Document:

Exhibit 10.1.6

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                            EXIMBANK CREDIT AGREEMENT

                                 by and between

                              ORMAT LEYTE CO. LTD.
                                   as Borrower

                                       and

                     EXPORT-IMPORT BANK OF THE UNITED STATES

                   Eximbank Credit No. AP069721 - Philippines

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                                                                  Exhibit 10.1.6

                                TABLE OF CONTENTS

SECTION 1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION............................................................1

         Section 1.01.  General Definitions.......................................................................1
         Section 1.02.  Principles of Construction ...............................................................4

SECTION 2.  THE EXIMBANK CREDIT...................................................................................4

         Section 2.01.  Amount of the Eximbank Credit.............................................................4
         Section 2.02.  Cash Payment..............................................................................5
         Section 2.03.  Credit Availability Date..................................................................5

SECTION 3.  TERMS OF THE EXIMBANK CREDIT..........................................................................5

         Section 3.01.  Principal Repayment.......................................................................5
         Section 3.02.  Interest Payment..........................................................................6
         Section 3.03.  Commitment Fee............................................................................6
         Section 3.04.  Credit Exposure Fee ......................................................................6
         Section 3.05.  Voluntary Prepayment......................................................................6
         Section 3.06.  Mandatory Prepayment......................................................................7
         Section 3.07.  Eximbank Note.............................................................................7
         Section 3.08.  Method of Payment.........................................................................8
         Section 3.09.  Application of Payments...................................................................8

SECTION 4.  CANCELLATION..........................................................................................9

         Section 4.01.  Mandatory Cancellation....................................................................9
         Section 4.02.  Cancellation by the Borrower..............................................................9
         Section 4.03.  Suspension by Eximbank....................................................................9

SECTION 5.  CONDITIONS PRECEDENT.................................................................................10

         Section 5.01.  Conditions Precedent to Lender Disbursement..............................................10
         Section 5.02.  Conditions Precedent to Eximbank Disbursement............................................16
         Section 5.03.  Request for Eximbank Disbursement........................................................19

SECTION 6.  REPRESENTATIONS AND WARRANTIES.......................................................................19

         Section 6.01.  Representations and Warranties with Respect to Guarantee
                              Operative Date.....................................................................19
         Section 6.02.  Representations and Warranties with Respect to the Disbursement
                              Date...............................................................................30
         Section 6.03.  Acknowledgment...........................................................................30

                                       i

SECTION 7.  AFFIRMATIVE COVENANTS................................................................................30

         Section 7.01.  Information Covenants....................................................................30
         Section 7.02.  Books, Records and Inspections; Accounting and Audit Matters.............................37
         Section 7.03.  Maintenance of Property, Insurance.......................................................38
         Section 7.04.  Maintenance of Existence; Privileges; Etc................................................40
         Section 7.05.  Compliance with Statutes.................................................................40
         Section 7.06.  Consultations Regarding Independent Engineer's Report....................................40
         Section 7.07.  Project Implementation; Use of Proceeds..................................................41
         Section 7.08.  Auditors.................................................................................42
         Section 7.09.  Taxes, Duties, Proper Legal Form.........................................................42
         Section 7.10.  Independent Engineer; Insurance Consultant...............................................42
         Section 7.11.  Performance of Obligations...............................................................43
         Section 7.12.  Additional Documents; Filings and Recordings.............................................43
         Section 7.13.  Bank Accounts............................................................................44
         Section 7.14.  Debt Reserve Cash Collateral Account.....................................................44
         Section 7.15.  Availability and Transfer of Foreign Currency............................................44
         Section 7.16.  Privatization of NAPOCOR or PNOC-EDC.....................................................44
         Section 7.17.  Spares...................................................................................45

SECTION 8.  NEGATIVE COVENANTS...................................................................................45

         Section 8.01.  Liens ...................................................................................45
         Section 8.02.  Consolidation, Merger, Sale of Assets, Etc...............................................46
         Section 8.03.  Dividends; Restricted Payments...........................................................46
         Section 8.04.  Leases...................................................................................47
         Section 8.05.  Indebtedness.............................................................................47
         Section 8.06.  Guarantees...............................................................................49
         Section 8.07.  Subsidiaries, Advances, Investments and Loans............................................49
         Section 8.08.  Transactions.............................................................................50
         Section 8.09.  Other Transactions.......................................................................50
         Section 8.10.  Modifications to Partnership Agreement of Borrower; Additional Agreements;
                              Assignments and Modifications of Agreements, Etc...................................50
         Section 8.11.  No Other Business........................................................................52
         Section 8.12.  Abandonment..............................................................................52
         Section 8.13.  Improper Use.............................................................................53
         Section 8.14.  Budgets..................................................................................53
         Section 8.15.  Press Releases; Advertising..............................................................54
         Section 8.16.  Employees and Employee Plan..............................................................54
         Section 8.17.  Name Changes; Etc. ......................................................................54
         Section 8.18.  Equity Ratio.............................................................................54
         Section 8.19.  Payments on Subordinated Debt............................................................54
         Section 8.20.  Limitation on Sale or Re-Export of the Items.............................................55

                                       ii

SECTION 9.  EVENTS OF DEFAULT....................................................................................55

         Section 9.01.  Payments.................................................................................55
         Section 9.02.  Representations, Etc.....................................................................55
         Section 9.03.  Covenants................................................................................55
         Section 9.04.  Default Under Other Agreements...........................................................56
         Section 9.05.  Bankruptcy, Etc..........................................................................58
         Section 9.06.  Project Events ..........................................................................58
         Section 9.07.  Material Adverse Effect..................................................................59
         Section 9.08.  Project Documents; Security Documents....................................................59
         Section 9.09.  Ownership of the Borrower................................................................60
         Section 9.10.  Judgments................................................................................61
         Section 9.11.  Governmental Action......................................................................61
         Section 9.12.  Permits..................................................................................62
         Section 9.13.  Transfer of Collateral; Event of Loss; Diminution of Property
                              Rights.............................................................................62
         Section 9.14.  Regulatory Status........................................................................62
         Section 9.15.  ERISA ...................................................................................62
         Section 9.16.  Funding Agreement........................................................................63

SECTION 10.  GOVERNING LAW AND JURISDICTION......................................................................64

         Section 10.01.  Governing Law ..........................................................................64
         Section 10.02.  Submission to Jurisdiction; Service of Process..........................................64
         Section 10.03.  Waiver of Sovereign Immunity............................................................65

SECTION 11.  MISCELLANEOUS.......................................................................................65

         Section 11.01.  Transportation..........................................................................65
         Section 11.02.  Transportation Costs....................................................................65
         Section 11.03.  Insurance...............................................................................65
         Section 11.04.  Disposition of Indebtedness.............................................................66
         Section 11.05.  Taxes ..................................................................................66
         Section 11.06.  Disclaimer..............................................................................67
         Section 11.07.  Indemnities and Expenses................................................................67
         Section 11.08.  Right of Setoff.........................................................................69
         Section 11.09.  Benefit of Agreement....................................................................69
         Section 11.10.  No Waiver; Remedies Cumulative..........................................................69
         Section 11.11.  Severability........................................................................... 70
         Section 11.12.  English Language........................................................................70
         Section 11.13.  Calculations; Computations .............................................................70
         Section 11.14.  Survival................................................................................70
         Section 11.15.  Amendments..............................................................................70
         Section 11.16.  Counterparts............................................................................70
         Section 11.17.  Notices.................................................................................71
         Section 11.18.  Judgment Currency.......................................................................73

                                      iii

         Section 11.19.  Headings Descriptive....................................................................73
         Section 11.20.  Prior Agreements Superseded.............................................................73
         Section 11.21.  No Recourse.............................................................................73

Schedules:

         Schedule X:        Additional Defined Terms and Principles of Construction
         Schedule 5.01(b):  Legal Opinions
         Schedule 5.01(t):  Governmental Approvals
         Schedule 6.01(h):  Litigation
         Schedule 6.01(t):  Foreign Exchange Control Approvals
         Schedule 6.01(u):  Construction Budget
         Schedule 7.03:     Insurance
         Schedule 7.07(c):  O&M Parameters
         Schedule 8.05(c):  Subordination Terms

Annexes:

         A - Form Promissory Note
         B - Request for Eximbank Disbursement to Account of Borrower C - Form
         of Post-Completion Ormat Guaranty

                                       iv

      EXIMBANK CREDIT AGREEMENT, dated as of May 13, 1996 (this "Agreement"),
between ORMAT LEYTE CO. LTD., a limited partnership organized and existing under
the laws of the Republic of the Philippines (the "Borrower") and EXPORT-IMPORT
BANK OF THE UNITED STATES ("Eximbank"), an agency of the United States.
Capitalized terms used herein shall be defined as provided in Section 1.01.

                                   BACKGROUND

      WHEREAS, the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders are entering into the Lender Credit Agreement, pursuant to which the
Lenders have agreed, subject to the terms and conditions set forth therein, to
finance, inter alia, exports from the United States to the Borrower's Country
for construction of the Project and, in connection therewith, the Guaranteed
Lenders (as defined in the Eximbank Guarantee Agreement referred to below) have
requested Eximbank to provide a limited guaranty of the Loans pursuant to a
guarantee agreement dated as of the date hereof among Eximbank, the Guaranteed
Lenders and the Administrative Agent (the "Eximbank Guarantee Agreement");

      WHEREAS, the Borrower has requested Eximbank to establish a credit (the
"Eximbank Credit") in the maximum amount of $49,763,955 (as the same may be
reduced pursuant to Section 4.01, the "Maximum Eximbank Credit Amount") in favor
of the Borrower as part of the overall debt financing for construction of the
Project and it is contemplated that the proceeds of the Eximbank Credit shall be
applied by the Borrower to repay in part the Loans made by the Guaranteed
Lenders;

      WHEREAS, Eximbank is prepared (i) issue its guarantee subject to the terms
and conditions of the Eximbank Guarantee Agreement and (ii) to establish the
Eximbank Credit and to make the Eximbank Credit available to the Borrower on or
after the Project Completion Date, subject the terms and conditions set forth in
this Agreement;

      NOW THEREFORE, the parties hereto agree as follows:

      SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

      Section 1.01. General Definitions. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings assigned
thereto in Schedule X attached hereto. In addition, wherever used in this
Agreement or any Annex, Exhibit or Schedule hereto, unless the context otherwise
requires, the following terms shall have the following meanings:

      "Agreement" shall mean this Credit Agreement, including any Annex,
Exhibit, Schedule and other attachment hereto, as amended or otherwise modified
from time to time.

      "Borrower" shall have the meaning specified in the first paragraph of this
Agreement.

      "Borrower's Country" shall mean the Republic.

      "Business Day" shall mean any day on which the Federal Reserve Bank of New
York is open for business.

      "Cash Payment" shall have the meaning set forth in Section 2.02.

      "Commitment Fee" shall have the meaning specified in Section 3.03.

      "Completion Date" shall have the meaning specified in the BOT Agreement.

      "Construction Note" shall mean the promissory note executed and delivered
by the Borrower pursuant to Section 2.4 of the Lender Credit Agreement.

      "Covered Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, withholdings, duties, fees, commissions or other charges,
of whatsoever nature and all liabilities paid with respect thereto imposed by
any Governmental Authority or taxing or monetary authority thereof, other than
any tax imposed on or measured by the net income or capital of a Person pursuant
to the laws of the jurisdiction of its place of incorporation or in which the
principal office is located or the office from which such Person books any
assigned interest of the Eximbank Credit.

      "Credit Exposure Fee" shall mean an exposure fee in the amount equal to
9.57% of the amount of the Eximbank Disbursement that represents: (i) the
Financed Portion of the Items; (ii) the IDC Financed Portion of IDC; and (iii)
the aggregate amount of the Guarantee Exposure Fee.

      "Default" shall mean any event, act or condition which, with notice, lapse
of time, or both, or the fulfillment of any other requirement provided for in
Section 9, would constitute an Event of Default.

      "Disbursement Date" shall mean the date on which the Eximbank Disbursement
is made by to the Borrower.

      "Eximbank Credit" shall have the meaning specified in the second WHEREAS
clause hereof.

                                       2

      "Eximbank Disbursement" shall mean the disbursement made under the
Eximbank Credit in accordance with the terms of this Agreement and evidenced by
the Eximbank Note.

      "Eximbank Note" shall have the meaning specified in Section 3.07(a).

      "Event of Default" shall have the meaning specified in Section 9.

      "Final Disbursement Date" shall mean the earlier of (i) June 15, 1998;
provided that (x) if on or before such date, the Completion Date for the entire
Power Plant shall have actually occurred pursuant to Section 6.1 of the BOT
Agreement, or shall have been deemed to have occurred pursuant to Section 5.4(h)
of the BOT Agreement, or (y) if on June (15) 1998, Force Majeure (as defined in
any of the BCE Agreement, the Construction Contract or the Supply Contract) or
default by PNOC-EDC under the BOT Agreement shall exist, or shall have existed
prior to June 15, 1998, for an aggregate period m excess of fifteen (15) days,
the date specified in clause (i) of this definition shall extended to March 15,
1999; and (ii) the date on which the Eximbank Credit is cancelled in full in
accordance with Section 4.02.

      "Guarantee Exposure Fee" shall have the meaning set forth in the Eximbank
Guarantee Agreement.

      "Guarantee Operative Date" shall mean the date designated by Eximbank on
or after which Utilizations may be made under the Lender Credit Agreement.

      "IDC" shall have the meaning specified in the Eximbank Utilization
Procedures.

      "IDC Financed Portion" shall have the meaning specified in the Eximbank
Utilization Procedures.

      "Items" shall have the meaning specified in the Eximbank Utilization
Procedures.

      "Lender Disbursement" shall mean each of the Loans disbursed from time to
time pursuant to Section 2 or 3 of the Lender Credit Agreement.

      "Local Cost Financed Portion" shall have the meaning specified in the
Eximbank Utilization Procedures.

      "Local Cost Item" shall have the meaning Specified in the Eximbank
Utilization Procedures.

                                       3

      "Maximum Eximbank Credit Amount" shall have the meaning specified in the
second clause of this Agreement.

      "Payment Date" shall mean July 30, 1996 and, thereafter, each succeeding
October 30, January 30, April 30, and July 30.

      "Payment Default Date" shall have the meanings in Section 3.02(b).

      "Principal Amortization Commencement Date" shall mean the earlier of (i)
the Completion Date (as defined in the BOT Agreement) for the initial Plant to
be constructed and tested in accordance with the terms of the Construction
Contract, the Supply Contract and the BOT Agreement and (ii) September 25, 1997.

      "Reconciliation Certificate" shall mean a reconciliation certificate in
the form of Exhibit 1 to Annex B hereto.

      "Request for Eximbank Disbursement" shall mean a request for disbursement
in the form of Annex B hereto.

      "Taxes" shall mean any and all present and future taxes, fees, levies,
imposts, duties or charges of whatsoever nature (whether imposed by withholding
or deduction or otherwise) imposed by any Governmental Authority (including
without limitation any and all liabilities with respect thereto).

      "U.S." or "United States" shall mean the United States of America.

      Section 1.02. Principles of Construction. The principles of construction
set forth in Schedule X apply.

                         SECTION 2. THE EXIMBANK CREDIT

      Section 2.01. Amount of the Eximbank Credit. (a) Eximbank hereby
establishes the Eximbank Credit, upon the terms and conditions set forth in this
Agreement, in favor of the Borrower to enable the Borrower to (i) refinance, in
an aggregate amount not to exceed $35,457,750, the Financed Portion of the costs
incurred on or after March 1, 1995 by the Borrower for the purchase m the United
States and export to the Republic of the Items; (ii) refinance, in an aggregate
amount not to exceed $5,832,000, the Local Cost Financed Portion of the costs
incurred on or after March 1, 1995 by the Borrower for the purchase m the
Republic of the Local Cost Items; (iii) refinance in an aggregate amount not to
exceed $3,124,000, the IDC Financed Portion of IDC; (iv) refinance the Guarantee
Exposure Fee; and (v) finance the Credit Exposure Fee.

                                       4

      (b) On the terms and conditions hereof, Eximbank shall make the Eximbank
Credit available to the Borrower in a single Eximbank Disbursement, subject to
the satisfaction of the conditions precedent to such disbursement under Section
5.02 hereof, and otherwise in accordance with Section 5.03 hereof.

      (c) The Eximbank Credit shall not under any circumstances exceed in
aggregate amount the lesser of:

            (i) the sum of (a) the aggregate amount of the Financed Portion for
      all Items; (b) the aggregate amount of the Local Cost Financed Portion for
      all Local Cost Items; (c) the aggregate amount of the IDC Financed Portion
      for all IDC; (d) 100% of the Guarantee Exposure Fee paid to Eximbank under
      the Eximbank Guarantee Agreement in respect of each of the above; and (e)
      100% of the Credit Exposure Fee payable to Eximbank under this Agreement;
      and

            (ii) the Maximum Eximbank Credit Amount.

      (d) All amounts due to Eximbank under this Agreement, the Eximbank Note
and the other Financing Documents are entitled to the benefit of the Security.
Any amount of the Eximbank Credit not disbursed on the Disbursement Date shall
automatically be canceled upon and as of the close of business on the
Disbursement Date.

      Section 2.02. Cash Payment. The Borrower shall have made or caused to be
made a cash payment for the purchase of each Item in an amount equal to not less
than fifteen percent (15%) of the Contract Price of such Item (the "Cash
Payment").

      Section 2.03. Credit Availability Date. The Eximbank Credit will not be
disbursed after, and Eximbank's commitment to make available the Eximbank Credit
shall terminate upon, the close of business on the Final Disbursement Date.

                     SECTION 3. TERMS OF THE EXIMBANK CREDIT

      Section 3.01. Principal Repayment. Subject to Section 4.01, the Borrower
shall repay all principal amounts disbursed under the Eximbank Credit in
approximately equal, successive quarterly installments (of which the maximum
number shall be 38), the first such installment being due on the first Payment
Date occurring on or after the date falling two hundred ten (210) days after the
Principal Amortization Commencement Date and on each succeeding Payment Date
thereafter, and ending on the Payment Date immediately preceding the Transfer
Date (as such term is defined in the BOT Agreement as in effect on the date
hereof); provided, that on the last such Payment Date the Borrower shall repay
in full the principal amount of the Eximbank Credit then outstanding. Eximbank
has determined the initial Payment Date by adding 180 days to

                                       5

its calculation of the weighted midpoint of the projected Completion Date for
each of the four Plants.

      Section 3.02 Interest Payment. (a) The Borrower shall pay interest on each
Payment Date, and on the date that all amounts disbursed under the Eximbank
Credit are paid in full, on all amounts disbursed and outstanding from time to
time under the Eximbank Credit, beginning on the first Payment Date which is
after the Disbursement Date, calculated at an interest rate per annum of 6.54%,
computed on the basis of the actual number of days elapsed (including the first
day but including the last day), using a 365-day year.

      (b) If ay amount of principal, accrued interest, fees or other amounts
owing by the Borrower to Eximbank under this Agreement, the Eximbank Note or any
other Financing Document is not paid in full when due (whether at stated
maturity, by acceleration or otherwise), the Borrower shall pay to Eximbank on
demand interest on the unpaid amount (to the extent permitted by applicable law)
for the period from the date such amount was due (the "Payment Default Date")
until the date such amount was paid in full, at an interest rate per annum equal
to the higher of: (i) the then applicable New Borrowing Rate (such rate to
remain in effect until such amount is paid in full); and (ii) the rate specified
in Section 3.02(a) above plus one percent (1.0%) per annum. For the purposes of
this Agreement and the Eximbank Note, "New Borrowing Rate" shall mean the
specified on the Commerce Department Economic Bulletin Board, under the heading
"Interest Rate for Credit Reform Act", for the year and calendar quarter in
which the Payment Default Date occurs, and under the "Maturity Ranges" category
which covers the total period of repayment described in Section 3.01.

      Section 3.03. Commitment Fee. The Borrower shall pay or cause to be paid
to Eximbank a commitment fee of one-half of one percent (0.5%) per annum on the
uncancelled amount of the Maximum Eximbank Credit (the "Commitment Fee"),
computed on the basis of the actual number of days elapsed (including the first
day hut excluding the last day), using a 365-day year, accruing from June 8,
1996 to the earlier of (i) the Disbursement Date and (ii) the Final Disbursement
Date, and payable quarterly on each Payment Date, beginning on July 30, 1996,
and on the Disbursement Date.

      Section 3.04. Credit Exposure Fee. No later than the Disbursement Date,
the Borrower shall pay or cause to be paid to Eximbank the Credit Exposure Fee.
The Credit Exposure Fee may be financed by the Borrower by the inclusion of the
request for such financing the Borrower's Request for Eximbank Disbursement.

      Section 3.05. Voluntary Prepayment. The Borrower may from time to tine
prepay all or any part of the outstanding principal amount of the Eximbank
Credit, provided that the Borrower (i) shall have given Eximbank ten (10)
Business Days prior

                                       6

written notice of the proposed amount and date of prepayment; (ii) shall have
paid in full all interest which has accrued to the date of prepayment on the
principal amount so prepaid, together with all other amounts then due to
Eximbank under this Agreement, the Eximbank Note, the Eximbank Guarantee
Agreement or any other Financing Document as of the date of such prepayment; and
(iii) shall pay to Eximbank a prepayment premium. The prepayment premium shall
be equal to the amount by which the prepaid principal amount is less than the
sum of the present values, discounted from the scheduled payment dates, of (A)
the installments of principal being prepaid, plus (B) the amounts of interest
which otherwise would have accrued on such principal amounts to the scheduled
repayment dates. The discount rate used to calculate such present values shall
be that rate of interest specified in the weekly Federal Reserve Statistical
Release, H.15 (519) Selected Interest Rates, in the category "U.S. government
securities; Treasury bills, Secondary market" for a Maturity Period (as
hereafter defined) through one year, or in the category "U.S. government
securities; Treasury constant maturities" for a Maturity Period of greater than
one year, in the column for Business Day which is five (5) Business Days prior
to the date of prepayment. "Maturity Date" shall mean the weighted average of
the periods between the date of prepayment and the scheduled repayment dates of
the installments of principal of the Eximbank Credit that are prepaid. All
prepayments shall be applied to the installments of principal of the Eximbank
Credit in the inverse order of their maturities.

      Section 3.06. Mandatory Prepayment. On the applicable dates set forth in
Sections 3.05(a) and 3.05(d) of the Disbursement Agreement, the Borrower shall,
without demand or notice, make prepayments to Eximbank using funds then made
available for such purpose from the Contingency Account by the Collateral
Trustee pursuant to Sections 3.05(a) and 3.05(d) of the Disbursement Agreement.
In addition, on the date of receipt of funds from any Buyout, the Borrower
shall, without demand or notice, make a prepayment to Eximbank in the amount of
the then outstanding principal amount of the Eximbank Credit, together with all
interest accrued thereon and all other amounts then payable to Eximbank by the
Borrower under any of the Financing Documents. In the case of any partial
payments, such prepayments shall be applied to the installments of principal of
the Eximbank Credit in the inverse order of their maturity. No prepayment
premium is payable in connection with a mandatory prepayment pursuant to this
Section 3.06.

      Section 3.07. Eximbank Note. (a) The Borrower agrees that to evidence
further its obligation to repay all amounts disbursed under the Eximbank Credit,
with interest accrued thereon, it shall issue and deliver to Eximbank a
promissory note dated the Disbursement Date in the form of Annex A (together
with replacements and substitutions therefor, the "Eximbank Note"). The Eximbank
Note shall be valid and enforceable as to its principal amount at any time only
to the extent of the amount then

                                       7

disbursed and outstanding under the Eximbank Credit and, as to interest, only to
the extent of the interest accrued thereon.

