and 14 Days BI
	 
	 	 
	Named Insured:

	 	Ormat Technologies Inc &/or Subsidiary &/or Associated Companies.
	 
	 	 
	Cancellation:

	 	90 Days.







197











 





EXHIBIT B

INSURANCE POLICY ENDORSEMENTS

PART 1

(ENDORSEMENTS TO DIRECT INSURANCE POLICIES)



All policies of insurance shall contain the following provisions or endorsements:





	1	 	Definitions used in this endorsement
	 
	 	 	In this endorsement it is agreed that:
	 
	 	 	“Global Agent” means DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH acting in
that capacity for, and insuring the interests of, the Finance Parties, and includes its
successors from time to time in that capacity.
	 
	 	 	“Company” means OrPower4 Inc.
	 
	 	 	“Finance Parties” are the banks, and other institutions who are additional insureds
hereunder and are involved in providing funding, financing, financial accommodation and
hedging facilities to the Company in relation to the Project. The phrase includes any
assignee, transferee, successor or novated, replacement or additional creditor of or in
relation to any of the foregoing.
	 
	 	 	“Insureds” means the Company and each of the Finance Parties severally.
	 
	 	 	“Onshore Security Agent” means the Person acting in that capacity under a Common Terms
Agreement between the Company and the Finance Parties for, and insuring the interests of,
the Finance Parties, and includes its successors from time to time.
	 
	 	 	“Project” means the design, development, financing, ownership, commissioning, completion,
insurance, operation and maintenance of a 48 MW geothermal power plant operated by the
Company in Kenya and the construction of all associated transmission and substation
facilities and all related ancillary works on or off the site.
	 
	2	 	Acknowledgement of assignment
	 
	 	 	The Insurers acknowledge that they have been notified that the Company has assigned by way
of first ranking security to the Finance Parties the benefit of this insurance and its
interest and rights in its subject matter of this insurance, and confirm that they have not
been notified of any other pledge or assignment of or security interest in the Company’s
interest in this insurance.




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	3	 	Additional insurance of the Finance Parties
	 
	 	 	The Insurers acknowledge that the Finance Parties and (in respect of third party
liabilities) their respective officers, directors, employees and assigns are each
additional nsureds under this policy and that the premium specified in this policy provides
consideration for their being additional insured parties. The Insurers waive any claim
that they might otherwise have against any such additional insured party in respect of any
premium payable in respect of this insurance.
	 
	4	 	Segregation of co-insureds’ cover
	 
	 	 	The Insurers agree that each of the Insureds shall for the purpose of this Policy be
treated as an individually and separately insured party to the insurance contract, and each
shall be separately insured from any other insured person in respect of its own insurable
rights and interest provided that the total liability of the Insurers under each Part of
this policy to all Insureds collectively shall not (unless the Policy specifically permits
otherwise) exceed the limit of indemnity stated to be insured thereby. The liability of
the Insurers under this Policy to any one Insured shall not be conditional upon the due
observance and fulfilment by any other insured party of the terms and conditions of this
Policy or of any contractual, pre-contractual or non-contractual duties imposed by law or
contract upon that other insured party relating thereto, and shall not be affected by any
failure in such observance or fulfilment by any such other insured party. Without
prejudice to the protections afforded to the Insured by this endorsement, no one Insured
represents or warrants the adequacy or accuracy of any information provided or
representation made by or on behalf of any other Insured.
	 
	5	 	Scope of Disclosure
	 
	 	 	The Insurers acknowledge that there is no information which has been relied on or is
required by Insurers in respect of their decision to co-insure the Finance Parties or their
directors, officers, employees or agents. Non-disclosure or misrepresentation, negligence
or breach by any one Insured (or its agent) shall not be attributable to any other insured
party who did not directly and actively participate in that non-disclosure or
misrepresentation knowing it to be such.
	 
	6	 	Limitation on Power to amend insurances
	 
	 	 	Each Insurer severally agrees that neither the sums insured nor the risks covered under
this policy and any renewal of it by that Insurer will be reduced in any way, and that no
deductible, excess or retention will be increased, without the prior written agreement of
the Onshore Security Agent.




199









 












	7	 	Waiver of Subrogation and Contribution Rights
	 
	 	 	The Insurers hereby waive all rights:






	 	(a)	 	of subrogation or action howsoever arising which they may have or acquire
arising out of any occurrence in respect of which any claim is admitted hereunder:






	 	(i)	 	against any of the Finance Parties or their officers,
directors, employees and agents; and
	 
	 	(ii)	 	against the Company until all its financial indebtedness to
the Finance Parties has been discharged; and/or
	 
	 	(iii)	 	involving the exercise of rights or powers vested in the
Company or any Finance Party (acting in any capacity) under or by virtue of
any agreement relating to the Project; and






	 	(b)	 	to reduce the amount payable under this policy by reason of the existence of
any other contract of insurance covering the same risk, or to seek contribution from
any other insurance effected by any of the Finance Parties.






	8	 	Offset
	 
	 	 	The Insurers shall not be entitled to offset any sums payable to the Finance Parties
against premium or other monies owing by the Company, nor any sums owing to the Company
under this Policy against any monies owing by the Company under any other policy or
contract.
	 
	9	 	Loss Payments
	 
	 	 	For the benefit of the Onshore Security Agent the insured parties irrevocably authorise and
instruct the Insurer to pay, and the Insurer agrees to pay, all claims, return premiums, ex
gratia settlements and any other monies payable to any of them, other than the Finance
Parties, under or in relation to this contract to the Offshore Insurance Proceeds Account
or to such other account as the Onshore Security Agent as loss payee may specify in
writing, and that no instruction, whether by the Company or by any person other than the
Onshore Security Agent, to make any payment to any other person or account shall be
honoured by the Insurer unless given or countersigned by the Onshore Security Agent, or
such other person as that Onshore Security Agent may notify to the Insurer in writing. All
such payments shall be made by the Insurer without any deduction or set-off on any account
or of any kind. A payment to the loss payee in accordance with this clause shall, to the
extent of that payment, discharge the liability of the




200









 












	 	 	Insurer to pay the Company or other
claimant insured party. Any monies received by the Insurer from any facultative reinsurers
of the risks insured under this policy shall be received and held by the Insurer in trust
for the relevant claimant Insured.
The arrangements in this clause shall continue to apply notwithstanding the liquidation or
insolvency of the Company or the Insurer.
	 
	10	 	Notices by Insurers
	 
	 	 	The Insurers shall give to the Onshore Security Agent 15 days’ notice in writing in respect
of any failure to pay any premium by the Company and otherwise at least 60 days notice in
writing:






	 	(a)	 	if any Insurer intends to cancel or suspend this insurance or any cover under
this insurance for any reason;
	 
	 	(b)	 	before avoiding for non payment of any overdue premium in order to give an
opportunity for that premium to be paid within the notice period;
	 
	 	(c)	 	of any act or omission or of any event of which the Insurer has knowledge and
which the Insurer considers may invalidate or render unenforceable in whole or in part
this insurance or any claim under it or which might entitle the Insurer to terminate,
rescind or repudiate this policy in whole or part, or treat it as avoided, terminated
or suspended, against any insured party; and
	 
	 	(d)	 	if they have not agreed to renew this Insurance at its next expiry date.






	11	 	Service of notices
	 
	 	 	All notices or other communications under or in connection with this policy will be given
in writing or by fax. Any such notice will be deemed to be given as follows:






	 	(a)	 	if in writing, when delivered;
	 
	 	(b)	 	if by fax, on the date on which it is transmitted but only if (i) immediately
after the transmission, the sender’s fax machine records the correct answerback (ii)
the transmission date is a normal business day in the country of the recipient at the
time of transmission and is recorded as received before 5.00 p.m. on that date in the
recipient’s time zone, failing which it shall be deemed to be given on the next normal
business day in the recipient’s country.






	 	 	The address and fax number of the Onshore Security Agent for all notices under or in
connection with this policy are those notified from time to time by the




201









 












	 	 	Onshore Security
Agent for this purpose to the Company. The initial address and fax number of the Onshore
Security Agent are as follows:
	 
	 	 	The Onshore Security Agent:
	 
	 	 	[               
                 ]
	 
	 	 	Address:
	 
	 	 	[               
                 ]
	 
	 	 	Fax: [               
                 ]
	 
	 	 	Attn: [               
                 ]
	 
	12	 	Role of Onshore Security Agent
	 
	 	 	The Onshore Security Agent is not agent of any party other than the Finance Parties for
receipt of any notice or any other purpose in relation to this insurance.
	 
	13	 	Governing Law
	 
	 	 	Notwithstanding any other provision of this contract, this contract shall be governed and
interpreted in accordance with the applicable law governing the policy.
	 
	14	 	Enforceability
	 
	 	 	Each Insurer agrees:






	 	(a)	 	that each provision of this clause as applicable to it is reasonable;
	 
	 	(b)	 	not to contest the enforceability of any such provision in any proceeding
arising out of or in connection with this contract or its purported repudiation,
avoidance or termination;
	 
	 	(c)	 	not to rely on any finding that any wider duty (including any pre-contractual
or other non-contractual duty) was owed to Insurers than is expressed in this contract
to be owed and that any such duty owed was breached (whether by any Insured or any
agent of an Insured or any other person) to decline any claim or to repudiate, avoid
or terminate this contract even such breach of duty was negligent;
	 
	 	(d)	 	that each such provision is severable from every other provision of this
contract and is intended by it to be valid, binding and enforceable in accordance with
its terms notwithstanding any purported repudiation, avoidance or termination;




202









 












	 	(e)	 	that the provisions of this specifically negotiated endorsement override any
inconsistent or incompatible provision elsewhere in the contract.






	15	 	Amendments to the policy
	 
	 	 	The provisions of this contract of insurance (including this endorsement) may only be
amended by written agreement between duly authorised representatives of the parties, such
amendment to be endorsed on the contract policy.
	 
	16	 	This endorsement overrides
	 
	 	 	This endorsement overrides any conflicting provision in any policy to which it applies.




203









 











PART 2

(REINSURANCE POLICY ENDORSEMENTS

FOR REINSURANCE POLICIES IN KENYA)



To the extent that any reinsurance is required in accordance with Clause 2.4(a) (Reinsurances) of
Schedule 12, all Local Reinsurances contain the following provisions or endorsements:





	1	 	Definitions used in this endorsement
	 
	 	 	In this endorsement it is agreed that:
	 
	 	 	“Company” means OrPower4 Inc.
	 
	 	 	“Finance Parties” are the banks, and other institutions who are additional insureds
hereunder and are involved in providing funding, financing, financial accommodation and
hedging facilities to the Company in relation to the Project. The phrase includes any
assignee, transferee, successor or novated, replacement or additional creditor of or in
relation to any of the foregoing.
	 
	 	 	“Global Agent” means DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH acting in
that capacity for, and insuring the interests of, the Finance Parties, and includes its
successors from time to time in that capacity.
	 
	 	 	“Insurer” means the insurer or insurers from time to time reinsured under this policy of
reinsurance.
	 
	 	 	“Insureds” means the Company and each of the Finance Parties severally.
	 
	 	 	“Onshore Security Agent” means the Person acting in that capacity under a Common Terms
Agreement between the Company and the Finance Parties for, and insuring the interests of,
the Finance Parties, and includes its successors from time to time.
	 
	 	 	“Project” means the design, development, financing, ownership, commissioning, completion,
insurance, operation and maintenance of a 48 MW geothermal power plant operated by the
Company in Kenya and construction of all associated transmission and substation facilities
and all ancillary works on or off the site.
	 
	2	 	Acknowledgement of assignments
	 
	 	 	The Reinsurers acknowledge that they have been notified that (a) the Insurer has assigned
to the Company absolutely the benefit of this reinsurance and its interest and rights in
its subject matter (pursuant to a Reinsurance Assignment




204









 












	 	 	Agreement), and confirm that the
Reinsurers have not been notified of any other assignment or pledge of or security interest
in the Insurer’s interest in this
reinsurance; and that (b) the Company has assigned by way of first ranking security to the
Onshore Security Agent (as agent for the Finance Parties) all its rights title and interest
in the underlying Insurances reinsured hereby as well as the benefit of any Reinsurance
Assignment Agreement.
	 
	3	 	Reinsurance premiums
	 
	 	 	The Insurer confirms that it has given irrevocable authority to the Company’s insurance
broker, as agent of the Insurer, to pay reinsurance premiums direct to the Reinsurers. The
Insurer acknowledges that this arrangement does not relieve it of liability for unpaid
reinsurance premium. A payment of reinsurance premium in accordance with this arrangement
shall, to the extent of its payment to the Reinsurers, discharge (a) the liability of the
Company to pay premium to the insurers and (b) the liability of the Insurers to pay premium
to the Reinsurers.
	 
	4	 	Scope of disclosure
	 
	 	 	The Reinsurers acknowledge for the benefit of the Insurer and the Insureds that there is no
information which has been relied on or is required by Reinsurers in respect of their
decision to reinsure in respect of the Insureds or their directors, officers, employees or
agents.
	 
	5	 	Non-disclosure, misrepresentation and breach
	 
	 	 	Notwithstanding any other provisions of this policy, the Reinsurers agree for the benefit
of the Insurer and the Insureds:






	 	(a)	 	that no Insured or agent for the Insured owes any duty to disclose any
information to the Reinsurers; and
	 
	 	(b)	 	not to reduce or amend the sums insured and/or the risks covered or increase
the Insurer’s retention under this policy or any renewal of it by that Reinsurer
without 45 days’ prior written notice to the Onshore Security Agent.






	6	 	Reinsurance Claims Handling
	 
	 	 	The Insurer shall promptly notify to the lead Reinsurer (on behalf of all Reinsurers) all
information of an event or circumstances which may give rise to a claim under this
reinsurance policy (though bona fide late notification shall not prejudice the Insurer’s
rights hereunder). The lead Reinsurer shall have the authority on behalf of both the
Insurer and all Reinsurers to investigate adjust and agree any claim by an Insured against
the Insurer and which may give rise to a claim hereunder. In the event that the lead
Reinsurer agrees that any reinsured




205









 












	 	 	claim by the Company or the Onshore Security Agent
(acting on behalf of the Finance Parties) should be settled or compromised, then that
determination shall be binding on the Insurer; and shall likewise bind the Reinsurers to
settle the Insurer’s reinsurance claim in accordance with the loss payment provisions of
this
policy. This Clause 6 (Reinsurance Claims Handling) shall be in accordance with the
provisions of the claims control clause within the Reinsurance policy and in the event of
any inconsistency the claims control clause shall prevail.
	 
	7	 	Currency
	 
	 	 	Any loss hereunder shall be settled and accounted for by the Reinsurers (pro rata to their
respective shares, and taking account of the proportion of the underlying risk of the
Insurer reinsured hereunder) in the same currency as the currency in which the loss has
been properly claimed by an Insured, and applying the same exchange rate as was applied in
calculating the Insurer’s liability to the Insured where the Insured’s loss has been
converted into a different currency for the purpose of the claim against the Insurer.
	 
	8	 	Timing of claim payment obligation
	 
	 	 	The Reinsurers’ obligation to pay under this reinsurance and in accordance with the loss
payment provisions of this policy arises when the ceding Insurer’s reinsured liability
becomes payable (whether by agreement or compromise by the Insurer of a claim, court order
or arbitral award) and is not dependant on the Insurer having actually paid a claim or
settled a liability to the Company or the Onshore Security Agent (acting on behalf of the
Finance Parties).
	 
	9	 	Loss Payments
	 
	 	 	The Insurer irrevocably authorises and instructs the Reinsurer to pay, and the Reinsurer
agrees to pay, all claims, return premiums, ex gratia settlements and any other monies
payable under or in relation to this contract to the account of the company to the Offshore
Insurance Proceeds Account or to such other account as the Onshore Security Agent as loss
payee may specify in writing, and that no instruction, whether by the Insurer or by any
person other than the Onshore Security Agent, to make any payment to any other person or
account shall be honoured by the Reinsurer unless given or countersigned by the Onshore
Security Agent, or such other person as the Onshore Security Agent may notify to the
Reinsurer in writing. All such payments shall be made by the Reinsurer without any
deduction or set-off on any account or of any kind except deductions for any unpaid
premiums. A payment to the loss payee in accordance with this provision shall, to the
extent of that payment, discharge (a) the liability of the Reinsurer to pay the Insurer,
and (b) the liability of the Insurer to the Insureds under the underlying insurance
contract reinsured hereby. The arrangements in this clause




206









 












	 	 	shall continue to apply
notwithstanding the liquidation or insolvency of the Insurer or the Reinsurer or the
Company.
	 
	10	 	Waiver of subrogation
	 
	 	 	The Reinsurers hereby waive all rights of action that they may have or acquire by way of
subrogation or otherwise howsoever (a) against any of the Insureds or their respective
officers, directors, employees and agents or (b) involving the
exercise of rights or powers vested in any Insureds (acting in any capacity) under or by
virtue of any agreement relating to the Project.
	 
	11	 	Underlying Insureds not liable for reinsurance premiums
	 
	 	 	The Reinsurers acknowledge that none of the Insureds is liable for payment of any premium
payable in respect of this reinsurance.
	 
	12	 	Offset
	 
	 	 	No Reinsurer shall be entitled to offset any sums payable to it by the Insurer or any
Insured on any account whatsoever (other than premium outstanding from the Insurer in
respect of this contract of reinsurance) against any amount payable by that Reinsurer under
this reinsurance.
	 
	13	 	Notices by Reinsurers
	 
	 	 	Reinsurers shall give to the Onshore Security Agent at least 45 days notice in writing:






	 	(a)	 	of any act or omission or of any event of which the Reinsurer has knowledge
and which the Reinsurer considers would invalidate or render unenforceable in whole or
in part this reinsurance or any claim under it or which might entitle the Reinsurer to
terminate, rescind, repudiate or avoid this policy, or to treat it as terminated, or
to exclude or decline any claim under it, in whole or part for any reason;
	 
	 	(b)	 	if they have not agreed to renew this Reinsurance policy at its next expiry
date.






	14	 	Service of notices
	 
	 	 	All notices or other communications under or in connection with this policy will be given
in writing or by fax. Any such notice will be deemed to be given as follows:






	 	(a)	 	if in writing, when delivered;




207









 












	 	(b)	 	if by fax, on the date on which it is transmitted but only if (i) immediately
after the transmission, the sender’s fax machine records the correct answerback (ii)
the transmission date is a normal business day in the country of the recipient at the
time of transmission and is recorded as received before 5.00 p.m. on that date in the
recipient’s time zone, failing which it shall be deemed to be given on the next normal
business day in the recipient’s country.






	 	 	The address and fax number of the Onshore Security Agent for all notices under or in
connection with this policy are those notified from time to time by the
Onshore Security Agent for this purpose to the Company. The initial address and fax number
of the Onshore Security Agent is as follows:
	 
	 	 	The Onshore Security Agent
	 
	 	 	Address: [              
                  ]
	 
	 	 	Fax: [               
                 ]
	 
	 	 	Attn: [               
                 ]
	 
	15	 	Role of Onshore Security Agent
	 
	 	 	The Onshore Security Agent is not agent of any party other than the Finance Parties for
receipt of any notice or any other purpose in relation to this reinsurance.
	 
	16	 	Direct Enforceability
	 
	 	 	It is agreed that the Insureds shall be entitled by virtue of the Contract (Rights of Third
Parties) Act 1999 to enforce the benefit of paragraphs 4, 5, 10, 11 and 12 of this
endorsement and to permit the Onshore Security Agent to enforce directly the benefit of
paragraphs 9, 13, 15 and 18 of this endorsement.
	 
	17	 	Governing law and jurisdiction
	 
	 	 	Notwithstanding any other provision of this contract, this contract shall be governed by
and interpreted in accordance with the applicable law governing the reinsurance policy.
	 
	18	 	Amendments to the policy
	 
	 	 	The provisions of this contract of insurance (including this endorsement) may only be
amended by written agreement between duly authorised representatives of the parties, such
amendment to be endorsed on the contract policy.




208









 












	19	 	This endorsement overrides
	 
	 	 	This endorsement overrides any conflicting provision in any policy to which it applies.




209









 











PART 3

(REINSURANCE POLICY ENDORSEMENT

FOR OFFSHORE REINSURANCE POLICIES)



To the extent that any reinsurance is required in accordance with Clause 2.4(c) (Reinsurances) of
Schedule 12, all Offshore Reinsurances contain the following provisions or endorsements:





	1	 	Definitions used in this endorsement
	 
	 	 	In this endorsement it is agreed that:
	 
	 	 	“Company” means OrPower4 Inc.
	 
	 	 	“Global Agent” means DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH acting in
that capacity for, and insuring the interests of, the Finance Parties, and includes its
successors from time to time in that capacity.
	 
	 	 	“Insurer” means the insurer or insurers from time to time reinsured under this policy of
reinsurance.
	 
	 	 	“Insureds” means the Company and the Offshore Security Agent severally.
	 
	 	 	“Offshore Security Agent” means BNY Corporate Trustee Services Limited, acting in that
capacity under a Common Terms Agreement between the Company and the Finance Parties for,
and insuring the interests of, the Finance Parties, and includes its successors from time
to time in that capacity.
	 
	 	 	“Project” means the design, development, financing, ownership, commissioning, completion,
insurance, operation and maintenance of a 48MW geothermal power plant operated by the
Company in Kenya and construction of all associated transmission and substation facilities
and all ancillary works on or off the site.
	 
	 	 	“Finance Parties” are the banks, and other institutions who are co-insureds hereunder and
are involved in providing funding, financing, financial accommodation and hedging
facilities to the Company in relation to the Project. The phrase includes any assignee,
transferee, successor or novated, replacement or additional creditor of or in relation to
any of the foregoing.
	 
	2	 	Acknowledgement of assignments
	 
	 	 	The Reinsurers acknowledge that they have been notified that (a) the Insurer has assigned
to the Company absolutely the benefit of this reinsurance and its interest and rights in
its subject matter (pursuant to a Reinsurance Assignment




210









 












	 	 	Agreement), and confirm that the
Reinsurers have not been notified of any other assignment or pledge of or security interest
in the Insurer’s interest in this
reinsurance; and that (b) the Company has assigned by way of first ranking security to the
Offshore Security Agent all its rights title and interest in the underlying reinsurances
and that (c) the Company has also assigned by way of first ranking security to the Offshore
Security Agent all its rights title and interest in the underlying insurances reinsured
hereby.
	 
	3	 	Reinsurance premiums
	 
	 	 	The Insurer confirms that it has given irrevocable authority to the Company’s insurance
broker, as agent of the Insurer, to pay reinsurance premiums direct to the Reinsurers. The
Insurer acknowledges that this arrangement does not relieve it of liability for unpaid
reinsurance premium. A payment of reinsurance premium in accordance with this arrangement
shall, to the extent of its payment to the Reinsurers, discharge (a) the liability of the
Company to pay premium to the Insurers and (b) the liability of the Insurer to pay premium
to the Reinsurers.
	 
	4	 	Scope of disclosure
	 
	 	 	The Reinsurers acknowledge for the benefit of the Insurer and the Insureds that there is no
information which has been relied on or is required by the Reinsurers in respect of their
decision to reinsure in respect of the Insureds or their directors, officers, employees or
agents.
	 
	5	 	Non-disclosure, misrepresentation and breach
	 
	 	 	Notwithstanding any other provisions of this policy, the Reinsurers agree for the benefit
of the Insurer and the Insureds:






	 	(a)	 	that no Insured or agent for the Insured owes any duty to disclose any
information to the Reinsurers; and
	 
	 	(b)	 	not to reduce or amend the sums insured and/or the risks covered or increase
the Insurer’s retention under this policy or any renewal of it by that Reinsurer
without 45 days’ prior written notice to the Offshore Security Agent.






	6	 	Reinsurance Claims Handling
	 
	 	 	The Insurer shall promptly notify to the lead Reinsurer (on behalf of all Reinsurers) all
information of an event or circumstances which may give rise to a claim under this
reinsurance policy (though bona fide late notification shall not prejudice the Insurer’s
rights hereunder). The lead Reinsurer shall have the authority on behalf of both the
Insurer and all Reinsurers to investigate adjust and agree any claim by an Insured against
the Insurer and which may give rise to a




211









 












	 	 	claim hereunder. In the event that the lead
Reinsurer agrees that any reinsured claim by the Company or the Offshore Security Agent
(acting on behalf of the Finance Parties) should be settled or compromised, then that
determination shall be binding on the Insurer; and shall likewise bind the Reinsurers to
settle the
Insurer’s reinsurance claim in accordance with the loss payment provisions of this policy.
This Clause 6 (Reinsurance Claims Handling) shall be in accordance with the provisions of
the claims control clause within the Reinsurance policy and in the event of any
inconsistency the claims control clause shall prevail.
	 
	7	 	Currency
	 
	 	 	Any loss hereunder shall be settled and accounted for by the Reinsurers (pro rata to their
respective shares, and taking account of the proportion of the underlying risk of the
Insurer reinsured hereunder) in the same currency as the currency in which the loss has
been properly claimed by an Insured, and applying the same exchange rate as was applied in
calculating the Insurer’s liability to the Insured where the Insured’s loss has been
converted into a different currency for the purpose of the claim against the Insurer.
	 
	8	 	Timing of claim payment obligation
	 
	 	 	The Reinsurers’ obligation to pay under this reinsurance and in accordance with the loss
payment provisions of this policy arises when the ceding Insurer’s reinsured liability
becomes payable (whether by agreement or compromise by the Insurer of a claim, court order
or arbitral award) and is not dependant on the Insurer having actually paid a claim or
settled a liability to the Company or the Offshore Security Agent (acting on behalf of the
Finance Parties).
	 
	9	 	Loss Payments
	 
	 	 	The Insurer irrevocably authorises and instructs the Reinsurer to pay, and the Reinsurer
agrees to pay, all claims, return premiums and any other monies payable under or in
relation to this contract to the account of the company to the Offshore Insurance Proceeds
Account or to such other account as the Offshore Security Agent as loss payee may specify
in writing, and that no instruction, whether by the Insurer or by any person other than the
Offshore Security Agent, to make any payment to any other person or account shall be
honoured by the Reinsurer unless given or countersigned by the Offshore Security Agent, or
such other person as the Offshore Security Agent may notify to the Reinsurer in writing.
All such payments shall be made by the Reinsurer without any deduction or set-off on any
account or of any kind except deductions for any unpaid premiums. A payment to the loss
payee in accordance with this provision shall, to the extent of that payment, discharge (a)
the liability of the Reinsurer to pay the Insurer; and (b) the liability of the Insurer to
the Insureds under the underlying insurance contract reinsured hereby. The arrangements in
this clause shall




212









 












	 	 	continue to apply notwithstanding the liquidation or insolvency of the
Insurer or the Reinsurer or the Company.
	 
	10	 	Waiver of subrogation
	 
	 	 	The Reinsurers hereby waive all rights of action that they may have or acquire by way of
subrogation or otherwise howsoever:






	 	(a)	 	against any of the Insureds or their respective officers, directors,
employees and agents; or
	 
	 	(b)	 	involving the exercise of rights or powers vested in any Insureds (acting in
any capacity) under or by virtue of any agreement relating to the Project.






	11	 	Underlying Insureds not liable for reinsurance premiums
	 
	 	 	The Reinsurers acknowledge that none of the Insureds is liable for payment of any premium
payable in respect of this reinsurance.
	 
	12	 	Offset
	 
	 	 	No Reinsurer shall be entitled to offset any sums payable to it by the Insurer or any
Insured on any account whatsoever (other than premium outstanding from the Insurer in
respect of this contract of reinsurance) against any amount payable by that Reinsurer under
this reinsurance.
	 
	13	 	Notices by Reinsurers
	 
	 	 	Reinsurers shall give to the Offshore Security Agent at least 45 days notice in writing:






	 	(a)	 	of any act or omission or of any event of which the Reinsurer has knowledge
and which the Reinsurer considers would invalidate or render unenforceable in whole or
in part this reinsurance or any claim under it or which might entitle the Reinsurer to
terminate, rescind, repudiate or avoid this policy, or to treat it as terminated, or
to exclude or decline any claim under it, in whole or part for any reason;
	 
	 	(b)	 	if they have not agreed to renew this Reinsurance policy at its next expiry
date.




213









 












	14	 	Service of notices
	 
	 	 	All notices or other communications under or in connection with this policy will be given
in writing or by fax. Any such notice will be deemed to be given as follows:






	 	(a)	 	if in writing, when delivered;
	 
	 	(b)	 	if by fax, on the date on which it is transmitted but only if (i) immediately
after the transmission, the sender’s fax machine records the correct answerback (ii)
the transmission date is a normal business day in the country of the recipient at the
time of transmission and is recorded as received before 5.00 p.m. on that date in the
recipient’s time zone, failing which it shall be deemed to be given on the next normal
business day in the recipient’s country.






	 	 	The address and fax number of the Offshore Security Agent for all notices under or in
connection with this policy are those notified from time to time by the Offshore Security
Agent for this purpose. The initial address and fax number of the Offshore Security Agent
are as follows:





	 	 	 
	Address:

	 	One Canada Square, London, E14 5AL.
	Fax:

	 	+44 207 964 2533
	Attention:

	 	Trustee Administration Manager







	15	 	Role of Offshore Security Agent
	 
	 	 	The Offshore Security Agent is not agent of any party other than the Finance Parties for
receipt of any notice or any other purpose in relation to this reinsurance.
	 
	16	 	Direct Enforceability
	 
	 	 	It is agreed that the Insureds shall be entitled by virtue of the Contract (Rights of Third
Parties) Act 1999 to enforce the benefit of paragraphs 4, 5, 10, 11 and 12 of this
endorsement and to permit the Offshore Security Agent to enforce directly the benefit of
paragraphs 9, 13, 15 and 18 of this endorsement.
	 
	17	 	Governing law and jurisdiction
	 
	 	 	Notwithstanding any other provision of this contract, this contract of reinsurance and any
non-contractual obligations arising out of or in connection with this contract of
reinsurance is governed by and to be interpreted in accordance with




214









 












	 	 	English law. Each
Reinsurer party submits irrevocably to the jurisdiction of the English courts for the
determination of any and all issues arising out of or in
connection with this contract (including as to its validity and enforceability). Without
prejudice to any other mode of service, each Reinsurer:






	 	(a)	 	irrevocably appoints [      
      ] as its agent for service of process in
relation to any proceedings before the English courts in connection with this
contract;
	 
	 	(b)	 	agrees to maintain that agent for service of process in England for so long
as any obligation is outstanding under this contact;
	 
	 	(c)	 	agrees that failure by a process agent to notify such Reinsurer of the
service of any process will not invalidate the proceedings concerned; and
	 
	 	(d)	 	agrees that if the appointment of any person mentioned paragraph (a) above
ceases to be effective, each Reinsurer shall immediately appoint a further person in
England to accept service of process on its behalf in England and, failing such
appointment within 15 days, the Offshore Security Agent is entitled to appoint such
person by notice to it.






	18	 	Amendments to the policy
	 
	 	 	The provisions of this contract of insurance (including this endorsement) may only be
amended by written agreement between duly authorised representatives of the parties, such
amendment to be endorsed on the contract policy.
	 
	19	 	This endorsement overrides
	 
	 	 	This endorsement overrides any conflicting provision in any policy to which it applies.






215











 





EXHIBIT C

BROKERS’ LETTER OF CONFIRMATION AND UNDERTAKING



To: DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH (the “Global Agent”)




[date]




Dear Sirs,





	1	 	In this letter:
	 
	 	 	“Company” means OrPower4 Inc.
	 
	 	 	“Common Terms Agreement” means the agreement entered into on or about the date of this
letter, between inter alia the Company, the Global Agent, nd the Finance Parties in
relation to the Project.
	 
	 	 	“Insurances” means each of those insurances and/or reinsurances (including any renewals or
replacements of them) which the Company has agreed in the Common Terms Agreement to procure
and maintain in relation to the Project and which are from time to time arranged by
ourselves or by other companies within our group of companies.
	 
	 	 	“Insurer” means any person other than a Reinsurer who has insured a liability under any
Insurances.
	 
	 	 	“Project” means the design, development, financing, ownership, commissioning, completion,
insurance, operation and maintenance of a 48 MW geothermal power plant operated by the
Company in Kenya and the construction of all associated transmission and substation
facilities and all ancillary works on or off the site.
	 
	 	 	“Reinsurer” means any person who has reinsured a liability assumed by an Insurer of the
Project.
	 
	2	 	We have placed the insurances summarised in Appendix A hereto.
	 
	3	 	Pursuant to instructions received from the Company, we confirm that:






	 	(a)	 	to the best of our knowledge and belief, the insurances listed in Appendix A
hereto are in full force and effect, and comply with the Company’s obligations under
the Finance Documents;
	 
	 	(b)	 	we have disclosed to each Insurer and Reinsurer every material circumstance
in relation to the Insurances which we, as agents to insure, 




216









 






	 	 	 	are required by law to disclose to them and no such information disclosed
by us was known by us to be potentially inaccurate, incomplete or misleading.






	4	 	We hereby undertake in respect of the interests of the Company and the Finance Parties in the
Insurances arranged by us:






	 	(a)	 	promptly when requested by the Company, to notify promptly to all insurers
from time to time of the Insurances of the assignment to the Finance Parties of the
Company’s rights under the Insurances and to the Insurance Proceeds and (where the
Finance Parties have so required) of the assignment of the insurers rights and
interest in the reinsurances to the Company in the form attached hereto and to use our
reasonable efforts to secure their acknowledgement of receipt of such notices of
assignment and by having the notices endorsed on the policies of Insurance, and to
provide you with true copies of such notices, endorsements and acknowledgements;
	 
	 	(b)	 	to notify you as soon as reasonably practicable prior to the expiry of these
Insurances if we have not received information regarding their renewal arrangements
from the Company;
	 
	 	(b)	 	to hold all Insurance policies received by us to your order, free from any
lien, if any, other than in respect of monies owing to us in respect of any Insurance
or Reinsurance;
	 
	 	(c)	 	to pay promptly to insurers and, on behalf of Insurers, to reinsurers all
premium received from the Company or for which we are liable in order to ensure that
each Insurance is valid and enforceable in accordance with its terms;
	 
	 	(d)	 	to procure payment of any claim collected by us on behalf of the Company or
the Finance Parties in accordance with the Loss Payment clause (if any) within any
Insurance;
	 
	 	(e)	 	to inform you in writing immediately if we receive or give notice that we are
to cease to act as insurance brokers to the Company or insurers for the purpose of
arranging, maintaining and/or monitoring any Insurances previously arranged by us.
Paragraphs (a) above to (d) above are subject to our continuing appointment as
insurance brokers in relation to the Insurances concerned and the handling of claims
in relation to them.






	5	 	For the avoidance of doubt, all undertakings and other confirmations given in this letter
relate solely to the insurances listed in Appendix A hereto. They do not apply to any other
insurances and nothing in this letter should be taken as providing any undertakings or
confirmations in relation to any insurance that 




217









 






	 	 	ought to have been placed or may at some
future date be placed by other brokers. Save as provided in the preceding paragraphs of this
letter, and save insofar as we
have given undertakings or assurances in this letter, it is to be understood by the Finance
Parties that we have not acted as their agent and that accordingly they may not rely on any
advice which we have given to the Company, and we do not represent that the Insurances are
suitable or sufficient to meet the needs of the Finance Parties, who must take such steps
and advice of their own as they consider necessary in order to protect their own position.






	6	 	This letter has been prepared exclusively for the use of the addressee and the Finance
Parties. No responsibility is accepted to any third party for the whole or any part of its
contents and in the event that it is disclosed to a third party any and all liability
howsoever arising to such third party is hereby expressly excluded. No person except the
addressee, the Finance Parties, us and our directors and employees have any rights arising out
of this letter under the Contracts (Rights of Third Parties) Act 1999.
	 
	7	 	Without prejudice to the preceding exclusion of liability our aggregate liability to any
persons, companies or organisations who act in reliance on this letter for any and all matters
arising from this letter and the contents thereof shall in any and all events be limited to
the sum of US$5,000,000 even if we are negligent. We do not limit liability for our fraud,
wilful misconduct or in respect of any liabilities which cannot lawfully be limited or
excluded.
	 
	8	 	Please countersign and return a copy of this letter to indicate that you accept its terms,
failing which you should not reply upon the contents of this letter and we disclaim any duty
of care to you or the Finance Parties.
	 
	9	 	This letter is given by us on the instructions of the Company and with the Company’s full
knowledge and consent as to its terms, as evidenced by the Company’s signature below.
	 
	10	 	This letter shall be governed by and construed in all respects in accordance with English
law.
	 
	 	 	Yours faithfully




[Attachment: Appendix A: list of insurance and reinsurance arranged by the broker]




218









 








SCHEDULE 13

Form of Equity Distribution Transfer Certificate




	 	 	 
	To:

	 	[Union Bank of California] as Offshore Account Bank.
	 
	 	 
	Copy to:

	 	DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH,
as Global Agent.






Dear Sirs:



We refer to the Common Terms Agreement dated [          ] between, inter alia, OrPower4 Inc. as
Company, DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH and Société de Promotion et de
Participation pour la Coopération Economique as Lenders and DEG-Deutsche Investitions- und
Entwicklungsgesellschaft mbH as Global Agent (the “Common Terms Agreement”) and the Project
Accounts Agreement.



Terms defined in the Common Terms Agreement have the same meanings herein.



We, [          ], Authorised Representatives of OrPower4 Inc. (the “Company”) and duly authorised
to give this certificate, hereby certify as follows:





	1	 	The Company proposes to Transfer funds from the [Offshore Proceeds Account]1
[Offshore Revenue Account]2 to the Equity Distribution Account as follows:






	 	(a)	 	Amount : US Dollars [          ] [calculated in accordance with paragraph
3(f) below]2
	 
	 	(b)	 	Proposed Distribution Date: [          ]
	 
	 	(c)	 	In respect of the Calculation Period from [          ] to [          ] and in
respect of the Financial Test for the Calculation Date [     ].






	2	 	The amount to be transferred to the Equity Distribution Account mentioned in paragraph 1
above does not exceed the balance standing to the credit of the [Offshore Revenue
Account]1 [Offshore Proceeds Account]2 on the scheduled Calculation Date
immediately preceding or coinciding with the Proposed Distribution Date after payment of all
amounts in accordance with the Project Accounts Agreement.
	 
	3	 	On the Proposed Distribution Date as evidenced by the Financial Test finally agreed in
accordance with Clause 19 (Financial Tests) [and Clause 5.5(c) (True-up
Disbursements)]1:






	 	(a)	 	[the most recently determined Debt Service Cover Ratio for the Calculation
Period immediately preceding the Proposed Distribution Date




219









 






	 	 	 	is [     ] and after making the proposed Transfer to the Equity Distribution Account
is [     ];]






	 	(b)	 	[the Projected Debt Service Cover Ratio for the two (2) Calculation Periods
immediately following the Proposed Distribution Date, calculated before and after
making the proposed Transfer to the Equity Distribution Account, will be [          ]
and [          ], respectively;]
	 
	 	(c)	 	[the Equity to Total Assets Ratio for the current Calculation Period and the
two (2) Calculation Periods immediately preceding the Proposed Distribution Date,
calculated before and after making the proposed Transfer to the Equity Distribution
Account, are [          ] and [          ], respectively;]
	 
	 	(d)	 	[the Debt to Equity Ratio for the current Calculation Period and the
Calculation Period immediately preceding the Proposed Distribution Date, calculated
before and after making the proposed Transfer to the Equity Distribution Account, are
[          ] and [          ], respectively;]
	 
	 	(e)	 	[on the proposed Disbursement Date after paying the True Up Amount by way of
a Distribution, refund or repayment, the Debt to Equity Ratio will not exceed 3.0 and
the Equity to Total Assets Ratio will not be less than 0.25;]1
	 
	 	(f)	 	[the amount of the proposed Transfer which would result in the Debt Service
Cover Ratio referred to in paragraph (a) above being no less than 1.15, is US$[     
];]2
	 
	 	(g)	 	if any Project Account is required to have a minimum balance on such Proposed
Distribution Date, that Project Account has at least that minimum balance;
	 
	 	(h)	 	there is not, nor would there be following the making of such Transfer, a
Default which is continuing;
	 
	 	(i)	 	the repayment instalment due and payable under each Facility on such Proposed
Distribution Date has not been deferred under the terms of each Loan Agreement.]





Dated:



	 	 	 	 	 
	By:  	 	 	 
	 
	[full name] 






220









 










 




			
	1	 	To be used in respect of Transfers pursuant to Clause 5.5(a) (True-up Disbursements)
only.
	 
	2	 	To be used in respect of Transfers pursuant to Clause 25.1(b) (Transfers to Equity
Distribution Account) only.




221









 










SCHEDULE 14

HIV Protective Measures



(Adopted from ILO Code of Practice on HIV/AIDS and the World of Work — Key principles)



The following principles are part of the International Labor Organization’s Code of Practice on
HIV/AIDS and the World of Work. The code is voluntary and meant for use by the private sector in
the development of workplace policies and guidelines.



HIV/AIDS is a workplace issue, not only because it affects the workforce, but also because the
workplace can play a vital role in limiting the spread and effects of the epidemic.



Non-Discrimination — There should be no discrimination or stigmatization against workers on the
basis of real or perceived HIV status.



Gender equality — More equal gender relations and the empowerment of women are vital to preventing
the spread of HIV infection and enabling women to cope with HIV/AIDS.



Healthy work Environment — The work environment should be healthy and safe, and adapted to the
state of health and capabilities of workers.



Social Dialogue — A successful HIV/AIDS policy and program requires cooperation, trust and dialogue
between employers, workers, and governments.



Screening for purposes of employment — HIV/AIDS screening should not be required of job applicants
or persons in employment, and testing for HIV should not be carried out at the workplace except as
specified in this code.



Confidentiality — Access to personal data relating to a worker’s HIV status should be bound by the
rules of confidentiality consistent with existing ILO codes of practice.



Continuing the employment relationship — HIV infection is not a cause for termination of
employment. Persons with HIV-related illnesses should be able to work for as long as medically fit
in appropriate conditions.



Prevention — The social partners are in a unique position to promote prevention efforts through
information and education; and support changes in attitudes and behaviour.



Care and Support — Solidarity, care and support should guide the response to AIDS in the workplace.
All workers are entitled to affordable health services and to benefits from statutory and
occupational schemes.




222









 








SCHEDULE 15

Authorisations




	 	 	 	 	 
	Particulars	 	Relevant Legislation	 	Relevant Authority
	 
	 	 	 	 
	ELECTRICAL AUTHORISATIONS	 	 
	 
	 	 	 	 
	1. Generation Licence

	 	Energy Act 2006
	 	Electricity
Regulatory Commission
	 
	 	 	 	 
	2. Geothermal Resources Licence

	 	Geothermal Resources Act
1982
	 	Minister of Energy
	 
	 	 	 	 
	3. Approval of the Power
Purchase Agreement

	 	Energy Act 2006
	 	Electricity
Regulatory Commission
	 
	 	 	 	 
	GENERAL DEVELOPMENT AUTHORISATIONS	 	 
	 
	 	 	 	 
	1. Development Permission

	 	Physical Planning Act
	 	Naivasha Municipal
Council
	 
	 	 	 	 
	2. Licence for use of Radio
Communication Apparatus

	 	Kenya Communications Act
1998
	 	Communications Commission of Kenya
	 
	 	 	 	 
	LAND AND CONSTRUCTION AUTHORISATIONS	 	 
	 
	 	 	 	 
	1. Water Permit

	 	Water Act
	 	Water Resources
Management Authority
(“Groundwater Permit
WD/WAB 13253 for
Abstraction of Water
from Borehole No.
C-13680 Situated on
L.R. No. 9005/11 in
Naivash Area of
Kakuru District”
dated 19 October
2002.)
	 
	 	 	 	 
	2. Approval of building plans
for the Plant

	 	occupational Safety and
Health Act 2007
	 	Director of
Occupational Safety
and Health Services.






223









 






	 	 	 	 	 
	Particulars	 	Relevant Legislation	 	Relevant Authority
	 
	 	 	 	 
	3. Registration as a
factory/workplace

	 	Occupational Safety and
Health Act 2007
	 	Director of
Occupational Safety
and Health Services
	 
	 	 	 	 
	4. Manufacturer’s test
certificate for new steam
boilers or a report from an
authorised boiler inspector
for previously used steam
boilers

	 	Occupational Safety and
Health Act, 2008 section 67
(8)
	 	Safety and Health
Officer.
	 
	 	 	 	 
	INVESTMENT CERTIFICATE	 	 
	 
	 	 	 	 
	Investment Certificate

	 	Investments Promotion Act
2004
	 	Kenya Investment
Authority
	 
	 	 	 	 
	ENVIRONMENTAL AUTHORISATIONS	 	 
	 
	 	 	 	 
	1. Environmental Impact
Assessment Licence

	 	Environmental Management
and Co-ordination Act
	 	NEMA
	 
	 	 	 	 
	2. Effluent Discharge Licence

	 	Environmental Management
and Co-ordination Act 1998
	 	NEMA
	 
	 	 	 	 
	IMMIGRATION AND EMPLOYMENT CONSENTS	 	 
	 
	 	 	 	 
	1. Entry Permits and work
permits for the Company’s
non-residents into Kenya

	 	Immigration Act, chapter 172
	 	Principal Immigration
Officer (Immigration
Department)
	 
	 	 	 	 
	2. Personal Identification
Number for the Company

	 	Income Tax Act
	 	Commissioner for
Income Tax (Kenya
Revenue Authority)
	 
	 	 	 	 
	3. Registration as an employer

	 	National Social Security
Fund Act, chapter 258
	 	The Managing Trustee,
NSSF
	 
	 	 	 	 
	4. Registration as an employer

	 	Industrial Training Act,
chapter 237 and Industrial
Training (Training Levy)
Order, 2007
	 	Director of
Industrial Training
	 
	 	 	 	 
	BUSINESS, TAX AND ACCOUNTING RELATED AUTHORISATIONS	 	 
	 
	 	 	 	 
	1. Permit to use a
standardisation mark

	 	Standards Act, Chapter 496
	 	Kenya Bureau of
Standards






224









 






	 	 	 	 	 
	Particulars	 	Relevant Legislation	 	Relevant Authority
	 
	 	 	 	 
	2. Single Business Permit

	 	Local Government Act
	 	Naivasha Municipal
Council
	 
	 	 	 	 
	3. Personal Identification
Numbers for the Company

	 	Income Tax Act, chapter 470
	 	Commissioner for
Income Tax (Kenya
Revenue Authority)
	 
	 	 	 	 
	4. VAT Registration

	 	Value Added Tax Act,
chapter 476
	 	Commissioner of Value
Added Tax (Kenya
Revenue Authority)
	 
	 	 	 	 
	5. Exemption of imported
capital equipment from VAT and
import duties

	 	Value Added Tax Act,
chapter 476 / Customs and
Excise Act, chapter 472
	 	Government of Kenya
	 
	 	 	 	 
	6. Registration as a foreign
company with a place of
business in Kenya

	 	Companies Act, chapter 486
	 	Registrar of Companies






225









 






SCHEDULE 16

Form of Drawdown Request




	 	 	 
	From:

	 	OrPower4 Inc.
	 
	 	 
	To:

	 	DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH,

as Global Agent






Dated:




Dear Sirs





	1	 	We refer to the Common Terms Agreement dated [          ] between, inter alia, OrPower4 Inc.
as Company, DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH and Société de
Promotion et de Participation pour la Coopération Economique as Lenders and DEG-Deutsche
Investitions- und Entwicklungsgesellschaft mbH as Global Agent (the “Common Terms Agreement”).
	 
	2	 	Terms defined in the Common Terms Agreement shall have the same meaning in this Drawdown
Request.
	 
	3	 	This is a Drawdown Request. This Drawdown Request is irrevocable.
	 
	4	 	We wish to borrow the following Loans under the Loan Agreements contemporaneously and on a
pro rata basis and upon the terms and subject to the conditions contained therein and on
[date] (or if such day is not a Business Day, the next Business Day):





	 	 	 	 	 	 	 
	 	 	 	 	 	 	Total Available
	 	 	Disbursement	 	Total Amount	 	Commitment (after
	Facility	 	Amount	 	Borrowed to date	 	Disbursement)
	DEG A Facility

	 	US$[     ]
	 	US$[     ]
	 	US$[     ]
	DEG B Facility

	 	US$[     ]
	 	US$[     ]
	 	US$[     ]
	DEG C Facility

	 	US$[     ]
	 	US$[     ]
	 	US$[     ]
	Proparco “A”
Facility

	 	US$[     ]
	 	US$[     ]
	 	US$[     ]







	5	 	The Interest Period will be six (6) months.




226









 












	6	 	We confirm that:






	 	(a)	 	each condition precedent under the Common Terms Agreement and each Loan
Agreement which must be satisfied on the date of this Drawdown Request is so
satisfied;
	 
	 	(b)	 	[The True-Up Amount is [     ] US Dollars (US$[     ]) and is calculated in
accordance with the attached Financial Test.]1






	7	 	Our [payment/delivery]2 instructions are: [     ]3.





Yours faithfully




                                                            

Authorised Representative

for and on behalf of

OrPower4 Inc.