      (b) If requested by Eximbank pursuant Section 11.05(a)(ii), the Borrower
shall issue and deliver to Eximbank a new Eximbank Note in exchange for the
Eximbank Note previously issued and delivered in accordance with this Agreement,
whereupon Eximbank shall surrender such previously issued Eximbank Note to the
Borrower for cancellation.

      (c) If the Eximbank Note is mutilated, lost, stolen or destroyed, the
Borrower shall issue and deliver a new Eximbank Note of the same date, maturity
and denomination as the Eximbank Note so mutilated, lost, stolen or destroyed;
provided that, in the case of any mutilated Eximbank, not such mutilate Eximbank
Note shall be returned to the Borrower, and, in the case of any lost, stolen or
destroyed Eximbank Note, the Borrower shall have first received such evidence of
loss, theft or destruction as shall reasonably be considered satisfactory to the
Borrower.

      Section 3.08. Method of Payment. (a) All payments to be made to Eximbank
under this Agreement, the Eximbank Note or any other Financing Document (whether
at stated maturity, by reason of acceleration or prepayment, or otherwise) shall
be made without set-off or counterclaim in Dollars in immediately available and
freely transferable funds no later than 11:00 a.m. (New York City time) on the
date on which due (each such payment made after such time shall be deemed to
have been made on the next succeeding Business Day) at the Federal Reserve Bank
of New York for credit to the following Eximbank account as identified below:

       U.S. Treasury Department
       021030004
       TREAS NYC/CTR/
       BNF = /AC-4984 OBI =
       EXPORT-IMPORT BANK
       DUE _____________ ON EIB CREDIT NO. AP069121 - PHILIPPINES
       FROM ORMAT LEYTE CO. LTD.

      (b) Whenever any payment under this Agreement or the Eximbank Note shall
be stated to be due and payable on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in the computation of any interest or fee due thereon.

      Section 3.09. Application of Payments. Eximbank shall apply payments
received by it under this Agreement, the Eximbank Note or any other Financing
Document (whether at stated maturity, by reason of acceleration or prepayment or

                                       8

otherwise) in the following order of priority: (i) interest due pursuant to
Section 3.02(b), (ii) Commitment Fee, Credit Exposure Fee, Guarantee Exposure
Fees and all other amounts due to Eximbank under this Agreement, the Eximbank
Note or any other Financing Document and not otherwise provided for under this
Section 3.09, (iii) interest due pursuant to Section 3.02(a) and (iv)
installments of principal due.

                       SECTION 4. CANCELLATION; SUSPENSION

      Section 4.01. Mandatory Cancellation. In the event any scheduled Payment
Date for the repayment of principal of the Eximbank Credit falls on a date that
is on or prior to the final Completion Date to occur in respect of the Plants
comprising the Power Plant, the Maximum Eximbank Credit Amount shall be reduced,
in respect of each such scheduled Payment Date occurring prior to such final
Completion Date, by an amount equal to one thirty-eighth (1/38th) of the Maximum
Eximbank Credit Amount.

      Section 4.02. Cancellation by the Borrower. The Borrower may cancel at any
time all or any part of the undisbursed and uncanceled amount of the Eximbank
Credit, provided that thirty (30) days' prior written notice is given to
Eximbank. In the event of a cancellation of all or any part of the Eximbank
Credit by the Borrower, the Borrower shall pay to Eximbank, on or before the
proposed date of cancellation, all Commitment Fees accrued and unpaid under
Section 3.03 in respect of the cancelled amount and all other amounts due and
payable to Eximbank under this Agreement, the Eximbank Note or any other
Financing Document as of the proposed date of cancellation. Cancellation in full
of the Eximbank Credit shall not terminate any provision of this agreement other
than Sections 7, 8 and 9 hereof.

      Section 4.03. Suspension by Eximbank.

      (a) In the event that:

            (i) prior to the Disbursement Date, the Borrower shall fail to pay
      when due any Commitment Fee payable by the Borrower to Eximbank hereunder
      or any other amount payable by the Borrower to Eximbank hereunder, under
      the Eximbank Guarantee Agreement or under any other Financing Document; or

            (ii) at any time, any Lender suspends the right of the Borrower to
      request disbursements in accordance with the Lender Credit Agreement; or

            (iii) at any time, Lenders with twenty-five percent (25%) or more of
      the total Commitments provided for in respect of the Lender Credit (such
      25%, the "Cancelled Commitments") cancel their respective Commitments
      (other than

                                       9

      any such cancellation pursuant to any undrawn Commitment at the Project
      Completion Date);

then Eximbank, by written notice to the Borrower and the Administrative Agent,
may:

            (x) in the case of clause (i) above, suspend disbursement of the
      Eximbank Credit until all such amounts due and owing to Eximbank shall
      have been paid in full to Eximbank (whether by or on behalf of the
      Borrower or by another Person, including any Lender or Lenders);

            (y) in the case of clause (ii) above, suspend disbursement of the
      Eximbank Credit until it is satisfied that the cause of such suspension
      has been removed; and

            (z) in the case of clause (iii) above, suspend disbursement of the
      Eximbank Credit until such time as another lender or lenders, with the
      consent of Eximbank, such consent not to be unreasonably withheld (it
      being understood that each of the Lenders is acceptable to Eximbank for
      this purpose), shall enter into a binding commitment with the Borrower to
      replace the Cancelled Commitments.

      (b) The terms of Section 4.03(a) above shall be in addition to and not in
limitation of any other rights of Eximbank under this Agreement or any other
Financing Document.

      SECTION 5. CONDITIONS PRECEDENT

      Section 5.01. Conditions Precedent to Lender Disbursement. The
applicability of the Eximbank Guarantee to any Utilization shall be subject to
the satisfaction of the following conditions on or prior to the Guarantee
Operative Date (or, if so specified, the Credit Date); provided that if any such
conditions shall have been satisfied on or prior to the Guarantee Operative
Date, then on the Credit Date the Borrower shall supply such evidence indicating
that such condition continues to be satisfied as Eximbank may reasonably
require, including, without limitation, bring-down opinions and certificates:

      (a) Project Documents. Each of the Project Documents, excluding (i) the
Governmental Approvals set forth in Part B of Schedule 5.01(t) hereto, (ii) the
BOT Operation Performance Security, (iii) the BOT Construction Performance
Security, (iv) the Post-Completion Ormat Guaranty and (v) agreements and
instruments pertaining to Permitted Indebtedness not then incurred shall have
been entered into by the respective parties thereto, shall be unconditional and
fully effective in accordance with their

                                       10

respective terms (except for this Agreement or the Eximbank Guarantee Agreement
having become unconditional and fully effective, if such is a condition of
effectiveness of any of such documents), shall be in form and substance
satisfactory to Eximbank and Eximbank and the Collateral Trustee shall each have
received a true, original copy thereof or, if a true, original copy is
unavailable, a certified true copy thereof.

      (b) Opinions of Counsel. Eximbank shall have received signed legal
opinions of counsel to each Person listed on Section A of Schedule 5.01(b)
hereto, each of which shall be in form and substance and by counsel satisfactory
to Eximbank and shall be dated the Guarantee Operative Date; provided that the
opinion of counsel to PNOC-EDC may be dated the Effectivity Date (as defined in
the BOT Agreement).

      (c) Organization Documents; Proceedings.

            (i) Eximbank shall have received a certificate, dated not earlier
      than the Guarantee Operative Date, signed by a Financial Officer of the
      General Partner, and attested to by the Secretary or any Assistant
      Secretary of the General Partner, in form and substance satisfactory to
      Eximbank, together with copies of the Partnership Agreement and other
      Organization Documents of the Borrower and such resolutions of the Board
      of Directors of the General Partner as are reasonably requested by
      Eximbank.

            (ii) Eximbank shall have received a certificate, dated not earlier
      than the Guarantee Operative Date, signed by a Financial Officer of each
      Obligor (other than the Borrower, PNOC-EDC, the BOT Construction
      Performance Security Issuer and the BOT Operation Performance Security
      Issuer) and attested to by the Secretary or any Assistant Secretary of
      such Obligor, in form and substance satisfactory to Eximbank, together
      with copies of the Articles of Incorporation and By-Laws of such Obligor
      and resolutions of such Obligor reasonably requested by Eximbank.

            (iii) Arrangements satisfactory to Eximbank shall have been made for
      the appointment of SyCip Gorres Velayo & Co. or such other firm of
      independent public accountants acceptable to Eximbank, as Auditors.

            (iv) Eximbank shall have received a certificate from each Obligor
      (other than PNOC-EDC, the BOT Construction Performance Security Issuer and
      the BOT Operation Performance Security Issuer) signed by an authorized
      officer certifying the incumbency of parties executing any Project
      Document or related document on behalf of such Obligor.

                                       11

      (d) Auditors. Eximbank shall have received copies of the authorization of
the Auditors referred to in Section 6.2(b) of the Lender Credit Agreement and
Section 7.02(b) hereof.

      (e) Pledged Certificates of Partnership Interests; Subordinated Notes. The
Partners shall have delivered to the Collateral Trustee, as pledgee, (i) the
partnership certificates representing all of their respective general and
limited partnership interests in the Borrower, together with executed and
undated partnership interest transfer powers, and (ii) the Subordinated Notes
evidencing all outstanding Required Subordinated Loans, Standby Subordinated
Loans and Post-Completion Standby Subordinated Loans.

      (f) Consent Letters. Eximbank shall have received a letter, in form and
substance satisfactory to Eximbank, from CT Corporation System, presently
located at 1633 Broadway, New York, New York 10019, indicating the consent of CT
Corporation System to its appointment by the Borrower, Ormat, Ormat
International, Orleyte Company, the Construction Contractor and the Construction
Supplier as their agent to receive service of process as specified in Section
10.02 hereof, in the case of the Borrower; as specified in the Funding
Agreement, the Keystone Agreement and the Ormat EPC Guarantee, in the case of
Ormat; as specified in the Funding Agreement, the Keystone Agreement and the
International EPC Guarantee in the case of Ormat International; as specified in
the Funding Agreement and the Mortgage, Assignment and Pledge Agreement in the
case of Orleyte Company; as specified in that Funding Agreement, the Pledge
Agreement, the Construction Contract and the Keystone Agreement in the case of
the Construction Contractor; and as specified in the Supply Contract and the
Keystone Agreement in the case of the Construction Supplier.

      (g) Environment Matters. Arrangements satisfactory to Eximbank shall have
been made for the Borrower and the Project to comply with Eximbank Environmental
Procedures and Guidelines (effective February 1, 1995) and Philippine law and
guidelines relating to occupational health and safety and to the environment.

      (h) BOT Agreement Effectiveness. Each of PNOC-EDC and the Borrower shall
have issued to Eximbank a certification confirming that the Effective Date (as
defined in the BOT Agreement) has occurred.

      (i) Certificates. Eximbank shall have received copies of each executed
Project Document, together with a certificate of a Financial Officer of the
Borrower certifying that (i) the Borrower is not in default in the performance,
observance or fulfillment of any of its obligations, covenants or conditions
contained therein and, to the best of the Borrower's and the General Partner's
knowledge, no other party to any such Project Document is in default in the
performance, observance or fulfillment of any of its material obligations,
covenants or conditions contained therein and (ii) in the case of each

                                       12

such document to which Eximbank is not a party, (x) that such document is in
full force and effect, (y) that to the best of the Borrower's and the General
Partner's knowledge no event of Force Majeure (as defined in such Project
Document) has occurred thereunder and (z) that the copy thereof delivered to
Eximbank is true, correct and complete. Eximbank shall have received evidence or
copies of all Governmental Approvals set forth in Schedule 5.01(t) hereto (other
than those set forth in Part B thereof), certified by a Financial Officer of the
Borrower as being in full force and effect and except as disclosed in such
Schedule 5.01(t), not the object of a currently pending appeal.

      (j) Construction Budget; Base Case Forecast. Eximbank shall have received
the Construction Budget and the Base Case Forecast, each of which shall be in
form and substance satisfactory to Eximbank.

      (k) Reports of Consultants. Eximbank shall have received the Independent
Engineer's Report, a report prepared by the Insurance Consultant and such other
information as shall be reasonably requested by Eximbank.

      (l) Financial Statements. Eximbank shall have received copies of the most
recent audited financial statements of Ormat and Ormat International and shall
have received copies of the most recent unaudited financial statements (if
audited financial statements are not otherwise available) of the Borrower and
each other Obligor (other than the Borrower, Ormat, Ormat international,
PNOC-EDC, the BOT Construction Performance Security Issuer and the BOT Operation
Performance Security Issuer), showing, for each such Person, no material adverse
change in the financial condition of such Person since the date of the last
financial statements provided to Eximbank prior to the date of this Agreement,
and certificates dated the Guarantee Operative Date and signed by a Financial
Officer of each such Person stating that (x) such financial statements are true,
complete and correct and (y) no material adverse change in the financial
condition, operations, properties, business or prospects of such Person has
occurred since the date of such financial statements.

      (m) Evidence of Authority. Eximbank shall have received evidence of the
authority of the Borrower to enter into this Agreement, the Eximbank Note, the
Lender Credit Agreement, the Disbursement Agreement, the Collateral Trust
Agreement and the Security Documents and the other documents required by this
Agreement and the Lender Credit Agreement as of the date hereof, and the names,
specimen signatures and evidences of authority of the person signing this
Agreement, the Eximbank Note, the Eximbank Guarantee Agreement, the Lender
Credit Agreement, the Funding Agreement, the Disbursement Agreement, the
Collateral Trust Agreement and the Security Documents, the Partnership Agreement
and the other documents required by this Agreement and the Lender Credit
Agreement as of the date hereof, or who, as of the date

                                       13

hereof, will otherwise act as representatives of the Borrower in the operation
of the Eximbank Guarantee Agreement and the Eximbank Credit.

      (n) Notice to Proceed and Construction Contractor's and Construction
Supplier's Representation. Eximbank shall have received a certified copy of the
Notice to Proceed under (and as defined in) the Construction Contract and the
Notice to Proceed under (and as defined in) the Supply Contract, each of which
shall have been issued on or prior to the Credit Date Eximbank shall have
received certificates signed by authorized representatives of each of the
Construction Contractor and the Construction Supplier to the effect that (i) the
Construction Contract and the Supply Contract, respectively, are effective and
work has commenced thereunder, (ii) as of the date hereof the Scheduled
Completion Date for each of Plant A, Plant B and Plant C is September 1, 1997
and for Plant D is January 1, 1998, or such later dates (which Eximbank has
confirmed in writing are acceptable to it) as shall correspond to any extension
of the milestone dates set forth in Section 4.1(a) of the BOT Agreement for the
achievement of the Completion Date for the relevant Plant, (iii) the Borrower is
not in default under the Construction Contract or the Supply Contract,
respectively, (iv) the Construction Contractor is not entitled to any change
orders under the Construction Contract and the Construction Supplier is not
entitled to any change orders under the Supply Contract (in each case, other
than change orders previously disclosed to Eximbank in writing) on such date and
is not then aware of any other change orders required under the Construction
Contract or the Supply Contract, respectively, and (v) to the best of the
Construction Contractor's or the Construction Supplier's (as the case may be)
respective knowledge, after reasonable inquiry, no Force Majeure event (as
defined in each of the Construction Contract and the Supply Contract) has
occurred.

      (o) Project Site. Eximbank shall have received (i) an opinion of counsel
to the Borrower to the effect that the Republic has valid legal title to the
Site free of Liens (other than Liens of or arising through the Borrower, the
Construction Contractor or the Construction Supplier) and that PNOC-EDC has the
valid legal authority to use the Site and delegate unencumbered use of the Site
to the Borrower on the terms and conditions set forth in the BOT Agreement,
which opinion shall be from counsel and in form and substance satisfactory to
Eximbank, and (ii) a certificate of the Borrower that PNOC-EDC has granted the
Borrower and its designees full access to and the ability to use the Site, so
that the Borrower and/or the Construction Contractor and their respective
designees may fully perform their respective obligations under the BOT Agreement
and their respective related obligations.

                                       14

      (p) No Default; Representative and Warranties. Immediately before and
after the initial Utilization:

            (i) no Lender Credit Default or Lender Credit Event of Default shall
      have occurred and be continuing; and

            (ii) all representations and warranties made by the Borrower and any
      Obligor which is an Affiliate of the Borrower and contained herein or in
      the Project Documents (other than the Insurance Contracts, Governmental
      Approvals or any other agreement, commitment or understanding referred to
      in subsection (xiv) of the definition of "Operating Agreements" in
      Schedule X) shall be true and correct in all material respects with the
      same effect as though such representations and warranties had been made on
      and as of the Guarantee Operative Date except where expressed to be made
      only as of an earlier date.

      (q) Security. The Security, in form and substance satisfactory to
Eximbank, shall have been duly created, perfected and, where appropriate,
registered, to create a first priority security interest and charge over the
Collateral in existence at the date hereof. Without limitation to the preceding
sentence, the Borrower shall have duly authorized, executed and delivered or, as
the case may be, provided:

            (i) acknowledgment copies of proper financing statements or other
      instruments duly filed under the Applicable Law of each jurisdiction as
      may be necessary or, in the reasonable opinion of Eximbank, desirable to
      perfect the charges and security interests purported to be created by the
      Security Documents;

            (ii) certified copies of requests, for information or copies, or
      equivalent reports, listing the financing statements and instruments
      referred to in clause (i) above and all other effective financing
      statements that name the Borrower as debtor and that are filed in the
      jurisdictions referred to in said clause (i), together with copies of such
      other financing statements and instruments (none of which shall cover the
      Collateral except to the extent evidencing Lender Credit Permitted Liens);

            (iii) evidence of the completion of all other recordings and filings
      of, or with respect to, the Security Documents as may be necessary or, in
      the reasonable opinion of Eximbank, desirable to perfect the security
      interests purported to be created by the Security Documents;

                                       15

            (iv) evidence that all other actions necessary or, in the reasonable
      opinion of Eximbank, desirable to perfect and protect the security
      interests purported to be created by the Security Documents have been
      taken;

            (v) the Borrower shall have established the Blocked Account; and

            (vi) the Required Funding Amount shall have been fully funded either
      through a cash deposit pursuant to Section 2(j)(i) of the Funding
      Agreement and/or a Required Letter of Credit pursuant to Section 2(k)(i)
      of the Funding Agreement.

      (r) Consent and Approvals. There shall have been obtained, or there shall
have been made arrangements, satisfactory to Eximbank, for obtaining during the
period prior to the Project Completion Date, in addition to the Project
Documents, the governmental, corporate, creditors', shareholders', partners' and
other licenses, approvals or consents listed in Schedule 5.01(t) hereto and all
other governmental, corporate, creditors, shareholders', partners' and other
necessary licenses, approvals or consents (other than with respect to Eximbank)
for: (i) the financing by each of the Lenders and the Issuing Bank under the
Lender Credit Agreement; (ii) the carrying on of the business of the Borrower as
it is presently carried on and is contemplated to carried on; (iii) the carrying
out of the Project; (iv) the due execution and delivery of, and performance
under, each Project Document which has been entered into at the date hereof, the
Security, and any documents in implementation of any thereof; and (v) the
remittance to Eximbank and the Collateral Trustee and by the Collateral Trustee
to the Secured Parties or the respective assignees, in Dollars, of all monies
payable pursuant to each Project Document which has been entered into on the
date hereof, and any documents in implementation of any thereof.

      (s) No Project Document Default; Governmental Approvals. Each of the
Project Documents which has been entered into or which is required to have been
entered into on the Guarantee Operative Date shall be in full force and effect
and no material breach or default shall have occurred under such Project
Document. No event of Force Majeure (as defined in any of the BOT Agreement, the
Supply Contract and the Construction Contract) shall have occurred which has
had, or in the reasonable judgment of Eximbank is reasonably likely to have, a
Material Adverse Effect. No events shall have occurred pursuant to which a claim
could be made by the Administrative Agent on behalf of the Lenders under the
Eximbank Guarantee Agreement.

      (t) Costs; Construction Progress. Eximbank and the Independent Engineer
shall have received from the Borrower a certificate in the form of Schedule
5.2(h) to the Lender Credit Agreement signed by an authorized representative of
the Borrower and expressed to be effective on the date of the relevant
Utilization that (i) the costs and

                                       16

expenses theretofore incurred by the Borrower and to be incurred by the Borrower
prior to the latest date on which the Final Disbursement Date can be expected to
occur will not exceed [$68,469,000] and (ii) the sum of (A) the aggregate
Financed Portion of the costs incurred by the Borrower after March 1, 1995 and
before the Final Disbursement Date for the purchase in the United States and
export to the Borrower's Country of the Items and (B) the aggregate Local Cost
Financed Portion of the costs incurred by the Borrower for the purchase in the
Republic of the Local Cost items and (C) the aggregate IDC Financed Portion of
IDC will not exceed the difference between (x) the Total Commitment and (y) 100%
of the Guarantee Exposure Fee.

      (u) Fees and Expenses. On or before the Credit Date, the Borrower shall
have paid or arranged for payment of fees, expenses and other charges (including
any and all Attorney Costs) then due and payable by it under this Agreement.

      (v) No Change in Contract Price. The contract price set forth in the
Supply Contract, the Construction Contract and the Keystone Agreement shall not
have been amended, changed or otherwise modified and Eximbank shall have
received a certificate from each of the Construction Supplier and the
Construction Contractor to such effect in form and substance satisfactory to
Eximbank.

      (w) Insurance. Eximbank shall have received a certificate from the
Insurance Consultant stating that the insurance policies required under the
Lender Credit Agreement to be in effect on the Credit Date are in full force and
effect.

      (x) Other Instrument, Conditions, Etc. The delivery of any other
instruments and agreements and the satisfaction of any other condition as
Eximbank may reasonably request.

      Section 5.02. Conditions Precedent to Eximbank Disbursement. As conditions
precedent to the Eximbank Disbursement, the documents described in paragraphs
(a) through (h) below shall have been received by Eximbank, each in form and
substance satisfactory to Eximbank and dated the Disbursement Date, and the
conditions described in paragraphs (i) through (n) shall have been fulfilled as
of the date on which the Eximbank Disbursement is requested by the Borrower to
be made, in a manner satisfactory to Eximbank:

      (a) Eximbank Note. The executed Eximbank Note in the principal amount of
the Eximbank Credit.

      (b) Opinions of Counsel. Signed legal opinions of counsel to each Person
listed on Section B of Schedule 5.01(c) hereto, each of which shall be in form
and

                                       17

substance and by counsel satisfactory to Eximbank and shall be dated the
Disbursement Date.

      (c) Evidence of Authority. Evidence of the authority of the Borrower to
execute, deliver and perform the terms and conditions of this Agreement, the
Eximbank Note and the other documents requested by this Agreement, and the names
and evidence of authority (including specimen signatures) of each person who, on
behalf of the Borrower, signed or will sign this Agreement, the Eximbank Note
and the other documents required by this Agreement, or will otherwise act as
representatives of the Borrower in the operation of the Eximbank Credit.

      (d) BOT Agreement. A certification signed by an authorized representative
of the Borrower and expressed to be effective as of the Disbursement Date,
stating that the Borrower is in compliance with the BOT Agreement and that such
agreement is in full force and effect.