 




			
	1	 	Only required for a True-Up Disbursement
	 
	2	 	Delete as appropriate
	 
	3	 	Specify relevant Project Account






227











 





SCHEDULE 17

Corporate Structure Chart









228









 








SCHEDULE 18

Incumbency Certificate




[          ] (the “Company”)




Pursuant to a meeting of the Board of Directors of the Company held at [                    ], on [          ]
at [                ],
it was resolved that [                    ] and [                    ] be authorised, as sole or joint
signatories, as applicable, to execute and deliver and, where appropriate, to seal and witness, on
behalf of the Company, the documents listed in the Schedule attached hereto together with all
documents and certificates delivered by the Company pursuant to any of the documents listed in the
Schedule attached hereto, and set out beside the name of each person is such person’s true
signature:



	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	[insert name]
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	[insert name]
	 	 	 	 	 	 






Certified to be the name and true




signatures of those persons authorised




to sign all Principal Documents to which the Company is a party




	 	 	 	 	 
	
 	 	 
	 
	 
	For and on behalf of [Company]

 	 	 
	
 	 	 
	 	 	 
	Date 	 	 
	 



[Attach Schedule listing all documents]




229









 





SCHEDULE 19

Form of Financial Statements

Part 1

Form of Unaudited Financial Statements for Company




	 	 	 	 	 	 	 	 	 
	 	 	September 30,	 	 
	 	 	2008	 	December 31,
	 	 	(Unaudited)	 	2007
	 	 	(in U.S. dollars)
	Assets
	 	 	 	 	 	 	 	 
	Current assets:
	 	 	 	 	 	 	 	 
	Cash and cash equivalents
	 	$	594,530	 	 	$	143,908	 
	Trade receivables
	 	 	2,131,514	 	 	 	1,552,771	 
	Prepaid expenses and other receivable
	 	 	1,696,163	 	 	 	1,824,427	 
	 	 	 
	Total current assets
	 	 	4,422,207	 	 	 	3,521,106	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Non-Current assets:
	 	 	 	 	 	 	 	 
	Deposits and other
	 	 	150,442	 	 	 	157,800	 
	Property, plant and equipment, net
	 	 	25,510,130	 	 	 	26,853,186	 
	Construction-in-process
	 	 	94,035,003	 	 	 	68,155,262	 
	 	 	 
	Total non-current assets
	 	 	119,695,575	 	 	 	95,166,248	 
	 	 	 
	Total assets
	 	$	124,117,782	 	 	$	$98,687,354	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Liabilities and Shareholder’s Equity
	 	 	 	 	 	 	 	 
	Current liabilities-
	 	 	 	 	 	 	 	 
	Accounts payable and accrued expenses
	 	$	3,828,843	 	 	$	353,046	 
	 
	 	 	 	 	 	 	 	 
	Non-Current liabilities:
	 	 	 	 	 	 	 	 
	Deferred income taxes
	 	 	6,919,994	 	 	 	7,141,360	 
	Due to related entities
	 	 	61,548,483	 	 	 	46,693,172	 
	Due to parent
	 	 	24,082,649	 	 	 	19,359,530	 
	 	 	 
	Total non-current liabilities
	 	 	92,551,126	 	 	 	73,194,062	 
	 	 	 
	Total liabilities
	 	 	96,379,969	 	 	 	73,547,108	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Shareholder’s equity:
	 	 	 	 	 	 	 	 
	Share capital
	 	 	1,000	 	 	 	1,000	 
	Retained earnings
	 	 	27,736,813	 	 	 	25,139,246	 
	 	 	 
	Total shareholder’s equity
	 	 	27,737,813	 	 	 	25,140,246	 
	 	 	 
	Total liabilities and shareholder’s equity
	 	$	124,117,782	 	 	$	98,687,354	 
	 	 	 






230









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Three months ended	 	Nine months ended
	 	 	September 30,	 	September 30,
	 	 	2008	 	2007	 	2008	 	2007
	 	 	(in U.S. dollars)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenues
	 	$	3,065,428	 	 	$	2,547,833	 	 	$	8,101,372	 	 	$	7,795,866	 
	Cost of revenues
	 	 	1,037,258	 	 	 	950,287	 	 	 	3,186,705	 	 	 	2,931,948	 
	 	 	 
	Gross margin
	 	 	2,028,170	 	 	 	1,597,546	 	 	 	4,914,667	 	 	 	4,863,918	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	General and
administrative expenses
	 	 	(167,004	)	 	 	(76,999	)	 	 	(437,938	)	 	 	(398,284	)
	Other operating income
	 	 	3,230	 	 	 	23,973	 	 	 	13,345	 	 	 	39,948	 
	Other expenses — net
	 	 	(59,918	)	 	 	(40,635	)	 	 	(271,752	)	 	 	(99,962	)
	 	 	 
	Operating income
	 	 	1,804,478	 	 	 	1,503,885	 	 	 	4,218,322	 	 	 	4,405,620	 
	Income tax expense
	 	 	569,961	 	 	 	605,088	 	 	 	1,632,226	 	 	 	1,724,204	 
	 	 	 
	Net income for the period
	 	 	1,234,517	 	 	 	898,797	 	 	 	2,586,096	 	 	 	2,681,416	 
	 	 	 






231









 






	 	 	 	 	 	 	 	 	 
	 	 	Nine Months Ended September 30,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	Cash flows from operating activities:
	 	 	 	 	 	 	 	 
	Income before income taxes
	 	$	4,218,322	 	 	$	4,405,620	 
	Interest received
	 	 	67	 	 	 	2,510	 
	Income tax paid
	 	 	 	 	 	 	(2,363,046	)
	 	 	 
	 
	 	 	4,218,389	 	 	 	2,045,084	 
	 	 	 
	Adjustments to reconcile net income to net cash
provided by operating activities:
	 	 	 	 	 	 	 	 
	Depreciation
	 	 	1,344,404	 	 	 	1,350,399	 
	Amortization of prepaid operating lease rentals
	 	 	7,359	 	 	 	7,359	 
	Profit on sale of property, plant and equipment
	 	 	(3,857	)	 	 	(10,574	)
	Interest received
	 	 	(67	)	 	 	(2,510	)
	Construction-in-process
	 	 	18,804	 	 	 	41,501	 
	Changes in operating assets and liabilities:
	 	 	 	 	 	 	 	 
	Receivables and prepaid expenses
	 	 	(807,925	)	 	 	145,256	 
	Intercompany
	 	 	 	 	 	 	150,162	 
	Accounts payable and accrued expenses
	 	 	568,001	 	 	 	129,248	 
	 	 	 
	 
	 	 	1,126,719	 	 	 	1,810,841	 
	 	 	 
	Net cash provided by operating activities
	 	 	5,345,108	 	 	 	3,855,925	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Cash flows from investing activities:
	 	 	 	 	 	 	 	 
	purchase of property, plant and equipment
	 	 	(1,348	)	 	 	(32,083	)
	Payments for construction in progress
	 	 	(9,620,114	)	 	 	(2,719,731	)
	Proceeds from disposal of property, plant and equipment
	 	 	3,857	 	 	 	10,574	 
	 	 	 
	Net cash used in investing activities
	 	 	(9,617,605	)	 	 	(2,741,240	)
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Cash flows from financing activities —
	 	 	 	 	 	 	 	 
	Repayment of related party balances
	 	 	4,723,119	 	 	 	(647,860	)
	 	 	 
	Net cash provided by (used in) financing activities
	 	 	4,723,119	 	 	 	(647,860	)
	 	 	 
	Net increase in cash and cash equivalents
	 	 	450,622	 	 	 	466,825	 
	Cash and cash equivalents at beginning of period
	 	 	143,908	 	 	 	20,838	 
	 	 	 
	Cash and cash equivalents at end of period
	 	$	594,530	 	 	$	487,663	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Supplemental non-cash investing activities —

	 	 	 	 	 	 	 	 
	
Increase in due to related party related to purchases
of property, plant and equipment
	 	$	14,855,311	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Increase in accounts payable related to purchases of
property, plant and equipment

	 	$	1,275,986	 	 	 	 	 
	 
	 	 	 	 	 	 	 






232











 





Part 2

Form of Audited Financial Statements for Kenyan Branch



REPORT
OF THE INDEPENDENT AUDITOR TO THE DIRECTORS OF ORPOWER 4 INCORPORATED IN RESPECT OF THE
KENYA BRANCH



Report on the financial statements




We have audited the accompanying financial statements of Orpower 4 Incorporated (Kenya) Branch
set out on pages 3 to 16. These financial statements comprise the balance sheet at 31 December
2006, and the profit and loss account, statement of changes in head office account and cash flow
statement for the year then ended, and a summary of significant accounting policies and other
explanatory notes.



Managements’ responsibility for the financial statements




Management
is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards. This responsibility
includes: designing, implementing and maintaining internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.



Auditor’s responsibility




Our responsibility is to express an independent opinion on the financial statements based on our
audit. We conducted our audit in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform our audit to
obtain reasonable assurance that the financial statements are free from material misstatement.



An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
branch’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.



We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.



Opinion




In our opinion the accompanying financial statements give a true and fair view of the state of
the branch’s financial affairs at 31 December 2006 and of its profit and cash flows for the year
then ended in accordance with International Financial Reporting Standards.



	 	 	 
	
	 	 
	Certified Public Accountants

	 	1/3/2007
	Nairobi
	 	 








233









 








Orpower 4 Incorporated (Kenya) Branch
Financial Statements
For the year ended 31 December 2006


 


Profit and loss account




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Year ended 31 December	 
	 	 	Notes	 	 	2006	 	 	2005	 
	 	 	 	 	 	$	 	 	$	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Sales
	 	 	 	 	 	 	10,552,007	 	 	 	10,361,844	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Cost of sales
	 	 	 	 	 	 	(3,579,100	)	 	 	(3,529,262	)
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Gross profit
	 	 	 	 	 	 	6,972,907	 	 	 	6,832,582	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Other operating income
	 	 	 	 	 	 	89,905	 	 	 	9,847	 
	Administrative expenses
	 	 	 	 	 	 	(287,557	)	 	 	(233,372	)
	Other expenses
	 	 	 	 	 	 	(146,595	)	 	 	(236,092	)
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Operating profit
	 	 	5	 	 	 	6,628,660	 	 	 	6,372,965	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Finance income/(costs)
	 	 	7	 	 	 	(51,570	)	 	 	(169,820	)
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Profit
before income tax
	 	 	 	 	 	 	6,577,090	 	 	 	6,203,145	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Income tax expense
	 	 	8	 	 	 	(2,619,464	)	 	 	(2,456,471	)
	 
	 	 	 	 	 	 	 	 	 	 
	 
	Profit for the year
	 	 	 	 	 	 	3,957,626	 	 	 	3,746,674	 
	 
	 	 	 	 	 	 	 	 	 	 





234









 





Orpower 4 Incorporated (Kenya) Branch
Financial Statements
For the year ended 31 December 2006


 


Balance sheet




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	31 December	 	 	31 December	 
	 	 	Notes	 	 	2006	 	 	2005	 
	 	 	 	 	 	 	$	 	 	$	 
	CAPITAL EMPLOYED
	 	 	 	 	 	 	 	 	 	 	 	 
	Head office current Account
	 	 	 	 	 	 	1,011,728	 	 	 	3,629,721	 
	Retained earnings
	 	 	 	 	 	 	34.962.632	 	 	 	21,005,006	 
	 
	 	 	 	 	 	 	 	 	 	 
	Head office funds
	 	 	 	 	 	 	25,974,360	 	 	 	24,634,727	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	Non-current liabilities
	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred income tax
	 	 	9	 	 	 	7,332,094	 	 	 	7,739,486	 
	Due to group companies
	 	 	17	 	 	 	4,043,478	 	 	 	5,502,495	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	11,375,572	 	 	 	13,241,981	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	37,349,932	 	 	 	37,876,708	 
	 
	 	 	 	 	 	 	 	 	 	 
	REPRESENTED BY
	 	 	 	 	 	 	 	 	 	 	 	 
	Non-current assets
	 	 	 	 	 	 	 	 	 	 	 	 
	Property, plant and equipment
	 	 	10	 	 	 	35,145,213	 	 	 	36.799,157	 
	Prepaid operating lease rentals
	 	 	11	 	 	 	167,612	 	 	 	177,424	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	35,312,825	 	 	 	36,976,581	 
	 
	 	 	 	 	 	 	 	 	 	 
	Current assets
	 	 	 	 	 	 	 	 	 	 	 	 
	Inventories
	 	 	12	 	 	 	116,936	 	 	 	80,792	 
	Receivables and prepayments
	 	 	13	 	 	 	2,102,514	 	 	 	1.107,496	 
	Cash and cash equivalents
	 	 	14	 	 	 	20,838	 	 	 	35,862	 
	Current income tax
	 	 	 	 	 	 	151,711	 	 	 	33,635	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	2,391,999	 	 	 	1,257,785	 
	 
	 	 	 	 	 	 	 	 	 	 
	Current liabilities
	 	 	 	 	 	 	 	 	 	 	 	 
	Payables and accrued expenses
	 	 	15	 	 	 	354,892	 	 	 	357,658	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	Net current assets
	 	 	 	 	 	 	2,037,107	 	 	 	900,127	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	37,349,932	 	 	 	37,376,708	 
	 
	 	 	 	 	 	 	 	 	 	 






The
financial statements on pages 3 to 16 were approved for issue by management on Mar. 1, 2007 and
signed on its behalf by:



	 	 	 	 	 
	 
	 	 	 	 
	 
	 	 

	 	 






235









 








Orpower 4 Incorporated (Kenya) Branch
Financial Statements
For the year ended 31 December 2006


 


Statement of changes in head office account




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Head office	 	 	 	 	 	 	 
	 	 	current	 	 	Retained	 	 	 	 
	 	 	account	 	 	earnings	 	 	Total	 
	 	 	$	 	 	$	 	 	$	 
	Year ended 31 December 2005
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	At start of year
	 	 	264,299	 	 	 	17,258,332	 	 	 	17,522,631	 
	Net movement head office current account
	 	 	3,365,422	 	 	 	—	 	 	 	3,365,422	 
	Profit for the year
	 	 	—	 	 	 	3,746,674	 	 	 	3,746,674	 
	 	 	 
	 
	At end of year
	 	 	3,629,721	 	 	 	21,005,006	 	 	 	24,634,727	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Year ended 31 December 2006
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	At start of year
	 	 	3,629,721	 	 	 	21,005,006	 	 	 	24,634,727	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Net movement head office current account
	 	 	(2,617,993	)	 	 	—	 	 	 	(2,617,993	)
	Profit for the year
	 	 	—	 	 	 	3,957,626	 	 	 	3,957,626	 
	 	 	 
	 
	At end of year
	 	 	1,011,728	 	 	 	24,962,632	 	 	 	25,974,360	 
	 	 	 







236











 





Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006 





Cash flow statement




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Year ended 31 December	 
	 	 	Notes	 	 	2006	 	 	2005	 
	 	 	 	 	 	 	$	 	 	$	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Operating activities
	 	 	 	 	 	 	 	 	 	 	 	 
	Cash generated from operations
	 	 	16	 	 	 	7,301,714	 	 	 	8,279,271	 
	Interest received
	 	 	7	 	 	 	355	 	 	 	163	 
	Income tax paid
	 	 	 	 	 	 	(3,144,931	)	 	 	(5,203,668	)
	 
	 	 	 	 	 	 	 	 	 	 
	Net cash generated from operating activities
	 	 	 	 	 	 	4,157,138	 	 	 	3,075,766	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Investing activities
	 	 	 	 	 	 	 	 	 	 	 	 
	Purchase of property, plant and equipment
	 	 	10	 	 	 	(95,152	)	 	 	(12,597	)
	 
	 	 	 	 	 	 	 	 	 	 
	Net cash used in investing activities
	 	 	 	 	 	 	(95,152	)	 	 	(12,597	)
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Financing activities
	 	 	 	 	 	 	 	 	 	 	 	 
	Repayment of long-term borrowings
	 	 	17	 	 	 	(1,400,000	)	 	 	(6,460,000	)
	Net movement in head office account
	 	 	 	 	 	 	(2,617,993	)	 	 	3,365,422	 
	Repayment/(receipt) of other related party balances
	 	 	17	 	 	 	(59,017	)	 	 	40,315	 
	 
	 	 	 	 	 	 	 	 	 	 
	Net cash used in financing activities
	 	 	 	 	 	 	(4,077,010	)	 	 	(3,054,263	)
	 
	 	 	 	 	 	 	 	 	 	 
	(Decrease)/increase in cash and cash equivalents
	 	 	 	 	 	 	(15,024	)	 	 	8,906	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Movement in cash and cash equivalents
	 	 	 	 	 	 	 	 	 	 	 	 
	At start of year
	 	 	 	 	 	 	35,862	 	 	 	26,956	 
	(Decrease)/increase
	 	 	 	 	 	 	(15,024	)	 	 	8,906	 
	 
	 	 	 	 	 	 	 	 	 	 
	At end of year
	 	 	14	 	 	 	20,838	 	 	 	35,862	 
	 
	 	 	 	 	 	 	 	 	 	 






237









 






Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006 





Notes





	1	 	General information
	 
	 	 	Orpower 4 Incorporated (Kenya) Branch is a branch of Orpower 4 Inc., incorporated in Cayman
Islands under the Companies Act as a private limited liability company, and is domiciled in
Kenya. The address of its registered office is:
	 
	 	 	P.O Box 1566, Code 20177
NAIVASHA.
	 
	 	 	The principal activity of the branch is electricity generation and sale from geothermal power,
	 
	2	 	Summary of significant accounting policies
	 
	 	 	The principal accounting policies adopted in the preparation of these financial statements
are set out below. These policies have been consistently applied to all years presented,
unless otherwise stated.
	 
	(a)	 	Basis of preparation
	 
	 	 	The financial statements are prepared in compliance with International Financial Reporting
Standards (IFRS). The measurement basis applied is the historical cost basis, except where
otherwise stated in the accounting policies below. The financial statements are presented in US
dollars ($).
	 
	 	 	The preparation of financial statements in conformity with IFRS requires the use of estimates
and assumptions. It also requires management to exercise its judgement in the process of
applying the branch’s accounting policies. The areas involving a higher degree of judgement or
complexity, or where assumptions and estimates are significant to the financial statements, are
disclosed in Note 4.
	 
	 	 	Adoption of new and revised standards
	 
	 	 	In 2006 new and revised standards and interpretations became effective for the first time and
have been adopted by the branch where relevant to its operations. The adoption of these new and
revised standards and interpretations had no material effect on the Branch’s accounting policies
or disclosures.
	 
	 	 	The following amendment to an existing standard and new standard will be mandatory for the
Branch’s accounting periods beginning on or after 1 January 2007, but which the Branch has not
early adopted:
	 
		 	— IFRS 7, Financial Instruments: Disclosures. IFRS 7 introduces new disclosures to improve the
information about financial instruments. It requires the disclosure of qualitative and
quantitative information about exposure to risks arising from financial instruments, including
specified minimum disclosures about credit risk, liquidity risk and market risk, including
sensitivity analysis to market risk.




238









 











Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006 





Notes (continued)





	(b)	 	Revenue recognition
	 
	 	 	Sales are recognised upon supply of electricity and are stated net of Value Added Tax (VAT).
	 
	 	 	Interest income is recognised on a time proportion basis using the effective interest
method.
	 
	(c)	 	Translation of foreign currencies
	 
	 	 	Transactions are recorded on initial recognition in United States dollars, being the functional
currency. Transactions in other currencies are converted into United States dollars using the
exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in other currencies are recognised in the
profit and loss account.
	 
	(d)	 	Property, plant and equipment
	 
	 	 	All categories of property, plant and equipment is stated at historical cost less depreciation.
	 
	 	 	Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the branch and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the profit and loss account during the financial period in which they
are incurred.
	 
	 	 	Depreciation is calculated using the straight line method to write down their cost to their
residual values over their estimated useful lives, as follows:





	 	 	 
	Buildings

	 	23 years
	Plant and machinery

	 	23 years
	Motor vehicles

	 	6.7 years
	Equipment

	 	4.3 years







	 	 	The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.
	 
	 	 	Property, plant and equipment are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units).
	 
	 	 	Gains and losses on disposal of property, plant and equipment are determined by reference to
their carrying amounts and are taken into account in determining operating profit.
	 
	(e)	 	Accounting for leases
	 
	 	 	Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating teases. Payments made under operating leases are






239











 





Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006
 





Notes (continued)





	(f)	 	Inventories
	 
	 	 	Inventories are stated at the lower of cost and net realisable value. Cost is determined by the
first-in, first-out (FIFO) method.
	 
	(g)	 	Receivables
	 
	 	 	Receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method. A provision for impairment of receivables is established
when there is objective evidence that the branch will not be able to
collect all the amounts
due according to the original terms of receivables. The amount of the provision is the
difference between the carrying amount and the present value of expected cash flows, discounted
at the effective interest rate. The amount of the provision is recognised in the profit and
loss account.
	 
	(h)	 	Cash and cash equivalents
	 
	 	 	Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short
term highly liquid investments with original maturities of three months or less.
	 
	(i)	 	Employee benefits






	 	(i)	 	Retirement benefit obligations






	 	 	The branch operates a defined contribution retirement benefit
scheme for its pensionable
employees. A defined contribution plan is a pension plan under which the branch pays fixed
contributions into a separate entity. The branch has no legal or constructive obligations to pay
further contributions if the fund does not hold sufficient assets to pay all employees the
benefits relating to employee service in the current and prior periods.
	 
	 	 	The assets of the scheme are held in separate trustee administered funds, which are funded
by contributions from both the branch and employees. The branch and all its employees also
contribute to the National Social Security Fund, which is a defined contribution scheme.
	 
	 	 	The branch’s contributions to the defined contribution schemes are charged to the profit and
loss account in the year to which they relate.






	 	(ii)	 	Other entitlements






	 	 	The estimated monetary liability for employees’ accrued annual leave entitlement at the balance
sheet date is recognised as an expense accrual.






	(J)	 	Income tax
	 
	 	 	Income tax expense is the aggregate of the charge to the profit and loss account in respect
of current income tax and deferred income tax.
	 
	 	 	Current income tax is the amount of income tax payable on the taxable profit for the year
determined in accordance with the Kenyan Income Tax Act.






240









 








Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006
 





Notes (continued)





	(j)	 	Income tax (continued)
	 
	 	 	Deferred income tax is provided in full, using the liability method, on all temporary
differences arising between the tax bases of assets and liabilities and their carrying values
for financial reporting purposes. However, if the deferred income tax arises from the initial
recognition of an asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit or loss, it is not
accounted for.

	 
	 	 	Deferred income tax is determined using tax rates and laws that have been enacted or
substantively enacted at the balance sheet date and are expected to apply when the related
deferred income tax liability is settled.
	 
	 	 	Deferred income tax assets are recognised only to the extent that it is probable that future
taxable profits will be available against which the temporary
differences can be utilised.
	 
	3	 	Financial risk management objectives and policies
	 
	 	 	The branch’s activities expose it to a variety of financial risks, including credit risk and the
effects of changes in foreign currency exchange rates and interest rates. The branch’s overall
risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on its financial performance, but the branch does not hedge
any risks.
	 
	4	 	Critical accounting estimates and judgements
	 
	 	 	Estimates and judgments are continually evaluated and are based on historical experience and
other factors, including experience of future events that are believed to be reasonable under
the circumstances.
	 
	 	 	(i) Critical accounting estimates and assumptions
	 
	 	 	Property, plant and equipment
	 
	 	 	Critical estimates are made by the directors in determining depreciation rates for
property, plant and equipment. The rates used are set out in Note 2(d) above.
	 
	 	 	(ii) Critical judgments in applying the entity’s accounting policies
	 
	 	 	In the process of applying the branch’s accounting policies, management has made judgments
in determining whether the assets are impaired.
	 