      (e) Security. A certification signed by an authorized representative of
the Borrower and expressed to be effective as of the Disbursement Date, stating
that the Security Documents are in full force and effect and that the Security
granted therein shall have been duly created, perfected and, where appropriate,
registered, to create a first priority security interest and charge over the
Collateral in existence on the Disbursement Date in favor of the Collateral
trustee for the benefit of Eximbank.

      (f) Agent for Service of Process. Evidence that the Borrower and each
other Obligor (other than PNOC-EDC, the BOT Operation Performance Security
Issuer and the BOT Construction Performance Security Issuer) has irrevocably
appointed as its agent for service of process the Person or Persons so specified
in Section 5.01(f), and that each such agent has accepted the appointment and
has agreed to forward forthwith to the Borrower, or the relevant Obligor, as the
case may be, all legal process addressed to the Borrower or such Obligor,
received by such agent.

      (g) Insurance. A certification from the Insurance Consultant stating that
the insurance policies required pursuant to Section 7.03 to be in effect on the
Disbursement Date, as such provisions may have been modified since the date of
this Agreement and as such provisions are in effect on such date, axe in full
force and effect.

      (h) Financial Completion Test. A certification signed by an authorized
representative of the Borrower and expressed to be effective as of the
Disbursement Date, attaching relevant calculations, and reasonably acceptable to
Eximbank, stating that, after giving effect to the Eximbank Disbursement:

                                       18

            (1)   The aggregate principal amount of all Senior Debt of the
                  Borrower then outstanding shall not exceed [$51,263,955].

            (2)   The outstanding principal amount of all Required Subordinated
                  Loans shall have been converted into common equity in the
                  Borrower on terms and conditions satisfactory to Eximbank.

            (3)   The Equity Ratio shall not be less than 25:75.

            (4)   The equity contributions to the Borrower aggregate no less
                  than $16,705,045.

      (i) Project Completion. The Project Completion Date shall have occurred.

      (j) No Event of Default. Both before and after giving effect to the
Eximbank Disbursement, no Lender Credit Default, Lender Credit Event of Default,
Default or Event of Default exists or will exist that has not been cured or
waived.

      (k) Representations and Warranties. All the representations and warranties
made by the Borrower in Section 6.02 shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of such date by reference to the facts and circumstances
existing on such date, except where such representation or warranty is expressed
to be made as of a specified date.

      (l) Fees and Costs. The fees due pursuant to Section 3.03 and all costs
and expenses required to be paid pursuant to Section 11.07 shall have been paid
by the Borrower, and (i) Eximbank has been paid the Credit Exposure Fee, or (ii)
arrangements satisfactory to Eximbank shall have been entered into for providing
payment to Eximbank of the Credit Exposure Fee. For the purposes of the
foregoing sentence, "arrangements satisfactory to Eximbank" shall include,
without limitation, the direct payment of the Credit Exposure Fee by the
Borrower to Eximbank prior to the Disbursement Date or the submission to
Eximbank by the Borrower of a Request for Eximbank Disbursement that includes a
request for Eximbank financing of the Credit Exposure Fee.

      (m) Debt Reserve Cash Collateral Account. The Debt Reserve Cash Collateral
Account shall be funded in an amount not less than $4,200,000 (if the principal
of the Eximbank Credit shall be repayable in 38 installments) and an amount
equal to the Senior Debt Service due and payable during the next succeeding six
months (if the principal of the Eximbank Credit shall be repayable in fewer than
38 installments).

                                       19

      (n) No Material Adverse Effect. No Material Adverse Effect shall exist or
shall have occurred that has not been waived by Eximbank.

      (o) Payment of Buy Down Amounts. All liquidated damages accruing under
Sections 14.2 and 14.3 of the Construction Contract and Sections 12.2 and 12.3
of the Supply Contract shall have been paid in full, irrespective of any
limitation on liability therefor set forth in the Construction Contract, the
Supply Contract or the Keystone Agreement.

      (p) Post-Competition Ormat Guaranty. The Post-Completion Ormat Guaranty
shall have been entered into by the respective parties thereto, shall be
unconditional and fully effective in accordance with its terms, shall be
substantially in the form of Annex C hereto, and Eximbank and the Collateral
Trustee shall have each received a true, original copy thereof or, if a true,
original copy is unavailable, a certified true copy thereof.

      (q) Lender Financing Termination Date. After giving effect to the Eximbank
Disbursement, the Lender Financing Termination Date shall have occurred.

      Section 5.03. Request for Eximbank Disbursement. The Borrower may, no
earlier than ten (10) and no later than five (5) Business Days prior to the
proposed Disbursement Date, submit to Eximbank a completed and duly executed
Request for Eximbank Disbursement; provided, however, that no Eximbank
Disbursement shall be made in respect of such Request for Eximbank Disbursement
until the conditions set forth in Section 5.02 have been fulfilled or waived by
Eximbank. The Request for Eximbank Disbursement shall be executed by an
authorized representative of the Borrower, and shall be accompanied by (i) true,
correct and complete copies of each Eximbank Certificate; (ii) a true, correct
and complete Reconciliation Certificate; and (iii) a written undertaking from
the Administrative Agent in the form of Exhibit 1 to Annex B hereto. In no event
shall the maximum amount of the Eximbank Disbursement exceed the aggregate of
the Dollar amounts certified by Eximbank in the accompanying Eximbank
Certificates as amounts eligible for Eximbank support and 100% of the Credit
Exposure Fee. Notwithstanding anything to the contrary contained herein, the
Borrower may only submit one (1) Request for Eximbank Disbursement under this
Agreement. The Borrower shall apply the proceeds of the Eximbank Disbursement to
the payment of amounts owed to the Lenders under the Lender Credit Agreement and
the payment of the Credit Exposure Fee in accordance with the terms of Section
6.30(d) of the Lender Credit Agreement and this Agreement.

                                       20

                    SECTION 6. REPRESENTATIONS AND WARRANTIES

      Section 6.01. Representations and Warranties with Respect to Guarantee
Operative Date. In order to induce Eximbank to enter into this Agreement and
each of the other Financing Documents to which it is a party, to issue the
Eximbank Guarantee Agreement and to establish the Eximbank Credit, the Borrower
makes the following representations, warranties and agreements as of the date of
execution hereof and as of the Guarantee Operative Date, which shall survive the
execution and delivery of this Agreement and the other Financing Documents to
which Eximbank is a party and the disbursement and repayment of the Eximbank
Credit:

      (a) Limited Partnership Status. The Borrower (i) is a limited partnership
duly organized and validly existing and in good standing under the laws of the
Republic, (ii) is duly qualified to do business under the laws of each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business as presently conducted or proposed to
be conducted makes such qualification necessary and (iii) has full power and
authority to own the property and assets owned by it and to lease the properties
leased by it and to transact the business in which it is engaged or proposes to
be engaged and to do all things necessary or appropriate in respect of the
Project and to consummate the transactions contemplated by the Project Documents
in effect or required to be in effect as of each date this representation is
made or deemed made. Orleyte Company is the sole general partner of the
Borrower, and Ormat Philippines and Orleyte Company are the sole limited
partners of the Borrower. Each Partner (a) is a limited life company duly
organized, validly existing and in good standing under the laws of the Cayman
islands, (b) is duly qualified to do business and is in good standing under the
laws of each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business as presently conducted
or as proposed to be conducted makes such qualification necessary or desirable,
and (c) has full power and authority to own the property an d assets owned by it
and to lease the properties leased by it and to transact the business in which
it is engaged or proposes to be engaged.

      (b) Power and Authority. The Borrower and each Partner has the full power
and authority to execute and deliver, and to perform the terms and provisions
of, each of the Project Documents to which it is party and has taken all
necessary partnership or corporate action, as the case may be, to authorize the
execution, delivery and performance by it of each of such Project Documents as
have been executed and delivered as of each date this representation and
warranty is made. The General Partner has the corporate power and authority to
execute and deliver in the name of the Borrower, and to perform on behalf of the
Borrower the terms and provisions of, each of the Project Documents to which the
Borrower is a party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it on the Borrower's behalf of each
of such Project Documents as of each date this representation and warranty is
made.

                                       21

The Borrower and each Partner has, or in the case of the Project Documents other
than this Agreement, by the Guarantee Operative Date will have, duly executed
and delivered each of the Project Documents to which it is party, and each of
such Project Documents constitutes or, in the case of each such other Project
Document when executed and delivered, will constitute, the legal, valid and
binding obligations of the Borrower or such Partner, as the case may be, and
enforceable in accordance with its respective terms, except as the
enforceability thereof may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) general equitable principles, regardless of
whether the issue of enforceability Is considered in a proceeding in equity or
at law.

      (c) No Violation. None of the execution and delivery by the Borrower of
the Project Documents to which it is a party, nor the Borrower's compliance with
or performance of the terms and provisions thereof, nor the use of the proceeds
of the Loans or the Eximbank Credit as contemplated by the respective Financing
Documents, nor the execution, delivery and performance on behalf of the Borrower
by the General Partner of the Project Documents to which the Borrower is a party
(i) will contravene or violate any provision of any Applicable Law to which the
Borrower or the General Partner, any of their respective assets or the Project
is subject, (ii) will conflict or be inconsistent with or result in any breach
of any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien (except any Permitted Liens) upon any of the property
or assets of the Borrower or the General Partner pursuant to the term of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower or the General
Partner is a party or by which either of them or any of any of their respective
property or assets is bound or to which either of them may be subject, (iii)
will violate any provision of the Partnership Agreement or any other
Organization Document of the Borrower or (iv) will require any consent or
approval of any Governmental Authority or any other Person which has not been
obtained.

      (d) Organization. The general and limited partnership interests of Orleyte
Company and the limited partnership interests of Ormat Philippines in the
Borrower and the respective interests of Orleyte Company and Ormat Philippines
in the capital and the profits and distributions of the Borrower are as set
forth in the Partnership Agreement. All such partnership interests in the
Borrower have been duly and validly authorized and issued. Orleyte Company and
Ormat Philippines own the general and limited partnership interests in the
Borrower set forth in the Partnership Agreement free and clear of any Liens of
any-nature on such partnership interests except for the Liens created pursuant
to the Mortgage, Assignment and Pledge Agreement. The Borrower does not have
outstanding any certificates or securities that evidence interests in the
Borrower (except for certificates representing the respective general and
limited partnership interests of

                                       22

Orleyte Company and Ormat Philippines in the Borrower), or any securities
convertible into or exchangeable for any of its partnership interests or any
rights to subscribe for or to purchase, or any warranties or options to
purchase, or any agreements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating to, any such
partnership interests, except for those rights established pursuant to the
Mortgage, Assignment and Pledge Agreement, the Partnership Agreement, the Itochu
MOU, and agreements (certified copies of which shall have been delivered to
Eximbank) relating to a sale or assignment to EPDCI or an Affiliate thereof of
limited partnership interests in the Borrower representing not more than 10% of
the aggregate partnership interests in the Borrower.

      (e) Subsidiaries. The Borrower has no Subsidiaries and owns no equity
interest in any other Person.

      (f) Singe-Purpose Borrower. The Borrower has not incurred any liabilities
other than in connection with its participation in the transactions contemplated
by the Project Documents. The Borrower (i) has not engaged in any business other
than the design, development, ownership, financing, construction and operation
of the Project and (ii) has not a party to any agreement, contract or commitment
(other than (w) the agreements identified in clauses (i) through (xiv),
inclusive, (xvii) and (xviii) of the definition of the term Operating Agreements
set forth in Schedule X hereto, (x) the Financing Documents, (y) agreements,
contracts or commitments contemplated by the O&M Parameters (including those
relating to employee training, secondment of employees and vehicle rentals), the
then-current Construction Budget or the then-current Annual Budget and (z)
agreements, contracts and commitments in respect of Permitted Indebtedness)
which, individually, creates an annual financial obligation of the Borrower in
excess of $75,000 (or the equivalent in other currency) or which would cause the
aggregate annual financial obligations of the Borrower under all agreements,
contracts and commitments (other than those specified in clauses (w) through (z)
immediately above) to which the Borrower is a party to exceed $150,000 (or the
equivalent in other currency).

      (g) Financial Statements; Financial Condition; Undisclosed Liabilities;
Etc.

            (i) The statements of financial condition of the Borrower and the
      General Partner most recently furnished to Eximbank present fairly the
      financial condition of the Borrower or the General Partner, as the case
      may be, at the date of such statements of financial condition and the
      results of the operations of the Borrower or the General Partner, as the
      case may be, for such fiscal year. Such financial statements have been
      prepared in accordance with Philippine (in the case of the Borrower) and
      Cayman Islands (in the case of the General Partner) generally accepted
      accounting principles and practices consistently applied.

                                       23

      Since the date of such financial statements, no event, condition or
      circumstance (including without limitation Force Majeure as defined in
      Articles 13.1(a) and 13.1(b) of the BOT Agreement) has existed or has
      occurred which is reasonably likely to have a Material Adverse Effect.

            (ii) Except as fully reflected in the financial statements referred
      to in Section 6.01(g)(i), there are no liabilities or obligations with
      respect to the Borrower or the General Partner of any nature whatsoever
      (whether absolute, accrued, contingent or otherwise and whether or not
      due) for the period to which such financial statements relate which,
      either individually or in the aggregate, is reasonably likely to have a
      Material Adverse Effect. Neither the Borrower nor the General Partner
      knows of any reasonable basis for the assertion against the Borrower or
      the General Partner of any liability or obligation of any nature
      whatsoever for such relevant period that is not fully reflected in the
      financial statements referred to in Section 6.01(g)(i) which, either
      individually or in the aggregate, is reasonably likely to have a Material
      Adverse Effect.

      (h) Litigation; Labor Duties.

            (i) Except as disclosed in Schedule 6.01(h) hereto, there is no
      action, suit, investigation or proceeding by or before any court,
      arbitrator, administrative agency or other Governmental Authority
      (including without limitation any appeal by any Person of a Governmental
      Approval) pending or, to the best of the Borrower's knowledge, threatened
      against or affecting the Borrower or any of its properties, revenues or
      assets or the Project or the Site which has had or is reasonably likely to
      have a Material Adverse Effect. The Borrower is not in default with
      respect to any order of any court, arbitrator, administrative agency or
      other Governmental Authority. There is no injunction, writ, preliminary
      restraining order of any nature issued by an arbitrator, court or other
      Governmental Authority directing that any of the material transactions
      provided for in any of the Project Documents not be consummated as herein
      or therein provided. To the best of the Borrower's knowledge, there is no
      action, suit, investigation or proceeding by or before any court,
      arbitrator, administrative agency or other Governmental Authority
      (including without limitation any appeal by any Person of a Governmental
      Approval) pending or threatened against or affecting any party to any
      Project Document which is an Affiliate of the Borrower or any of their
      properties, revenues or assets, and the Borrower does not have knowledge
      of any such action, suit, investigation or proceeding pending or
      threatened against or affecting any other party to any Project Document or
      any of their properties, revenues or assets, in each case

                                       24

      described in this sentence which has had or is reasonably likely to have a
      Material Adverse Effect.

            (ii) There are no strikes, slowdowns or work stoppages by the
      Borrower's employees on-going or, to the knowledge of the Borrower,
      threatened which are reasonably likely to have a Material Adverse Effect.

      (i) True and Complete Disclosure. All factual information (taken as a
whole, which, for the avoidance of doubt (i) shall not include any information
by way of projections, estimates or other expressions of view as to future
circumstances provided that such projections, estimates or other expressions of
view are expressed in good faith and on the basis of reasonable assumptions and
(ii) shall be qualified by any disclaimers with respect to such factual
information provided by the Borrower to Eximbank) heretofore or
contemporaneously furnished by or on behalf of the Borrower, Ormat or any other
Affiliate of the Borrower in writing to Eximbank (including without limitation
such factual information as contained in the information Memorandum and the
Project Documents), and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of the Borrower, Ormat or any other
Affiliate of Ormat in writing to Eximbank will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such
time in light of the circumstances under which such information was provided.
There are in existence no documents or agreements which have not been disclosed
to Eximbank which are material in the context of the Project Documents or which
have the effect of varying any of the Project Documents.

      (j) Tax Returns and Payments. The Borrower has filed all tax returns
required by Applicable Law to be filed by it and has paid all income taxes
payable by it which have become due pursuant to such tax returns and all other
taxes and assessments payable by it which have become due, other than those not
yet delinquent and except for those contested in good faith and for which
adequate reserves have been established. The Borrower has paid, or has provided
adequate reserves (in the good faith judgment of the management of the Borrower)
for the payment of, all national, regional or local income taxes applicable for
all prior Fiscal Years and for the current Fiscal Year to the date hereof.

      (k) Governmental Approvals. All Governmental Approvals necessary under
Applicable Law in connection with (i) the due execution and delivery of, and
performance by the Borrower of its obligations and the exercise of its rights
under, the Project Documents in effect or required to be in effect as of each
date this representation is made or deemed made, (ii) the investment by the
Partners in the Borrower, (iii) the due execution, delivery and performance by
the General Partner on behalf of the Borrower of

                                       25

each of the Project Documents to which the Borrower is a party, (iv) the grant
by each of the Borrower, the Partners, and Ormat International of the Liens
created pursuant to the Security Documents and the Funding Agreement and the
validity, enforceability and perfection thereof and the exercise by Eximbank or
the Collateral Trustee of its rights and remedies thereunder and (v) the
construction and operation of the Project as contemplated by the Project
Documents, to be obtained by the Borrower or any Affiliate of the Borrower are,
and to be obtained by any other Person (to the best knowledge of the Borrower)
are, set forth in Schedule 5.01(t). Each of the Governmental Approvals set forth
in Part A of Schedule 5.01(t) and each other Governmental Approval obtained by
the Borrower after the date of this Agreement but on or prior to the date this
representation is made, has duly obtained or made, is validly issued, is in full
force and effect, is not the object of a currently pending appeal, is held in
the name of the Person identified in Schedule 5.01(t) and is free from any
condition or requirement compliance with which is reasonably likely to have a
Material Adverse Effect or which the Borrower does not reasonably expect to be
able to satisfy. There is no proceeding (including without limitation any appeal
by any Person) pending or, to the best knowledge of the Borrower, threatened
which is reasonably likely to result in the rescission, termination, material
modification, suspension or determination of invalidity or lack of effectiveness
of any such Governmental Approval. The information set forth in each application
and other written material submitted by the Borrower to the applicable
Governmental Authority in connection with each such Governmental Approval is
accurate and complete in all material respects. The Governmental Approvals set
forth in Part B of Schedule 5.01(t) are required solely in connection with later
stages of construction and operation of the Project. The Borrower has no reason
to believe that any Governmental Approval that has not been obtained by the
Borrower, but which will be required in the future, will not be granted to it in
due course, on or prior to the date when required and free from any condition or
requirement compliance with which is reasonably likely to have a Material
Adverse Effect or which the Borrower does not reasonably expect to be able to
satisfy. The Project, if constructed in accordance with the Construction
Contract, the Supply Contract and the other Project Documents, will conform to
and comply with all covenants, conditions, restrictions and reservations in the
Governmental Approvals and the Project Documents applicable thereto and all
Applicable Laws. The Borrower has no reason to believe that the Collateral
Trustee will not be entitled, without undue expense or delay, to the benefit of
each Governmental Approval set forth on Schedule 5.01(t) upon the exercise of
remedies under the Security Documents Eximbank has received a true and complete
copy of each Governmental Approval heretofore obtain or made by the Borrower.

      (l) Compliance with Statutes, Etc.

            (i) Each of the Borrower and, with respect to its ownership interest
      in and management of the Borrower, the General Partner is in compliance
      with all

                                       26

      Applicable Laws in respect of the conduct of its business and the
      ownership of its property (including, without limitation, Applicable Laws
      relating to environmental standards and controls and resettlements and
      Applicable Laws relating to the maintenance of debt to equity ratios).

            (ii) Without limitation to the foregoing clause (i), the Borrower's
      business and the Project are being carried out in compliance with
      applicable Republic environmental guidelines.

      (m) Environmental Matters. To the best of the Borrower's knowledge,
neither the Site nor the Power Plant (nor any other property with respect to
which the Borrower has retained or assumed liability either contractually or by
operation of the law) has been affected by any Hazardous Material in a manner
that is reasonably likely to give rise to any material liability of the Borrower
under any Environmental Law or which has had or is reasonably likely to have an
Adverse Effect.

      (n) Patents, Licenses, Franchises and Formulas. The Borrower owns or has
the right to use all the patents, trademarks, permits, service marks, trade
names, copyrights, licenses, franchises and formulas, or rights with respect
thereto, and has obtained assignments of all leases and other rights of whatever
nature, necessary for the present and proposed conduct of its business and the
carrying out of the Project in the manner contemplated by the Project Documents,
without any known conflict with the fights of others which, or the failure to
obtain which, as the case may be, is reasonably likely to result in a Material
Adverse Effect.

      (o) Submission to Law and Jurisdiction. As of the Guarantee Operative
Date, the choice of governing law for each of the respective Project Documents
in effect or required to be in effect as of the Guarantee Operative Date will be
recognized in the courts of the Republic, and those courts will recognize and
give effect to any judgment in respect of such Project Document obtained by or
against the Borrower in the courts of the jurisdictions to which the Borrower
has submitted.

      (p) Status of the Loans and the Eximbank Credit. The Lender Financing
Secured Obligations constitute, and the Eximbank Secured Obligations will
constitute, direct, unconditional, and general obligations of the Borrower and
rank senior as to priority of payment and security to all Subordinated Secured
Obligations and Affiliated Reimbursement Obligations of the Borrower and not
less than pari passu as to priority of payment to all other Indebtedness of the
Borrower. Except as permitted by Section 8.01 of this Agreement, the Borrower
has not secured or agreed to secure any such other Indebtedness by any Lien upon
any of its present or future revenues, assets or properties or upon any general
or limited partnership interests in the Borrower.

                                       27

      (q) Documents; Sufficiency of Project Documents.

            (i) Eximbank has received a complete copy of each Project Document
      in effect or required to be in effect as of each date this representation
      is made or deemed made (including all exhibits, schedules and disclosure
      letters referred to therein or delivered pursuant thereto, if any).

            (ii) To the best of the Borrower's knowledge, the services to be
      performed, the materials to be supplied and easements, licenses and other
      rights granted or to be granted to the Borrower pursuant to the terms of
      the Project Documents provide or will provide the Borrower with all rights
      and property interests required to enable the Borrower to obtain all
      services, materials or rights (including access) required for the design,
      construction, start-up, operation and maintenance of the Project,
      including the Borrower's full and prompt performance of its obligations,
      and full and timely satisfaction of all conditions precedent to the
      performance by others of their obligations, under the Project Documents,
      other than those services, materials or rights that reasonably can be
      expected to be obtainable in the ordinary course of business without
      material additional expenses or material delay.

      (r) Fees and Enforcement. Other than amounts that have been paid in full
or will have been paid in full by the Guarantee Operative Date (or, for the
purposes of Section 6.02 hereof, the Disbursement Date), no fees or taxes,
including without limitation stamp, transaction, registration or similar taxes,
are required to be paid for the legality, validity, or enforceability of this
Agreement or any of the other Project Documents in effect or required to be in
effect as of each date this representation is made or deemed made. This
Agreement and each of such Project Documents executed and delivered as of the
date this representation is made or deemed made are each in proper legal form
under the laws of the Republic, and under the respective governing laws selected
in such Project Documents, for the enforcement thereof in such jurisdiction
without any further action on the part of the Collateral Trustee or Eximbank.

      (s) Utility Availability. Arrangements reflected accurately and completely
in the Construction Budget have been made under the Construction Contract, the
Supply Contract, the BOT Agreement or otherwise on commercially reasonable terms
for the provision of all services, materials and utilities reasonably necessary
for the construction of the Project.

      (t) Availability and transfer of Foreign Currency. Except as disclosed in
Schedule 6.01(t) to this Agreement, all requisite foreign exchange control
approvals and other authorizations, if any, by the Republic or any department or
agency thereof have been duly obtained and validly issued and are in full force
and effect to assure (i) the

                                       28

ability of the Borrower to receive, and the ability of any other Person to make,
any and all payments to the Borrower contemplated by the Project Documents, (ii)
the availability of Dollars to enable the Borrower to perform all of its
obligations under the Financing Documents or any of the other Project Documents,
as the case may be, in accordance with their respective terms, and (iii) the
ability of the Borrower to convert all sums received in Peso amounts from
PNOC-EDC under the BOT Agreement and the PNOC-EDC Consent Agreement and from the
Republic under the Performance Undertaking and the Republic Consent Agreement,
including any Peso amounts representing SFRI Fees, from Pesos to Dollars,
immediately upon receipt thereof, and to use the Dollars as necessary to perform
all of its obligations under the Project Documents, in accordance with their
respective terms. None of such foreign exchange control approvals and other
authorizations are subject by its respective terms as currently in effect to
modification or revocation. Except as disclosed in Schedule 6.01(t) to this
Agreement, there are no restrictions or requirements which limit the
availability or transfer of foreign exchange, or the conversion to a foreign
exchange, for the purpose of the performance by the Borrower of its obligations
under the Financing Documents, this Agreement or under any of the other Project
Documents.

      (u) Construction Budget.

            (i) The Construction Budget as in effect on the date hereof is
      attached as Schedule 6.01(u) to this Agreement. The Construction Budget
      accurately specifies all costs and expenses incurred and, to the best of
      the Borrower's knowledge, anticipated to be incurred, prior to the latest
      date on which the Maturity Date can be expected to occur to construct and
      finance the construction of the Project in the manner contemplated by the
      Project Documents. In addition, to the best of the Borrower's knowledge,
      the amount of all costs and expenses required to be paid or incurred prior
      to the latest date on which the Maturity Date can be expected to occur to
      construct and finance the construction of the Project in the manner
      contemplated by the Project Documents does not exceed the amount reflected
      in the Construction Budget

            (ii) To the best of the Borrower's knowledge, all projections and
      budgets (including the Construction Budget and the Base Case Forecast)
      furnished or to be furnished to the Administrative Agent, the Collateral
      Trustee, the Issuing Bank, the Lenders or Eximbank by or on behalf of the
      Borrower and the summaries of significant assumptions related thereto (w)
      have been and will be prepared with due care, (x) fairly present, and will
      fairly present, the Borrower's expectations as to the matters covered
      thereby as of their date, (y) are based on, and will be based on,
      reasonable assumptions as to all factual and legal matters material to the
      estimates therein (including interest rates and costs)

                                       29

      and (z) are in all materials respects consistent with, and will be in all
      material respects consistent with, the provisions of the Project
      Documents.

      (v) Title; Liens. The Borrower has good and valid title to all of its
other properties and assets, in each case, free and clear of all Liens other
than Permitted Liens, including without limitation, on and subject to the terms
and conditions of the BOT Agreement, an unconditional and unencumbered right to
use the Site for the duration of the Cooperation Period (as defined in the BOT
Agreement). No mortgage or financing statement or other instrument or
recordation covering all or any part of the property or assets of the Borrower
is on file in any recording office, except such as relate to Liens described in
paragraphs (a) and (b) of Section 8.01 hereof.

      (w) Transactions with Affiliates. The Borrower is not a party to any
contracts or agreements with, or any other commitments to, whether or not in the
ordinary course of business, any Affiliate, which are individually valued in
excess of $50,000 or in the aggregate valued in excess of $100,000 except for
the Lender Credit Agreement, the Construction Contract, the Supply Contract, the
Funding Agreement, the Mortgage, Assignment and Pledge Agreement, the Keystone
Agreement, the Assignment and Assumption Agreement, the O&M Support Undertaking
and any other contracts, agreements or commitments that are contemplated in the
O&M Parameters (including those relating to employee training, vehicle rentals
and secondment of employees) or in the Funding Agreement.

      (x) No Additional Fees. Other than as expressly set forth in the Base Case
Forecast and the Construction Budget, the Borrower has not paid or become
obligated to pay any fee or commission to any broker, finder or intermediary for
or on account of arranging the financing of the transactions contemplated by the
Project Documents.

      (y) Regulation of Parties. None of the Borrower, its Affiliates nor any of
the Secured Parties or Eximbank is or will be, solely as a result of the
participation by such parties separately or as a group in the transactions
contemplated hereby or by any other Project Document, or as a result of the
ownership, use or operation of the Project, subject to regulation by any
Governmental Authority of the United States as a "public utility", an "electric
utility holding company", a "public utility holding company", a "holding
company", or an "electrical corporation" or a subsidiary or affiliate of any of
the foregoing under any Applicable Law of the United States (including, without
limitation, PUHCA and FPA) or by any Governmental Authority of the Republic as a
"public utility" under any Applicable Law of the Republic. So long as the owner
and operator of the Project is an "exempt wholesale generator" under Section 32
of PUHCA or a "foreign utility company" under Section 33 of PUHCA, none of the
Secured Parties will by reason of its or their ownership or operation of the
Project upon the exercise or remedies under the Security Documents be subject to
regulation by any Governmental Authority of the

                                       30

United States as a "public utility", an "electric utility", an "electric utility
holding company", a "holding company", or an "electric corporation" or a
subsidiary or affiliate of any of the foregoing under any Applicable Law of the
United States (including, without limitation, PUHCA and FPA).

      (z) Regulatory Status. The Borrower is not subject to regulation as a
"subsidiary company" of a holding company under PUHCA.

      (aa) ERISA and Employees. The Borrower does not sponsor, maintain,
administer, contribute to, participate in, or have any obligation to contribute
to or any liability under, any Plan nor since the date which is six years
immediately preceding the Guarantee Operative Date has the Borrower established,
sponsored, maintained, administered, contributed to, participated in, or had any
obligation to contribute to or liability under, any Plan. A Termination Event
has not occurred with respect to any Plan the occurrence of which has had or to
the Borrower's knowledge is reasonably likely to result in a Material Adverse
Effect. Neither the Borrower nor any ERISA Affiliate has failed to make a
required contribution or payment to a Multiemployer Plan when due, the failure
of which has had or to the Borrower's knowledge is reasonably likely to result
in a Material Adverse Effect. To the Borrower's knowledge, no accumulated
funding deficiency as defined in Section 412 of the Code has been incurred nor
has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the Borrower or any ERISA
Affiliate failed to make any contribution or to pay any amount due and owing as
required by Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan, nor has there been any event requiring disclosure under Section
404l(c)(3)(C) or Section 4063 of ERISA with respect to any Pension Plan, the
event or occurrence of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect. To the Borrower's
knowledge, the Borrower and each ERISA Affiliate has met its minimum funding
requirements under ERISA and the Code with respect to the Plans and all benefit
liabilities under each Pension Plan are being funded in accordance with
applicable legal requirements and reasonable actuarial assumptions and methods
as set forth in ERISA and the Code. To the Borrower's knowledge, no material
proceeding, claim, lawsuit and/or investigation exists or, to the best of the
Borrower's knowledge, is threatened concerning any (i) Pension Plan, or (ii)
Multiemployer Plan, the occurrence of which has had or is reasonably likely to
result in a Material Adverse Effect. Neither the Borrower nor, to the Borrower's
knowledge, any ERISA Affiliate has incurred any liability to the PBGC other than
for insurance premiums with respect to a Pension Plan, the payment of which is
not yet due.

      (bb) Investment Company Act. Neither the Borrower nor any of its
Affiliates is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.

                                       31

      Section 6.02. Representations and Warranties with Respect to the
Disbursement Date. In order to induce Eximbank to make the Eximbank Credit
available to the Borrower on the Disbursement Date, the Borrower confirms the
representations and warranties set forth in Section 6.01 as if made as of the
Disbursement Date (except where specified to be made as of a special date).

      Section 6.03. Acknowledgment. The Borrower acknowledges that it has made
the foregoing representations and warranties with the intention of persuading
Eximbank to enter into this Agreement, the Eximbank Guarantee Agreement and the
other Financing Documents to which Eximbank is a party, and that Eximbank has
entered into this Agreement, the Eximbank Guarantee Agreement and the other
Financing Documents to which Eximbank is a party on the basis of, and in full
reliance on, each of such representations and warranties. The Borrower warrants
to Eximbank that each of such representations is true and correct in all
material respects as of the date of this Agreement and that none of them omits
any matter necessary to make such representation not misleading in any material
respect. The rights and remedies of Eximbank in relation to any
misrepresentations or breach of warranty on the part of the Borrower shall not
be prejudiced by any investigation by or on behalf of Eximbank into the affairs
of the Borrower, by the execution, delivery or performance of this Agreement or
any other Financing Document or by any other act or thing which may be done by
or on behalf of Eximbank in connection with this Agreement or any other
Financing Document and which might, apart from this Section, prejudice such
rights or remedies. The representations referred to in this Section 6 shall
survive the execution and delivery of this Agreement and the making of the
Eximbank Disbursement.

      SECTION 7. AFFIRMATIVE COVENANTS

      With respect to provisions of this Section 7 so specifying, from and after
the Disbursement Date and, with respect to all remaining provisions of this
Section 7, from and after the execution and delivery of this Agreement, in each
case until the Eximbank Credit is paid in full, except as otherwise waived
pursuant to the next two succeeding sentences, the Borrower covenants and agrees
as provided in this Section 7. Provisions of this Section 7 specifying effect
from and after the Disbursement Date and provisions requiring consultations with
or the furnishing of documents or other information to Eximbank or requiring the
consent or approval of Eximbank to the taking or omission of any action may only
be waived by Eximbank and in writing. All other provisions of this Section 7 may
be waived with effect during the period prior to the Disbursement Date by the
Required Secured Parties and in writing and, thereafter, by Eximbank and in
writing.

      Section 7.01. Information Covenants. The Borrower shall furnish to shall
furnish to Eximbank:

                                       32

      (a) Quarterly Financial Statements. As soon as available but, in any
event, within ninety (90) days (or one hundred twenty (120) days in the case of
the fourth quarterly accounting period) after the close of each quarterly
accounting period in each Fiscal Year:

            (i) two copies of complete unaudited statements of financial
      condition of the Borrower and the General Partner as at the end of such
      quarterly period with related statements of income and retained earnings
      and statements of changes in financial position for such quarterly period
      and for the elapsed portion of the Fiscal Year ended with the last day of
      such quarterly period, in each case setting forth comparative figures for
      the related periods in the prior Fiscal Year, which shall be prepared in
      accordance with generally accepted accounting principles as in effect from
      time to time (A) in the case of the Borrower, in the Republic and (B) in
      the case of the General Partner, in the United States and which, in either
      case, shall otherwise be in form satisfactory to Eximbank and certified by
      the chief financial officer of the Borrower or the General Partner, as the
      case may be, subject to normal year-end audit adjustments;

            (ii) a report on any event or condition which has had or which is
      reasonably likely to have a Material Adverse Effect; and

            (iii) a statement, in form reasonably satisfactory to Eximbank, of
      all financial transactions in such Quarter between the Borrower and any
      Affiliate of the Borrower, including a certification that such
      transactions were on ordinary commercial terms negotiated on an
      arms-length basis.

      (b) Annual Financial Statement. As soon as available but, in any event,
within one hundred twenty (120) days after the close of each Fiscal Year, two
copies of the following, all prepared in accordance with generally accepted
accounting principles as in effect in the Republic from time to time and
otherwise in form satisfactory to Eximbank: (i) statements of financial
condition of the Borrower as at the end of such Fiscal Year with the related
statements of income and retained earnings and statements of changes in
financial position for such Fiscal Year, setting forth comparative figures for
the preceding Fiscal Year and certified by the Auditors, together with (if
applicable) consolidated statements and all adjustments thereto (all such
statements being in agreement with the Borrower's books of account and prepared
in accordance with Republic generally accepted accounting principles
consistently applied), (ii) a report of the Auditors (x) stating that in the
course of its regular audit of the financial statements of the Borrower, which
audit was conducted in accordance with Republic generally accepted auditing
standards, the Auditors obtained no knowledge of any Incipient Default Event or
Default Event which has occurred and is continuing or, in the opinion of the

                                       33

Auditors such an Incipient Default Event or Default Event has occurred and is
continuing, a statement as to the nature thereof and (y) certifying that, based
on said financial statements, the Borrower was in compliance with the financial
covenant contained in Section 8.18 as of the end of the relevant Fiscal Year
and, during the last fiscal quarter of such Fiscal Year, did not receive any
distributions or make any payments of principal of or interest on any
Subordinated Secured Obligations or Affiliated Reimbursement Obligations in
violation of such covenant or of the Debt Reserve Annual Coverage Ratios set
forth in priorities SIXTH, SEVENTH, EIGHTH or NINTH, as the case may be, of
Section 3.02(d)(ii) of the Disbursement Agreement or, as the case may be,
detailing any non-compliance therewith and (iii) a certificate of the chief
financial officer of the Borrower setting forth comparative figures for such
statements of financial condition and the pro forma financial projections
submitted to Eximbank in connection with the Borrower's application for credit
approval.

      (c) Other Financial Statements.

            (i) Within one hundred twenty (120) days (or, with respect to Ormat,
      one hundred fifty (150) days) of the end of each fiscal year, copies of
      the audited (or unaudited, if audited are not available) annual financial
      statements (consisting of a balance sheet and the related statements of
      income, equity and cash flows) of Ormat, Ormat International, Orleyte
      Company and Ormat Philippines certified by the respective chief financial
      officer of each such person and within ninety (90) days after the end of
      each of the first three fiscal quarters of each fiscal year, copies of the
      unaudited quarterly financial statements (consisting of a balance sheet
      and the related statements of income, equity and cash flows) of Ormat,
      Ormat International, Orleyte Company and Ormat Philippines, certified by
      the respective chief financial officer of each such person that such
      financial statements are true and correct and have been prepared in
      accordance with United States (or, in the case of Ormat, Israeli)
      generally accepted accounting principles (subject to normal year-end
      adjustments); provided, however, that the Borrower shall have no
      obligation hereunder to provide to Eximbank the financial statements of
      either Ormat or Ormat International after such entity is no longer an
      Obligor.

            (ii) Within one hundred (115) days after the close of the second
      fiscal quarter of each Fiscal Year of the Borrower, a report of the
      Auditors certifying that, as of the end of such fiscal quarter, the
      Borrower was in compliance with the financial covenant contained in
      Section 8.18 and, during such fiscal quarter, did not receive any
      distributions or make any payments of principal of or interest on any
      Subordinated Secured Obligations or Affiliated Reimbursement Obligations
      in violation of such covenant or of the Debt Reserve Annual Coverage
      Ratios set forth in priorities SIXTH, SEVENTH, EIGHTH or NINTH,

                                       34

      as the case may be, of Section 3.02(d)(ii) of the Disbursement Agreement
      or, as the case may be, detailing any non-compliance therewith.

            (iii) Within ninety (90) days after the close of each of the first
      and third fiscal quarters of each Fiscal Year of the Borrower, a
      certificate of the chief financial officer of the Borrower, accompanied by
      calculations in reasonable detail supporting the conclusions set forth
      therein, to the effect as of the end of each such fiscal quarter, the
      Borrower was in compliance with the financial covenant contained in
      Section 8.18 and, during each such fiscal quarter, did not receive any
      distributions or make any payments of principal of or interest on any
      Subordinated Secured Obligations or Affiliated Reimbursement Obligations
      in violation of such covenant or of the Debt Reserve Annual Coverage
      Ratios set forth in priorities SIXTH, SEVENTH, EIGHTH or NINTH, as the
      case may be, of Section 3.02(d)(ii) of the Disbursement Agreement or, as
      the case may be, detailing any non-compliance therewith.

            (iv) Contemporaneously with the delivery thereof to the Collateral
      Trustee, copies of each certificate requesting a distribution or payment
      of principal of or interest on any Subordinated Secured Obligations or
      Affiliated Reimbursement Obligations in accordance with priorities SIXTH,
      SEVENTH, EIGHTH or NINTH, as the case may be, of Section 3.02(d)(ii) of
      the Disbursement Agreement.

      (d) Management Letters. Promptly after the Borrower's receipt thereof, a
copy of any "management letter" or other similar communication received by the
Borrower from the Auditors in relation to the Borrower's financial, accounting
and other systems, management and accounts.

      (e) Annual Operating Budget. As soon as available but, in any event,
within sixty (60) days prior to (i) the Cooperation Period Commencement Date in
respect of the initial Plant to be completed and, thereafter, (ii) the
commencement of each Fiscal Year, an annual operating budget (the "Annual
Budget") (including budgeted statements of income and sources and uses of cash
and balance sheets) prepared by the Borrower and accompanied by a statement of
the chief financial officer of the Borrower to the effect that, the best of his
or her knowledge, the budget is a reasonable estimate for the period covered
thereby. The first Annual Budget shall cover the period from the Cooperation
Period Commencement Date through the end of the Fiscal Year in which the
Cooperation Period Commencement Date occurs, and, if such period consists of
less than six (6) months, for the immediately succeeding Fiscal Year. Each
Annual Budget shall contain complete, fair and accurate estimates (by principal
components) of Sales Proceeds, Operating and Maintenance Costs and Debt Service
for each Month covered by such Annual Budget based on the Borrower's best
projections at such time. Unless otherwise

                                       35

consented to by Eximbank, the Annual Budget from year to year shall be based on
the same format as the Base Case Forecast, including any amounts allocated for
contingencies, and be maintained on the same basis and provide sufficient detail
to permit a meaningful comparison. For each Annual Budget that is expected to
cover any period occurring after the Disbursement Date, Eximbank (in
consultation with the Independent Engineer) shall review such Annual Budget, and
Eximbank's response shall not be unreasonably delayed. If Eximbank does not
approve an Annual Budget, Eximbank shall notify the Borrower of the items which
are disapproved and the reason for such disapproval. Until such Annual Budget is
so approved, the Annual Budget most recently in effect shall continue to apply,
except that any items of the then proposed Annual Budget that have been approved
shall also be given effect. From time to time, but not more frequently than once
per Quarter, the Borrower may propose amendments to an Annual Budget, and
Eximbank (in consultation with the Independent Engineer) may reject such
proposal within thirty (30) Business Days from the date the Borrower submits
such proposal if in Eximbank's reasonable judgment such amendment is not
reasonably necessary or advisable for operation of the Project and, if no such
rejection is made, such amendments shall become effective. Not later than three
(3) Business Days after the effective date of each Annual budget and of any
amendment thereto, the Borrower shall provide a copy of the same to the
Collateral Trustee.

      (f) Officer's Certificates. At the time of the delivery of the financial
statements provided for in Section 7.01(a) and (b), a certificate of a Financial
Officer of the Borrower to the effect that, to the best of his or her knowledge,
no Incipient Default Event or Default Event has occurred and is continuing or,
if any Incipient Default Event or Default Event has occurred and is continuing,
specifying the nature and extent thereof and what action the Borrower is taking
or proposes to take in response thereto, which certificate shall (without
duplication of the Borrower's obligations under Section 7.03(c)(iii)), from and
after the Disbursement Date, set forth the calculations required to establish
whether the Borrower was in compliance with the provisions of Section 7.14, 8.03
and 8.18 and Section 3.02(d)(ii) of the Disbursement Agreement.

      (g) Notice of Default, Litigation, etc. (i) Immediately upon the Borrower
obtaining knowledge thereof, notice, by facsimile, cable or telex, of any event
which constitutes an Incipient Default Event or Default Event, specifying the
nature of such Incipient Default Event or Default Event and any steps the
Borrower is taking to remedy the same; and (ii) promptly, and in any event
within twenty (20) Business Days (or such shorter period as may be specified
below) after an officer of the Borrower or the General Partner, as the case may
be, obtains knowledge thereof:

            (A) notice of any litigation or governmental proceeding pending (x)
      against the Borrower or the General Partner (i) involving a claim in
      excess of $125,000 (or the equivalent thereof in other currency) or (ii)
      which is

                                       36

      reasonably likely to have a Material Adverse Effect or (y) with respect to
      any Project Document;

            (B) notice of any proposal by any Governmental Authority to acquire
      compulsorily the Borrower or the General Partner, any of the Collateral or
      a substantial part of the Borrower's or the General Partner's business or
      assets;

            (C) notice of any substantial dispute between the Borrower or any
      Affiliate of the Borrower and any Governmental Authority relating to the
      Project;

            (D) notice of any change in the authorized officers or directors
      referred to in Section 5.01(m) above, giving certified specimen signatures
      of any new officer or director so appointed and, if requested by Eximbank,
      satisfactory evidence of the authority of such new officer or director;

            (E) (x) as promptly as practicable and in any event not later than
      two Business Days after becoming aware thereof notice of any actual or
      proposed termination, rescission, discharge (otherwise than by
      performance) under any material provision of any Project Document (other
      than by Eximbank) and (y) as promptly as practicable and in any event not
      later than ten Business Days after becoming aware thereof notice of any
      actual or proposed amendment, waiver or indulgence under any material
      provision of any Project Document (other than by Eximbank);

            (F) copies of any material notice or correspondence received or
      initiated by the Borrower or the General Partner relating to a
      Governmental Approval or other license or authorization necessary for the
      Performance by the Borrower or the General Partner of its respective
      obligations under the Project Documents;

            (G) notice of any Lien (other than a Permitted Lien) becoming
      enforceable over any of the Borrower's assets;

            (H) notice of any proposed material change in the nature or scope of
      the Project or the business or operations of the Borrower and any one or
      more events, conditions or circumstances (including without limitation
      Force Majeure as defined in Sections 14.1(a) and 14.1(b) of the BOT
      Agreement) that exist or have occurred which are reasonably likely to have
      a Material Adverse Effect;

            (I) until the Eximbank Guarantee Agreement has terminated in
      accordance with its terms, notice of the occurrence of any event or act
      which

                                       37

      could reasonably qualify as a Political Risk (as defined in the Eximbank
      Guarantee Agreement);

            (J) notice of or (in the case of items described in the immediately
      succeeding clause (x)) copies of: (x) each funding waiver request filed
      with respect to any Pension Plan and all communications received or sent
      by the Borrower or any ERISA Affiliate with respect to such request, and
      (y) the failure of the Borrower or any ERISA Affiliate to make a required
      installment or payment under Section 412 of the Code, Section 302 of ERISA
      or the terms of any Pension Plan by the due date (other than the quarterly
      contributions described in Section 302(e) of ERISA or Section 412(m) of
      the Code);

            (K) notice of the occurrence of any Termination Event which has had
      or is reasonably likely to result in a Material Adverse Effect in
      connection with any Pension Plan or any trust thereunder, specifying the
      nature thereof, what action the Borrower or the ERISA Affiliate has taken,
      is taking or proposes to take with respect thereto and, when known, any
      action taken or threatened by the United States Internal Revenue Service,
      the United States Department of Labor or the PBGC with thereto;

            (L) copies of: (x) all notices of the PBGC's intent to terminate any
      Pension Plan or to have a trustee appointed to administer any Pension
      Plan; and (y) all notices from a Multiemployer Plan sponsor concerning the
      imposition or amount of withdrawal liability pursuant to Section 4202 of
      ERISA; or

            (M) notice of the filing of an intent to terminate any Pension Plan
      under a distress termination within the meaning of Section 4041(c) of
      ERISA; or

            (N) a copy of each agreement, commitment or understanding (whether
      or not subject to the approval of Eximbank pursuant to any other provision
      of this Agreement) executed by or on behalf of the Borrower (excluding (x)
      the agreements set forth in clauses (i) through (xiii), inclusive, (xvi),
      (xvii) and (xviii) of the definition of the term "Operating Agreements" in
      Schedule X hereto but including replacements thereof and (y) agreements,
      commitments or understandings entered into in the ordinary course of
      business which are required to perform the O&M Parameters and which (1) do
      not, individually, create a financial obligation of the Borrower in excess
      of $75,000 and (2) would not, in the aggregate, result in the expenditure
      of funds in any Fiscal Year in excess of the amount budgeted for Operating
      and Maintenance Costs (including the Contingent O&M Amount) in the
      then-current Annual Budget for such Fiscal Year) in connection with the
      Project, which notice shall specifically refer to this Section
      7.01(g)(ii)(N) and, with respect to any such agreement,

                                       38

      commitment or understanding extending by its terms beyond the Disbursement
      Date, request that Eximbank confirm (prior to the Disbursement Date, after
      consultation with the Administrative Agent) whether or not such agreement,
      commitment or understanding shall constitute an Operating Agreement, in
      which case such agreement, commitment or understanding shall only
      constitute an Operating Agreement if Eximbank shall so designate it as an
      Operating Agreement in a writing delivered to the Borrower within 60 days
      of Eximbank's receipt thereof; or

            (O) notice of the occurrence of any event of default or default
      under Section 19.1 of the Construction Contract or under the Assignment
      and Assumption Agreement.