	5	 	Operating profit
	 
	 	 	The following items have been charged in arriving at operating profit:





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	 
	Depreciation on property, plant and equipment (Note 10)
	 	 	1,749,095	 	 	 	1,754,031	 
	Operating lease rentals expensed (Note 11)
	 	 	9,812	 	 	 	9,812	 
	Inventories expensed
	 	 	6,377	 	 	 	85,105	 
	Employee benefits expense (Note 6)
	 	 	183,632	 	 	 	187,885	 
	Auditors’
remuneration
	 	 	15,130	 	 	 	12,463	 






241









 





Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006
 





Notes (continued)





	6	 	Employee benefits expense





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	 
	The following items are included
within employee benefits expense:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Retirement benefits costs:
	 	 	 	 	 	 	 	 
	— Defined contribution scheme
	 	 	7,061	 	 	 	8,074	 
	— National Social Security Fund
	 	 	682	 	 	 	651	 
	 
	 	 	 	 	 	 






	7	 	Finance costs





	 	 	 	 	 	 	 	 	 
	Interest income
	 	 	355	 	 	 	163	 
	Net foreign exchange losses
	 	 	(51,925	)	 	 	(169,983	)
	 
	 	 	 	 	 	 
	
	 	 	 	 	 	 	 	 
	Net finance costs
	 	 	(51,570	)	 	 	(169,820	)
	 
	 	 	 	 	 	 






	8	 	Income tax expense





	 	 	 	 	 	 	 	 	 
	Current income tax
	 	 	3,026,856	 	 	 	2,758,477	 
	Deferred income tax (Note 9)
	 	 	(407,392	)	 	 	(302,006	)
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Income tax expense
	 	 	2,619,464	 	 	 	2,456,471	 
	 
	 	 	 	 	 	 






	 	 	The tax on the branch’s profit before income tax differs from the theoretical amount that
would arise using the statutory income tax rate as follows:





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	 
	Profit before income tax
	 	 	6,577,090	 	 	 	6,203,145	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Tax
calculated at the statutory income tax rate of 37.5% (2005 — 37.5%)
	 	 	2,466,409	 	 	 	2,326,179	 
	
Tax effect of:
	 	 	 	 	 	 	 	 
	Income not subject to tax
	 	 	—	 	 	 	(26,438	)
	Expenses not deductible for tax purposes
	 	 	11,960	 	 	 	156,730	 
	Exchange differences on tax balances
	 	 	141,095	 	 	 	—	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Income tax expense
	 	 	2,619,464	 	 	 	2,456,471	 
	 
	 	 	 	 	 	 





242









 






Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006

 





Notes (continued)





	9	 	Deferred income tax
	 
	 	 	Deferred income tax is calculated using the enacted income tax rate of 37.5% (2005: 37.5%). The
movement on the deferred income tax account is as follows:





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	 
	At start of year
	 	 	7,739,486	 	 	 	8,041,429	 
	Credit to
profit and loss account (Note 8)
	 	 	(407,392	)	 	 	(302,006	)
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	At end of year
	 	 	7,332,094	 	 	 	7,739,486	 







	 	 	Deferred income tax assets and liabilities, deferred income
tax charge/(credit) in the profit and
loss account are attributable to the following items:





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	Charged/	 	 	 	 
	 	 	 	 	 	 	(credited)	 	 	 	 
	 	 	1.1.2006	 	 	to P/L	 	 	31.12.2006	 
	 	 	$	 	 	$	 	 	$	 
	 
	Deferred income tax liabilities
	 	 	 	 	 	 	 	 	 	 	 	 
	Property, plant and equipment:
	 	 	7,793,709	 	 	 	(294,131	)	 	 	7,499,578	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred income tax assets

	 	 	(12,597	)	 	 	9,863	 	 	 	(2,734	)
	Provisions
	 	 	 	 	 	 	 	 	 	 	 	 
	Other deductible temporary differences
	 	 	(41,626	)	 	 	(123,124	)	 	 	(164,750	)
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	(54,223	)	 	 	(113,261	)	 	 	(167,484	)
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Net deferred income tax liability
	 	 	7,739,486	 	 	 	(407,392	)	 	 	7,332,094	 
	 	 	 






243











 





Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006 





Notes (continued)





	10	 	Property, plant and equipment





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Vehicles	 	 	 	 	 	 	 
	 	 	 	 	 	 	Plant &	 	 	Drilling	 	 	&	 	 	Office	 	 	 	 
	 	 	Buildings	 	 	machinery	 	 	equipment	 	 	equipment	 	 	equipment	 	 	Total	 
	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	At 1 January 2005
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cost
	 	 	866,214	 	 	 	22,266,606	 	 	 	22,234,628	 	 	 	267,394	 	 	 	100,522	 	 	 	45,735,364	 
	Accumulated depreciation
	 	 	(199,379	)	 	 	(4,342,183	)	 	 	(2,435,262	)	 	 	(163,253	)	 	 	(54,696	)	 	 	(7,194,773	)
	 	 	 
	Net book amount
	 	 	666,835	 	 	 	17,924,423	 	 	 	19,799,366	 	 	 	104,141	 	 	 	45,826	 	 	 	38,540,591	 
	 	 	 
	Year ended 31 December 2005
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Opening net book amount
	 	 	666,835	 	 	 	17,924,423	 	 	 	19,799,366	 	 	 	104,141	 	 	 	45,826	 	 	 	33,540,591	 
	Additions
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	12,597	 	 	 	12,597	 
	Depreciation charge
	 	 	(37,361	)	 	 	(968,113	)	 	 	(689,224	)	 	 	(40,109	)	 	 	(18,924	)	 	 	(1,754,031	)
	 	 	 
	Closing net book amount
	 	 	629,174	 	 	 	16,956,310	 	 	 	19,110,142	 	 	 	64,032	 	 	 	39,499	 	 	 	36,799,157	 
	 	 	 
	At 31 December 2005
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cost
	 	 	866,214	 	 	 	22,266,606	 	 	 	22,234,628	 	 	 	267,394	 	 	 	113,119	 	 	 	45,747,961	 
	Accumulated depreciation
	 	 	(237,040	)	 	 	(5,310,296	)	 	 	(3,124,486	)	 	 	(203,362	)	 	 	(73,620	)	 	 	(8,948,804	)
	 	 	 
	Net book amount
	 	 	629,174	 	 	 	16,956,310	 	 	 	19,110,142	 	 	 	64,032	 	 	 	39,499	 	 	 	36,799,157	 
	 	 	 
	Year ended 31 December 2006
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Opening net book amount
	 	 	629,174	 	 	 	16,956,310	 	 	 	19,110,142	 	 	 	64,032	 	 	 	39,499	 	 	 	36,799,157	 
	Additions
	 	 	33,207	 	 	 	—	 	 	 	—	 	 	 	34,026	 	 	 	27,919	 	 	 	95,152	 
	Depreciation charge
	 	 	(37,706	)	 	 	(966,113)	)	 	 	(689,015	)	 	 	(37,204	)	 	 	(17,057	)	 	 	(1,749,095	)
	 	 	 
	Closing net book amount
	 	 	624,675	 	 	 	15,988,197	 	 	 	18,421,127	 	 	 	60,854	 	 	 	50,361	 	 	 	35,145,214	 
	 	 	 
	At 31 December 2006
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cost
	 	 	899,421	 	 	 	22,266,606	 	 	 	22,234,628	 	 	 	301,420	 	 	 	141,038	 	 	 	45,843,113	 
	Accumulated depreciation
	 	 	(274,746	)	 	 	(6,278,409	)	 	 	(3,813,501	)	 	 	(240,566	)	 	 	(90,677	)	 	 	(10,697,899	)
	 	 	 
	Net book amount
	 	 	624,675	 	 	 	15,988,197	 	 	 	18,421,127	 	 	 	60,854	 	 	 	50,361	 	 	 	35,145,214	 
	 	 	 





244









 






Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006 





Notes (continued)





	11	 	Prepaid operating lease rentals





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	Prepaid operating lease rentals	 	$	 	 	$	 
	 
	 	 	 	 	 	 	 	 
	At Start of the year
	 	 	177,424	 	 	 	187,236	 
	Amortisation charge for the year
	 	 	(9,812	)	 	 	(9,812	)
	 
	 	 	 	 	 	 
	At end of year
	 	 	167,612	 	 	 	177,424	 
	 
	 	 	 	 	 	 







	12	 	Inventories





	 	 	 	 	 	 	 	 	 
	Plant spare parts, pentane and diesel
	 	 	116,936	 	 	 	80,792	 
	 
	 	 	 	 	 	 






	13	 	Receivables and prepayments





	 	 	 	 	 	 	 	 	 
	Trade receivables
	 	 	2,015,466	 	 	 	1,027,996	 
	Prepayments
	 	 	78,189	 	 	 	72,499	 
	Other receivables
	 	 	8,859	 	 	 	7,001	 
	 
	 	 	 	 	 	 
	 
	 	 	2,102,514	 	 	 	1,107,496	 
	 
	 	 	 	 	 	 







	 	 	The carrying amounts of the above receivables and prepayments approximate to their
fair values.
	 
	14	 	Cash and cash equivalents





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	 
	 	 	 	 	 	 	 	 
	Cash at bank and in hand
	 	 	20,838	 	 	 	35,862	 
	 
	 	 	 	 	 	 







	 	 	For the purposes of the cash flow statement, cash and cash equivalents comprise the cash and
cash equivalent balances indicated above.
	 
	15	 	Payables and accrued expenses





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	 
	 	 	 	 	 	 	 	 
	Trade payables
	 	 	169,288	 	 	 	134,232	 
	Accrued expenses
	 	 	44,851	 	 	 	102,049	 
	Other payables
	 	 	140,753	 	 	 	121,377	 
	 
	 	 	 	 	 	 
	 
	 	 	354,892	 	 	 	357,658	 
	 
	 	 	 	 	 	 






The carrying amounts  of the above payables and accrued expenses approximate to their fair values.




245









 








Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006 





Notes (continued)





	16	 	Cash generated from operations
	 
	 	 	Reconciliation of profit before income tax to cash generated from operations:





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	Profit before income tax
	 	 	6,577,090	 	 	 	6,203,145	 
	 
	 	 	 	 	 	 	 	 
	Adjustments for:
	 	 	 	 	 	 	 	 
	Interest income (Note 7)
	 	 	(355	)	 	 	(163	)
	Depreciation (Note 10)
	 	 	1,749,095	 	 	 	1,754,031	 
	Amortisation of prepaid operating lease rentals
	 	 	9,812	 	 	 	9,812	 
	Changes in working capital
	 	 	 	 	 	 	 	 
	— receivables and prepayments
	 	 	(995,018	)	 	 	129,740	 
	— inventories
	 	 	(36,144	)	 	 	33,206	 
	— payables and accrued expenses
	 	 	(2,766	)	 	 	149,500	 
	 
	 	 	 	 	 	 
	Cash generated from operations
	 	 	7,301,714	 	 	 	8,279,271	 
	 
	 	 	 	 	 	 







	17	 	Related party transactions
	 
	 	 	The branch is controlled by Ormat Holdings Incorporated, incorporated in Cayman Islands. The
ultimate parent of the Group is Ormat Technologies, incorporated in United States of America.
There are other companies that are related to Orpower 4 Incorporated (Kenya) Branch through
common shareholdings or common directorships.
	 
	i)	 	The movement in transactions with related parties is as follows:





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Ormat	 	 	 	 	 	 	 
	 	 	Orda 6	 	 	Systems	 	 	Ormat	 	 	 	 
	 	 	Incorporated	 	 	Limited	 	 	Technologies	 	 	Total	 
	 	 	$	 	 	$	 	 	Inc.	 	 	$	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at start of year
	 	 	5,423,597	 	 	 	78,898	 	 	 	—	 	 	 	5,502,495	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Purchase of spare parts for equipment maintenance
	 	 	—	 	 	 	77,938	 	 	 	3,187	 	 	 	81,125	 
	Repayments during the year
	 	 	(1,400,000	)	 	 	(140,142	)	 	 	—	 	 	 	(1,540,142	)
	 	 	 
	Balance at end of year
	 	 	4,023,597	 	 	 	16,694	 	 	 	3,187	 	 	 	4,043,478	 
	 	 	 







	 	 	The terms and conditions of the borrowing from related companies, which are denominated in US
dollars, are yet to be agreed. However, Orda 6 Inc. and Ormat Systems Limited have confirmed
that no interest will be charged in respect of the year ended 31 December 2006. and that no
repayment of the principal will be demanded within 12 months of the balance sheet date.
	 
	 	 	Transactions with the holding company through the head office account relate to payments
of local suppliers and cash advances to OrPower 4 Incorporated, Kenya
branch for their operations and the collection of trade receivables.




246









 











Orpower 4 Incorporated (Kenya) Branch

Financial Statements

For the year ended 31 December 2006 





Notes (continued)





	ii)	 	Purchase of goods and services





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	 
	 	 	 	 	 	 	 	 
	Ormat Systems Limited
	 	 	77,938	 	 	 	40,315	 
	Ormat Technologies Incorporated
	 	 	3,187	 	 	 	—	 
	 
	 	 	 	 	 	 
	 
	 	 	81,125	 	 	 	40,315	 
	 
	 	 	 	 	 	 







	iii)	 	Key management compensation





	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 	 	$	 	 	$	 
	 
	 	 	 	 	 	 	 	 
	Salaries and other short-term employment benefits
	 	 	58,179	 	 	 	46,407	 
	Post-employment benefits
	 	 	6,321	 	 	 	2,613	 
	 
	 	 	 	 	 	 
	 
	 	 	64,500	 	 	 	49,020	 
	 
	 	 	 	 	 	 






----------000----------





247











 





Part 3

Form of Audited Financial Statements for Company




ORPOWER4, INC

FINANCIAL STATEMENTS

AS OF JUNE 30, 2008 AND DECEMBER 31, 2007 AND

FOR THE SIX MONTHs ENDED JUNE 30, 2008 AND FOR

THE YEAR ENDED DECEMBER 31, 2007




ORPOWER4, INC.

INDEX TO FINANCIAL STATEMENTS




	 	 	 	 	 
	REPORT OF INDEPENDENT AUDITORS
	 	 	2	 
	 
	 	 	 	 
	FINANCIAL STATEMENTS
	 	 	 	 
	 
	 	 	 	 
	Balance Sheets as of June 30, 2008 and December 31, 2007	 	 	3	 
	 
	 	 	 	 
	Statements of Operations for the Six Months Ended June 30, 2008 and
for the Year Ended December 31, 2007	 	 	4	 
	 
	 	 	 	 
	Statements of Changes in Shareholder’s Equity for the Six Months
Ended June 30, 2008 and for the Year Ended December 31, 2007	 	 	5	 
	 
	 	 	 	 
	Statements of Cash Flows for the Six Months Ended June 30, 2008 and
for the Year Ended December 31, 2007
	 	 	6	 
	 
	 	 	 	 
	Notes to Financial Statements
	 	 	7-22	 






The amounts are presented in U.S. dollars ($).





248









 













	 	 	 	 
	 	 	 	 
	 

	 	 	Kesselman & Kesselman
	 

	 	 	Certified Public Accountants (Isr.)
	 

	 	 	Trade Tower, 25 Hamered Street
	 

	 	 	Tel Aviv 68125 Israel
	 

	 	 	P.O. Box 452 Tel Aviv 61003 Israel
	 

	 	 	Telephone +972-3-7954555
	 

	 	 	Facsimile +972-3-7954556






REPORT OF INDEPENDENT AUDITORS




To the Shareholder’s of

Orpower 4, Inc.



We have audited the accompanying balance sheets of Orpower 4, Inc. (the
“Company”) as of June 30, 2008 and December 31, 2007 and the related
statements of operations, changes in shareholder’s equity and
cash flow for
the six months ended June 30, 2008 and for the year ended December 31, 2007.
These financial statements are the responsibility of the Company’s board of
directors and management. Our responsibility is to express an opinion on
these financial statements based on our audits.



We conducted our audit in accordance with International Standards on
Auditing. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by the Company’s board of directors and
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.



In our opinion, based on our audits, the financial statements referred to
above present fairly, in all material respects, the financial position of the
Company as of June 30, 2008 and December 31, 2007, and the results of its
operations, changes in shareholder’s equity and cash flow for the six months
ended June 30, 2008 and the year ended December 31, 2007, in accordance with
International Financial Reporting Standards.




	 	 	 
	 

	 	
	Tel-Aviv, Israel

	 	Kesselman & Kesselman
	    August 31, 2008

	 	Certified Public Accountants (Isr.)






249









 






ORPOWER4, INC.

BALANCE SHEETS




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	June 30,	 	December 31,
	 	 	Note	 	2008	 	2007
	 	 	 	 	 	 	(in U.S. dollars)
	Assets
	 	 	 	 	 	 	 	 	 	 	 	 
	Current assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents
	 	 	 	 	 	$	1,564,020	 	 	$	143,908	 
	Trade receivables
	 	 	 	 	 	 	2,235,518	 	 	 	1,552,771	 
	Prepaid expenses and other receivable
	 	 	4	 	 	 	2,287,981	 	 	 	1,824,427	 
	 	 	 	 	 	 	 
	Total current assets
	 	 	 	 	 	 	6,087,519	 	 	 	3,521,106	 
	 	 	 	 	 	 	 
	 
	Non-Current assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Deposits and other
	 	 	5	 	 	 	152,894	 	 	 	157,800	 
	Property, plant and equipment, net
	 	 	6	 	 	 	25,933,207	 	 	 	26,853,186	 
	Construction-in-process
	 	 	7	 	 	 	84,801,016	 	 	 	68,155,262	 
	 	 	 	 	 	 	 
	Total non-current assets
	 	 	 	 	 	 	110,887,117	 	 	 	95,166,248	 
	 	 	 	 	 	 	 
	Total assets
	 	 	 	 	 	$	116,974,636	 	 	$	98,687,354	 
	 	 	 	 	 	 	 
	 
	Liabilities and Shareholder’s Equity
	 	 	 	 	 	 	 	 	 	 	 	 
	Current liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payable and accrued expenses
	 	 	8	 	 	$	3,498,531	 	 	$	353,046	 
	 
	 	 	11	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Total current liabilities
	 	 	 	 	 	 	3,498,531	 	 	 	353,046	 
	 	 	 	 	 	 	 
	 
	Non-Current liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred income taxes
	 	 	10	 	 	 	6,919,994	 	 	 	7,141,360	 
	Due to related entities
	 	 	11	 	 	 	55,923,133	 	 	 	46,693,172	 
	Due to parent
	 	 	11	 	 	 	24,141,153	 	 	 	19,359,530	 
	 	 	 	 	 	 	 
	Total non-current liabilities
	 	 	 	 	 	 	86,984,280	 	 	 	73,194,062	 
	 	 	 	 	 	 	 
	Total liabilities
	 	 	 	 	 	 	90,482,811	 	 	 	73,547,108	 
	 	 	 	 	 	 	 
	 
	Shareholder’s equity:
	 	 	 	 	 	 	 	 	 	 	 	 
	Share capital
	 	 	 	 	 	 	1,000	 	 	 	1,000	 
	Retained earnings
	 	 	 	 	 	 	26,490,825	 	 	 	25,139,246	 
	 	 	 	 	 	 	 
	Total shareholder’s equity
	 	 	 	 	 	 	26,491,825	 	 	 	25,140,246	 
	 	 	 	 	 	 	 
	Total liabilities and shareholder’s
equity
	 	 	 	 	 	$	116,974,636	 	 	$	98,687,354	 
	 	 	 	 	 	 	 






	 	 	 
	 
	Amit Gorka 

Vice President and 

Controller — Ormat 

Technologies, Inc.
	 	Aaron Choresh

Vice President — Operations Rest

of the World and product support

— Ormat Technologies, Inc.






250









 






The accompanying notes are an integral part of the financial statements.



251








 








ORPOWER4, INC.

STATEMENTS OF OPERATIONS




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Six Months	 	Year Ended
	 	 	 	 	 	 	Ended June 30,	 	December 31,
	 	 	Note	 	2008	 	2007
	 	 	 	 	 	 	(in U.S. dollars)
	 
	Revenues
	 	 	9	 	 	$	5,035,944	 	 	$	9,882,424	 
	Cost of revenues
	 	 	14a	 	 	 	2,149,447	 	 	 	3,918,811	 
	 	 	 	 	 	 	 
	Gross margin
	 	 	 	 	 	 	2,886,497	 	 	 	5,963,613	 
	 
	General and administrative expenses
	 	 	14b	 	 	 	(270,934	)	 	 	(333,504	)
	Other operating income
	 	 	 	 	 	 	10,115	 	 	 	43,294	 
	Other expenses — net
	 	 	14c	 	 	 	(211,834	)	 	 	(203,476	)
	 	 	 	 	 	 	 
	Operating income
	 	 	 	 	 	 	2,413,844	 	 	 	5,469,927	 
	Income tax expense
	 	 	10	 	 	 	1,062,265	 	 	 	2,467,388	 
	 	 	 	 	 	 	 
	Net income for the period
	 	 	 	 	 	$	1,351,579	 	 	$	3,002,539	 
	 	 	 	 	 	 	 






The accompanying notes are an integral part of the financial statements.




252









 








ORPOWER4, INC.

STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Total
	 	 	Share	 	Retained	 	Shareholder’s
	 	 	Capital	 	Earnings	 	Equity
	 	 	(in U.S. dollars)
	 	 	 
	 
	Balance at January 1, 2007
	 	$	1,000	 	 	$	22,273,136	 	 	$	22,137,707	 
	Net income
for the year ended December 31, 2007
	 	 	 	 	 	 	3,002,539	 	 	 	3,002,539	 
	 	 	 
	Balance at December 31, 2007
	 	 	1,000	 	 	 	25,139,246	 	 	 	25,140,246	 
	Net income
for the six months ended June 30, 2008
	 	 	 	 	 	 	1,351,579	 	 	 	1,351,579	 
	 	 	 
	Balance at June 30, 2008
	 	$	1,000	 	 	$	26,490,825	 	 	$	26,491,825	 
	 	 	 






The
accompanying notes are an integral part of the financial
statements.





253











 





ORPOWER4 INC.

STATEMENTS OF CASH FLOWS




	 	 	 	 	 	 	 	 	 
	 	 	Six Months	 	Year Ended
	 	 	Ended June 30	 	December 31,
	 	 	2008	 	2007
	 	 	(in U.S. dollars)
	 	 	 
	Cash flows from operating activities —
	 	 	 	 	 	 	 	 
	Income before income taxes
	 	$	2,413,844	 	 	$	5,469,927	 
	Interest received
	 	 	33	 	 	 	3,090	 
	Income tax paid
	 	 	 	 	 	 	(2,863,858	)
	 	 	 
	 
	 	 	2,413,877	 	 	 	2,609,159	 
	 	 	 
	Adjustments to reconcile net income to net cash
provided by operating activities:
	 	 	 	 	 	 	 	 
	Depreciation
	 	 	921,327	 	 	 	1,860,281	 
	Amortization of prepaid operating lease
rentals
	 	 	4,906	 	 	 	9,812	 
	Profit on sale of property, plant and
equipment
	 	 	(3,857	)	 	 	(9,598	)
	Interest received
	 	 	(33	)	 	 	(3,090	)
	Construction-in-process
	 	 	10,047	 	 	 	31,717	 
	Changes in operating assets and liabilities:
	 	 	 	 	 	 	 	 
	Receivables and prepaid expenses
	 	 	(1,503,747	)	 	 	(469,116	)
	Intercompany
	 	 	104,044	 	 	 	583,490	 
	Accounts payable and accrued expenses
	 	 	2,253,874	 	 	 	(36,420	)
	 	 	 
	 
	 	 	1,786,561	 	 	 	1,967,076	 
	Net cash provided by operating
activities
	 	 	4,200,438	 	 	 	4,576,235	 
	 	 	 
	Cash flows from investing activities —
	 	 	 	 	 	 	 	 
	purchase of property, plant and equipment
	 	 	(1,348	)	 	 	(31,649	)
	Payments for construction in progress
	 	 	(7,486,100	)	 	 	(46,827,867	)
	Proceeds from disposal of property, plant and
equipment
	 	 	3,857	 	 	 	10,667	 
	 	 	 
	Net cash used in investing activities
	 	 	(7,483,591	)	 	 	(46,848,849	)
	 	 	 
	Cash flows from financing activities —
	 	 	 	 	 	 	 	 
	Repayments on long-term borrowing
	 	 	 	 	 	 	(1,450,000	)
	Repayment of related party balances
	 	 	4,703,265	 	 	 	43,845,684	 
	 	 	 
	Net cash provided by financing activities
	 	 	4,703,265	 	 	 	42,395,684	 
	 	 	 
	Net increase in cash and cash equivalents
	 	 	1,420,112	 	 	 	123,070	 
	Cash and cash equivalents at beginning of period
	 	 	143,908	 	 	 	20,838	 
	 	 	 
	Cash and cash equivalents at end of period
	 	$	1,564,020	 	 	$	143,908	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Supplemental non-cash investing activities —
	 	 	 	 	 	 	 	 
	Increase in accounts payable and accrued
expenses —
	 	 	 	 	 	 	 	 






254









 






	 	 	 	 	 	 	 	 	 
	related companies, related to purchase of
property,
plant and equipment
	 	$	15,515,689	 	 	$	434,748	 
	 	 	 






The accompanying notes are an integral part of the financial statements.




255








 








NOTE 1 — BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES




Business




OrPower4, Inc. (the “Company”) incorporated in Cayman Islands under the Companies Act as a private
limited liability company, and is domiciled in Kenya.



The principal activity of the Company is generation and sale of electricity from geothermal power
plants.



Basis of Preparation




The financial statements are prepared in accordance International Financial Reporting Standards
(IFRS) and include the accounts of the Company and its Kenyan branch. The measurement basis applied
is the historical cost basis, except where otherwise stated in the accounting policies below. The
financial statements are presented in US dollars (dollars or $).