      (h) Implementation Reports. Prior to the Project Completion Date, within
twenty-one (21) days of the end of each Month, a report, in a form satisfactory
to Eximbank, on the implementation and progress of the Project, including (i)
any factors materially and adversely affecting or which are reasonably likely to
materially and adversely affect the carrying out of the Project and (ii) copies
of any reports received by the Borrower from any outside technical consultant
identifying any matter that is or may prove to be of material adverse
significance to the operation of the Plant.

      (i) Completion Date and Operation Date Notices. The Borrower shall provide
Eximbank with not more than ten (10) or less than two (2) Business Days' prior
notice of the scheduled occurrence of the Completion Late for each Plant. The
Borrower shall provide Eximbank with not more than ten (10) or less than two (2)
Business Days' prior notice of the scheduled occurrence of (i) each Operation
Date and (ii) the date on which the Borrower expects to satisfy the conditions
precedent to Eximbank Disbursement specified in Section 5.02 hereof (other than
those conditions that may only be satisfied on and as of the Disbursement Date).
The Borrower shall provide Eximbank with notice of the Completion Date for each
Plant and the Operation Date for each Plant not more than five (5) Business Days
after the occurrence of any thereof.

      (j) Other Information. From time to time, such other information or
documents (financial or otherwise) as Eximbank may reasonably request including,
without limitation, (1) advance notice of the commencement of all performance
tests under the Construction Contract and (2) if the Completion Date for any
Plant in the BOT Agreement shall have been deemed to have occurred pursuant to
Section 5.4(h) of the BOT Agreement, information as to the circumstances giving
rise to the same, the action(s) which the Borrower (and, to the extent known by
the Borrower, PNOC-EDC) is taking or proposes to take with respect to the same
and periodic reports of the status of such actions and the implementation
thereof.

                                       39

      Section 7.02. Books, Records and Inspections; Accounting and Audit
Matters.

      (a) The Borrower will keep proper books of record and account adequate to
reflect truly and fairly the financial condition and results of operations of
the Borrower (including the progress of the Project) in which full, true and
correct entries in conformity with Philippine generally accepted accounting
principles consistently applied and all Applicable Laws shall be made of all
dealings and transactions in relation to its business and activities. The
Borrower will permit officers and designated representatives of Eximbank to
visit and inspect, under guidance of officers of the Borrower, any of the
properties of the Borrower, and to examine and make copies of the books of
record and account of the Borrower and discuss the affairs, finances and
accounts of the Borrower with, and be advised as to the same by, its and their
officers, all at such reasonable times and intervals and to such reasonable
extent as Eximbank may request.

      (b) The Borrower shall (i) authorize the Auditors (whose fees and expenses
shall be for the account of Borrower) to communicate directly with Eximbank at
reasonable intervals, but if an Incipient Default Event or a Default Event has
occurred or is continuing, then at any time, regarding the Borrower's accounts
and operations and (ii) furnish to Eximbank a copy of such authorization, which
shall be in the form of Schedule 6.2(b) to the Lender Credit Agreement;
provided, however, that Eximbank will (i) provide the Borrower with copies of
any correspondence between Eximbank and the Auditors, and (ii) provide the
Borrower with reasonable notice of any meeting between Eximbank and the
Auditors, with a description of the matters to be discussed at such meeting, and
allow the Borrower to attend any such meeting.

      (c) The Borrower will at all times cause a complete set of the current and
(when available) as-built plans (and all supplements thereto) relating to each
Plant to be maintained at such Plants or the Construction Contractor's office
for inspection by the independent Engineer and Eximbank.

      Section 7.03. Maintenance of Property, Insurance. (a) The Borrower will
(i) keep all property useful and necessary (other than property that has become
obsolete) in its business in good working order and condition and (ii) keep its
present and future properties and business insured with financially sound and
reputable insurers satisfactory to Eximbank against loss or damage in such
manner and to the same extent as required in Section A of Schedule 7.03 hereto
until the expiration of such policies and immediately thereafter as required in
Section C of Schedule 7.03 hereto, including in each case pursuant to policies
naming the Collateral Trustee as sole loss payee thereunder, permitting the
Collateral Trustee to make claims thereunder, and containing cut-through
endorsements to reinsurers, provisions requiring that the Collateral Trustee and
Eximbank shall receive notices of extensions or renewals of insurance policies
and notice

                                       40

of any non-payment of premiums and that such policy may only be canceled for
non-payment of premiums, if cancelable, upon sixty (60) days prior notice to the
Collateral Trustee and Eximbank. On or prior to the dates required pursuant to
Section A or Section C, as the case may be, of Schedule 7.03, the Borrower will
submit to Eximbank certificates of insurance relating to the insurances required
by Section A and Section C of Schedule 7.03 (together with copies of such
insurance policies if then available) from the Borrower's insurers or insurance
brokers (including confirmation of premium payments then due), which
certificates shall indicate the properties insured, amounts and risks covered,
names of the expiration dates, names of the insurers and special features of the
insurance policies. The Borrower shall provide Eximbank with copies of insurance
policies relating to the insurances required by Section A and Section C of
Schedule 7.03 hereto on or prior to the date such policies are required to be
delivered to Eximbank in accordance with such Section A or Section C, as the
case may be Prior to the Disbursement Date, the Borrower shall provide Eximbank
with copies of the insurance policies relating to the insurances required by
Section C of Schedule 7.03 hereto, such policies to be in form and substance,
and issued by companies, satisfactory to Eximbank (in consultation with the
Insurance Consultant).

      (b) The Borrower will cause the Construction Contractor and the
Construction Supplier, as applicable, to (i) keep the insurances described in
Section B of Schedule 7.03 hereto with financially sound and reputable insurers
satisfactory to, prior to the Disbursement Date, the Administrative Agent and,
thereafter, Eximbank, in each case against loss or damage in such manner and to
the same extent as so described, in each case pursuant to policies of insurance
naming the Collateral Trustee as sole loss payee thereunder, permitting the
Collateral Trustee to make claims thereunder, and containing cut-through
endorsements to reinsurers and provisions requiring that the Collateral Trustee
and Eximbank shall receive notices of any non-payment of premiums and that such
policy may only be canceled (x) as provided in Section B of Schedule 7.03 hereto
or (y) if not therein provided, for non-payment of premiums, if cancelable, upon
thirty (30) days prior written notice to the Collateral Trustee Eximbank. On or
prior to the dates required pursuant to Section B of Schedule 7.03, the Borrower
will cause the Construction Contractor or the Construction Supplier, as
applicable, to submit to Eximbank certificates of insurance relating to the
insurances required by Section B of Schedule 7.03 (together with copies of such
insurance policies if then available) from the insurers or insurance brokers for
such insurances (including confirmation of premium payments then due), which
certificates shall indicate the type of insurance, amounts and risks covered,
names of the beneficiaries, expiration dates, names of the insurers and special
features of the insurance policies. The Borrower will cause the Construction
Contractor or the Construction Supplier, as applicable, to provide Eximbank with
copies of insurance policies relating to the insurances described in Section B
of Schedule 7.03 hereto on or prior to the date such policies are required to be
delivered to Eximbank in

                                       41

accordance with such Section B of Schedule 7.03 hereto, such policies to be in
form and substance, and issued by companies, satisfactory to Eximbank in
consultation with the Insurance Consultant. The Borrower will cause the
Construction Contractor to establish the BOT Construction Performance Security
in favor of PNOC-EDC within the time required by PNOC-EDC in connection with the
BOT Agreement and will deliver evidence reasonably satisfactory to Eximbank of
PNOC-EDC's acceptance of the BOT Construction Performance Security within
fifteen (15) calendar days after the same is so established.

      (c) In the event any insurance (including the limits or deductibles
thereof) hereby required to be maintained by the Borrower or for which the
Borrower is responsible, or required to be maintained by the Construction
Supplier or the Construction Contractor or for which the Construction Supplier
or the Construction Contractor is responsible, other than insurance required by
Applicable Law to be maintained, shall not be available on commercially
reasonable terms in the commercial insurance market, the Administrative Agent,
prior to the Lender Financing Termination Date, or, thereafter, Eximbank, shall
not unreasonably withhold its consent to waive such requirement to the extent
the maintenance thereof is not so available; provided, however, that (i) the
Borrower shall first request any such waiver in writing, which request shall be
accompanied by a written report prepared by the Borrower's insurance adviser
certifying that such insurance is not reasonably available and commercially
feasible in the commercial insurance market for electric generating plants of
similar type and capacity and, with respect to catastrophic perils, located in
Southeast Asia, and (ii) the Insurance Consultant shall confirm in writing the
conclusions contained in such report. The failure at any time to satisfy the
condition to any waiver of an insurance requirement set forth in the proviso to
the preceding sentence shall not impair or be construed as a relinquishment of
the Borrower's ability to obtain a waiver of an insurance requirement pursuant
to the preceding sentence at any other time upon satisfaction of such
conditions.

      (c) The provisions of this Section 7.03 shall be deemed to be supplemental
to, but not duplicative of, the provisions of any of the Security Documents that
require the maintenance of insurance. In the event that any insurance whatsoever
is purchased, taken or otherwise obtained by the Borrower with respect to the
Project otherwise than as required hereunder or if not properly endorsed to the
Collateral Trustee as the sole loss payee or beneficiary or otherwise made upon
the terms required in this Section 7.03, without limitation to any provision of
the Mortgage, Assignment and Pledge Agreement, such insurance shall be
considered assigned hereunder to the Collateral Trustee with the right of the
Collateral Trustee to make, settle, compromise and liquidate any and all claims
thereunder, without prejudice to the exercise of any other rights and remedies
that the Collateral Trustee may have under any of the Financing Documents, or
under any Applicable Law.

                                       42

      Section 7.04. Maintenance of Existence; Privileges; Etc. The Borrower
shall, and with respect to clauses (a)(i), (a)(iii) and (b) of this Section 7.04
shall cause the General Partner to, at all times (a) preserve and maintain in
full force and effect (i) its existence as a limited partnership or a
corporation, as the case may be, in each case duly authorized, validly existing
and in good standing under the laws of the Republic or the Cayman Islands, as
the case may be (ii) its qualification to do business in each other jurisdiction
in which the character of the properties owned or leased by it or in which the
transaction of its business as conducted or proposed to be conducted makes such
qualification necessary and (iii) all of its powers, rights, privileges and
franchise necessary for the construction, ownership, maintenance and operation
of the Project and the maintenance of its existence, (b) obtain in a timely
manner and maintain in full force and effect (or where appropriate, renew) all
Governmental Approvals (including, without limitation, those under Environmental
Laws) and all other licenses, registrations, waivers, consents and approvals
required at any time in connection with the construction, maintenance, ownership
or good and orderly operation of the Project and all licenses, consents and
approvals necessary for the conversion to Dollars of all Peso amounts
(including, without limitation, Peso amounts representing SFRI Fees) payable
under the BOT Agreement, the PNOC-EDC Consent Agreement, the Performance
Undertaking and the Republic Consent Agreement and for the remission to the
United States in Dollars of any amounts paid or payable to the Secured Parties
in connection with any Financing Document or the transactions contemplated
thereby or the partnership interests of the Borrower and (c) preserve and
maintain good and marketable title to its properties and assets (it being
understood that the Borrower's rights with respect to the Site are solely as set
forth in the BOT Agreement and the Accession Undertaking) subject to no Liens
other than Permitted Liens.

      Section 7.05. Compliance with Statutes. The Borrower will comply with all
Applicable Laws in respect of the conduct of its business and the ownership,
operation and use of its property (including, without limitation, Applicable
Laws relating to environmental standards and controls and Applicable Laws
relating to the maintenance of debt to equity ratios). The Borrower will cause
the General Partner to comply with all Applicable Laws in respect of the General
Partner owning its equity interest in, and acting in its capacity as general
partner of, the Borrower.

      Section 7.06. Consultations Regarding Independent Engineer's Report. The
Borrower agrees that (i) in addition to any other consultation required
hereunder, following the end of each Month, upon the request of the
Administrative Agent or Eximbank, the Borrower shall consult with such Person
regarding any materially adverse event or condition identified by the
Independent Engineer in the reports provided by the Independent Engineer for
such Month pursuant the Representative Agreement, and (ii) in the event the
Borrower fails to hold such consultations within 30 days of such request, such
event or condition shall be deemed to have a Material Adverse Meet.

                                       43

      Section 7.07. Project Implementation; Use of Proceeds.

      (a) The Borrower shall (i) carry out the Project and conduct its business
with due diligence and efficiency and in accordance with sound engineering,
financial, and business practices and in accordance with the Annual Budget as
specified in Section 7.01(e); and (ii) use the proceeds of the Loans and the
Eximbank Credit only for the purpose set forth in Section 2.01.

      (b) Without limiting the generality of the preceding clause (a), the
Borrower will cause the construction of the Project to be prosecuted and
completed with due diligence and continuity (except for interruptions due to
events of Force Majeure (as defined in any of the BOT Agreement, the
Construction Contract and the Supply Contract), which the Borrower will use its
best efforts to mitigate), in good and workmanlike manner and in accordance with
(i) sound generally accepted budding and engineering practices, (ii) all
Governmental Approvals and Applicable Laws applicable to the Site, the Plants or
the Borrower, (iii) the Construction Contract, (iv) the Supply Contract and (v)
the Construction Budget.

      (c) Without limiting the generality of clause (a) of this Section 7.07,
from and after the Cooperation Period Commencement Date, the Borrower will
operate and maintain the Project, and retain and maintain the staff sufficient
to operate and maintain the Project, in accordance with the O&M Parameters and
will otherwise comply with and fully satisfy all of the requirements of the O&M
Parameters.

      (d) Without limiting the generality of clauses (a) and (b) of this Section
7.07, in order to avoid a deemed abandonment under Section 15.4.1(d) of the BOT
Agreement, if the conditions precedent specified in clauses (a) and (b) of
Section 13.3 of the Construction Contract have been satisfied the Borrower
shall, within ten (10) Business Days prior to the date of potential abandonment
under the BOT Agreement, exercise the right granted to it under the last
sentence of Section 13.3 of the Construction Contract and certify to PNOC-EDC
that the Power Plant (as defined in the Construction Contract) has achieved BOT
Completion in accordance with Section 6.1(a) of the BOT Agreement.

      (e) The Borrower shall provide Eximbank with notice immediately upon
becoming aware that the conditions to enforcing any of the Ormat EPC Guaranty,
the Ormat International EPC Guaranty, the Post-Completion Ormat Guaranty or the
O&M Support Undertaking have been met.

      (f) The Borrower agrees that it shall not designate an arbitrator or
engineering firm under either the Construction Contract or the Supply Contract
with respect to any disputes thereunder without obtaining the prior written
consent of the Required Secured Parties, such consent not to be unreasonably
withheld.

                                       44

      (g) Without the prior written consent of Eximbank, which approval shall
not be unreasonably withheld, the Borrower shall not direct that Geothermal
Fluid (as defined in the Construction Contract) be run through any GU (as
defined in the Construction Contract) under circumstances which would give rise
to the commencement of any of the Warranty Periods (as defined in the
Construction Contract) pursuant to clause (a) of Section 17.10 of the
Construction Contract.

      Section 7.08. Auditors. In the event that SyCip Gorres Velayo & Co. should
cease to be the Auditors of the Borrower for any reason, the Borrower shall
appoint and maintain as the Auditors another firm of independent public
accountants approved by Eximbank.

      Section 7.09. Taxes, Duties, Proper Legal Form. The Borrower will pay and
discharge all taxes, duties, fees, assessments or other governmental charges
imposed on it, on its income or profits, on any of its property, or in
connection with any such charges imposed on it with respect to any payment made
under this Agreement or the execution, issue, delivery, registration,
notarization, assignment or transfer of any interest in or for the legality,
validity, or enforceability, of any Project Document prior to the date on which
penalties attach thereto, and all claims, levies or liabilities (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which have or, if unpaid, might become a
Lien upon the property of Borrower (or any part thereof). The Borrower shall
have the right, however, to contest in good faith the validity or amount of any
such tax, assessment, governmental charge or claim by proper proceedings timely
instituted, and may permit the taxes, assessments, governmental charges or
claims so contested to remain unpaid during the period of such contest if (i)
the Borrower diligently prosecutes such contest, (ii) during the period of such
contest the enforcement of any contested item is effectively stayed, (iii) the
Borrower sets aside on its books adequate reserves with respect to the contested
items and (iv) such contest does not, in the reasonable discretion of, prior to
the Disbursement Date, the Administrative Agent and thereafter, Eximbank,
involve a material risk of the sale, forfeiture or loss of any of the
Collateral. The Borrower will promptly pay or cause to be paid any valid, final
judgment enforcing any such tax, duty, fee, assessment, other governmental
charge or claim and cause the same to be satisfied of record.

      Section 7.10. Independent Engineer; Insurance Consultant. The Borrower (i)
agrees to the Independent Engineer carrying out the role described in the
Representative Agreement, (ii) confirms and agrees to the terms of its
Acknowledgment appended to the Representative Agreement, which terms are
incorporated herein by reference as if fully set forth herein and (iii) will
ensure that the Insurance Consultant will be provided with all information
reasonably requested by the Insurance Consultant and will exercise due care to
ensure that any information which it may supply the Insurance Consultant is

                                       45

materially accurate and not, by omission of information or otherwise, misleading
in any material respect.

      Section 7.11. Performance of Obligations. The Borrower will perform all of
its obligations under the terms of each mortgage, indenture, security agreement
and other debt instrument by which it is bound and will perform (i) all of its
obligations under the terms of the Financing Documents and the BOT Agreement and
(ii) such of its obligations under the terms of the Project Documents (other
than the Financing Documents and the BOT Agreement) the non-performance of which
is reasonably likely to have a Material Adverse Effect. The Borrower will
maintain in full force and effect each of the Project Documents to which it is a
party. The Borrower will preserve, protect, defend and enforce the rights
granted to it under or in connection with the Project Documents. The Borrower
shall take all action within its control required or in the reasonable opinion
of Eximbank advisable to ensure that, unless otherwise consented to in writing
by Eximbank, each of the Project Documents is in proper legal form under the
laws of the Republic or under the respective governing laws selected in such
Project Documents, for the enforcement thereof in such jurisdictions without any
further action on the part of Eximbank or the Lenders, as the case may be.

      Section 7.12. Additional Documents; Filings and Recordings. The Borrower
shall execute, and deliver, from time to time as reasonably requested by
Eximbank or the Collateral Trustee, at the Borrower's expense, such other
documents as shall be necessary or advisable or that Eximbank or the Collateral
Trustee may reasonably request in connection with the rights and remedies of the
Secured Parties granted or provided for by the Project Documents, as applicable,
and to consummate the transactions contemplated therein. The Borrower shall, at
its own expense, take all reasonable actions that have been or shall be
requested by Eximbank or the Collateral Trustee or that the Borrower knows are
necessary to establish, maintain, protect, perfect and continue the perfection
of the first priority security interests of the Secured Parties created by the
Security Documents and shall furnish timely notice of the necessity of any such
action, together with such instruments, in execution form, and such other
information as may be required to enable Eximbank and any other appropriate
Secured Party to effect any such action. Without limiting the generality of the
foregoing, the Borrower shall (a) execute or cause to be executed and shall file
or cause to be filed such financing statements, continuation statements, fixture
filings, mortgages or deeds of trust and mortgage supplements in all places
necessary or advisable (in the opinion of counsel for Eximbank or the Collateral
Trustee) to establish, maintained perfect such security interests and in all
other places that Eximbank or the Collateral Trustee shall reasonably request
and (b) do everything necessary in the reasonable judgement of Eximbank or the
Collateral Trustee to (i) create and perfect the Security with respect to future
assets covered by the Mortgage, Assignment and Pledge Agreement, (ii) maintain
the Security in full force and effect at all times and (iii) preserve and
protect the Collateral and protect and enforce its rights and

                                       46

title and the rights and title of the Secured Parties to the Collateral. In
connection with the registration of each mortgage supplement required pursuant
to Section 5 of Part B of the Mortgage, Assignment and Security Agreement, the
Borrower shall deliver to Eximbank a certified true copy of the legal opinion
required pursuant to Section 5.01(c) of Part B of the Mortgage, Assignment and
Security Agreement.

      Section 7.13. Bank Accounts. The Borrower shall maintain all its bank
accounts with the Collateral Trustee.

      Section 7.14. Debt Reserve Cash Collateral Account. On or before the
Disbursement Date, the Debt Reserve Cash Collateral Account shall be fully
funded in an amount equal to at least $4,200,000 (if the principal of the
Eximbank Credit shall be repayable in 38 installments) and an amount equal to
the Senior Debt Service due and payable during the next succeeding six months
(if the principal of the Eximbank Credit shall be repayable in fewer than 38
installments) in addition to all amounts required to be deposited at such time
in accordance with clause "FOURTH" of 3.02(d)(ii) of the Disbursement Agreement.

      Section 7.15. Availability and Transfer of Foreign Currency. The Borrower
will ensure that all requisite foreign exchange control approvals and other
authorizations, if any, by the Republic or any department or agency thereof will
be kept current and in full force and effect to assure (i) the ability of the
Borrower to receive, and the ability of any other party to make, any and all
payments to the Borrower contemplated by the Project Documents, (ii) the
availability of Dollars to enable the Borrower to perform all of its obligations
under the Financing Documents or any of the other Project Documents, as the case
may be, in accordance with their respective terms, and (iii) (on and after the
Disbursement Date) the ability of the Borrower to convert all sums received in
Peso amounts from PNOC-EDC under the BOT Agreement and the PNOC-EDC Consent
Agreement and from the Republic under the Performance Undertaking and the
Republic Consent Agreement, including any Peso amounts representing SFRI Fees,
from Pesos to Dollars, immediately upon receipt thereof, and to use the Dollars
as necessary to perform all of its Obligations under the Project Documents, in
accordance with their respective terms.