The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Company’s accounting policies. The areas involving a higher degree of
judgement or complexity, or where assumptions and estimates are significant to the financial
statements, are disclosed in Note 2.



Foreign currency translation





	1	 	Functional and presentation currency -
	 
	 	 	Items included in the financial statements of each of the Company’s entities are measured
using the currency of the primary economic environment in which the entity operates (“the
functional currency”). The functional currency of the Company is the U.S. dollar.
	 
	2	 	Transactions and balances -
	 
	 	 	Monetary assets and liabilities are translated at the current exchange rate, while
non-monetary items are translated at historical rates. Income and expense items are
translated at the average exchange rate for the year, except for depreciation, which is
translated at historical rates. Translation adjustments and transactions gains or losses
are included in results of operations.





Property, plant and equipment




Property, plant and equipment are stated at cost. Major improvements are capitalized and repairs
and maintenance costs are expensed



256









 





The cost and accumulated depreciation of items sold or retired are removed from the accounts. Any
resulting gain or loss is recognized currently and is recognized in operating income.



Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Company and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to income during the financial period in which they are incurred.



Depreciation is calculated using the straight line method to write down cost of each asset to its
residual value over its estimated useful life, as follows:



	 	 	 	 	 
	Buildings
	 	23 years
	Plant and machinery
	 	23 years
	Motor vehicles
	 	6.7 years
	Equipment
	 	4.3 years






The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.



Property, plant and equipment are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.



The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units).



Gains and losses on disposal of property, plant and equipment are determined by reference to their
carrying amounts and are taken into account in determining operating income.



Financial assets




Receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets in receivables and prepayments in
the balance sheet.



The Company assesses at each balance sheet date whether there is objective evidence that the
financial asset is impaired



Receivables




Receivables are recognized initially at fair value and subsequently measured at amortised cost
using the effective interest method. A provision for impairment of receivables is established when
there is objective evidence that the Company will not be able to collect



255









 







all the amounts due according to the original terms of receivables. The amount of the provision is
the difference between the carrying amount and the present value of expected cash flows, discounted
at the effective interest rate. The amount of the provision is recognized in income.



Cash and cash equivalents




The Company considers all highly liquid instruments, with an original maturity of three months or
less, to be cash equivalents.



Income taxes




Income tax expense is the aggregate of the charge to income in respect of current income taxes and
deferred income taxes.



Current income tax is the amount of income tax payable on the taxable income for the period
determined in accordance with the Kenyan Income Tax Act.



Deferred income taxes are provided in full, using the liability method, on all temporary
differences arising between the tax bases of assets and liabilities and their carrying values for
financial reporting purposes. However, if the deferred income taxes arise from the initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable income or loss, they are not
accounted for.



Deferred income taxes are determined using tax rates and laws that have been enacted or
substantively enacted at the balance sheet date and are expected to apply when the related deferred
income tax liability is settled.



Deferred income tax assets are recognized only to the extent that it is probable that future
taxable profits will be available against which the temporary differences can be utilized.



Employee benefits





	1.	 	Retirement benefit obligations
	 
	 	 	The Company operates a defined contribution retirement benefit scheme for its pensionable
employees. A defined contribution plan is a pension plan under which the Company pays fixed
contributions into a separate entity. The Company has no legal or constructive obligations
to pay further contributions if the fund does not hold sufficient assets to pay all
employees the benefits relating to employee service in the current and prior periods.
	 
	 	 	The assets of the scheme are held in separate trustee administered funds, which are funded
by contributions from both the Company and employees.
	 
	 	 	The Company and all its employees also contribute to the National Social Security Fund,
which is a defined contribution scheme.




258









 






	 	 	The Company’s contributions to the defined contribution schemes are charged to income in
the period to which they relate.
	 
	2.	 	Other entitlements
	 
	 	 	The estimated monetary liability for employees’ accrued annual leave entitlement at the
balance sheet date is recognized as an expense accrual.
	 
	 	 	Revenues and cost of revenues
	 
	 	 	Revenues related to the sale of electricity from geothermal power plants and capacity
payments are recorded based upon supply of electricity and are stated net of Value Added
Tax (“VAT”).
	 
	 	 	Interest income is recognized on a time proportion basis using the effective interest
method.
	 
	 	 	Accounting for leases
	 
	 	 	Leases in which a significant portion of the risks and rewards of ownership are retained by
the lessor are classified as operating leases. Payments made under operating leases are
charged to income on a straight-line basis over the period of the lease.
	 
	 	 	Recently issued accounting pronouncements:
	 
	1.	 	Standards and interpretations that became effective in the year ended December 31, 2007:
	 
	 	 	In the year ended December 31, 2007, the following new and revised standards and
interpretations to published standards became effective for the first time and have been
adopted by the Company where relevant to its operations. The comparative figures have been
restated as required.






	 	(a)	 	IAS No. 1 Amendment, “Capital Disclosures”
	 
	 	 	 	The amendment to IAS No. 1 introduces disclosures about the level of the Company’s
capital and how to manage capital.
	 
	 	(b)	 	IFRS No. 7, “Financial Instruments: Disclosures”
	 
	 	 	 	IFRS No. 7 introduces new disclosures relating to financial instruments. This
standard did not have any impact on the classification or measurement of the
Company’s financial instruments.






	2.	 	Standards and interpretations to existing standards that became effective in the year ended
December 31, 2007, but not relevant to the Company:
	 
	 	 	IFRS No. 4, “Insurance Contracts”;




259









 






	 	 	IFRIC No. 7, “Applying the Restatement Approach under IAS 29, Financial Reporting in
Hyper-inflationary Economies”;
	 
	 	 	IFRIC No. 8, “Scope of IFRS 2”; and
	 
	 	 	IFRIC No. 9, “Re-assessment of Embedded Derivatives”.
	 
	3.	 	An interpretation to existing standard that became effective in the six month period ended
June 30, 2008:
	 
	 	 	IFRIC No. 14 to IAS No. 19, “The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction”
	 
	 	 	IFRIC No. 14 provides guidance on assessing the limit in IAS No. 19 on the amount of the
surplus that can be recognized as an asset. It also explains how the pension asset or
liability may be affected by a statutory or contractual minimum funding requirement. The
adoption of this interpretation did not have a material effect on the financial statements
of the Company.
	 
	4.	 	Standards, amendments and interpretations to existing standards that are not yet effective
and have not been early adopted by the Company:






	 	(a)	 	IAS No. 23 (Revised), “Borrowing Costs” (“IAS No. 23R”) (effective for
periods commencing January 1, 2009 or thereafter)
	 
	 	 	 	IAS No. 23R requires an entity to capitalize borrowing costs directly attributable
to the acquisition, construction or production of a qualifying asset (one that
takes a substantial period of time to get ready for use or sale) as part of the
cost of that asset. The option of immediately expensing those borrowing costs has
been removed. The Company did not use the above option and therefore the
application of IAS No. 23R from January 1, 2009 is not expected to have an effect
on its financial statements.
	 
	 	(b)	 	IFRS No. 3 (Revised), “Business Combinations” (“ IFRS No. 3R”) (effective for
periods commencing July 1, 2009 or thereafter)
	 
	 	 	 	IFRS No. 3R outlines principles and requirements essentially describing how the
purchaser has to: (i) recognize and measure in its financial statements the
identified assets purchased under a business combination, the liabilities it has
undertaken, and the minority interest in the purchased entity; (ii) recognize and
measure the acquired goodwill in a business combination or the gain arising from
the purchase transaction; and (iii) determine what information has to be disclosed
in the financial statements to allow an evaluation of the nature of the business
combination and its financial impact. Management is currently assessing the
possible impact of applying IFRS No. 3R on the Company’s financial statements in
the coming periods.




260









 






	 	(c)	 	IAS No. 1 (Revised), “Presentation of Financial Statements” “ IAS No. 1R”)
(effective for periods commencing January 1, 2009 or thereafter)
	 
	 	 	 	IAS No. 1R outlines overall requirements for financial statement presentation,
guidelines for financial statement structure and minimum requirements as to the
content of financial statements. IAS No. 1R requires, among other things, that any
change in equity, arising from transactions with shareholders, in their capacity as
owners, should be presented in the statements of changes in equity separately from
changes not stemming from such transactions.
	 
	 	(d)	 	IFRIC No. 15 (Revised), “Agreements for the Construction of Real Estate”
(effective for periods commencing January 1, 2009 or thereafter)
	 
	 	 	 	IFRIC No. 15 outlines guidelines for determining when IAS 11, “Construction
Contracts” should be applied to the construction and sale of real estate, and when,
IAS 18, “Revenue” from the contractor’s point of view, a determination that depends
on the specific circumstances and requires the application of judgement. It also
explains when revenue from the construction of real estate should be recognized in
accordance with each of the two applicable standards (IAS 11 and IAS 18). The
Group will apply IFRIC No. 15 as from January 1, 2009, and does not expect that
such application will have a significant impact on its financial statements.
	 
	 	(e)	 	IFRIC No. 16, “Hedges of a Net Investment in a Foreign Operation (effective
for periods commencing October 1, 2008 or thereafter)
	 
	 	 	 	IFRIC No. 16 provides guidelines on several issues, including:






	 	(1)	 	Hedge accounting in respect of a net investment in a foreign
operation may not be applied to foreign exchange differences resulting from
the difference in presentation currency, but only to foreign exchange
differences arising from a difference between the parent entity’s functional
currency and that of its foreign operation.
	 
	 	(2)	 	In the event of a group of companies, IFRIC No. 16 concludes
that the hedging instrument may be held by any entity within the group
(provided it meets the criteria of IAS No.39, “Financial Instruments:
Recognition and Measurement”).
	 
	 	(3)	 	In the event of disposal of the foreign operation, the amount
to be reclassified from equity to the statement of operations will be the
cumulative profit or loss on the hedge relating to the effective portion
recognized directly in equity.






	 	 	 	The Company will apply IFRIC No.16 as from January 1, 2009, and does not expect
that such application will have a significant impact on its financial statements.




261









 












	5.	 	Standards and interpretations to existing standards that became effective in the six month
period ended June 30, 2008 but not relevant to the Company:
	 
	 	 	IFRIC No. 11, “Group and Treasury Share Transactions”; and
	 
	 	 	IFRIC No. 12, “Service Concession Arrangements”.
	 
	6.	 	Standards, amendments and interpretations to existing standards not yet effective in and not
relevant to the Company:
	 
	 	 	IAS No. 27 (Revised), “Consolidated and Separate Financial Statements” (“IAS No. 27R”)
	 
	 	 	IFRS No. 8, “Operating Segments”; and
	 
	 	 	IFRIC No. 13, “Customer Loyalty Programs”.





NOTE 2 — CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS




Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including experience of future events that are believed to be reasonable under the
circumstances.




	 	(a)	 	Critical accounting estimates and assumptions
	 
	 	 	 	Property, plant and equipment
	 
	 	 	 	Critical estimates are made by management in determining depreciation rates for
property, plant and equipment. The rates used are set out in Note 1 above.
	 
	 	(b)	 	Critical judgements in applying the entity’s accounting policies
	 
	 	 	 	In the process of applying the Company’s accounting policies, management has made
judgements in determining whether the assets are impaired.
	 
	 	 	 	Income taxes
	 
	 	 	 	Significant judgement is required in determining the Company’s provision for income
taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Company
recognizes liabilities for anticipated tax audit issues based on estimates of
whether additional taxes will be due. Where the final tax outcome of these matters
is different from the amounts that were initially recorded, such differences will
impact the income tax and deferred tax provisions in the period in which such
determination is made.




262









 











NOTE 3 — FINANCIAL RISK MANAGEMENT





	 	 	The Company’s activities expose it to a variety of financial risks, including credit risk
and the effects of changes in foreign currency exchange rates and interest rates. The
Company’s overall risk management programmed focuses on the unpredictability of financial
markets and seeks to minimize potential adverse effects on its financial performance, but
the Company does not hedge any risks.
	 
	 	 	Credit Risk
	 
	 	 	Credit risk arises from trade and other receivables. The Company has only one customer,
Kenya Power and Lighting Co. Ltd. (“KPLC”). The Company credit controller assesses the
credit quality of KPLC, taking into account the Power Purchase Agreement, past experience
and other factors. There are no credit limits but credit terms are in accordance with
limits set by the power purchase agreement (“PPA”).
	 
	 	 	The amount that best represents the Company’s maximum exposure to credit risk at June 30,
2008 and December 31, 2007 is as follows:





	 	 	 	 	 	 	 	 	 
	 	 	June 30,	 	December 31,
	 	 	2008	 	2007
	 	 	(in U.S. dollars)
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Cash and cash equivalents
	 	$	1,564,020	 	 	$	143,908	 
	Trade receivables
	 	 	2,235,518	 	 	 	1,552,771	 
	VAT receivable
	 	 	1,260,144	 	 	 	455,644	 
	Other receivables
	 	 	14,127	 	 	 	11,515	 
	 	 	 
	 
	 	$	5,073,809	 	 	$	2,163,838	 
	 	 	 







	 	 	No collateral is held for any of the above assets. All receivables that are neither past
due or impaired are within their approved credit limits, and no receivables have had their
terms renegotiated.
	 
	 	 	None of the above assets are past due or impaired except for the following amounts in trade
receivables (which are due within 30 days of the end of the month in which they are
invoiced):





	 	 	 	 	 	 	 	 	 
	 	 	June 30,	 	December 31,
	 	 	2008	 	2007
	 	 	(in U.S. dollars)
	 	 	 
	Past due, but not impaired
	 	$	1,114,756	 	 	$	698,662	 
	 	 	 






263









 






Market Risks





	1.	 	Foreign exchange risk
	 
	 	 	The Company transactions are primarily in dollars, the functional currency. Foreign
exchange risk is therefore restricted to transactions and balances in Kenya Shillings.
Foreign exchange risk arises from future commercial transactions, recognized assets and
liabilities.
	 
	 	 	At June 30, 2008, if the Kenya Shilling had weakened/strengthened by 10% against the dollar
with all other variables held constant, the net income for the year would have been $14,590
lower/higher), mainly as a result of Kenya Shilling bank balances and trade payables.
	 
	 	 	At December 31, 2007 if the Kenya Shilling had weakened/strengthened by 10% against the
dollar with all other variables held constant, the net income for the year would have been:
$8,068 higher/lower), mainly as a result of Kenya Shilling bank balances and trade
payables.
	 
	2.	 	Interest rate risk
	 
	 	 	The Company’s only interest bearing assets are its cash deposits, all of which are at
variable rate. At June 30, 2008 and December 31, 2007, an increase/decrease of about 50
basis points would have resulted in an increase/decrease in net income of $48 and $4,645,
respectively.
	 
	3.	 	Liquidity risk
	 
	 	 	Prudent liquidity risk management includes maintaining sufficient cash.
	 
	 	 	Management monitors rolling forecast of the Company’s liquidity reserve on the basis of
expected cash flow and budget control.
	 
	 	 	The table below analyses the Company’s financial liabilities that will be settled in net
basis relevant maturity groupings based on the remaining period at the balance sheet date
to the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances, as impact of discounting is not significant.





	 	 	 	 	 
	 	 	Between 1 and	 
	 	 	1 and 3 Months	 
	 	 	(in U.S. dollars)	 
	At June 30, 2008: —	 	 	 	 
	— trade and other payables	 	£	3,498,531	 
	 
	 	 	 
	 
	 	 	 	 
	At December 31, 2007 —	 	 	 	 
	— trade and other payables	 	$	53,046	 
	 
	 	 	 






264









 







	 	 	Capital risk management
	 
	 	 	The Company is funded by the parent company and other related parties.





NOTE 4 — PREPAID EXPENSES AND OTHER RECIEVABLES





	 	 	Prepaid expenses and other receivables consist of the following





	 	 	 	 	 	 	 	 	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Prepaid insurance
	 	$	907,607	 	 	$	875,562	 
	VAT receivable
	 	 	1,260,144	 	 	 	455,644	 
	Income tax receivable
	 	 	 	 	 	 	357,446	 
	Other
	 	 	120,230	 	 	 	135,775	 
	 
	 	 	 	 	 	 
	 
	 	$	2,287,981	 	 	$	1,824,427	 
	 
	 	 	 	 	 	 






NOTE 5 — DEPOSITS AND OTHER





	 	 	Deposits and other consist of the following:





	 	 	 	 	 	 	 	 	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Prepaid operating lease rental:
	 	 	 	 	 	 	 	 
	Unamortized balance at the beginning of
period
	 	$	157,800	 	 	$	167,612	 
	Less amortization charge for the period
	 	 	(4,906	)	 	 	(9,812	)
	 
	 	 	 	 	 	 
	 
	 	$	152,894	 	 	$	157,800	 
	 
	 	 	 	 	 	 






NOTE 6 — PROPERTY, PLANT AND EQUIPMENT





	 	 	Property, plant and equipment, net, consist of the following:





	 	 	 	 	 	 	 	 	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Buildings
	 	$	899,421	 	 	$	899,421	 
	Plant and machinery
	 	 	22,266,606	 	 	 	22,266,606	 
	Drilling equipment
	 	 	16,508,141	 	 	 	16,508,141	 
	Vehicles and equipment
	 	 	250,054	 	 	 	279,803	 
	Office equipment
	 	 	172,158	 	 	 	170,810	 
	 
	 	 	 	 	 	 
	 
	 	 	40,096,380	 	 	 	40,124,781	 
	Less accumulated depreciation
	 	 	(14,163,173	)	 	 	(13,271,595	)
	 
	 	 	 	 	 	 
	Property, plant and equipment, net
	 	$	25,933,207	 	 	$	26,853,186	 
	 
	 	 	 	 	 	 






265









 







	 	 	Depreciation expense for the six months ended June 30, 2008 and for the year ended December
31, 2007 amounted to $921,327 and $1,860,281, respectively.
	 
	 	 	Pursuant to a 20-year PPA with KPLC, the Kenyan parastatal electricity transmission and
distribution company, the Company agreed to design, construct and operate geothermal power
plants in Kenya in several phases.





NOTE 7 — CONSTRUCTION-IN-PROCESS





	 	 	The Company has incurred $84,801,016 and $68,155,262 as of June 30, 2008 and December 31,
2007, respectively, in connection with the construction of Phase II of the Olkaria III
project. Pursuant to the amended and restated PPA, the parties agreed to shorten the
construction period for Phase II to approximately twenty-one months commencing on February
7, 2007 and to reduce the tariff payable by KPLC on the total capacity of the plant upon
completion of Phase II. Management believes that the project will be completed in the
required timeframe. If the Company does not complete the construction of Phase II by the
required date, the Company may lose some or all of its investment in the
construction-in-process relating to Phase II.





NOTE 8 — ACCOUNTS PAYABLE AND ACCRUED EXPENSES





	 	 	Accounts payable and accrued expenses consist of the following:





	 	 	 	 	 	 	 	 	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Trade Payables
	 	$	1,842,103	 	 	$	98,445	 
	Current income tax payable
	 	 	926,185	 	 	 	 	 
	Accrued expenses
	 	 	78,100	 	 	 	82,834	 
	Other Payables
	 	 	652,143	 	 	 	171,767	 
	 
	 	 	 	 	 	 
	 
	 	$	3,498,531	 	 	$	353,046	 
	 
	 	 	 	 	 	 






NOTE 9 — POWER PURCHASE AGREEMENT





	 	 	The Olkaria III project is located in Naivasha, Kenya. The Olkaria III project is currently
comprised of one plant, which commenced commercial operation in August 2000, and a
geothermal field. The plant currently has a generating capacity of approximately 13 MW
(Phase I) .The Company is working on the construction of Phase II of this project which it
expects, upon completion, will increase the generating capacity of the Olkaria III project
to approximately 48 MW. Phase I of the Olkaria III project utilizes a binary system. In
November




266









 






	 	 	1998, following an international tender, the Company entered into a PPA with KPLC, which
was recently amended and restated in January 2007. The PPA for the project will expire 20
years from the completion of Phase II, which is expected to be completed by the end of
2008.The Company leases the site on which the geothermal resources and the plant facilities
are located from the Kenyan government, pursuant to an agreement which will expire in 2040.
The Kenyan government granted the company a license giving it exclusive rights of use and
possession of the relevant geothermal resources for an initial period of 30 years, expiring
in 2029, which initial period may be extended by the Company for two additional five-year
terms. The Kenyan Minister of Energy has the right to terminate or revoke the license in
the event the Company ceases work in or under the license area during a period of six
months, or has failed to comply with the terms of the license or the provisions of the law
relating to geothermal resources. The Company is obligated to pay the Kenyan government
monthly fees and royalties based on the amount of power supplied to KPLC.
	 
	 	 	On January 19, 2007, the company entered into an Amended and Restated PPA and a Project
Security Agreement with KPLC with respect to Phase II of the Olkaria III project. These
agreements were executed after the receipt of appropriate regulatory approvals from the
Kenyan authorities. The construction of the second phase of the project is expected, upon
completion, to add approximately 35 MW to the existing facility, bringing the project’s
total capacity to approximately 48 MW. Following completion of Phase II, total anticipated
annual revenues from the project will be approximately $32 million. Under the Project
Security Agreement, KPLC provided a letter of credit in an amount equal to the value of
four months of anticipated revenues from the project under the Amended and Restated PPA
(currently valued at approximately $8 million).





NOTE 10 — INCOME TAXES




	 	 	 	 	 	 	 	 	 
	 	 	Six Months	 	 	Year Ended	 
	 	 	Ended June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Current taxes
	 	$	1,243,426	 	 	$	2,381,794	 
	Deferred taxes
	 	 	(221,366	)	 	 	(190,734	)
	Exchange differences on tax balances
	 	 	40,205	 	 	 	276,328	 
	 
	 	 	 	 	 	 
	Income tax expense
	 	$	1,062,265	 	 	$	2,467,388	 
	 
	 	 	 	 	 	 






267









 







	 	 	The tax on the Company’s profit before income tax differs from the theoretical amount that
would arise using the statutory income tax rate, as follows:





	 	 	 	 	 	 	 	 	 
	 	 	Six Months	 	 	Year Ended	 
	 	 	Ended June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 
	 	 	 	 	 	 	 	 
	Income before income taxes
	 	$	2,413,844	 	 	$	5,469,927	 
	 
	 	 	 	 	 	 	 	 
	Tax calculated at the statutory income tax rate —
37.5%
	 	 	905,192	 	 	 	2,051,223	 
	Tax effect of:
	 	 	 	 	 	 	 	 
	Income not subject to tax
	 	 	(104	)	 	 	(318	)
	Expenses not deductible for tax purposes
	 	 	116,972	 	 	 	140,155	 
	Exchange differences on tax balances
	 	 	40,205	 	 	 	276,328	 
	 
	 	 	 	 	 	 
	Income tax expense
	 	$	1,062,265	 	 	$	2,467,388	 
	 
	 	 	 	 	 	 







	 	 	Deferred income taxes are calculated using the enacted income tax rate of 37.5%. The
movement in the deferred income tax account is as follows:





	 	 	 	 	 	 	 	 	 
	 	 	Six Months	 	 	Year Ended	 
	 	 	Ended June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Balance at the beginning of period
	 	$	7,141,360	 	 	$	7,332,094	 
	Charges during the period
	 	 	(221,366	)	 	 	(190,734	)
	 
	 	 	 	 	 	 
	Balance at end of period
	 	$	6,919,994	 	 	$	7,141,360	 
	 
	 	 	 	 	 	 







	 	 	Deferred income tax assets and liabilities, deferred income tax charge/ (credit) in income,
are attributable to the following items:





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Balance at	 	 	Charged/	 	 	Balance at	 	 	Charged/	 	 	Balance at	 
	 	 	January 1,	 	 	(credited)	 	 	December 31,	 	 	(credited)	 	 	June 30,	 
	 	 	2007	 	 	to Income	 	 	2007	 	 	to Income	 	 	2008
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred income tax liabilities
in respect of property, plant
and equipment
	 	$	7,499,578	 	 	$	(356,172	)	 	$	7,143,406	 	 	$	(216,774	)	 	$	6,926,632	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred income tax assets in
respect of:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Provisions
	 	 	(2,734	)	 	 	(2,554	)	 	 	(5,288	)	 	 	(1,350	)	 	 	(6,638	)
	Other deductible temporary
differences
	 	 	(164,750	)	 	 	167,992	 	 	 	3,242	 	 	 	(3,242	)	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	(167,484	)	 	 	165,438	 	 	 	(2,046	)	 	 	(4,592	)	 	 	(6,638	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net deferred income tax liability
	 	$	7,332,094	 	 	$	(190,734	)	 	$	7,141,360	 	 	$	(221,366	)	 	$	6,919,994	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






268









 







NOTE 11 — TRANSACTIONS WITH RELATED ENTITIES





	 	 	The Company is controlled by Ormat Holdings Corporation, incorporated in Cayman Islands.
The ultimate parent of the Company is Ormat Technologies, incorporated in United States of
America. There are other companies that are related to Orpower4 Incorporated (Kenya)
Company through common shareholdings or common directorships.
	 
	 	 	The movement in transactions with related parties is as follows:





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Ormat	 	 	Ormat	 	 	Ormat	 	 	Ormat	 	 	 	 
	 	 	 	 	 	 	Systems	 	 	Technologies,	 	 	International	 	 	Holding	 	 	 	 
	 	 	Orda 6, Inc.	 	 	Ltd.	 	 	Inc.	 	 	Inc.	 	 	Corporation	 	 	Total
	 	 	(in U.S. dollars)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at January 1, 2007
	 	$	4,023,597	 	 	$	16,694	 	 	$	87,789	 	 	$	12,667	 	 	$	18,498,034	 	 	$	22,638,781	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Purchase of plant and
equipment and other costs
paid on behalf of the
Company
	 	 	43,921,725	 	 	 	61,040	 	 	 	 	 	 	 	80,866	 	 	 	1,916,942	 	 	 	45,980,573	 
	Repayments during the year
	 	 	(1,450,000	)	 	 	(61,206	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(1,511,206	)
	Transfer of funds, net
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(1,055,446	)	 	 	(1,055,446	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at December 31,
2007
	 	 	46,495,322	 	 	 	16,528	 	 	 	87,789	 	 	 	93,533	 	 	 	19,359,530	 	 	 	66,052,702	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Purchase of plant and
equipment and other costs
paid on behalf of the
Company
	 	 	9,040,374	 	 	 	163,901	 	 	 	 	 	 	 	25,686	 	 	 	979,607	 	 	 	10,209,568	 
	Transfer of funds, net
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,802,016	 	 	 	3,802,016	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at June 30, 2008
	 	$	55,535,696	 	 	$	180,429	 	 	$	87,789	 	 	$	119,219	 	 	$	24,141,153	 	 	$	80,064,286	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






269









 







	 	 	The balances are presented in the balance sheets as follows:





	 	 	 	 	 	 	 	 	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Among current liabilities — due
to related entities
	 	$	2,757,212	 	 	$	2,593,312	 
	Among non-current liabilities:
	 	 	 	 	 	 	 	 
	Due to related entities
	 	 	53,165,921	 	 	 	44,099,860	 
	Due to parent.
	 	 	24,154,153	 	 	 	19,359,530	 
	 
	 	 	 	 	 	 
	 
	 	$	80,064,286	 	 	$	66,052,702	 
	 
	 	 	 	 	 	 







	 	 	The terms and conditions of the borrowing from related companies, which are denominated in
dollars, are yet to be agreed. However, Orda 6, Inc., and Ormat Systems Ltd. have confirmed
that no interest will be charged in respect of the six months ended June 30, 2008 and the
year ended December 31, 2007, and that no repayment of the principal will be demanded
within 12 months of the balance sheet date.
	 
	 	 	The following transactions were carried out with related parties:





	 	 	 	 	 	 	 	 	 
	 	 	Six Months	 	 	Year Ended	 
	 	 	Ended June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Purchase of goods and services
	 	 	 	 	 	 	 	 
	Ormat Systems Ltd.
	 	 	163,901	 	 	 	61,040	 
	Orda 6, Inc.
	 	 	9,040,374	 	 	 	43,921,725	 
	Ormat International Inc.
	 	 	25,686	 	 	 	80,866	 
	 
	 	 	 	 	 	 
	 
	 	 	9,229,961	 	 	 	44,063,631	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Other costs paid on behalf of the
Company
	 	 	979,607	 	 	 	1,916,942	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Transfer of funds, net:
	 	 	 	 	 	 	 	 
	From (to) Ormat holding., net
	 	 	3,802,016	 	 	 	(1,055,446	)
	To Orda 6, Inc.
	 	 	 	 	 	 	(1,450,000	)
	To Ormat Systems Ltd.
	 	 	 	 	 	 	(61,206	)
	 
	 	 	 	 	 	 
	 
	 	 	3,802,016	 	 	 	(2,566,652	)
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Key management compensation:
	 	 	 	 	 	 	 	 
	Salaries and other short-term employment
benefits
	 	 	31,120	 	 	 	62,370	 
	Post-employment benefits
	 	 	3,912	 	 	 	7,638	 
	 
	 	 	 	 	 	 
	 
	 	 	35,032	 	 	 	70,008	 
	 
	 	 	 	 	 	 






270









 






NOTE 12 — CONTINGENCIES





	 	 	As of June 30, 2008 the Company is negotiating for a waiver of interest and penalties
following a withholding tax assessment from the Kenya Revenue Authority estimated at
$111,140. It is not anticipated that any material liability will arise from this
assessment.
	 
	 	 	At December 31, 2007 the Company has disputed a withholding tax assessment amounting to Shs
22.3 million. It is not anticipated that any material liability will arise from this
assessment.
	 
	 	 	It is the opinion of the Company’s management that the expected outcome of these matters,
individually or in the aggregate, will not have a material effect on the results of
operations and financial condition of the Company.





NOTE 13 — COMMITMENTS





	 	 	Capital commitments
	 
	 	 	Capital expenditure contracted for at the balance sheet date but not recognized in the
financial statements is as follows:





	 	 	 	 	 	 	 	 	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	Property, plant and equipment
	 	$	11,966,000	 	 	$	28,500,000	 
	 
	 	 	 	 	 	 






NOTE 14 — SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION





	 	(a)	 	Cost of revenues:





	 	 	 	 	 	 	 	 	 
	 	 	Six Months	 	 	Year Ended	 
	 	 	Ended June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Plant costs
	 	$	204,733	 	 	 	139,850	 
	Salaries
	 	 	155,492	 	 	 	256,249	 
	Depreciation
	 	 	893,902	 	 	 	1,809,786	 
	Royalties
	 	 	202,945	 	 	 	407,955	 
	Insurance
	 	 	513,310	 	 	 	1,072,891	 
	Management Services
	 	 	72,000	 	 	 	156,000	 
	Other
	 	 	107,065	 	 	 	76,080	 
	 
	 	 	 	 	 	 
	 
	 	$	2,149,447	 	 	$	3,918,811	 
	 
	 	 	 	 	 	 






271









 







	 	(b)	 	General and administrative expenses:





	 	 	 	 	 	 	 	 	 
	 	 	Six Months	 	 	Year Ended	 
	 	 	Ended June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Insurance
	 	$	2,196	 	 	$	4,188	 
	Cleaning
	 	 	8,525	 	 	 	10,711	 
	Exchange rate differences
	 	 	84,396	 	 	 	38,068	 
	Bank charges
	 	 	1,975	 	 	 	3,963	 
	Security
	 	 	21,599	 	 	 	34,027	 
	Office supplies
	 	 	16,629	 	 	 	28,798	 
	Rented Car expenses
	 	 	8,402	 	 	 	21,701	 
	Communication
	 	 	18,395	 	 	 	38,871	 
	Realized losses
	 	 	4,547	 	 	 	 	 
	Rent Expenses
	 	 	15,966	 	 	 	19,999	 
	Office repairs
	 	 	2,540	 	 	 	8,562	 
	Land lease amortization
	 	 	4,906	 	 	 	9,812	 
	Employees’ related expenses
	 	 	10,862	 	 	 	18,522	 
	Donations
	 	 	20,076	 	 	 	21,545	 
	Consumables
	 	 	21,395	 	 	 	25,906	 
	Licenses
	 	 	5,396	 	 	 	6,078	 
	Sanitation and cleaning expenses
	 	 	6,683	 	 	 	12,443	 
	Other
	 	 	16,446	 	 	 	30,310	 
	 
	 	 	 	 	 	 
	 
	 	$	270,934	 	 	$	333,504	 
	 
	 	 	 	 	 	 







	 	(c)	 	Other expenses (income) — net:





	 	 	 	 	 	 	 	 	 
	 	 	Six Months	 	 	Year Ended	 
	 	 	Ended June 30,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(in U.S. dollars)	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Donations
	 	$	20,070	 	 	$	15,158	 
	Salaries
	 	 	19,511	 	 	 	30,650	 
	Depreciation
	 	 	27,425	 	 	 	50,495	 
	Accounting
	 	 	22,403	 	 	 	37,932	 
	Income Tax Levies
	 	 	121,159	 	 	 	12,776	 
	Interest income
	 	 	(33	)	 	 	(3,090	)
	Net foreign exchange expenses
	 	 	 	 	 	 	64,196	 
	Other
	 	 	1,299	 	 	 	(4,641	)
	 
	 	 	 	 	 	 
	 
	 	$	211,834	 	 	$	203,476	 
	 
	 	 	 	 	 	 







272











 





Part 4

Form of Unaudited Financial Statements for Kenyan branch




ORPOWER 4, INC (Kenya) Branch.




CONDENSED BALANCE SHEETS

As of June 30, 2007 and December 31, 2006




	 	 	 	 	 	 	 	 	 
	 	 	June 30, 2007	 	 	December 31, 2006	 
	 	 	(Unaudited)	 
	ASSETS
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Current assets:
	 	 	 	 	 	 	 	 
	Cash and cash equivalents
	 	$	251,337	 	 	$	20,838	 
	Trade Receivables
	 	 	2,079,742	 	 	 	2,015,465	 
	Prepaid expenses and other receivables
	 	 	419,860	 	 	 	389,417	 
	Inventory
	 	 	78,563	 	 	 	116,936	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total current assets
	 	 	2,829,502	 	 	 	2,542,656	 
	 
	 	 	 	 	 	 	 	 
	Deposits and other
	 	 	162,706	 	 	 	167,612	 
	Property, plant and equipment, net
	 	 	34,481,740	 	 	 	35,141,533	 
	 
	 	 	 	 	 	 
	 
	 	$	37,473,948	 	 	$	37,851,801	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	LIABILITIES AND STOCKHOLDER’S EQUITY
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Current liabilities:
	 	 	 	 	 	 	 	 
	Accounts payable and accrued expenses
	 	$	306,303	 	 	$	383,803	 
	Due to Related Entities
	 	 	2,606,618	 	 	 	4,043,478	 
	Due to Parent
	 	 	556,341	 	 	 	1,011,728	 
	Deferred Income Taxes
	 	 	7,027,431	 	 	 	7,313,730	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total liabilities
	 	 	10,496,693	 	 	 	12,752,739	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Stockholder’s equity:
	 	 	 	 	 	 	 	 
	Retained earnings
	 	 	26,977,255	 	 	 	25,099,062	 
	 
	 	 	 	 	 	 
	 
	 
	 	 	26,977,255	 	 	 	25,099,062	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	$	37,473,948	 	 	$	37,851,801	 
	 
	 	 	 	 	 	 






273









 






ORPOWER 4, INC (Kenya) Branch.




CONDENSED STATEMENTS OF OPERATIONS

For The Six and Three Months Ended June 30, 2007 and 2006




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Three months ended June 30,	 	 	Six months ended June 30,	 
	 	 	June 30, 2007	 	 	June 30, 2006	 	 	June 30, 2007	 	 	June 30, 2006	 
	 	 	(Unaudited)	 	 	(Unaudited)	 
	Revenues:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Power
	 	$	2,666,859	 	 	$	2,641,992	 	 	$	5,248,033	 	 	$	5,238,833	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	2,666,859	 	 	 	2,641,992	 	 	 	5,248,033	 	 	 	5,238,833	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cost of Sales:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Power
	 	 	885,344	 	 	 	947,858	 	 	 	1,837,388	 	 	 	1,802,793	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	885,344	 	 	 	947,858	 	 	 	1,837,388	 	 	 	1,802,793	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross margin
	 	 	1,781,515	 	 	 	1,694,134	 	 	 	3,410,645	 	 	 	3,436,040	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Selling, general and administrative
	 	 	103,060	 	 	 	115,395	 	 	 	199,270	 	 	 	214,638	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	 	1,678,455	 	 	 	1,578,739	 	 	 	3,211,375	 	 	 	3,221,402	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other income (expense)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Finance income (expense)
	 	 	(29,533	)	 	 	(10,533	)	 	 	(44,910	)	 	 	(17,005	)
	Miscellaneous Income (expense)
	 	 	3,139	 	 	 	2,571	 	 	 	(169,156	)	 	 	5,175	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before income taxes
	 	 	1,652,061	 	 	 	1,570,777	 	 	 	2,997,309	 	 	 	3,209,572	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income tax provision
	 	 	561,337	 	 	 	530,721	 	 	 	1,119,116	 	 	 	1,138,723	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income
	 	$	1,090,724	 	 	$	1,040,056	 	 	$	1,878,193	 	 	$	2,070,849	 
	 	 	 	 	 	 	 	 	 






274









 






ORPOWER 4, INC (Kenya) Branch.




Condensed Statements of Cash Flows

For The Six Months Ended June 30, 2007




	 	 	 	 	 
	 	 	June 30, 2007	 
	 	 	(Unaudited)	 
	Increase in cash and cash equivalents:
	 	 	 	 
	Cash flows from operating activities:
	 	 	 	 
	Net income
	 	$	1,878,193	 
	Adjustments to reconcile net income to net cash provided by operating activities:
	 	 	 	 
	Depreciation
	 	 	846,634	 
	Change in assets and liabilities:
	 	 	 	 
	Receivables
	 	 	(64,277	)
	Prepaid expenses
	 	 	(30,443	)
	Deposits and other
	 	 	4,906	 
	Inventory
	 	 	38,373	 
	Due to related entities
	 	 	(l,436,860	)
	Accounts payable and accrued expenses
	 	 	(77,500	)
	Deferred income taxes
	 	 	(286,299	)
	 
	 	 	 
	 
	 	 	 	 
	Net cash provided by operating activities
	 	 	872,727	 
	 
	 	 	 
	 
	 	 	 	 
	Cash flows from Investing activities:
	 	 	 	 
	 
	 	 	 	 
	Capital expenditures
	 	 	(186,841	)
	 
	 	 	 
	 
	 	 	 	 
	Net cash used in investing activities
	 	 	(186,841	)
	 
	 	 	 
	 
	 	 	 	 
	Cash Flows From Financing Activities:
	 	 	 	 
	Due to parent
	 	 	(455,387	)
	 
	 	 	 
	 
	 	 	 	 
	Net cash provided by (used in) financing activities
	 	 	(455,387	)
	 
	 	 	 
	 
	 	 	 	 
	Net increase in cash and cash equivalents
	 	 	230,499	 
	Cash and cash equivalents beginning of year
	 	 	20,838	 
	 
	 	 	 
	 
	 	 	 	 
	Cash and cash equivalents at end of year
	 	$	251,337	 
	 
	 	 	 







275











 





SCHEDULE 20

Excluded Activities





	1	 	Production or activities involving forced labour1 or child labour2.
	 
	2	 	Production or trade in any product or activity deemed illegal under host country laws or
regulations or international conventions and agreements.
	 
	3	 	Production or trade in3






	 	3.1	 	weapons and munitions
	 
	 	3.2	 	tobacco
	 
	 	3.3	 	hard liquor.






	4	 	Gambling, casinos and equivalent enterprises4.
	 
	5	 	Any business relating to pornography or prostitution.
	 
	6	 	Trade in wildlife or wildlife products regulated under CITES5.
	 
	7	 	Production or use of or trade in hazardous materials such as radioactive
materials6, unbounded asbestos fibres and products containing PCBs7.
	 
	8	 	Cross-border trade in waste and waste products unless compliant to the Basel Convention and
the underlying regulations.
	 
	9	 	Drift net fishing in the marine environment using nets in excess of 2.5km in length.







 




			
	1	 	Forced labour means all work or service, not
voluntarily performed, that is extracted from an individual under threat of
force or penalty as defined in the ILO conventions.
	 
	2	 	Employees may only be taken if they are at least 14
years old, as defined in the ILO Fundamental Human Rights conventions (Minimum
Age Convention C138, Art. 2), unless local legislation specifies compulsory
school attendance or the minimum age for working. In such cases the higher age
shall apply.
	 
	3	 	This applies when these activities are a substantial
part of a project sponsor’s primary operations.
	 
	4	 	This applies when these activities are a substantial
part of a project sponsor’s primary operations.
	 
	5	 	CITES: Convention on International Trade in Endangered
Species or Wild Fauna and Flora.
	 
	6	 	This does not apply to the purchase of medical
equipment, quality control (measurement) equipment and any other equipment
where EFP considers the radioactive source to be trivial and/or adequately
shielded.
	 
	7	 	PCBs: Polychlorinated biphenyls, a group of highly
toxic chemicals. PCBs are likely to be found in oil-filled electrical
transformers, capacitors and switchgear dating from 1950-1985.




276









 











	10	 	Production, use of or trade in pharmaceuticals, pesticides/herbicides, chemicals, ozone
depleting substances8 and other hazardous substances subject to international
phase-outs or bans.
	 
	11	 	Significant conversion or degradation9 of Critical Habitat10.
	 
	12	 	Production and distribution of racist, anti-democratic and/or neo-nazi media.







 




			
	8	 	Ozone Depleting Substances: Chemical compounds, which
react with and delete stratospheric ozone, resulting in “holes in the ozone
layer“. The Montreal Protocol lists ODs and their target reduction and
phase-out dates.
	 
	9	 	Significant conversion or degradation means the (1)
elimination or seves diminution of the integrity of a habitat caused by a
major, long-term change in land or water use; or (2) modification of a habitat
that substantially reduces the habitat’s ability to maintain viable population
of its native species.
	 
	10	 	Critical habitat is a subset of both natural and
modified habitat that deserves particular attention. Critical habitat includes
areas with high biodiversity value that meet the criteria of the world
Conservation Union (IUCN) classification, including habitat required for the
survival of critically endangered or endangered species as defined by the IUCN
Red List of Threatened Species or as defined in any national legislation; areas
having special significance for endemic or restricted-range species; sites that
are critical for the survival of migratory species; areas supporting globally
significant concentrations or numbers of individuals of congregatory species;
areas with unique assemblages of species or which are associated with key
evolutionary processes or provide key ecosystem services; and areas having
biodiversity of significant social, economic or cultural importance to local
communities. Primary Forest or forests of High Conservation Value shall be
considered Critical Habitats.




277









 










SCHEDULE 21

Calculation of the Mandatory Cost





	1	 	The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of
compliance with:






	 	(a)	 	the requirements of the Bank of England and/or the Financial Services
Authority (or, in either case, any other authority which replaces all or any of its
functions); or
	 
	 	(b)	 	the requirements of the European Central Bank.






	2	 	On the first day of each Interest Period (or as soon as possible thereafter) the Global Agent
shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in
accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the
Global Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in
proportion to the percentage participation of each Lender in the relevant Loan) and will be
expressed as a percentage rate per annum.
	 
	3	 	The Additional Cost Rate for any Lender lending from a Facility Office in a Participating
Member State will be the percentage notified by that Lender to the Global Agent. This
percentage will be certified by that Lender in its notice to the Global Agent to be its
reasonable determination of the cost (expressed as a percentage of that Lender’s participation
in all Loans made from that Facility Office) of complying with the minimum reserve
requirements of the European Central Bank in respect of loans made from that Facility Office.
	 
	4	 	The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom
will be calculated by the Global Agent as follows:





	 	 	 
	E x 0.01 
300

	 	per cent. per annum.







	 	 	Where:
	 
	 	 	E: is designed to compensate Lenders for amounts payable under the Fees Rules and is
calculated by the Global Agent as being the average of the most recent rates of charge
supplied by the Reference Banks to the Global Agent pursuant to paragraph 7 below and
expressed in pounds per £1,000,000.
	 
	5	 	For the purposes of this Schedule:






	 	(a)	 	“Fees Rules” means the rules on periodic fees contained in the FSA
Supervision Manual or such other law or regulation as may be in force




278









 






	 	 	 	from time to time in respect of the payment of fees for the acceptance of deposits;
	 
	 	(b)	 	“Fee Tariffs” means the fee tariffs specified in the Fees Rules under the
activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee
required pursuant to the Fees Rules but taking into account any applicable discount
rate); and
	 
	 	(c)	 	“Tariff Base” has the meaning given to it in, and will be calculated in
accordance with, the Fees Rules.






	6	 	If requested by the Global Agent, each Reference Bank shall, as soon as practicable after
publication by the Financial Services Authority, supply to the Global Agent, the rate of
charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees
Rules in respect of the relevant financial year of the Financial Services Authority
(calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs
applicable to that Reference Bank for that financial year) and expressed in pounds per
£1,000,000 of the Tariff Base of that Reference Bank.
	 
	7	 	Each Lender shall supply any information required by the Global Agent for the purpose of
calculating its Additional Cost Rate. In particular, but without limitation, each Lender
shall supply the following information on or prior to the date on which it becomes a Lender:






	 	(a)	 	the jurisdiction of its Facility Office; and
	 
	 	(b)	 	any other information that the Global Agent may reasonably require for such
purpose.






	 	 	Each Lender shall promptly notify the Global Agent of any change to the information
provided by it pursuant to this paragraph.
	 
	8	 	The rates of charge of each Reference Bank for the purpose of E above shall be determined by
the Global Agent based upon the information supplied to it pursuant to paragraphs 6 and 7
above and on the assumption that, unless a Lender notifies the Global Agent to the contrary,
each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same
as those of a typical bank from its jurisdiction of incorporation with a Facility Office in
the same jurisdiction as its Facility Office.
	 
	9	 	The Global Agent shall have no liability to any person if such determination results in an
Additional Cost Rate which over or under compensates any Lender and shall be entitled to
assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3,
6 and 7 above is true and correct in all respects.




279









 






	10	 	The Global Agent shall distribute the additional amounts received as a result of the
Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based
on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7
and 8 above.
	 
	11	 	Any determination by the Global Agent pursuant to this Schedule in relation to a formula, the
Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the
absence of manifest error, be conclusive and binding on all Parties.
	 
	12	 	The Global Agent may from time to time, after consultation with the Company and the Lenders,
determine and notify to all Parties any amendments which are required to be made to this
Schedule in order to comply with any change in law, regulation or any requirements from time
to time imposed by the Bank of England, the Financial Services Authority or the European
Central Bank (or, in any case, any other authority which replaces all or any of its functions)
and any such determination shall, in the absence of manifest error, be conclusive and binding
on all Parties.




280









 











SCHEDULE 22

Site Plan









281









 





SCHEDULE 23

Form of Project Costs Reports




	 	 	 
	To:

	 	DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH, as
Global Agent and Stone & Webster Management Consultants, Inc as the
Lenders’ Engineer
	 
	 	 
	From:

	 	OrPower 4, Inc.
	 
	 	 
	Dated:
	 	 






Dear Sirs





	1	 	We refer to the Common Terms Agreement dated [                    ] between, inter alia, OrPower4
Inc. as Company, DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH and Société de
Promotion et de Participation pour la Coopération Economique as Lenders, and DEG as Global
Agent (the “Common Terms Agreement”).
	 
	2	 	Terms defined in the Common Terms Agreement shall have the same meaning in this Project Costs
Report.
	 
	3	 	We certify that to date [                    ] Project Costs in an amount equal to US$[     
               ]
have been incurred by or on behalf of the Sponsor.
	 
	4	 	We certify that the above Project Costs have been properly incurred in the development of the
Project.
	 
	5	 	The following is a breakdown of those Project Costs:





	 	 	 	 	 	 	 
	Item	 	Description	 	Amount US$	 	Comments
	 
	 	 	 	 	 	 
	(a)

	 	Property, plant and
equipment at cost as
of June 30, 2008
	 	US$40,096,380
	 	As evidenced by the
attached audited
financial statements
as of June 30, 2008
(Note 6)
	 
	 	 	 	 	 	 
	(b)

	 	Construction in
process as of June
30, 2008
	 	US$84,801,016
	 	As evidenced by the
attached audited
financial statements
as of June 30, 2008
(Note 7) and
invoices attached
	 
	 	 	 	 	 	 





282









 






	 	 	 	 	 	 	 
	Item	 	Description	 	Amount US$	 	Comments
	 
	 	 	 	 	 	 
	(c)

	 	Supplied equipment
by ORDA 6, Inc.
between July 1, 2008
and the date hereof,
not included in
items (a) and (b)
above
	 	[TBD]
	 	As evidenced by the
attached invoices
covering the
respective period
	 
	 	 	 	 	 	 
	(d)

	 	Construction works,
services and
materials incurred
by Orpower 4 between
July 1, 2008 and the
date hereof, not
included in items
(a) and (b) above
	 	[TBD]
	 	As evidenced by the
attached invoices
and accounting
statements covering
the respective
period
	 
	 	 	 	 	 	 
	(e)

	 	Escalation on
Supplied equipment
and services, to the
extent not included
in items (a) to (d)
above
	 	US$5,500,000
	 	As evidenced by the
attached invoice
issued by ORDA 6,
Inc.
	 