      Section 7.16. Privatization of NAPOCOR or PNOC-EDC. The Borrower shall
promptly upon becoming aware thereof notify Eximbank of the occurrence of any
event or events that give rise to any rights or benefits to the Borrower under
Article 20 of the BOT Agreement. The Borrower agrees to consult with Eximbank
prior to requesting or accepting any assurances, or making any determinations,
in accordance with such Article 20. Any such consultation shall include, without
limitation, a reasonably detailed explanation (which shall be provided to
Eximbank in writing if so requested) of the

                                       47

economic rationale for any determination or proposed course of action made or
proposed to be made under or pursuant to such Article 20.

      Section 7.17. Spares. On or before the Disbursement Date, the Borrower
shall purchase all spare parts identified on the Acquisition List (as defined in
the Eximbank Guarantee Agreement).

                         SECTION 8. NEGATIVE COVENANTS.

      With respect to provisions of this Section 8 so specifying, from and after
the Disbursement Date and, with respect to all remaining provisions of this
Section 8, from and after the execution and delivery of this Agreement, in each
case until the Eximbank Credit is paid in full, except as otherwise waived
pursuant to the next two succeeding sentences, the Borrower covenants and agrees
as provided in this Section 8. Provisions of this Section 8 specifying effect
from and after the Disbursement Date and provisions requiring consultations with
or the furnishing of documents or other information to Eximbank or requiring the
consent or approval of Eximbank to the taking or omission of any action may only
be waived by Eximbank and in writing. All other provisions of this Section 8 may
be waived with effect during the period prior to the Disbursement Date by the
Required Secured Parties and in writing and, thereafter, by Eximbank and in
writing.

      Section 8.01. Liens. The Borrower will not, and will not agree to, create,
incur, assume or suffer to exist any Lien upon or with respect to any property
or assets (real, personal or mixed, tangible or intangible) of the Borrower,
whether now owned or hereafter acquired, provided that the provisions of this
Section 8.01 shall not prevent the creation, incurrence, assumption or existence
of, prior to the Disbursement Date, Lender Credit Permitted Liens and,
thereafter, the following Liens (each, a "Post-Completion Permitted Lien"):

      (a) any tax or other statutory Lien, provided that such lien shall be
discharged within sixty (60) days after the Borrower or the General Partner
becomes aware or reasonably should have been aware of such Lien (unless
contested in good faith by the Borrower, in which case it shall be discharged
within thirty (30) days after final adjudication, and provided that during the
period of such contest the Borrower sets aside on its books adequate reserves
with respect to the contested items);

      (b) Liens created pursuant to the Security Documents;

      (c) purchase-money Liens on any property acquired after the Operation Date
provided, however, that (i) any property subject to such purchase-money Lien is
acquired by the Borrower in the ordinary course of its business and such
purchase-money Lien attaches to such property concurrently or within ninety (90)
days after the acquisition

                                       48

thereof; (ii) the Indebtedness secured by such purchase-money Lien shall not
exceed ninety percent (90%) of the lesser of the cost or the fair market value
as of the time of the acquisition of the property covered thereby by the
Borrower; (iii) each such purchase-money Lien shall attach only to the property
so acquired and fixed improvements thereon; (iv) the Indebtedness secured by all
such purchase-money Liens shall not at any time exceed $500,000 (or an
equivalent amount in other currency); and (v) the Indebtedness secured by such
purchase-money Lien is not otherwise prohibited by the provisions of Section
8.05;

      (d) Liens on property and equipment constituting leases permitted by
Section 8.04; and

      (e) mechanics', materialmen's, carrier's and similar Liens securing
obligations incurred in the ordinary course of business which (i) are not past
due or which are the subject of a Good Faith Contest by the Borrower (unless
during the pendency of such contest or as a result thereof the Liens of the
Security Documents could reasonably be expected to be materially endangered or
any material portion of the Site, any Plant, the Power Plant or the Project
could reasonably be expected to become subject to loss or forfeiture) and (ii)
which do not in the aggregate materially detract from the value of the Site, any
Plant, the Power Plant or the Project or other assets of the Borrower or
materially impair the use thereof; provided that, upon the commencement of any
proceeding to foreclose or enforce any such Post-Completion Permitted Lien,
Eximbank or the Collateral Trustee may take such action as it reasonably deems
necessary to protect its interest in the Site, any Plant, the Power Plant or the
Project including, without limitation, payment of amounts reasonably necessary
to release any such Lien, and in such event the Borrower shall reimburse
Eximbank or the Collateral Trustee, as the case may be, upon demand for the cost
thereof together with interest thereon at a rate per annum equal to (in the case
of Eximbank) the higher of (x) the New Borrowing Rate (as defined the Section
3.02(b)) that would be applicable to ____ such amounts if such amounts paid by
Eximbank were deemed to be due from the Borrower on the date paid by Eximbank
and not paid by the Borrower when due and (y) the rate specified in Section
3.02(a) plus 1.0% or (in the case of the Collateral Trustee) the Base Rate plus
3.75%.

      Section 8.02. Consolidation, Merger, Sale of Assets, Etc. The Borrower
will not, and will not permit the General Partner to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation.
The Borrower will not (a) convey, sell, lease or otherwise dispose of (or agree
to do any of the foregoing at any future time) all or any part of its property
or assets (other than electricity and any chemical by-products produced by the
Power Plant) except in the ordinary course of business, or sales of equipment
which is uneconomic or obsolete or sales of assets that are no longer used by or
useful to the Borrower and which are promptly replaced (if applicable) by
adequate substitutes of substantially equivalent utility to the replaced assets;
or (b) purchase or

                                       49

otherwise acquire (in one or a series of related transactions) any part of the
property or assets of any Person (other than purchases or other acquisitions of
inventory or materials or capital expenditures, each in the ordinary course of
business).

      Section 8.03. Dividends; Restricted Payments. The Borrower will not
declare or pay any partnership distributions, or return any capital, to the
Partners or authorize or make any other distribution, payment or delivery of
property or cash to the Partners as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for consideration, any general or
limited partnership interests now or hereafter outstanding (or any options or
warrants issued by the Borrower with respect to any partnership interests)
(collectively, "Restricted Payments") unless:

            (i) such Restricted Payment is permitted by Applicable Law;

            (ii) no Default or Event of Default is then in existence (or would
      be in existence after giving effect to such Restricted Payment);

            (iii) such Restricted Payment is made in accordance with the
      provisions of Section 3.02(d)(ii) of the Disbursement Agreement; and

            (iv) such Restricted Payment is made only after the Disbursement
      Date.

      Section 8.04. Leases. The Borrower will not enter into any agreement or
arrangement to acquire by lease the use of any property or equipment of any
kind, except leases as contemplated by the O&M Parameters, the Construction
Budget or the Annual Budget (in each case as then in effect), or except leases
of operating equipment and premises under which the aggregate rental payments
(including, without limitation, any property taxes paid as additional rent or
lease payment) do not exceed the equivalent of $400,000 in any Fiscal Year.

      Section 8.05. Indebtedness. (i) The Borrower will not contract, create,
incur, assume or suffer to exist any Indebtedness, except for, prior to the
Disbursement Date, Lender Credit Permitted Indebtedness and, thereafter, the
following types of Indebtedness ("Post-Completion Permitted Indebtedness"):

      (a) Indebtedness of the Borrower incurred under this Agreement;

      (b) Indebtedness incurred after the Operation Date which is not in a
principal amount in excess, in the aggregate of $500,000, at any time and is
accrued expenses or current trade accounts payable incurred in the ordinary
course of business or obligations under trade letters of credit incurred by the
Borrower in the ordinary course of business,

                                       50

which are to be repaid in full not more than ninety (90) days after the date on
which such Indebtedness is originally incurred to finance the purchase of goods
by the Borrower;

      (c) Unsecured Senior Working Capital Indebtedness and Subordinated Secured
Working Capital Indebtedness incurred after the Operation Date not exceeding in
the aggregate at any one time outstanding $1,500,000, provided that (i)
Unsecured Senior Working Capital Indebtedness shall not exceed $500,000 at any
one time outstanding; (ii) any and all Subordinated Secured Working Capital
Indebtedness shall be subordinated to the payment of the Eximbank Credit in
accordance with the provisions of Schedule 8.05(c); (iii) any and all
Subordinated Working Capital Lenders shall, prior to the date on which any
Subordinated Secured Working Capital Indebtedness is incurred, become party to
the Collateral Trust Agreement and deliver to the Collateral Trustee and
Eximbank an opinion of counsel to such Subordinated Working Capital Lender
reasonably satisfactory to Eximbank to the effect that the subordination terms
set forth in Schedule 8.05(c) hereto constitute the binding obligations of such
Subordinated Working Capital Lender enforceable in accordance with their
respective terms (subject to customary qualifications); and (iv) any
Subordinated Working Capital Lender consisting of Ormat or an Affiliate of Ormat
shall (if it is not a party thereto) accede to the Mortgage, Assignment and
Pledge Agreement and pledge and deliver to the Collateral Trustee the executed
original of the Subordinated Note evidencing its Subordinated Working Capital
Loans;

      (d) Third Party Subordinated indebtedness in an outstanding principal
amount not to exceed $2,500,000 at any time; provided, however, that (i) any and
all Third Party Subordinated Indebtedness shall be subordinated to the payment
of the Eximbank Credit in accordance with the provisions of Schedule 8.05(c) and
(ii) any and all Third Party Subordinated Lenders shall, prior to the date on
which such Indebtedness is incurred, become party to the Collateral Trust
Agreement and deliver to the Collateral Trustee and Eximbank an opinion of
counsel to such Third Party Subordinated Lender reasonably satisfactory to
Eximbank to the effect that the subordination terms set forth in Schedule
8.05(c) hereto constitute the binding obligations of such Third Party
Subordinated Lender enforceable in accordance with their respective terms
(subject to customary qualifications);

      (e) Indebtedness secured by purchase money Liens incurred after the
Operation Date and otherwise permitted under Section 8.01(c);

      (f) Indebtedness constituting lease obligations permitted under Section
8.04;

      (g) Optional Subordinated Loans, Standby Subordinated Loans and Post-
Completion Standby Subordinated Loans in an aggregate outstanding principal
amount not to exceed at any time the sum of $5,000,000 plus the outstanding
principal amount of

                                       51

any Optional Subordinated Loans made by Ormat pursuant to the terms of the
Development Agreement, and which bear interest at a rate not in excess of 10%
per annum; provided, that (i) any and all Optional Subordinated Loans, Standby
Subordinated Loans and Post-Completion Standby Subordinated Loans shall be
subordinated to the payment of the Eximbank Credit in accordance with the
provisions of Schedule 8.05(c) and the Collateral Trust Agreement; (ii) all
requirements of the Collateral Trust Agreement shall have been satisfied prior
to (or contemporaneous with) the incurrence thereof; and (iii) the Person making
such Optional Subordinated Loans, Standby Subordinated Loans and Post-Completion
Standby Subordinated Loans shall (if it has not previously done so) pledge
(pursuant to an instrument substantially similar in form and scope to Part D of
the Mortgage, Assignment and Pledge Agreement) and deliver to the Collateral
Trustee the executed original of the Subordinated Note or Subordinated Notes
evidencing its Optional Subordinated Loans, Standby Subordinated Loans or
Post-Completion Standby Subordinated Loans, as the case may be;

      (h) Affiliated Reimbursement Obligations; and

            (i) Contingent Obligations permitted under Section 8.06.

            (ii) The Borrower agrees that it will not obligate itself to make
      regularly scheduled payments during the period when the Eximbank Credit is
      outstanding of or on any Permitted Indebtedness that is Indebtedness for
      Borrowed Money other than quarterly and other than on a Permitted Payment
      Date or a date occurring no earlier than eight (8) days after and no later
      than fifteen (15) days after a Permitted Payment Date.

      Section 8.06. Guarantees. Without limitation to the restrictions of
Section 8.05 hereof, from and after the Disbursement Date, the Borrower will not
enter into or have outstanding any Contingent Obligations, including without
limitation any agreement or arrangement to guarantee or, in any way or under any
condition, become obligated for all or any part of any Indebtedness or other
obligation of another Person, except that, notwithstanding the restrictions of
this Section 8.06 or Section 8.05 hereof, the Borrower may enter into (a) the
Accession Undertaking, (b) Contingent Obligations set forth in the then-current
Construction Budget or Annual Budget and identified as Contingent Obligations in
any such budget so as to permit a determination of the Borrower's compliance
with this Section 8.06, (c) an obligation, not secured by any Lien, to (i)
reimburse the BOT Operation Performance Security Issuer for amounts paid to
PNOC-EDC under the BOT Operation Performance Security, provided that such
obligation is subordinated to the prior payment in full of the Eximbank Secured
Obligations on the terms set forth in Schedule 8.05(c), or (ii) reimburse Ormat
International or one or both of the Affiliated Funding Entities for Affiliated
Reimbursement Obligations, provided that such obligation is subordinated to the
prior payment in full of the Eximbank Secured

                                       52

Obligations on the terms set forth in Schedule 8.05(c) and payment is made
solely out of funds available to the Borrower for the payment of Affiliated
Reimbursement Obligations as set forth in Section 3.02(d)(ii) of the
Disbursement Agreement, and (d) other Contingent Obligations to the extent that
the amount of all such other Contingent Obligations does not exceed, in the
aggregate, $50,000 (or the equivalent in other currency).

      Section 8.07. Subsidiaries; Advances, Investments and Loans. The Borrower
will not form or have any Subsidiaries, lend money or credit or make deposits
(other than deposits in relation to the payment for goods and equipment in the
ordinary course of business) with or advances (except as specifically required
by the Construction Contract or the Supply Contract) to any Person, or purchase
or acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any other Person, except that the Borrower may
use idle cash to acquire and hold Cash Equivalents solely to give employment to
its idle resources in accordance with the Disbursement Agreement.

      Section. 8.08. Transactions. From and after the Disbursement Date, the
Borrower will not (a) enter into or have in effect any transaction or series of
related transactions with any Person other than in the ordinary course of
business and on an arm's-length basis or (b) establish or have in effect any
sole and exclusive purchasing or sales agency, or enter into any transaction
whereby the Borrower might receive less than the full ex-works commercial price
(subject to normal trade discounts) for electricity or pay more than ex-works
commercial price for products of others, provided, however, that nothing in this
Section 8.08 shall be deemed to prohibit the execution, delivery, declaring
effective and performance by the Borrower of the BOT Agreement, the Construction
Contract, the Supply Contract, the Keystone Agreement, the O&M Support
Undertaking, the Assignment and Assumption Agreement, contracts contemplated by
the O&M Parameters (including those relating to employee training and secondment
of employees), the Funding Agreement or the Lender Credit Agreement.

      Section 8.09. Other Transactions. From and after the Disbursement Date,
the Borrower will not enter into or have in effect any partnership,
profit-sharing, or royalty agreement or other similar arrangement whereby the
Borrower's income or profits are, or might be, shared with any other Person, or
enter into or have in effect any management contract or similar arrangement
whereby its business or operations are managed by any other Person, provided,
however, that nothing in this Section 8.09 shall be deemed to prohibit the
execution, delivery, declaring effective and performance by the Borrower of the
contracts contemplated by the O&M Parameters and the Funding Agreement.

      Section 8.10. Modifications to Partnership Agreement of Borrow; Additional
Agreements; Assignments and Modifications of Agreements; Etc.

                                       53

      (a) The Borrower will not (i) amend or modify its Partnership Agreement or
other Organization Documents (ii) change its Fiscal Year or (iii) materially
change the nature of its present business.

      (b) The Borrower will not become a party to any agreement, contract or
commitment (other than (i) (w) the agreements identified in clauses (i) through
(xiv), inclusive, (xvi), (xvii) and (xviii) of the definition of the term
Operating Agreements set forth in Schedule X hereto, but not replacements
thereof, (x) the Financing Documents, (y) agreements, contacts or commitments
contemplated by the O&M Parameters (including those relating to employee
training, secondment of employees and vehicle rentals), the then-current
Construction Budget, the then-current Annual Budget or the Funding Agreement and
(z) agreements, contracts or commitments in respect of Post-Completion Permitted
Indebtedness) which, individually, creates after the Disbursement Date an annual
financial obligation of the Borrower in excess of $75,000 (or the equivalent in
other currency) or (ii) which would cause the aggregate annual financial
obligations of the Borrower after the Disbursement Date under all agreements,
contracts and commitments (other than those specified in clauses (w) through (z)
immediately above) to which the Borrower is a party to exceed $150,000 (or the
equivalent in other currency).

      (c) Except as contemplated by the Assignment and Assumption Agreement, the
Borrower shall not, directly or indirectly, terminate, cancel or suspend, or
permit or consent to any termination, cancellation or suspension of, or enter
into or consent to or permit the assignment of the rights or obligations of any
party to, any of the Project Documents; provided, however, that prior to the
Disbursement Date and without the prior written consent of the Required Secured
Parties or Eximbank the Borrower may do, permit to be done or consent to any of
the foregoing if (i) the Project Document which is the subject of the proposed
termination, cancellation, suspension or assignment is an Insurance Contract
(other than an Insurance Contract pertaining to the operation of the Power
Plant) pertaining to the construction of the Power Plant and the Administrative
Agent, after consultation with the Insurance Consultant, shall have consented
thereto or (ii) the Project Document which is the subject of the proposed
termination, cancellation, suspension or assignment is a non-material
Governmental Approval or an agreement, commitment or understanding described in
clause (xv) of the definition of the term "Operating Agreements" set forth in
Schedule X hereto and, in each case, the Administrative Agent shall have
reasonably determined that such termination, cancellation, suspension or
assignment is not reasonably likely to have a Material Adverse Effect and so
notified Eximbank. The Borrower shall not, directly or indirectly amend, modify,
supplement or waive, or permit or consent to the amendment, modification,
supplement or waiver of, or request a waiver of, any of the provisions of, or
give any consent under, any of the Project Documents (except for change orders
under the Construction Contract or the Supply Contract or Change in the Work and

                                       54

amendments, modifications, supplements or waivers that, in any such case, have
no, or could not reasonably be expected to have any, adverse effect on the
rights, benefits, obligations or duties of the Borrower existing on or arising
after the Disbursement Date, or the current or prospective operation of any of
the Plants or the value of any of the Collateral) without first obtaining the
written consent of Eximbank to such proposed or requested amendment, supplement,
waiver, or consent (provided, however, that if in any Project Document the
consent of the Borrower to an assignment by the other party thereto cannot be
unreasonably withheld, the consent of Eximbank to such an assignment shall not
be unreasonably withheld). Notwithstanding the foregoing, the Borrower shall
not, without the prior written consent of Eximbank (i) directly or indirectly,
amend, modify, supplement or waive, or permit or consent to the amendment,
modification, supplement or waiver of, (x) any provision of Article 9 of the BOT
Agreement or (y) any other provision of the BOT Agreement governing the terms
and conditions of, or the events or circumstances giving rise to the Borrower's
or PNOC-EDC's right to require, a buyout of the Power Plant (as defined in the
BOT Agreement); (ii) enter into or permit or grant any amendment or modification
of the BOT Agreement or any supplement to or waiver thereunder which is
reasonably likely to have an adverse financial impact on the Borrower
(including, without limitation, on the amounts of or timing of payments to the
Borrower under the BOT Agreement); (iii) the definitions of Guaranteed Net Plant
Steam Rate, Net Plant Steam Rate, Performance Tests, Net Deliverable Capacity
Guarantee and Reliability Guarantee, set forth in the Construction Contract; or
(iv) Exhibit E to the Construction Contract.

      (d) Other than the assignment as security of the Project Documents to the
Collateral Trustee as security for the benefit of the Secured Parties, the
Borrower will not assign (except with respect to Permitted Liens) any of its
rights or obligations under any Project Document without the prior written
consent of Eximbank.

      (e) The Borrower will not take any action under Article 9 of the BOT
Agreement to require a Buyout without the prior written consent of Eximbank.

      (f) From and after the Disbursement Date, without the prior written
consent of Eximbank, the Borrower will not refund to PNOC-EDC (but may credit to
PNOC-EDC) any amount described in the penultimate paragraph of Section 5.4 of
the BOT Agreement.

      (g) From and after the Disbursement Date, the Borrower shall not claim for
itself Force Majeure as provided in Article 14 of the BOT Agreement, Section 22
of the Construction Contract or Section 22 of the Supply Contract without the
prior written consent of Eximbank (in consultation with the Independent
Engineer).

                                       55

      (i) The Borrower shall not agree to any proposed revised testing protocols
in accordance with the final paragraph of Section 13.5 of the Construction
Contract without the prior written consent of Eximbank.

      Section 8.11. No Other Business. Without the prior written consent of
Eximbank and except as contemplated by Section 8.07 hereof, the Borrower will
not carry on any business other than in connection with the completion and
operation of the Project and will take no action whether by acquisition or
otherwise which would constitute or result in any material alteration to the
nature of that business or the nature or scope of the Project.

      Section 8.12. Abandonment. From and after the Disbursement Date, the
Borrower will not abandon or agree to abandon the Project or place it or agree
to place it on a "care and maintenance" basis for more than fourteen (14) days
in any calendar year, provided, however, that (i) nothing in this Section shall
prevent the Borrower from shut-downs necessary for repairs and maintenance at
any of the Plants or from putting any of the Plants on a "care and maintenance
basis" during any Force Majeure (as defined in the BOT Agreement) not within the
control of the Borrower which Force Majeure prevents the Borrower from
developing, constructing or operating such Plant; and (ii) nothing in this
Section 8.12 shall be deemed to waive or limit in any way the right of Eximbank
to declare an Event of Default as provided in Section 9 hereof, including
without limitation Sections 9.06 and 9.07 hereof.

      Section 8.13. Improper Use. The Borrower will not use, maintain, operate
or occupy, or allow the use, maintenance, operation or occupancy of, any portion
of the Site or any Plant for any purpose:

      (a) which may be dangerous, unless safeguarded as required by Applicable
Law (provided, however, that this clause (a) shall not be deemed to prohibit the
Borrower from carrying out the Project in accordance with the terms of the BOT
Agreement and the Construction Contract in a reasonable and prudent manner);

      (b) which violates any Applicable Law in any material respect;

      (c) which may constitute a public or private nuisance resulting in a
Material Adverse Effect;

      (d) which may make void, voidable, or cancelable, or increase the premium
of, any insurance then in force with respect to the Site or Project or any part
thereof unless, in the case of an increase in premium, the Borrower gives proof
of payment of such increase; or

                                       56

      (e) otherwise than for the intended purpose thereof in the construction,
operation and maintenance of the Plants.

      Section 8.14. Budgets. From and after the Disbursement Date the Borrower
will not make expenditures in any Fiscal Year in excess of the projected annual
Operating and Maintenance Costs (including Contingent O&M Amount) set forth in
the Annual Budget for such Fiscal Year except for:

      (a) emergency operating costs amounts funded with funds available to the
Borrower pursuant to payment of priorities SIXTH, SEVENTH, EIGHTH or NINTH of
Section 3.02(d)(ii) of the Disbursement Agreement and, to the extent that such
funds are not sufficient for such purpose: (i) proceeds of Unsecured Senior
Working Capital Indebtedness or Subordinated Secured Working Capital
Indebtedness permitted under Section 8.05; (ii) proceeds of Optional
Subordinated Loans or Third Party Subordinated Loans permitted under Section
8.05; (iii) proceeds of additional capital contributions to the Borrower; or
(iv) withdrawals from the Debt Reserve Cash Collateral Account permitted under
Section 3.03(b) of the Disbursement Agreement;

      (b) provided no Event of Default has occurred and is continuing,
expenditures not to exceed in any Fiscal Year in the aggregate $400,000 (or the
equivalent in other currency) required as a result of casualties for which the
Borrower is, in its good faith judgment, insured; provided that (A) the Borrower
promptly files a claim or claims for reimbursement under such insurance for any
such casualty, (B) the Borrower uses its best efforts to expedite payment of
such claims, and (C) the proceeds from any such insurance claims, shall be paid
into the Contingency Account; and

      (c) provided no Event of Default has occurred and is continuing,
non-budgeted payments of amounts for which the Borrower is liable to PNOC-EDC
under Article 4.11 of the BOT Agreement, not to exceed, without the consent of
the Required Secured Parties, $5,700.000.