	 	 	 	 	 	 
	(f)

	 	Reimbursement of
interest applied on
construction
advances incurred
prior to projected
Full Plant
Commercial Operation
Date (“IDC”)
	 	[US$3,876,965]
	 	As evidenced by the
attached invoice and
supporting
calculation
schedule, issued by
ORDA 6, Inc.
	 
	 	 	 	 	 	 
	(g)

	 	Financing fees and
other transaction
costs in connection
with the financing
as of the date
hereof
	 	[TBD]
	 	As evidenced by the
attached invoices
	 
	 	 	 	 	 	 
	(h)

	 	Initial Debt Service
Reserve Amount
required as CP for
funding
	 	[US$13,500,000]
	 	A CP for funding as
evidenced by the
Common Terms
Agreement
	 
	 	 	 	 	 	 
	 

	 	TOTAL
	 	[TBD]	 	 











283









 












	6	 	The above Project Costs are evidenced by the invoices and other evidence attached in the
Annex.





	 	 	 	 	 
	For and on behalf of OrPower 4, Inc.

 	 	 
	By:  	 	 	 
	 	Authorised Representative 	 	 



Countersignature by Lenders’ Engineer:



We have reviewed the Project Costs attached to this Project Costs Report, but have not
independently verified or audited the costs. We find these costs to be reasonable when compared to
other projects of similar size and scope to the Project.




	 	 	 	 	 
	By:  	 	 	 
	 	 	 	 


For and on behalf of Stone & Webster Management Consultants, Inc.




Dated:                                                             




Annex



[Attach invoices and other relevant evidence (including contracts with third parties pursuant to
which the Project Costs were incurred.]





284











 




SCHEDULE 24




Form of PPA Direct Agreement



Date:                    2008


THE KENYA POWER AND LIGHTING COMPANY LIMITED



and


ORPOWER4 INC.



and


[                                        ]


 




DIRECT AGREEMENT

in respect of the

Olkaria III Geothermal Plant


 







Hillgate House

26 Old Bailey

London EC4M 7HQ


T: +44 (0)20 7653 9700

F: +44 (0)20 7900 3945




285









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	Page
	1

	 	INTERPRETATION	 	285
	 
	 	 	 	 
	2

	 	CONSIDERATION	 	289 
	 
	 	 	 	 
	3

	 	CONSENT AND ACKNOWLEDGEMENT	 	289 
	 
	 	 	 	 
	4

	 	PAYMENT OF MONIES	 	289 
	 
	 	 	 	 
	5

	 	NOTICES	 	289 
	 
	 	 	 	 
	6

	 	ELIGIBLE PERSON	 	291 
	 
	 	 	 	 
	7

	 	STEP-IN PERIOD	 	292 
	 
	 	 	 	 
	8

	 	STEP-OUT	 	293 
	 
	 	 	 	 
	9

	 	NOVATION	 	293 
	 
	 	 	 	 
	10

	 	TRANSFERS BY KPLC	 	294 
	 
	 	 	 	 
	11

	 	INSURANCES	 	294 
	 
	 	 	 	 
	12

	 	FURTHER ASSURANCE	 	294 
	 
	 	 	 	 
	13

	 	COMPANY INDEMNITY	 	295 
	 
	 	 	 	 
	14

	 	INFORMATION	 	295 
	 
	 	 	 	 
	15

	 	ARBITRATION	 	295 
	 
	 	 	 	 
	16

	 	MISCELLANEOUS	 	297 
	 
	 	 	 	 
	17

	 	GOVERNING LAW	 	298 






286









 






DIRECT AGREEMENT




THIS AGREEMENT by and between





	(1)	 	THE KENYA POWER AND LIGHTING COMPANY LIMITED, a company incorporated in Kenya with its
registered office at Stima Plaza, PO Box 30099-00100, Nairobi, Kenya (“KPLC”);
	 
	(2)	 	ORPOWER4 INC., a company incorporated in the Grand Cayman Islands, British West Indies, with
its registered office in Grand Cayman, British West Indies, with an office at 6225 Neil Road,
Reno, Nevada, USA and which will act through its branch at Off Moi South Lake Road, Hellsgate
National Park, P.O. Box 1566-20117, Naivasha, Kenya (the “Company”);
	 
	(3)	 	[                                        ], as agent and trustee for the Lenders (as defined in
the Credit Agreement (defined below) (the “Kenyan Security Agent”).




WHEREAS:





	(A)	 	Pursuant to the Credit Agreement (as defined below) the Company is obliged to enter into this
Agreement.
	 
	(B)	 	The Kenyan Security Agent has been appointed as Kenyan Security Agent for and on behalf of
the Lenders pursuant to intercreditor arrangements.
	 
	(C)	 	The Lenders have agreed to provide financing to the Company in respect of the Project, which
terms include entry into this Agreement.




IT IS AGREED as follows:





	1	 	INTERPRETATION
	 
	1.1	 	PPA Meanings
	 
	 	 	Except as otherwise defined herein, words and expressions defined in the PPA should have
the same meanings when used in this Agreement.
	 
	1.2	 	In this Agreement:
	 
	 	 	“Additional Obligor” means a person who has the Eligible Person Qualifications and who,
pursuant to Clause 6 (Eligible Person), assumes joint and several liability with the
Company for the obligations referred to in that Clause.
	 
	 	 	“Contracts” means the PPA and the Project Security Agreement.
	 
	 	 	“Credit Agreement” means the credit agreement dated on or about the date of this Agreement
between (among others) the Company, the Kenyan Security Agent and the Lenders.




287









 












	 	 	“Default Notice” means notice by the Kenyan Security Agent to KPLC that an Event of Default
has occurred.
	 
	 	 	“Eligible Person” means any of:






	 	(a)	 	the Kenyan Security Agent;
	 
	 	(b)	 	one or any number of the Lenders;
	 
	 	(c)	 	any affiliate of the Kenyan Security Agent or a Lender;
	 
	 	(d)	 	a person directly or indirectly owned or controlled by the Kenyan Security
Agent or one or any number of the Lenders;
	 
	 	(e)	 	an Insolvency Official; or
	 
	 	(f)	 	any other person who the Kenyan Security Agent believes (acting reasonably)
has:






	 	(i)	 	the legal capacity, power and authority to become a party to
and perform the obligations of the Company under the PPA; and
	 
	 	(ii)	 	no lesser or otherwise acceptable resources available to it
(including sufficient committed technical and financial resources and
sub-contracts) than were available to the Company at the date of the PPA to
enable it to perform the obligations and meet the liabilities owed to KPLC
under the PPA.






	 	 	In this definition control means the power to direct the management and policies of an
entity, whether through the ownership of voting capital, by contract or otherwise.
	 
	 	 	“Eligible Person Qualifications” means the Eligible Person shall possess:






	 	(a)	 	The legal capacity, power and authority to become a party to and perform the
obligations of the Company under the PPA; and
	 
	 	(b)	 	either:






	 	(i)	 	the financial and technical resources that the Company had at
the date of this Agreement; or
	 
	 	(ii)	 	in conjunction with the Company, the financial and technical
resources either of its own or available to it sufficient to perform the
obligations and meet the liabilities under the Contracts.






	 	 	“Enforcement Action” means any step or action by KPLC towards establishing or enforcing a
claim, recovering a debt or taking legal proceedings to require the Company to take or not
take any action.




288









 












	 	 	“Enforcement Notice” means a notice given by KPLC to the Kenyan Security Agent, in
accordance with Clause 5(b) of this Agreement, proposing termination or suspension of any
Contract or the taking of action against or in respect of the Company or any of its assets.
	 
	 	 	“Event of Default” means any of the events or circumstances described as such in the Credit
Agreement.
	 
	 	 	“Facility Agent” means DEG — Deutsche Investitions- Und Entwicklungsgesellschaft MBH.
	 
	 	 	“Finance Document” means any agreement entered into with the Company in relation to the
financing of the Project.
	 
	 	 	“GOK” means the Government of the Republic of Kenya.
	 
	 	 	“GOK Letter” means the letter issued by GOK to the Lenders and the Company.
	 
	 	 	“Grant” means Grant Number I.R. 85444 dated 8th February 2001 registered in the
Land Titles Registry at Nairobi as Number 85444/1 and relating to Land Reference Number
12881/3 being the land delineated and described on Land Survey Plan Number 233899 deposited
in the Survey Records Office at Nairobi (and annexed to the Grant).
	 
	 	 	“Insolvency Official” means a receiver and/or manager appointed under or pursuant to the
Security Documents.
	 
	 	 	“Insurances” means the contracts and policies of insurance taken out by or on behalf of the
Company from time to time.
	 
	 	 	“Lender” means DEG- Deutsche Investitions-Und Entwicklungsgesellschaft MBH and Société de
Promotion et de Participation pour La Coopération Economique together with any assignee or,
transferee.
	 
	 	 	“Outstanding Obligations Notice” means a notice issued in accordance with Clause
5(c)(Notices).
	 
	 	 	“Party” means a party to this Agreement.
	 
	 	 	“Plant” has the meaning given to that term in the PPA.
	 
	 	 	“PPA” means the amended and restated Power Purchase Agreement dated 19 January 2007 between
the Company and KPLC, as amended from time to time.
	 
	 	 	“Project” means the ownership, financing, designing, construction, completion, testing,
commissioning, insuring, operating, maintenance and management of the 




289









 






	 	 	48 MW Olkaria Generating Project located in Naivasha, Kenya as further defined in the PPA.






	 	 	“Project Document” means any document entered into between the Company and any counterparty
in relation to the Project.
	 
	 	 	“Project Security Agreement” means the Olkaria III Project Secuirty Agreement dated 19
January, 2007 between the Company and KPLC.
	 
	 	 	“Security Document” means the:






	 	(a)	 	debenture creating security by way of fixed and floating charges over all the
assets of the Company;
	 
	 	(b)	 	fixed charge over the rights and interests of the Company under the Grant;
	 
	 	(c)	 	the assignment of the receivables of the Company under the PPA; and
	 
	 	(d)	 	any other document evidencing or creating security over any asset of the
Company to secure any obligation of the Company to a Lender.






	 	 	“Step-In Date” means the date (if any) on which the Kenyan Security Agent procures that an
Insolvency Official is appointed in relation to the Company and/or the shares in the
Company, the security created by the Security Documents over the shares in the Company is
enforced or an Eligible Person becomes an Additional Obligor.
	 
	 	 	“Step-In Period” means the period from the Step-In Date up to and including the earlier of:






	 	(a)	 	the corresponding Step-Out Date;
	 
	 	(b)	 	the date of any novation permitted by this Agreement;
	 
	 	(c)	 	the date of any termination of the PPA by KPLC for breach in accordance with
this Agreement and the Contracts; and
	 
	 	(d)	 	the date of expiry of the PPA.






	 	 	“Step-Out Date” means the date of release of the obligations of, and cancellation of any
right of, any Additional Obligor under the Contracts in accordance with this Agreement.
	 
	1.3	 	Interpretation
	 
	 	 	Unless the contrary intention appears, a reference to:






	 	(f)	 	an amendment includes a supplement, novation, restatement or re-enactment and
amended will be construed accordingly;




290









 












	 	(g)	 	a document is a reference to that document as amended; and
	 
	 	(h)	 	a Party or a person includes its successors in title, permitted assigns and
permitted transferees.






	2	 	CONSIDERATION
	 
	 	 	In consideration of the Lenders granting and making available to the Company the credit and
financial facilities for the development of the Project pursuant to the Finance Documents,
KPLC, the Kenyan Security Agent and the Company agree, acknowledge, confirm and undertake
as provided in this Agreement.
	 
	3	 	CONSENT AND ACKNOWLEDGEMENT






	 	(a)	 	The Company hereby gives notice to KPLC that under the Security Documents the
Company has charged (by way of first fixed charge over the Grant and assignment of the
receivables under the PPA) in favour of the Kenyan Security Agent all its rights in
respect of the PPA and the Project Security Agreement. KPLC acknowledges receipt of
the notice and consents to the charge over the PPA and the Project Security Agreement
as created by the Security Documents.
	 
	 	(b)	 	KPLC confirms that as at the date of this Agreement it has not received
notice of any interest of any assignment, charge, mortgage or other third party in the
Contracts other than the notice from the Company under Clause 3(a) above.






	4	 	PAYMENT OF MONIES






	 	(a)	 	The Company hereby irrevocably authorises and instructs KPLC and KPLC
undertakes to make all payments due or that may become due from KPLC to the Company
arising under or in respect of and in accordance with the Contracts by payment to such
account as the Kenyan Security Agent may at any time direct in writing to KPLC on not
less than 7 Business Days’ prior notice.
	 
	 	(b)	 	The authority and instruction in paragraph (a) above may not be revoked or
varied without the prior written consent of the Kenyan Security Agent.
	 
	 	(c)	 	Each payment made in accordance with paragraph (a) above shall discharge to
the same extent KPLC’s obligation to make the relevant payment to the Company.






	5	 	NOTICES






	 	(a)	 	KPLC shall be entitled to rely on any notice received under this Clause 5
(Notices) as being valid in accordance with its terms.




291









 












	 	(b)	 	Subject to paragraph (g) below, KPLC must not terminate or suspend or give
notice to terminate or suspend all or any part of the PPA or the
Project Security Agreement or take any other Enforcement Action against or in
respect of the Company or any of its assets (including, without limitation, taking
any step towards any receivership, winding up or other insolvency, liquidation or
rehabilitative proceedings affecting the Company or any of its assets) unless
grounds for taking such action have arisen under the PPA or the Project Security
Agreement for a period of 90 days following the delivery of the Outstanding
Obligations Notice (or the verified Outstanding Obligations Notice, as the case may
be) to the Company and the Kenyan Security Agent. Simultaneously with delivery of
the Outstanding Obligations Notice, KPLC shall give a least 90 days prior written
notice to the Company and to the Kenyan Security Agent stating:






	 	(i)	 	the proposed date of termination, suspension or action
(which, for the avoidance of doubt, shall be after the expiry of such 90 day
period and any relevant grace or remedy period provided for in the PPA or the
Project Security Agreement); and
	 
	 	(ii)	 	the grounds for terminating or suspending the Contracts or
taking such Enforcement Action.






	 	(c)	 	As soon as reasonably practicable after the date of:






	 	(i)	 	an Enforcement Notice; or
	 
	 	(ii)	 	if a Default Notice has been served and the Kenyan Security
Agent so requests such details as set out below, that Default Notice,






	 	 	 	KPLC shall provide to the Company and the Kenyan Security Agent full details of any
amount owed by the Company to KPLC (including damages) within KPLC’s knowledge and
any other unperformed liabilities of the Company under the Contracts at the date of
that notice and any other remedies which KPLC may be seeking under the Contracts
and, in the case of an Enforcement Notice, all reasonable details of any other
estimated payment obligations of the Company which will fall due to KPLC on or
before the period of 90 days following such Outstanding Obligations Notice. KPLC
acknowledges that the Kenyan Security Agent or the Kenyan Security Agent may
appoint an independent third party to, verify the accuracy of any Outstanding
Obligations Notice and KPLC agrees, subject to appropriate confidentiality
undertakings, to give all reasonable access to any such third party to KPLC’s
documents for such verification and to accept, in the absence of manifest error,
such verification as final and binding.




292









 












	 	(d)	 	KPLC agrees not to terminate or suspend or give notice to terminate or
suspend all or any part of the PPA or the Project Security Agreement or take any other
action against or in respect of the Company or any of its
assets (including, without limitation, taking any step towards any receivership,
winding up or other insolvency, liquidation or rehabilitative proceedings affecting
the Company or any of its assets) if the grounds for such action are cured or
substantially mitigated within the 90 day period referred to in paragraph (b) above
or during any relevant grace or remedy period provided for in the PPA or the
Project Security Agreement whether by the Company or pursuant to paragraph (e)
below.
	 
	 	(e)	 	During the 90 day period referred to in paragraph (b) above, KPLC will, for
all purposes, accept performance of any obligation or liability of the Company and/or
the remedy or cure of any breach or failure by the Company by or on behalf of any
Eligible Person.
	 
	 	(f)	 	After any Enforcement Notice or Default Notice has been given any Eligible
Person is, in addition to the Company, entitled to exercise and enjoy all rights to
access the site, intellectual property or information of the Company under the PPA or
the Project Security Agreement.
	 
	 	(g)	 	Paragraph (b) above shall not apply during a Step-In Period.
	 
	 	(h)	 	No grace or remedy period provided for in the Contracts shall run
concurrently with the 90 day period referred to in paragraph (b) above.






	6	 	ELIGIBLE PERSON






	 	(a)	 	If an Event of Default is outstanding or at any time during the period of 90
days following receipt by the Kenyan Security Agent of an Outstanding Obligations
Notice, the Kenyan Security Agent may by notice to KPLC procure that an Eligible
Person assumes, jointly and severally with the Company, all of the Company’s payment
obligations under the Contracts which are referenced in an Outstanding Obligations
Notice (together with all other obligations and liabilities which KPLC has no
knowledge of as at the date of delivery of the Outstanding Obligations Notice up to a
maximum aggregate value of US$1,000,000 provided that KPLC acknowledges that the
Kenyan Security Agent or the Kenyan Security Agent may appoint an independent third
party to verify the accuracy of any claim in respect of additional obligations and
liabilities and KPLC agrees, subject to appropriate confidentiality undertakings, to
give all reasonable access to any such third party to KPLC’s documents for such
verification and to accept, in the absence of manifest error, such verification as
final and binding) and all of the Company’s obligations under the PPA which fall due
for performance after the date of such assumption of joint and several liability.




293









 












	 	(b)	 	The Company acknowledges that the rights granted to the Kenyan Security Agent
under paragraph (a) above do not affect the Kenyan Security Agent’s rights under the
Security Documents.
	 
	 	(c)	 	KPLC shall:






	 	(i)	 	use all reasonable endeavours to co-operate with any
Insolvency Official appointed in relation to the Company, some or all of the
Company’s assets, the Company’s shareholder and/or some or all of the assets
of the Company’s shareholder (including, without limitation, the shares in the
Company); and
	 
	 	(ii)	 	accept any Eligible Person assuming the Company’s obligations
under the PPA (and, if relevant, the Grant) in accordance with paragraph (a)
above.






	7	 	STEP-IN PERIOD






	 	(a)	 	KPLC shall not terminate or suspend or give notice to terminate or suspend
all or any part of the Contracts or take any other Enforcement Action against or in
respect of the Company or any of its assets (including, without limitation, taking any
step towards any receivership, winding-up or other insolvency, liquidation or
rehabilitative proceedings affecting the Company or its assets) during a Step-In
Period on grounds:






	 	(i)	 	that the Kenyan Security Agent or any Lender has exercised
any of its rights:






	 	(A)	 	under this Agreement; or
	 
	 	(B)	 	to take any enforcement action under any of
the Finance Documents, or






	 	(ii)	 	arising before the Step-In Date unless those grounds:






	 	(A)	 	entitle KPLC to take such action in
accordance with the Contracts;
	 
	 	(B)	 	are referred to in an Outstanding
Obligations Notice (or any subsequent notice issued in accordance
with the provisions in Clause 6(a) (Eligible Person) above); and
	 
	 	(C)	 	continue unremedied for 90 days after the
Step-In Date; or






	 	(iii)	 	arising under the Contracts during the Step-In Period unless
the cause of the action is a breach of the Contracts which first occurred
after the commencement of the Step-In Period and is not remedied within the
period provided in the Contracts.




294









 












	 	(b)	 	If an Additional Obligor is appointed, KPLC shall deal with the Additional
Obligor and not the Company during the Step-In Period.
	 
	 	(c)	 	No grace or remedy period provided for in the Contracts shall run
concurrently with the periods referred to in paragraphs (a)(ii)(C) and (a)(iii) above.






	8	 	STEP-OUT






	 	(a)	 	Any Additional Obligor will be, on the earlier of:






	 	(i)	 	14 days’ prior written notice from the Kenyan Security Agent
or the Additional Obligor to KPLC; and
	 
	 	(ii)	 	the date on which all amounts which may be or become
outstanding by the Company to the Lenders under the Finance Documents have
been irrevocably paid and discharged in full,






	 	 	 	released from its obligations to KPLC under the Contracts (including those arising
before the Step-Out Date) and any rights of the Additional Obligor in respect of
the Contracts will be cancelled.
	 
	 	(b)	 	This Clause does not affect the Company’s obligations under the Contracts
which continue in full force and effect.






	9	 	NOVATION






	 	(a)	 	Subject to paragraph (b) below, any time during the Step-In Period, the
Kenyan Security Agent may on 21 days’ prior written notice to KPLC and any current
Additional Obligor, procure and, except as provided below, transfer (by novation or by
assignment or assumption at the option of the Kenyan Security Agent) of the Company’s
rights and obligations under the Contracts to an Additional Obligor.
	 
	 	(b)	 	The identity of the Additional Obligor under paragraph (a) above must be
approved in writing by KPLC within the 21 day prior written notice period provided
that any person that fulfils the Eligible Person Qualification shall be deemed
approved.
	 
	 	(c)	 	On any transfer under this Clause:






	 	(i)	 	any Additional Obligor and the Company will be released from
any obligations arising under or in connection with the Contracts after the
date of transfer;
	 
	 	(ii)	 	the relevant Eligible Person being appointed Additional
Obligor will assume those rights, obligations and liabilities subsisting on




295









 






	 	 	 	and after that date in substitution for the Company or any Additional Obligor;
	 
	 	(iii)	 	any subsisting breach of the Contracts and any notice
relating to the termination or suspension of the Contracts must be waived by
KPLC; and
	 
	 	(iv)	 	KPLC shall enter into a new direct agreement with the Kenyan
Security Agent on substantially the same terms as this Agreement. The Kenyan
Security Agent shall indemnify KPLC for all costs and expenses that may be
incurred by KPLC relating to the new direct agreement.






	 	(d)	 	KPLC undertakes that, in the event that the Lenders exercise their rights in
respect of the Security and/or this Agreement, KPLC shall take such steps as are
reasonably necessary to ensure that the Olkaria III Project Security Agreement is
novated to the Additional Obligor (or that it executes an agreement with the
Additional Obligor on terms substantially similar to the Olkaria III Project Security
Agreement) on a Novation pursuant to this Clause 9 (Novation).






	10	 	TRANSFERS BY KPLC
	 
	 	 	KPLC may not assign or transfer any interest in or its rights and/or obligations under the
Contracts or this Agreement to any person unless:






	 	(a)	 	the Kenyan Security Agent agrees; and
	 
	 	(b)	 	the person accedes to this Agreement in the place of KPLC.






	11	 	INSURANCES
	 
	 	 	KPLC agrees that it will not exercise any rights under the PPA or the Project Security
Agreement as a result of the Company failing to obtain any of the Insurances due to the
unavailability of any of the Insurances on reasonable market terms or from insurers that
are acceptable to the Kenyan Security Agent (acting reasonably) provided that where any
such Insurances are unavailable the Company shall use all reasonable endeavours to procure
comparable insurances on reasonable market terms from acceptable insurers which cover
similar risks and required sums insured as set out in the PPA. Any dispute as to whether
such level of cover is available at commercially reasonable terms or at commercially
reasonable rates shall be referred to an Expert in accordance with Clause 19.3 of the PPA.
	 
	12	 	FURTHER ASSURANCE
	 
	 	 	KPLC shall provide all reasonable assistance that the Kenyan Security Agent, any Additional
Obligor or any Eligible Person may require for perfecting any transfer 




296









 






	 	 	or release to be
carried out under this Agreement including the execution of any transfer or assignment, and
the giving of any notice, order or direction and the making of any registration which, in
each case, the Kenyan Security Agent,
Additional Obligor or Eligible Person reasonably requires. Any costs KPLC incurs in
complying with the requirements of this Clause 12 shall be payable by the Kenyan Security
Agent immediately upon demand.






	13	 	COMPANY INDEMNITY
	 
	 	 	The Company must forthwith on demand indemnify each Lender against any loss or liability
which that Lender incurs as a consequence of the operation of this Agreement other than any
liability caused by the gross negligence or wilful default of any Additional Obligor or
that Lender.
	 
	14	 	INFORMATION
	 
	 	 	KPLC agrees to simultaneously send to the Kenyan Security Agent, a copy of any notice
served on the Company pursuant to:






	 	(a)	 	Clause 16 (Termination and Default) of the PPA; or
	 
	 	(b)	 	Clause 9 (Communications) of the Project Security Agreement.