      Section 8.15. Press Releases; Advertising. If the Borrower shall issue, or
if the Borrower shall obtain knowledge that any other Person has issued, any
press release or other announcement or advertisement that refers to the
provision of financing or other support by Eximbank for the Project, the
Borrower shall promptly notify Eximbank thereof and promptly deliver to Eximbank
a copy of such press release or other announcement or advertisement.

      Section 8.16. Employees and Employee Plan. The Borrower shall not adopt,
establish, maintain, sponsor, administer, contribute to, participate in, or
incur any liability under or obligation to contribute to, any Plan or incur any
liability to provide post-

                                       57

retirement welfare benefits, except such liability to provide post-retirement
welfare benefits as required by Applicable Law.

      Section 8.17. Name Changes; Etc. The Borrower shall not change its name
without the prior written consent of Eximbank. The Borrower shall not adopt or
change any trade name or fictitious business name without the prior written
consent of Eximbank. The Borrower shall execute and deliver to Eximbank and the
Collateral Trustee any additional documents or certificates necessary or
advisable to reflect any permitted adoption of or change in its name, trade name
or fictitious business name.

      Section 8.18. Equity Ratio. On and after the Disbursement Date, the
Borrower shall not permit the Equity Ratio at any time to be less than 25:75
(which, for the avoidance of doubt, shall be calculated in accordance with
generally accepted accounting principles as in effect in the United States from
time to time).

      Section 8.19. Payments on Subordinated Debt. Without the prior written
consent of Eximbank, the Borrower will not make any payment or delivery of
property or cash to any Person on account of any Subordinated Secured Obligation
or other subordinated debt or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for consideration, any Subordinated Secured Obligations
or other subordinated debt now or hereafter outstanding, or set aside any funds
for any of the foregoing purposes collectively, "Subordinated Debt Payments")
unless:

      (i) such Subordinated Debt Payment is permitted by Applicable Law;

      (ii) no Default or Event of Default is then in existence (or would be in
existence after giving effect to such Subordinated Debt Payment);

      (iii) such Subordinated Debt Payment is made only after the Disbursement
Date; and

      (iv) such Subordinated Debt Payment is made in accordance with the
provisions of Section 3.02(d)(ii) of the Disbursement Agreement.

      Section 8.20. Limitation on Sale or Re-Export of the Items. The Borrower
shall not, without the prior written consent of Eximbank, sell the Items or use
or permit the use of the Items in any country other than the Borrower's Country.
In no event shall the Borrower sell, use or permit the use of any Item in any
Excluded Country.

                                       58

                          SECTION 9. EVENTS OF DEFAULT

      Notwithstanding anything herein or in any of the Financing Documents or
elsewhere to the contrary, upon the occurrence of any of the following events
(each of the following events, an "Event of Default"):

      Section 9.01. Payment. The Borrower shall (a) default in the payment when
due of any principal of or interest on the Eximbank Note or any other amount
owing under this Agreement or the Eximbank Note, (b) default in the payment when
due (after giving effect to any grace periods provided in the relevant Financing
Document) of any principal of or interest on, or any other amount owing under,
any other Financing Document save for any default arising by reason of a failure
of the Collateral Trustee to make any payment where funds are available and
payable pursuant to the Disbursement Agreement to meet such payment; or

      Section 9.02. Representations, Etc. Any representation or warranty
confirmed or made in any Project Document by the Borrower or any Obligor which
is an Affiliate of the Borrower, or in any writing provided by any of the them
in connection with the execution and delivery of, or in connection with any
disbursement under any of the Lender Credit Agreement or this Agreement or for a
payment of monies from any Account by the Collateral Trustee, shall be found to
have been incorrect in any material respect when made or deemed to be made and,
if remediable, shall continue to be incorrect for a period of thirty (30) days
after note thereof shall have been given to the Borrower by Eximbank; or

      Section 9.03. Covenants. (a) The Borrower shall fail to perform or observe
any covenant, term or agreement contained in Sections 2.01 (Amount of the
Eximbank Credit; Use of Proceeds), 7.03 (Maintenance of Property; Insurance),
7.14 (Debt Reserve Cash Collateral Account), 8.01 (Liens), 8.02 (Consolidation,
Merger, Sale of Assets, Etc.), 8.03 (Dividends; Restricted Payments), 8.04
(Leases), 8.05 (Indebtedness), 8.06 (Guarantees), 8.07 (Subsidiaries; Advances,
Investments and Loans), 8.10(a), (f) and (g) (Modifications to Partnership
Agreement of Borrower; Additional Agreements; Assignments and Modifications of
Agreements; Etc.), 8.11 (No Other Business); 8.18 (Equity Ratio); Section 8.19
(Payments on Subordinated Debt); or

      (b) The Borrower or any Obligor which is an Affiliate of the Borrower
shall fail to perform or observe any other covenant, term or agreement contained
in this Agreement or any other Project Document and such failure shall not be
remediable or, if remediable, shall continue unremedied for a period of thirty
(30) days after the earlier of (i) the date on which such failure shall have
first become known to the Borrower and (ii) the date on which written notice
thereof shall have been received by the Borrower from Eximbank; provided that if
(A) such failure cannot be cured within such thirty (30)

                                       59

day period, (B) such failure in the reasonable judgment of the Independent
Engineer or Eximbank is susceptible of cure, (C) the Borrower is proceeding with
diligence and in good faith to cure such failure, (D) the existence of such
failure in the reasonable judgment of Eximbank has not had and is not reasonably
likely to have a Material Adverse Effect and (E) Eximbank shall have received an
officer's certificate signed by a Financial Officer of the Borrower to the
effect of clauses (A), (B) and (C) above, certifying that the existence of such
failure has not had and is not reasonably likely to have a Material Adverse
Effect and stating what action the Borrower is taking to cure such failure,
then, such thirty (30) day cure period shall be extended by up to an additional
sixty (60) days as shall be necessary for the Borrower diligently to cure such
failure; or

      Section 9.04. Default Under Other Agreements. (a) The Borrower shall (i)
default in any payment of any Indebtedness For Borrowed Money (other than as
provided in Section 9.01) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For Borrowed Money was
created or (ii) default (other than in the manner referred to in clause (i)) in
the observance or performance of any agreement or condition relating to any
Indebtedness For Borrowed Money (other than as provided in Section 9.01) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
such default or other event or condition is to (x) cause any such Indebtedness
For Borrowed Money to become due prior to its stated maturity or (y) if such
Indebtedness For Borrowed Money ranks pari passu in right of payment with the
Eximbank Secured Obligations, permit the Person to whom such Indebtedness For
Borrowed Money is owed to declare the same due and payable prior to the stated
maturity thereof; or

      (b) any Indebtedness For Borrowed Money of the Borrower shall be declared
to be due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof; or

      (c) any Obligor (other than PNOC-EDC, Ormat and the BOT Operation
Performance Security Issuer) shall (i) default in any payment of any
Indebtedness For Borrowed Money in an aggregate principal amount exceeding the
equivalent of $2,000,000 beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For Borrowed Money was
created or (ii) default in the observance or performance of any agreement or
condition relating to any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding the equivalent of $2,000,000 or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause any such Indebtedness For Borrowed Money to become due
prior to its stated maturity; or

                                       60

      (d) Ormat shall (i) default in any payment of any Indebtedness For
Borrowed Money in an aggregate principal amount exceeding $4,000,000 beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness For Borrowed Money was created or (ii) default in the
observance or performance of any agreement or condition relating to any
Indebtedness For Borrowed Money in an aggregate principal amount exceeding
$4,000,000 or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause any such Indebtedness
For Borrowed Money to become due prior to its stated maturity; provided,
however, that if one or more of the events described in this clause (d) shall
occur after the date on which Ormat shall cease to be an Obligor, the occurrence
of such event or events shall not be deemed an Event of Default unless, in the
reasonable judgment of the Required Secured Parties, the occurrence of such
event or events has had or is reasonably likely to have a material adverse
effect on the operations, business, condition (financial or otherwise) or
property of the Borrower; or

      (e) any indebtedness For Borrowed Money in an aggregate principal amount
exceeding the equivalent of $2,000,000 of any Obligor (other than PNOC-EDC,
Ormat and the BOT Operation Performance Security Issuer), or any Indebtedness
for Borrowed Money in an aggregate principal amount exceeding $4,000,000 of
Ormat, shall be declared to be due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment, prior to the stated maturity
thereof, and, if such Obligor is the Construction Supplier, the existence of
such Indebtedness For Borrowed Money that has been declared due and payable
prior to the stated maturity thereof, in the reasonable judgment of Eximbank,
has had or is reasonably likely to have a Material Adverse Effect; provided,
however, that if one or more of the events described in this clause (e) with
respect to the Indebtedness For Borrowed Money of Ormat or Ormat International,
as the case may be, shall occur after the date on which Ormat or Ormat
International, as the case may be, shall cease to be an Obligor, the occurrence
of such event or events shall not be deemed an Event of Default unless, in the
reasonable judgment of Eximbank, the occurrence of such Event or events has had
or is reasonably likely to have a Material Adverse Effect; or

      (f) a default shall have occurred in the performance of any material
obligation by (i) any Obligor (other than the BOT Operation Performance Security
Issuer) or the Republic under any of the Project Documents to which such Person
is a party and such default shall continue unremedied beyond the period of
grace, if any, extended to such Person with respect to such default, as
specified in the Project Document under which such obligation was created or
(ii) any other party (other than the Persons referred to in clause (i) of this
Section 9.04(f)) under any of the Project Documents and the existence of such
default in the reasonable judgment of Eximbank has had or is reasonably likely
to have a Material Adverse Effect (and has not been cured within 60 days); or

                                       61

      Section 9.05. Bankruptcy, Etc. (a) There shall have been entered against
the Borrower or any Obligor (other than the BOT Operation Performance Security
Issuer or PNOC-EDC) a decree or order by a court adjudging the Borrower or such
Obligor bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Borrower or such Obligor under any Applicable Law; or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Borrower or such Obligor or of any substantial part of its property or other
assets, or ordering the winding up or liquidation of its affairs, or the
institution by the Borrower or such Obligor of proceedings to be adjudicated
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it; or the filing by it of a petition or answer
or consent seeking reorganization or debt relief under any Applicable Law; or
the consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Borrower or any such Obligor or of any substantial part of its
property; or the making by it of an assignment for the benefit of creditors; or
the admission by it in writing of its inability to pay its debts generally as
they become due; or any other event shall have occurred which under any
Applicable Law would have an effect analogous to any of those events listed
above in this subsection with respect to the Borrower or any such Obligor; or
any corporate action is taken by the Borrower or any such Obligor for the
purpose of effecting any of the foregoing; provided that any reorganization or
reconstruction of a company while solvent with the prior consent of Eximbank
shall not be held to constitute any event mentioned in this paragraph; and
provided, further, that in connection with any Obligor, no Event of Default
shall be declared under this Section 9.05 if (x) such Person has fully complied
and continues to fully comply with all of its obligations under all Project
Documents to which such Person is a party and (y) in the reasonable judgment of
Eximbank, such Event of Default has not had and is not reasonably likely to have
a Material Adverse Effect; or

      (b) The General Partner shall convene a meeting of creditors, or shall
convene a meeting of its board of directors (or such other applicable
controlling body or persons) to determine whether to commence voluntary
bankruptcy proceedings; or

      Section 9.06. Project Events. (a) The Borrower shall cease to have the
right to possess and use all or any portion of the Site; or

      (b) any event shall have occurred which entitles the Borrower or PNOC-EDC
to give a notice under Section 9.1 of the BOT Agreement; or

      (c) the Borrower shall (except as permitted by Section 8.02 hereof) sell
or otherwise dispose of any of its interest in the Project; or

                                       62

      (d) an event or circumstance described in subclause (a), (b), (c) or (d)
of Section 15.4.1 of the BOT Agreement shall have occurred, it being understood
that for purposes of this Section 9.06(d), the words "one-hundred twenty (120)"
or "120" contained in subclauses (b) and (c) of Section 15.4.1 of the BOT
Agreement shall be replaced with the words "sixty (60)" in each place where such
words appear and the words "one hundred fifty (150)" or "150" contained in
subclause (d) of Section 15.4.1 of the BOT Agreement shall be replaced by the
words "ninety (90)" in each place where such words appear; or

      (e) an event or circumstance described in subclause (a), (b) or (c) of
Section 15.4.2 of the BOT Agreement shall have occurred, it being understood
that for purposes of this Section 9.06(e), the words "one-hundred twenty (120)"
contained in subclauses (b) and (c) of Section 15.4.2 of the BOT Agreement shall
be replaced with the words "sixty 60" in each place where such words appear; or

      (f) the Borrower shall have received notice from PNOC-EDC under Section
15.2(c) of the BOT Agreement and shall have failed to cure the underlying BOT
Agreement default giving rise to such notice within 15 days after Borrower's
receipt thereof; provided, however, that if following the receipt of such notice
and prior to Eximbank taking action pursuant to an Event of Default under this
Section 9.06(f), (i) the Borrower and PNOC-EDC shall have agreed in writing to
one or more fixed extensions of the period provided for in Section 15.2(c) of
the BOT Agreement and (ii) the Borrower shall have provided Eximbank, in the
case of each such extension, with an opinion of Philippine counsel reasonably
satisfactory to Eximbank to the effect that such extension is legal, valid,
binding and enforceable, then an Event of Default under this Section 9.06(f)
shall have occurred only if the Borrower shall have failed to cure the
underlying BOT Agreement default giving rise to such notice from PNOC-EDC on or
prior to the date falling 15 days prior to the expiry of any such extended
period; or

      Section 9.07. Material Adverse Effect. One or more events, conditions or
circumstances (including without limitation Force Majeure as defined in Sections
14.1(a) and 14.1(b) of the BOT Agreement) shall exist or shall have occurred
which, in the reasonable judgment of Eximbank is reasonably likely to have a
Material Adverse Effect; or

      Section 9.08. Project Documents; Security Document. (a) This Agreement or
any of the other Financing Documents or any of the BOT Agreement, the Supply
Contract, the Construction Contract, the Keystone Agreement or any provision
hereof or thereof (i) is or becomes invalid, illegal or unenforceable or any
party thereto (other than Eximbank or any Lender Financing Secured Party) shall
so assert, or (ii) ceases to be in full force and effect, or shall cease to give
the Secured Parties the Liens, rights, powers

                                       63

and privileges purported to be created thereby or hereby or any party thereto
(other than Eximbank or any Lender Financing Secured Party) shall so assert; or

      (b) any of the Project Documents (other than the Financing Documents or
any of the BOT Agreement, the Supply Contract, the Construction Contract or the
Keystone Agreement) or any material provision thereof (i) is or becomes invalid,
illegal or unenforceable or any party thereto (other than Eximbank or any Lender
Financing Secured Party) shall so assert, and such default shall have continued
for a period of thirty (30) days after notice thereof shall have been given to
the Borrower by Eximbank, or (ii) ceases to be in full force and effect, or
shall cease to give the Secured Parties the Liens, rights, powers and privileges
purported to be created thereby such that the interests of the Secured Parties
are adversely affected to a material extent; or

      (c) except as permitted by Section 8.01 hereof, the Security or any
component part thereof for any reason fails to constitute a valid and perfected
first priority Lien or ceases to be in full force and effect or the Borrower or
the grantor or pledgor thereof shall so assert; or

      Section 9.09. Ownership of the Borrower. (a) Orleyte Company shall cease
to be the sole general partner of the Borrower; or

      (b) Ormat shall cease to maintain Control (as defined below) of the
Borrower or Orleyte Company or, without the prior written consent of Eximbank,
one or more sales or other transfers, directly or indirectly, of any limited
partnership interest in the Borrower, shall have occurred such that, after
giving effect thereto, either (x) Ormat would own, directly or indirectly, less
than 66 2/3% of the aggregate partnership interests in the Borrower free and
clear of all Liens (other than the Liens created by the Security Documents) or
(y) Ormat and any of its Affiliates would have received, directly or indirectly,
aggregate gross proceeds on account of the sale or other transfer of limited
partnership interests of the Borrower exceeding an amount equal to 40% of the
capitalization of the Borrower as at the Disbursement Date (for purposes of this
Section 9.09, "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, including operating and maintenance decisions, whether through ownership
of voting interests, by contract, or otherwise); or

      (c) The Borrower shall, without the prior consent of Eximbank, permit or
suffer to occur any sale, assignment or transfer of any limited partnership
interest in the Borrower, or issue or have outstanding any securities
convertible into or exchangeable for limited partnership interests in the
Borrower or issue or grant or have outstanding any rights to subscribe for or to
purchase, or any options or warrants for the purchase of, or any agreements,
arrangements or understandings providing for the issuance (contingent

                                       64

or otherwise) of, or any calls, commitments or claims of any character relating
to any limited partnership interest in the Borrower; provided, however, that, if
at all times 100% of the general and limited partnership interests in the
Borrower remain subject to a Lien in favor of the Collateral Trustee pursuant to
the terms of the Mortgage, Assignment and Pledge Agreement (or any similar
security document acceptable to Eximbank) and the Collateral Trustee remains in
possession of all of the certificates evidencing partnership interests in the
Borrower together with undated transfer powers endorsed in blank, an Event of
Default shall not be deemed to have occurred under this Section 9.09(c) if (i)
at any time after the date hereof Orleyte Company sells, assigns or transfers
limited partnership interests in the Borrower representing not more than 10% of
the aggregate partnership interests in the Borrower to each of (x) Itochu
pursuant to the terms of the Itochu MOU and (y) EPDCI (or an Affiliate thereof)
on terms no less favorable to Ormat and its Affiliates than those in the Itochu
MOU and (ii) at any time from and after the Disbursement Date (A) any sale,
assignment or transfer referred to in this Section 9.09(c), (B) full dilution of
the limited partnership interests in the Borrower by the methods noted above in
this Section 9.09(c) or (C) any combination thereof would not have the effect of
reducing below 66 2/3% the aggregate direct or indirect ownership of Ormat in
the Borrower; or

      Section 9.10. Judgments. One or more judgments or decrees shall be entered
(i) against the Borrower or any Partner involving in the aggregate a liability
not paid or fully covered by insurance) of $2,000,000 or more; or (ii) prior to
the date on which Ormat shall cease to be an Obligor, against Ormat involving in
the aggregate a liability (not paid or fully covered by insurance) of $4,000,000
or (ii) prior to the date on which Ormat International shall cease to be an
Obligor, against Ormat International involving in the aggregate a liability (not
paid or fully covered by insurance) of $2,000,000 or more; or (iv) prior to the
date on which the Construction Contractor shall cease to be an Obligor, against
the Construction Contractor involving in the aggregate a liability (not paid or
fully covered by insurance) of $2,000,000 or more, which liability, in the
reasonable judgment of the Required Secured Parties, has had or is reasonably
likely to have a Material Adverse Effect; or (v) prior to the date on which the
Construction Supplier shall cease to be an Obligor, against the Construction
Supplier involving in the aggregate a liability (not paid or fully covered by
insurance) of $2,000,000 or more, which liability, in the reasonable judgment of
the Required Secured Parties, has had or is reasonably likely to have a Material
Adverse Effect; or (vi) prior to the date on which any other Obligor ceases to
be an Obligor, against such Obligor involving in the aggregate a liability (not
paid or fully discharged by insurance) of $2,000,000 or more, which liability in
the reasonable judgment of the Required Secured Parties has had or is likely to
have a Material Adverse Effect; and in any such case all such judgments or
decrees shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days after the entry thereof; or

                                       65

      Section 9.11. Governmental Action. Any government or Governmental
Authority shall have condemned, nationalized, seized, or otherwise expropriated
all or any substantial part of the property or other assets of the Borrower or
of its general or limited partnership interests or shall have assumed custody or
control of such property or other assets or of the business or operations of the
Borrower or of its general or limited partnership interests or shall have taken
any action for the dissolution or disestablishment of the Borrower or any action
that would prevent the Borrower or its officers from carrying on its business or
operations or a substantial part thereof; or

      Section 9.12. Permits. The Borrower or any Obligor shall fail to obtain,
renew, maintain or comply in all material respects with any Governmental
Approval set forth in Schedule 5.01(t) hereof or any license, approval or
consent referred to in Section 5.2(c) of the Lender Credit Agreement; or any
such Governmental Approval or license, approval or consent shall be rescinded,
terminated, suspended, modified or withheld or shall be determined to be invalid
or shall cease to be in full force and effect; or any proceeding shall be
commenced by or before any Governmental Authority for the purpose of rescinding,
terminating, suspending, modifying or withholding any such Governmental Approval
or license, approval or consent and such proceeding is not dismissed within 60
days; and such failure, rescission, determination of invalidity, termination,
suspension, modification, withholding, cessation or commencement is reasonably
likely to have a Material Adverse Effect; or

      Section 9.13. Transfer of Collateral; Event of Loss; Diminution of
Property Rights. (a) Title to or any right in all or any part of (i) the
Mortgage Collateral, (ii) any of the Plants or (iii) any other collateral
purported to be covered by the Security Documents (other than as permitted
pursuant to this Agreement, including Section 8.02 hereof) shall become vested
in any party other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of law or otherwise, or (iv)
there shall have occurred an Event of Loss; or

      (b) Except as otherwise permitted pursuant to this Agreement, the Borrower
hereafter grants any easement or dedication, files any plat, declaration or
restriction or enters into any lease or sub-lease concerning the Site or any
portion thereof, the Mortgage Collateral or any of the Plants and the effect
thereof is determined by Eximbank, in its reasonable discretion, to be material
and adverse to the Site or such portion, the Mortgage Collateral, such Plant or
Plants or the Borrower; or

      Section 9.14. Regulatory Status. The Borrower shall fail to remain
continuously exempt from all regulation under PUHCA as a result of being a
"foreign utility company" under Section 33 of PUHCA or otherwise; or

                                       66

      Section 9.15. ERISA. Any of the following events occur or exist with
respect to the Borrower or, in the case of (a) through (e) below, any ERISA
Affiliate: (a) any Termination Event with respect to any Plan; (b) any event or
circumstance that is reasonably likely to constitute grounds entitling the PBGC
to institute proceedings under Section 4042 of ERISA for the imposition of
liability in respect of any Pension Plan (other than a liability to the PBGC for
insurance premiums the payment of which is not yet due); (c) any Pension Plan
shall have an accumulated funding deficiency as defined in Section 412 of the
Code or Section 302 of ERISA; (d) any Plan intended to be qualified under
Section 401(a) or 401(k) of the Code shall be disqualified; (e) any Plan shall
be subject to an excise tax pursuant to Code Section 4980B or shall fail to
comply with Sections 601-606 (inclusive) of ERISA; (f) the Borrower provides
employee welfare benefits to retirees other than statutorily required or
pursuant to Section 601 et seq. of ERISA and Section 4980B of the Code; or (g)
the Borrower incurs liability under or relating to any Plan resulting from a
violation of ERISA, the Code and/or any other applicable law, including without
limitation the Age Discrimination in Employment Act, the Americans With
Disabilities Act and Title VII of the Civil Rights Act, each as amended; and in
each case above, such event or condition, individually or in the aggregate,
together with all other such events or conditions, if any, is reasonably likely
to subject the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which in
the aggregate has had or is reasonably likely to have a Material Adverse Effect;
or the Borrower or any ERISA Affiliate shall fail to pay when due an amount or
amounts which it shall have become liable to pay under Title IV or ERISA or as a
contribution to a Pension Plan and/or Multiemployer Plan which, as a result, has
had or is reasonably likely to have a Material Adverse Effect; or

      Section 9.16. Funding Agreement. Ormat International, Inc. shall fail to
cause the Affiliated Funding Entities to make any Post-Completion Standby
Subordinated Loan or Post-Completion Standby Equity Contribution or shall fail
to cause the Affiliated Funding Entities to pay any amount required to be paid
by either of them under, or otherwise to comply with any of the terms of, the
Funding Agreement required to be performed after the Eximbank Disbursement Date;
provided that no Event of Default under this Section 9.16 shall be declared as a
result of any such failure of the Affiliated Funding Entities to make a
Post-Completion Standby Subordinate Loan or a Post-Completion Standby Equity
Contribution if within 30 days after such failure Ormat shall have paid all such
defaulted amounts pursuant to the terms of the Post-Completion Ormat Guaranty;

then, (a) in the event that an Event of Default described in Section 9.01(a)
with respect to any amount owing to Eximbank shall occur and be continuing on or
prior to the Disbursement Date, Eximbank shall have the right to suspend
disbursement of the Eximbank Credit in accordance with Section 4.03(a), and (b)
in the event that any Event

                                       67

of Default (including any Event of Default described in Section 9.01(a) with
respect to any amount owing to Eximbank) shall occur, and at any time
thereafter, if such Event of Default is continuing on and/or after the
Disbursement Date, Eximbank shall have the right to (i) take any actions
necessary to cure such Event of Default and/or declare an Event of Default, (ii)
declare, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by Borrower, the entire amount of Borrower's
outstanding Eximbank Secured Obligations to be immediately due and payable,
irrespective of any other provision of any Financing Document, whereupon the
same shall be and become immediately due and payable (provided that if an Event
of Default specified in Section 9.05 shall have occurred or a Buyout shall have
occurred, the entire amount of Borrower's outstanding Eximbank Secured
Obligations shall be automatically immediately due and payable without any
declaration, presentment, demand, protest or notice or other act of any kind by
Eximbank or any of the other Secured Parties whatsoever), and (iii) proceed to
enforce or cause or instruct the Collateral Trustee to enforce any remedies
provided under any of the Financing Documents. If an event or occurrence
constitutes an Event of Default or Default under more than one of the provisions
of this Section 9, Eximbank may during the continuance of such Event of Default
take all actions and remedies provided hereunder upon expiration of the shortest
grace period, if any, applicable to such Default or Event of Default.