	15	 	ARBITRATION






	 	(a)	 	Any dispute or difference of any kind between the Parties in connection with
or arising out of this Agreement including the interpretation of this Agreement, its
validity and any purported breach or termination (a “Dispute”) shall be finally
settled by arbitration under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce (the “Rules”) in accordance with the Rules which are
deemed to be incorporated by reference into this Clause 15 (Arbitration). It is
hereby agreed that:






	 	(i)	 	the seat of the arbitration shall be London, England;
	 
	 	(ii)	 	there shall be three arbitrators;
	 
	 	(iii)	 	the language of the arbitration shall be English;
	 
	 	(iv)	 	the award rendered shall apportion the costs of the arbitration;
	 
	 	(v)	 	the award shall be in writing and shall set forth in
reasonable detail the facts of the Dispute and the reasons for the tribunal’s
decision;
	 
	 	(vi)	 	the award in such arbitration shall be final and binding upon
the Parties and judgment thereon may be entered in any Court having
jurisdiction for its enforcement; and the Parties renounce any right 




297









 






	 	 	 	of appeal
from the decision of the tribunal insofar as such renunciation can validly be
made; and






	 	(vii)	 	if any Dispute arising out of or in connection with this
Agreement raises issues which are substantially the same as issues arising out
of or in connection with any dispute in connection with any Project Document
(a “Related Project Document”), the Kenyan Security Agent may, by written
notice to KPLC and to any arbitrators who have already been agreed or
appointed pursuant to this Agreement, require the dispute in connection with
the Related Project Document to be referred to and finally settled by the
arbitral tribunal appointed under the Related Project Document, save that no
such notice may be given if an award or awards have been issued by the
tribunal in connection with this Agreement and provided further that:






	 	(A)	 	the arbitration pursuant to the Related
Project Document is an arbitration under the Rules of Conciliation
and Arbitration of the International Chamber of Commerce (or any
other rules reasonably satisfactory to KPLC and the Lenders);
	 
	 	(B)	 	the provisions of Clauses 15 (i) — (vi)
(both inclusive) apply to the arbitration; and
	 
	 	(C)	 	the arbitral tribunal appointed under the
Related Project Document has the necessary expertise and is otherwise
qualified to arbitrate the Dispute arising out of or in connection
with this Agreement.






	 	(b)	 	The appointment of an arbitral tribunal in connection with this Agreement and
its jurisdiction to resolve any dispute in connection with this Agreement shall
terminate immediately upon the giving of such notice and the arbitral tribunal shall
be deemed to be functus officio. The Parties hereby waive to the maximum extent
permitted by law, any objections that they may have as to the validity and/or
enforcement of any arbitral awards made by the tribunal following the joinder of
disputes or arbitral proceedings in accordance with this Clause to the extent that
such objections are based on the fact that joinder of the same has occurred.
	 
	 	(c)	 	Each Party will appoint an arbitrator within thirty (30) days of the date of
the request to initiate arbitration who will then jointly appoint a third arbitrator
within thirty (30) days of the date of the appointment of the second arbitrator, which
third arbitrator shall not be a citizen of the Republic of Kenya, Israel or the Cayman
Islands and no arbitrator shall have any existing or prior relationship with either
Party, to act as Chairman of the tribunal. Arbitrators not appointed within the time
limits 




298









 






	 	 	 	set forth in the preceding sentence shall be appointed by the ICC Court of
Arbitration (as defined in the ICC Rules). Both Parties undertake to implement the
arbitration award.






	16	 	MISCELLANEOUS






	 	(a)	 	KPLC warrants to the Kenyan Security Agent and each other Lender on each date
on which this Agreement is in full force and effect that:






	 	(i)	 	this Agreement is within its powers and has been duly
authorised by it;
	 
	 	(ii)	 	this Agreement is its legally binding obligation; and
	 
	 	(iii)	 	all authorisations required by it in relation to this
Agreement have been obtained.






	 	(b)	 	The Kenyan Security Agent and the Company respectively warrant to KPLC on the
date of this Agreement that:






	 	(i)	 	this Agreement is within its powers and has been duly
authorised by it;
	 
	 	(ii)	 	this Agreement is its legally binding obligation; and
	 
	 	(iii)	 	all authorisations required by it in relation to this
Agreement have been obtained;






	 	(c)	 	The rights of the Kenyan Security Agent under this Agreement:






	 	(i)	 	may be exercised as often as necessary;
	 
	 	(ii)	 	are not exclusive of its rights under the general law; and
	 
	 	(iii)	 	may be waived only in writing and specifically.






	 	 	 	Delay in exercising or non-exercise of any such right is not a waiver of that
right.
	 
	 	(d)	 	The Company enters into this Agreement solely to acknowledge its terms and to
undertake the obligations expressed to be undertaken by it.
	 
	 	(e)	 	If a provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:






	 	(i)	 	the validity or enforceability in that jurisdiction of any
other provision of the Agreement; or




299









 












	 	(ii)	 	the validity or enforceability in other jurisdictions of that
or any other provision of the Agreement.






	 	(f)	 	This Agreement will remain in effect until the date on which all amounts
which may be or become outstanding by the Company to the Lenders
under or in respect of the Finance Documents have been irrevocably paid and
discharged in full.
	 
	 	(g)	 	This Agreement may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single copy of this
Agreement.
	 
	 	(h)	 	KPLC may continue to deal with the Company pursuant to the terms of the PPA
other than in relation to the provisions set out under this Agreement.






	17	 	GOVERNING LAW
	 
	 	 	This Agreement is governed by and shall be construed in all respects in accordance with the
laws of the Republic of Kenya.






300









 





SIGNATORIES




	 	 	 	 	 
	KPLC



Kenya Power and Lighting Company Limited

 	 	 
	By:  	 	 	 
	 
	Company



OrPower4 Inc.

 	 	 
	By:  	 	 	 
	 	 	 	 
	Kenyan Security Agent



[                                        ]

 	 	 
	By:  	 	 	 
	 	 	 	 
	 	 	 	 



301









 






	 	 	 	 	 



SCHEDULE 25

Form of Compliance Certificate




	 	 	 
	From:

	 	OrPower4 Inc.
	 
	 	 
	To:

	 	DEG- Deutsche Investitions- und Entwicklungsgesellschaft mbH,
as Global Agent
	 
	 	 
	Dated:
	 	 






Dear Sirs





	1	 	We refer to the Common Terms Agreement dated [                    ] between, inter alia, OrPower4 Inc.
as Company, DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH and Société de
Promotion et de Participation pour la Coopération Economique as Lenders and DEG-Deutsche
Investitions- und Entwicklungsgesellschaft mbH (the “Common Terms Agreement”).
	 
	2	 	This is a Compliance Certificate. Terms defined in the Common Terms Agreement have the same
meaning when used in this Compliance Certificate unless given a different meaning in this
Compliance Certificate.
	 
	3	 	We confirm that (as evidenced by the attached Financial Test):






	 	(a)	 	the Debt Service Cover Ratio for:






	 	(i)	 	the current Calculation Period is [     ]; and
	 
	 	(ii)	 	the immediately preceding Calculation Period is [     ]; and






	 	(b)	 	the Projected Debt Service Cover Ratio for the next two (2) Calculation
Periods is [     ];
	 
	 	(c)	 	the Equity to Total Assets Ratio for the Calculation Date is [     ]; and
	 
	 	(d)	 	the Debt to Equity Ratio for the Calculation Date is [     ].






	4	 	We confirm that:






	 	(a)	 	the balance standing to the credit of the Debt Service Reserve Account or
available to be drawn under the DSRA Letter of Credit is US$[          ]; and
	 
	 	(b)	 	the balance standing to the credit of the Well Drilling Reserve Account is
US$[          ].




302









 












	5	 	We confirm that no Default is continuing.





Signed







for and on behalf of

OrPower4 Inc.




[Attach Financial Test in accordance with Clause 19 (Financial Calculations)]




303









 








SCHEDULE 26

Form of Environmental and Social Action Plan



The Company shall carry out the actions as specified below, within the specified deadlines, and
declares that the resources specified below have been allocated. This Environmental and Social
Action Plan is based on the Environmental and Social Review Summary (ESRS, dated 23.06.08) that was
prepared for the Project by DEG. This Environmental and Social Action Plan does not substitute the
Environmental and Social Management Plan (“ESMP”).




	 	 	 	 	 	 	 	 	 	 	 
		 	 	 	Responsible staff	 	 	 	Target	 	Allocated
	Environmental & social issues	 	Action description	 	member/s	 	Status11	 	completion12	 	budget13 (USD)
	 
	 	 	 	 	 	 	 	 	 	 
	IFC Performance Standards	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Compliance with IFC 

Performance 

Standards as per 

the Common Terms 

Agreement

	 	Incorporate into the ESMP the
commitment to comply with the
IFC Performance Standards
	 	Plant Manager
	 	Under Preparation
	 	CP
	 	Included in General

& Administrative

Budget (G&A)








 




			
	11	 	Status: planned, budgeted, started, completed
	 
	12	 	Target completion: specified date, ongoing
	 
	13	 	Allocated budget: Please give a cost estimate. If this
is not applicable, please write “n. a.” (not applicable).




304









 










	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Responsible staff	 	 	 	Target	 	Allocated
	Environmental & social issues	 	Action description	 	member/s	 	Status11	 	completion12	 	budget13 (USD)
	 
	 	 	 	 	 	 	 	 	 	 
	Management capacity
and organisation

	 	Nominate responsible person
within the organisation for:


•   community contacts and issues


•   environmental issues



•   health and safety

	 	Environmental

Officer
	 	Done
	 	CP
	 	Included in G&A
	 
	 	 	 	 	 	 	 	 	 	 
	Mitigation of social impacts	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Massai community

	 	Develop and implement a
formalised grievance mechanism
for surrounding communities
that allows individuals to
address concerns
	 	Plant Manager
	 	 	 	CP
	 	Included in G&A
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Continue regular consultation
and take, if necessary,
actions necessary as a result
of the consultations
	 	Plant Manager
	 	Under Preparation
internal procedures
to attend quarterly
meetings with
National Park and
local communities
	 	Quarterly
	 	Included in G&A
	 
	 	 	 	 	 	 	 	 	 	 
	HIV/ AIDS

	 	Draft a HIV/AIDS policy in
accordance with the Common
Terms Agreement t (Schedule
14)
	 	Plant Manager
	 	 	 	3 months from closing
	 	included in G&A






305









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Responsible staff	 	 	 	Target	 	Allocated
	Environmental & social issues	 	Action description	 	member/s	 	Status11	 	completion12	 	budget13 (USD)
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Formally adopt and launch a
HIV/AIDS policy and establish
the required program
	 	Plant Manager
	 	 	 	6 months from closing
	 	included in G&A
	 
	 	 	 	 	 	 	 	 	 	 
	Mitigation of physical / chemical impacts	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greenhouse gas 

emissions

	 	Develop a method to quantify
the composition of non
condensable gas (“NCG”)
emissions of the project and -
include figure into the annual
reporting
	 	Plant Manager
	 	Sampling procedures
shall be developed
with Thermochem
(USA) or others
	 	3 months from closing
annually
	 	included in G&A
	 
	 	 	 	 	 	 	 	 	 	 
	Tracer studies

	 	Take all reasonable efforts to
verify the presence and the
results of the tracer studies
carried out by KenGen
	 	 	 	 	 	3 months from closing	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Monitoring	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ESMP

	 	Review the ESMP subsequent to
operation to assess areas
where changes or additional
actions would be appropriate
	 	Plant Manager
	 	 	 	annually	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	H2S Monitoring

	 	Installation of two continuous
H2S monitors at locations
accessible to the public.
	 	Plant Manager
	 	 	 	4 months from closing
	 	USD 80,000






306









 






	 	 	 	 	 	 	 	 	 	 	 
		 	 	 	Responsible staff	 	 	 	Target	 	Allocated
	Environmental & social issues	 	Action description	 	member/s	 	Status11	 	completion12	 	budget13 (USD)
	 
	 	 	 	 	 	 	 	 	 	 
	Soil sampling

	 	Obtain soils samples and
analyze annually for
contaminants such as boron,
arsenic and mercury at one or
two nearby locations in
vegetated areas (selection of
location to based on results
of initial measurements)
	 	Plant Manager
	 	 	 	annually	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Reporting and Review	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Annual independent 

review

	 	Review of compliance with
environmental and social
contractual obligations by an
independent — NEMA approved  —
consultant and include results
in the Annual Environmental
and Social Report prepared by
the consultant and submitted
to NEMA and copied to the
Global Agent
	 	Plant Manager
	 	 	 	Annually
	 	USD 25,000 / year







307











 





SCHEDULE 27

Form of ERC Comfort Letter




DEG — DEUTSCHE INVESTITIONS — UND

ENTWICKLUNGSGESELLSCHAFT mbH

Kämmergasse 22

50676 Köln

Germany




SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION

POUR LA COOPÉRATION ECONONIQUE

5 rue Roland Barthes

75598 Paris cedex 12

France




ORPOWER4, INC.

Off Moi South Lake Road

Hellsgate National Park

P.O. Box 1566-20117

Naivasha, Kenya




Dear Sirs,




Olkaria III Geothermal (the “Project”)



We, the Energy Regulatory Commission (the “ERC”), being the regulator of the production,
distribution, supply and use of energy in Kenya, hereby acknowledge that OrPower4, Inc. (the
“Company”) shall be procuring credit and financial facilities in relation to the Project from
Deutsche Investitions— und Entwicklungsgesellschaft mbH (“DEG”) and Société de Promotion et
Participation pour la Coopération Economique (“Proparco”) (together the “Lenders”) and further
acknowledge that the Company shall be creating various securities in favour of the Lenders to
secure its obligations to the Lenders (the “Securities”).



Upon your representation that the Lenders are providing credit and financial facilities to the
Company, and that the Company shall be creating various securities in favour of the Lenders, I am
pleased to confirm as follows with respect to the Project as requested:





	1	 	That the Electric Power Production Licence dated 24 November 2000 granted to the Company
permitting the Company to undertake the Project (the “Generation Licence”) was validly granted
in compliance and in accordance with the provisions of the Electric Power Act, 1997 as
repealed and replaced by the Energy Act, 2006 (the “Energy Act”) and the Geothermal Resources
Licence dated 4 March 1999 granted to the Company permitting the Company to undertake the




308









 






	 	 	Project (the “Geothermal Licence” and, together with the Generation Licence, the “Licences”)
was validly granted in compliance and in accordance with the provisions of the Geothermal
Resources Act, 1982 (the “Geothermal Resources Act”).
	 
	2	 	That the Licences are in full force and effect as of the date hereof.
	 
	3	 	That ERC consents to the transfer of the Licences to the Lenders or to parties duly nominated
by the Lenders upon the occurrence of an enforcement event in accordance with the terms and
conditions of the financing agreements between the Company and the Lenders as stipulated in
the Licences.
	 
	4	 	That ERC shall, before suspending or revoking the Licences pursuant to the provisions of the
Energy Act or the Geothermal Resources Act, as applicable, comply with the relevant provisions
of the Energy Act or the Geothermal Resources Act, as applicable.




This Letter is provided to you and executed by the Director General with the approval of the ERC.



Dated on this                    day of                    200[  ]




Signed by:




Director General

For and on behalf of:

ENERGY REGULATORY COMMISSION




Acknowledged and agreed




	 	 	 
	 
	 	 
	 

For and on behalf of

	 	 
	THE MINISTER OF ENERGY
	 	 






309









 






SCHEDULE 28

Form of Lender KPLC Confirmation




From: DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH, as Global Agent




To: OrPower4 Inc.




Dated:




Dear Sirs





	1	 	We refer to the Common Terms Agreement dated [      
     ] between, inter alia, OrPower4 Inc.
as Company, DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH and Société de
Promotion et de Participation pour la Coopération Economique as Lenders and DEG-Deutsche
Investitions- und Entwicklungsgesellschaft mbH as Global Agent (the “Common Terms Agreement”).
	 
	2	 	This is the Lender KPLC Confirmation. Terms defined in the Common Terms Agreement have the
same meaning when used in this Lender KPLC confirmation unless given a different meaning in
this Lender KPLC Confirmation.
	 
	3	 	We confirm that we have been instructed by each Lender and each Participant to provide this
Lender KPLC Confirmation.
	 
	4	 	We confirm that the Lenders and Participants are not aware that there is any outstanding
failure by KPLC to pay any indebtedness in excess of five million Dollars (US$5,000,000) owing
to any other private sector independent power project in Kenya (other than any which are being
disputed in good faith).





Signed




	 	 	 
	 
	 	 
	 

For and on behalf of

	 	 
	DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH 

as Global Agent
	 	 






310









 






SCHEDULE 29

Form of Agent Deed of Accession




To:




OrPower4 Inc. as the Company;



DEG — Deutsche Investitions — und Entwicklungsgesellschaft mbH in its capacities as the Global
Agent, the DEG “A” Lender; the DEG “B” Lender; the DEG “C” Lender; and



Société de Promotion et de Participation pour la Coopération Economique as the Proparco “A” Lender.




From: ]ONSHORE SECURITY AGENT




Date: [               ]



This Agent Deed of Accession dated [               ] (this “Deed”) is supplemental to a Common
Terms Agreement dated [               ] between, inter alia, OrPower4 Inc. as Company,
DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH and Société de Promotion et de
Participation pour la Coopération Economique as Lenders and DEG-Deutsche Investitions- und
Entwicklungsgesellschaft mbH as Global Agent (the “Common Terms Agreement”).





	1	 	We refer to the Common Terms Agreement. Capitalised terms defined in the Common Terms
Agreement have the same meaning in this Deed.
	 
	2	 	This Deed is an Agent Deed of Accession. This Deed is a Finance Document.
	 
	3	 	[Name of new Party] hereby agrees with each other Person who is or who becomes party to the
Common Terms Agreement that with effect on and from the date of this Deed, it will be bound by
the obligations of and will benefit from, the Common Terms Agreement and any other Finance
Documents as Onshore Security Agent as if it had been party to the Common Terms Agreement and
any other Finance Documents in that capacity.
	 
	4	 	The contact details of [name of new Party] for the purposes of Clause 34 (Notices) of the
Common Terms Agreement are as follows:





	 	 	 
	Address:

	 	[                    ]
	Fax:

	 	[                    ]
	Attention:

	 	[                    ]






311









 







	5	 	By its signature below, each party confirms its acceptance of the [name of new Party] as
Onshore Security Agent for all purposes under the Common Terms Agreement and any other Finance
Document in accordance with the terms thereof.
	 
	6	 	This Deed shall be governed by and construed in all respects in accordance with the laws of
England.
	 
	7	 	This Deed may be executed in any number of counterparts and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.




IN WITNESS whereof this Deed has been duly executed the day and year first before written.




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	[Onshore Security Agent]
	 	 





[Execution under seal or under power of attorney registered in accordance with the Registration of
Documents Act.]




Company




	 	 	 	 	 
	SIGNED by:

	 	 	 	 
	 

	 	 	 	 
	the duly constituted attorney(s) of

ORPOWER4 INC.

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Witness Name:
	 	 	 	 
	 

	 	 	 	 
	Witness Address:
	 	 	 	 
	 

	 	 

	 	 






312









 






Original Lenders




DEG “A” Lender




	 	 	 	 	 
	SIGNED by:

	 	 	 	 
	 

	 	 	 	 
	the duly constituted attorney(s) of

DEG- DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Witness Name:
	 	 	 	 
	 

	 	 	 	 
	Witness Address:
	 	 	 	 
	 

	 	 

	 	 






DEG “B” Lender




	 	 	 	 	 
	SIGNED by:

	 	 	 	 
	 

	 	 	 	 
	the duly constituted attorney(s) of

DEG- DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Witness Name:
	 	 	 	 
	 

	 	 	 	 
	Witness Address:
	 	 	 	 
	 

	 	 

	 	 






DEG “C” Lender




	 	 	 	 	 
	SIGNED by:

	 	 	 	 
	 

	 	 	 	 
	the duly constituted attorney(s) of

DEG- DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Witness Name:
	 	 	 	 
	 

	 	 	 	 
	Witness Address:
	 	 	 	 
	 

	 	 

	 	 






313









 






Proparco “A” Lender




	 	 	 	 	 
	SIGNED by:

	 	 	 	 
	 

	 	 	 	 
	the duly constituted attorney(s) of

SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION POUR LA COOPÉRATION ECONOMIQUE

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Witness Name:
	 	 	 	 
	 

	 	 	 	 
	Witness Address:
	 	 	 	 
	 

	 	 

	 	 






Global Agent




	 	 	 	 	 
	SIGNED by:

	 	 	 	 
	 

	 	 	 	 
	the duly constituted attorney(s) of

DEG- DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Witness Name:
	 	 	 	 
	 

	 	 	 	 
	Witness Address:
	 	 	 	 
	 

	 	 

	 	 






314









 






Offshore Security Agent




	 	 	 
	EXECUTED as a deed by affixing the common seal of BNY CORPORATE TRUSTEE
SERVICES LIMITED

in the presence of:
	 	 
	 
	 	 
	 
	 	 
	 

Director

	 	 
	 
	 	 
	 
	 	 
	 

Director/secretary

	 	  






315









 






SIGNATORIES




Company




	 	 	 	 	 
	SIGNED by:
	 	/s/
Yehudit Bronicki	 	 
	the duly constituted attorney(s) of

ORPOWER4 INC.

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	/s/
Connie Stechman	 	 
	Witness Name:
	 	
Connie Stechman	 	 
	Witness Address:
	 	OrPower4
Inc.

c/o Ormat Nevada Inc.,
6225 Neil Road,
Reno, Nevada	 	 






Original Lenders




DEG “A” Lender




	 	 	 	 	 
	SIGNED by:
	 	/s/
Justus Vitinius / Matthias Goulnik 	 	 
	the duly constituted attorney(s) of

DEG- DEUTSCHE INVESTITIONS-UND
ENTWICKLUNGSGESELLSCHAFT MBH

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	/s/
Burckhard Thiemann	 	 
	Witness Name:
	 	Burckhard Thiemann	 	 
	Witness Address:
	 	DEG-Deutsche
Investitions- und Entwicklungsgesellshaft mbH
Kämmergasse
22,
50676 Köln, Germany	 	 






316









 





DEG “B” Lender




	 	 	 	 	 
	SIGNED by:
	 	/s/
Justus Vitinius / Matthias Goulnik	 	 	 
	the duly constituted attorney(s) of

DEG- DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	/s/
 Burckhard Thiemann	 	 
	Witness Name:
	 	Burckhard Thiemann	 	 
	Witness Address:
	 	DEG-Deutsche Investitions-
und
Entwicklungsgesellschaft mbH
Kämmergasse 22
50676
Köln, Germany	 	 
	 

	 	 

	 	 






DEG “C” Lender




	 	 	 	 	 
	SIGNED by:

	 	/s/
Justus Vitinius / Matthias Goulnik	 	 
	the duly constituted attorney(s) of

DEG- DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH

in the presence of:	 	 






	 	 	 	 	 
	 
	 	 	 	 
	/s/
Burckhard Thiemann	 	 
	Witness Name:
	 	Burckhard Thiemann	 	 
	Witness Address:
	 	DEG-Deutsche Investitions-
und
Entwicklungsgesellschaft mbH
Kämmergasse 22
50676
Köln, Germany	 	 
	 

	 	 

	 	 






317









 





Proparco “A” Lender




	 	 	 	 	 
	SIGNED by:
	 	/s/ Philippe Bassery	 	 
	 

	 	 	 	 
	the duly constituted attorney(s) of

SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION POUR LA COOPÉRATION ECONOMIQUE

in the presence of:	 	 






	 	 	 	 	 
	/s/
Laurent Demey
	 	 
	 	 	 
	Witness Name:
	 	Laurent Demey	 	 
	 

	 	 	 	 
	Witness Address:
	 	Proparco, 5
rue Roland
Barthes,
75598 Paris Cedex 12,
France	 	 
	 

	 	 

	 	 






Global Agent




	 	 	 	 	 
	SIGNED by:
	 	/s/ Justus Vitinius / Matthias Goulnik	 
	 

	 	 	 
	the duly constituted attorney(s) of

DEG- DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH

in the presence of:	 	 






	 	 	 	 	 
	/s/
Burckhard Thiemann
	 	 
	 	 	 
	Witness Name:
	 	Burckhard Thiemann	 	 
	 

	 	 	 	 
	Witness Address:
	 	DEG-Deutsche Investitions-
und
Entwicklungsgesellschaft mbH
Kämmergasse 22,
50676
Köln, Germany
	 

	 	 

	 	 






318









 






Offshore Security Agent




	 	 	 
	EXECUTED by affixing the common seal of BNY CORPORATE TRUSTEE SERVICES LIMITED

in the presence of:
	 	[corporate seal]
	 
	 	 
	 
	 	 
	/s/ Daniel Wynne	 	 
	 

Director

	 	 
	 
	 	 
	/s/  Dean Fletcher	 	 
	 

Director/secretary

	 	  







319