                   SECTION 10. GOVERNING LAW AND JURISDICTION

      Section 10.01. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SUCH STATE WITHOUT REGARD TO THE CONFLICT OF LAWS RULES THEREOF.

      Section 10.02. Submission to Jurisdiction; Service of Process. (a) The
Borrower irrevocably agrees that any legal action or proceeding against the
Borrower with respect to this Agreement, the Eximbank Note or any Financing
Document may be brought in the courts of the State of New York in the County of
New York or of the United States for the Southern District of New York and, by
execution and delivery of this Agreement, the Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower agrees
that a judgment, after exhaustion of all available appeals, in any such action
or proceeding shall be conclusive and binding upon the Borrower, and may be
enforced in any other jurisdiction, including without limitation the Republic,
by a suit upon such judgment, a certified copy of which shall be conclusive
evidence of the judgment. The Borrower hereby irrevocably designates, appoints
and empowers CT Corporation System, with offices on the date hereof at 1633
Broadway, New York, New

                                       68

York 10019, as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and in respect of its property, service of
any and all legal process, summons, notices and documents which may be served in
any such action or proceeding. If for any reason such designee, appointee and
agent shall cease to be available to act as such, the Borrower agrees to
designate a new designee, appointee and agent in New York City on the terms and
for the purposes of this provision satisfactory to Eximbank, advise Eximbank
thereof, and deliver to Eximbank evidence in writing of the successor agent's
acceptance of such appointment. The Borrower further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Borrower, at its address set forth opposite its
signature below, such service to become effective 30 days after such mailing.
The foregoing provisions constitute, among other things, a special arrangement
for service between the parties to this Agreement for the purposes of 28 U.S.C.
(section) 1608. Nothing herein shall affect the right of the Collateral Trustee
or Eximbank to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower in the Republic or
in any other jurisdiction.

      (b) The Borrower hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement, the Eximbank
Note or any other Financing Document brought in the courts referred to in clause
(a) above and hereby further irrevocably waives and agrees not to plead or claim
in any such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.

      Section 10.03. Waiver of Sovereign Immunity. The Borrower acknowledges and
agrees that the activities contemplated by the provisions of this Agreement, the
Eximbank Note and the Financing Documents are commercial in nature rather than
governmental or public, and therefore acknowledges and agrees that it is not
entitled to any right of immunity on the grounds of sovereignty or otherwise
with respect to such activities or in any legal action or proceeding arising out
of or relating to this Agreement, the Eximbank Note or the other Financing
Documents. The Borrower, in respect of itself, its process agents, and its
properties and revenues, expressly and irrevocably waives any such right of
immunity which may now or hereafter exist (including any immunity from any legal
process, from the jurisdiction of any court or from any execution or attachment
in aid of execution prior to judgment or otherwise) or claim thereto which may
now or hereafter exist, and agrees not to assert any such right or claim in any
such action or proceeding, whether in the United States or otherwise.

                                       69

                            SECTION 11. MISCELLANEOUS

      Section 11.01. Transportation. All items which are financed under the
Eximbank Credit and which are exported by ocean vessel must be transported from
the United States in vessels of U.S. Registry as required by 46 U.S.C.
(section)1241-1 (Public Resolution No. 17 of the 73rd Congress of the United
States, as amended), except to the extent that a waiver of this requirement is
obtained from the U.S. Maritime Administration ("MARAD"). If shipments are made
on non-U.S. vessels without a waiver or contrary to the provisions of the
waiver, the Items will not be eligible for financing under the Eximbank Credit
or for coverage under the Eximbank Guaranty Agreement.

      Section 11.02. Transportation Costs. The costs of ocean or air freight for
shipment of any item on a vessel or aircraft of non-U.S. registry pursuant to a
waiver from MARAD will constitute Foreign Cost associated with such Item if such
costs are included in the Contract Price of such Item. If such freight costs are
for shipment of an Item on a vessel or aircraft of U.S. registry, such costs
will constitute U.S. Content.

      Section 11.03. Insurance. The Borrower shall obtain insurance against
marine and transit hazards on all shipments of the Items in an amount not less
than the amount of the Disbursements made with respect to those shipments.
United States insurers shall be given a nondiscriminatory opportunity to bid for
such insurance business related to the Items. The cost of the premiums for such
insurance may be included in the U.S. content of the insured Item if the
insurance is placed in the United States with a United States company. In all
other cases, the cost of the premiums shall be included in the Foreign Cost
associated with the Item.

      Section 11.04. Disposition of Indebtedness. Eximbank may sell, transfer,
pledge, negotiate, grant participations in or otherwise dispose of all or any
part of the Borrower's indebtedness under this Agreement and the Eximbank Note
to any party, and any such party shall enjoy all the rights and privileges of
Eximbank under this Agreement and the Eximbank Note. The Borrower shall, at the
request of Eximbank, execute and deliver to Eximbank or to any party that
Eximbank may designate any such further instruments as may be necessary or
desirable to give full force and effect to the disposition by Eximbank.
Notwithstanding anything to the contrary contained herein, the Borrower may not
assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of Eximbank.

      Section 11.05. Taxes. (a) The Borrower agrees to pay all amounts owing by
it to Eximbank under this Agreement, the Eximbank Guarantee Agreement, the
Eximbank Note or any other Financing Document free and clear of and without
deduction for any Taxes. The Borrower further agrees:

                                       70

      (i) that if it is prevented by operation of law from paying any Taxes,
then the interest rate or fees required to be paid under this Agreement, the
Eximbank Guarantee Agreement, the Eximbank Note or any other Financing Document
shall increase by the amount necessary to yield to Eximbank interest, fees or
expenses in the amounts provided for in this Agreement, the Eximbank Guarantee
Agreement, the Eximbank Note or such other Financing Document after provision
for the payment of all such Taxes;

      (ii) that it shall at the request of Eximbank execute and deliver to
Eximbank such further instruments as may be necessary or desirable to effect the
increased in the interest or fees as provided for in clause (i) immediately
above, including new Eximbank Notes to be issued in exchange for any Eximbank
Note previously issued;

      (iii) that it shall hold Eximbank harmless from and against any
liabilities with respect to any such Taxes (whether or not properly or legally
asserted);

      (iv) to provide Eximbank with the original or a certified copy of evidence
of the payment of any Taxes by the Borrower as Eximbank may reasonably request,
or, if no Taxes have been paid, to provide Eximbank, at Eximbank's request, with
a certificate from the appropriate taxing authority or an opinion of counsel
acceptable to Eximbank stating that no Taxes are payable.

      (v) In the event that it is necessary for Eximbank to cooperate with the
Borrower in order for the Borrower to fulfill its obligations under this Section
11.05, Eximbank shall cooperate to the extent necessary, provided Eximbank shall
incur no expense or other liability in connection therewith.

      (b) In the event Eximbank assigns or transfers its rights, title and
interest under this Agreement to a Person which is not a Person entitled to tax
exemptions on its assets, revenues and operations substantially similar to the
tax exemptions applicable to Eximbank, then the definite n of "Taxes" applicable
to such Person for purposes of this Agreement shall be the definition of
"Covered Taxes" set forth herein.

      Section 11.06. Disclaimer. Eximbank shall not be responsible in any way
for the performance of the Purchase Contracts, and no claim against the supplier
of any Item or any other person with respect to the performance of the Purchase
Contracts will affect the obligations of the Borrower under this Agreement, the
Eximbank Note or any Financing Document.

      Section 11.07. Indemnities and Expenses. (a) The Borrower shall, whether
or not the transactions herein contemplated are consummated, pay the reasonable
fees and expenses of the Independent Enginier, the Insurance Consultant, Winston
& Strawn, special counsel to Eximbank, and Castillo Laman Tan Panteleon & San
Jose, special

                                       71

Philippine counsel to Eximbank and the law firms referred to in Sections 5.01(b)
and 5.02(b), and all reasonable costs and expenses incurred by Eximbank,
incurred in connection with (i) the preparation, printing, execution, delivery,
administration, registration (where appropriate) or enforcement of this
Agreement, the Eximbank Note, the Eximbank Guarantee Agreement and the other
Financing Documents and any other documents related thereto (including the Legal
Opinions); (ii) any amendment or modification to, preservation of rights under,
or waiver in connection with, the Financing Documents or any such other
document; and (iii) the registration (where appropriate) and the delivery of the
evidences of Indebtedness relating to the Eximbank Credit and the Disbursement
thereof.

      (b) The Borrower Shall, whether or not the transactions herein
contemplated are consummated, (i) pay and hold Eximbank harmless from and
against any and all present and future stamp and other similar taxes and
documentary or registration fees with respect to the matters referred to in the
foregoing clause (a) and save Eximbank harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to Eximbank) to pay such taxes or fees; and (ii)
indemnify Eximbank and each of its respective officers, directors, employees,
representatives, attorneys and agents from and hold each of them harmless
against any and all liabilities incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not Eximbank is a party thereto)
related to the entering into and/or performance of this Agreement, the Eximbank
Note, the Eximbank Guarantee Agreement or any other Project Document or the use
of the proceeds of the Eximbank Credit or the consummation of any transactions
contemplated herein or in any other Project Document, including, without
limitation, the reasonable fees and disbursements of counsel selected by such
indemnified party incurred in connection with any such investigation, litigation
or other proceeding or in connection with enforcing the provisions of this
Section 11.07(b) (but excluding any such liabilities, obligations or losses, to
the extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified or its officers, directors, employees,
representatives, attorneys or agents, as the case may be as determined by a
court of competent jurisdiction). Without limitation to the foregoing provisions
of this paragraph, the indemnity provided hereunder shall cover any loss,
liability or expense reasonably incurred other than by reason of gross
negligence or wilful misconduct on behalf of Eximbank arising out of or in
connection with claims by third parties (including without limitation any Lender
or the Administrative Agent) to whom a copy of the Information Memorandum has
been distributed with the knowledge of the Borrower against Eximbank relating to
any alleged inaccuracy of the factual information (taken as a whole) which, for
the avoidance of doubt shall not include any information by way of projections,
estimates or other expressions of view as to future circumstances (provided that
such projections, estimates or other expressions of view are

                                       72

expressed in good faith and on the basis of assumptions which when made were
viewed by the Borrower in good faith to be reasonable) contained in, or any
alleged omission of information which will render such aforesaid factual
information (taken as a whole) inaccurate or misleading in a material respect
from, the Information Memorandum and the Project Documents. Eximbank shall (1)
use reasonable efforts to, upon its becoming aware of any event which may result
in the Borrower being required to perform any of its indemnity obligations under
this paragraph (b), promptly notify the Borrower (provided that failure to so
notify shall not mitigate the obligations of the Borrower hereunder), (2) upon
request from the Borrower consult with the Borrower regarding any step
(including any step which may mitigate the effect of such event) it proposes to
take in respect of such event and (3) consult with the Borrower before entering
into any settlement or compromise in relation to any such claims, actions or
suits.

      (c) Without limitation to the provisions of paragraph (b) above, the
Borrower agrees to defend, protect, indemnify and hold harmless Eximbank and
each of its officers, directors, employees, representatives, attorneys and
agents from and hold each of them harmless against any and all liabilities
(including removal and remedial actions), obligation, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses and disbursements
(including reasonable attorneys' and consultants' fees and disbursements)
imposed on or asserted against any such Persons directly or indirectly based on,
or arising or resulting from, (i) the actual or alleged presence of Hazardous
Materials on, under or at any of the Plants or any portion of the Site, (ii) any
Environmental Claim relating to the Borrower or the Project or arising out of
the use of any of the Plants or any portion of the Site, or (iii) the exercise
of Eximbank's rights under any of the provisions of this Section regardless of
when any such matters arise, but excluding any matter based solely on the gross
negligence or willful misconduct of Eximbank or its officers, directors,
employees, representatives, attorneys or agents, as the case may be. Eximbank
shall (1) use reasonable efforts to, upon its becoming aware of any event which
may result in the Borrower being required to perform any of its obligations
under this paragraph (c), promptly notify the Borrower (provided that failure to
so notify shall not mitigate the obligations of the Borrower hereunder), (2)
upon request from the Borrower consult with the Borrower regarding any step
(including any step which may mitigate the effect of such event) it proposes to
take in respect of such event and (3) consult with the Borrower before entering
into any settlement or compromise in relation to any such claims, actions or
suits.

      (d) To the extent that the undertaking in the preceding paragraphs of this
Section may be unenforceable because it is violative of any law or public
policy, the Borrower will contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of such
undertakings.

                                       73

      (e) All sums paid and costs incurred by Eximbank with respect to any
matter indemnified hereunder shall bear interest at the default rate applicable
to the Eximbank Credit from the date so paid or incurred until reimbursed by the
Borrower, and all such sums and costs shall be added to the debt and be secured
by the Security Documents and shall be immediately due and payable on demand.

      Section 11.08. Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, Eximbank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by Eximbank to or for the credit or the account of the
Borrower against and on account of the Eximbank Secured Obligations and
liabilities of the Borrower to Eximbank under this Agreement or under any of the
other Financing Documents, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Financing Document,
irrespective of whether or not Eximbank shall have made any demand with respect
thereto.

      Section 11.09. Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, except that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of Eximbank.

      Section 11.10. No Waiver; Remedies Cumulative. No failure or delay on the
part of Eximbank in exercising any right, power or privilege hereunder or under
any other Financing Document and no course of dealing between the Borrower and
Eximbank shall impair any such right, power or privilege or operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Financing Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Financing Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which Eximbank would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Eximbank to any other or further action in any
circumstances without notice or demand.

      Section 11.11. Severability. Any provision of this Agreement, the Eximbank
Note and any other Financing Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability but that shall not invalidate the remaining
provisions of this

                                       74

Agreement, the Eximbank Note or any Financing Document or affect such provision
in any other jurisdiction.

      Section 11.12. English Language. All documents to be furnished or
communications to be given or made under this Agreement or any other Financing
Document shall be in the English language.

      Section 11.13. Calculations; Computations. All financial calculations to
be made under, or for the purposes of, this Agreement shall be determined in
accordance with Philippine generally accepted accounting principles, applied on
a consistent basis and, except as otherwise required to conform to the
definitions contained in Schedule X or any other provisions of this Agreement,
shall be calculated from the then most recently issued quarterly financial
statements which the Borrower is obligated to furnish to Eximbank from time to
time, as provided hereunder; provided, however, that (a) if the relevant
quarterly financial statements should be in respect of the last quarter of a
Fiscal Year then, at the option of Eximbank, such calculations may instead be
made from the audited financial statements for the relevant Fiscal Year, and (b)
if there should occur any material adverse change in the financial condition or
results of operations of the Borrower after the end of the period covered by the
relevant financial statements, then such material adverse change shall also be
taken into account in calculating the relevant figures.

      Section 11.14. Survival. All indemnities set forth herein shall survive
the execution and delivery of this Agreement and the Eximbank Note, the
execution, delivery and termination of the Eximbank Guarantee Agreement, and the
making and repayment of the Eximbank Credit.

      Section 11.15. Amendments. No term or provision of this Agreement may be
amended, changed, modified or waived except by an instrument in writing signed
by the party against whom such amendment, change, modification or waiver is
sought to be enforced.

      Section 11.16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

      Section. 11.17. Notices. Except as otherwise expressly provided herein,
(a) all notices and other communications provided for hereunder shall be
provided in writing (including telegraphic, telex, facsimile or cable
communication) and shall be sent by telecopy, telex, telegraph or cable with the
original of such communication dispatched by (if inland) overnight or (if
overseas) international courier and, if such courier service is not available,
by registered airmail (or, if inland, registered first-class mail) with

                                       75

postage prepaid to the Borrower, the Collateral Trustee and Eximbank at their
respective addresses specified below, or at such other address as shall be
designated by such party in a written notice to the other parties hereto and (b)
all such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective seven (7) days
after being deposited in the mails in the manner as aforesaid, when delivered to
the telegraph company or cable company (if inland), one (1) day or (if overseas)
three (3) days after delivery to a courier in the manner as aforesaid, as the
case may be, or when sent by telex (with the correct answer back) or telecopier:

      Addresses:

      If to the Borrower:

      ORMAT LEYTE CO. LTD.
      Solid Bank Building
      8th Floor
      777 Paseo de Roxas
      Makati City  1200
      Philippines
      Attn: President
      Tel: 011-632-812-5631
      Fax: 011-632-812-5638

      and with copies to:

      ORMAT INTERNATIONAL, INC.

      980 Greg Street
      Sparks, Nevada  89431
      Attn: President
      Tel: (702) 356-9029
      Fax: (702) 356-9039

      with a copy of any notice relating to a dispute to:

      Robert E. Giles
      Perkins Coie
      1201 Third Avenue
      40th Floor
      Seattle, WA  98101-3099
      Tel: (206) 583-8536
      Fax: (206) 583-8500

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      If to Eximbank:

      EXPORT-IMPORT BANK OF THE UNITED STATES
      811 Vermont Avenue, N.W.
      Washington, D.C.  20571
      U.S.A.
      Attn:  Vice President-
             Project Finance (AP069721-Philippines)
      Tel: (202) 565-3690
      Fax: (202) 565-3695
      Telex: RCA 248460 EXBK UR
             TRT 197681 EXIM UT
             WUI 64319 EXIBANK
             WUT 89461 EXIBANK WSH

      with a copy of each notice to:

      Winston & Strawn
      1400 L Street, N.W.
      Suite 800
      Washington, D.C.  20005
      Attn: Administrative Partner
            (U.S. Eximbank -- Leyte Field Project)
      Tel: (202) 371-5971
      Fax: (202) 371-5950

      Section 11.18. Judgment Currency. All payments of principal, interest,
fees or other amounts due to Eximbank under this Agreement, the Eximbank Note or
any other Financing Document shall be made in Dollars, regardless of any law,
rule, regulation or statute, whether now or hereafter in existence or in effect
in any jurisdiction, which affects or purports to affect such obligations. The
obligation of the Borrower in respect of any amount due under this Agreement,
the Eximbank Note or any other Financing Document, notwithstanding any payment
in any other currency (whether pursuant to a judgment or otherwise), shall be
discharged only to the extent of the amount in Dollars that the Person entitled
to receive that payment may, in accordance with normal banking procedures,
purchase with the sum paid in that other currency (after any premium and costs
of exchange) on the Business Day immediately succeeding the day on which that
Person receives that payment. If the amount in Dollars that may be so purchased
for any reason falls short of the amount originally due, the Borrower shall pay
such additional amounts, in Dollars, to compensate for the shortfall. Any
obligation of the Borrower not discharged by that payment shall continue to be
due as a separate and

                                       77

independent obligation and shall accrue interest in accordance with Section 3.02
until discharged as provided herein.

      Section 11.19. Headings Descriptive. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.

      Section 11.20. Prior Agreements Superseded. This Agreement, the Eximbank
Guarantee Agreement, the Eximbank Note and the other Financing Documents to
which the Borrower is a party shall completely and fully supersede all prior
understandings or agreements, both written and oral, among the parties hereto
regarding the Eximbank Credit and the Eximbank Guarantee Agreement.

      Section 11.21. No Recourse. Except as provided in the last sentence of and
the proviso to the penultimate sentence of this Section 11.21, neither any
Partner, the Construction Supplier or the Construction Contractor nor their
respective shareholders or Affiliates (other than the Borrower), nor its or
their respective officers, directors, stockholders, controlling persons or
employees (each, a "Non-Recourse Party"), shall have any personal liability for
any amounts payable by the Borrower hereunder or under the Eximbank Note or any
other Project Document or for the performance of any covenant, agreement or
obligation of the Borrower, or for the breach of any representation, warranty or
covenant of the Borrower under this Agreement, the Eximbank Note or any other
Project Document, agreement, undertaking, certificate or other document
delivered by or on behalf of the Borrower in connection with this Agreement, and
therefore no judgment or recourse shall be sought or enforced against any
Non-Recourse Party for the payment or performance of the obligations of the
Borrower under any Project Document or any other such agreement, undertaking,
certificate or document executed by the Borrower. Except as provided in the last
sentence of this Section 11.21, it is expressly understood that all obligations
and liabilities of the Borrower under this Agreement, the Eximbank Note and the
other Project Documents to which the Borrower is a party and any other related
document, agreement or instrument executed by the Borrower are solely
obligations of the Borrower, provided, that such limitation of liability shall
not apply to a Non-Recourse Party if and to the extent that such Non-Recourse
Party commits fraud or misappropriation of earnings, revenues, profits or
proceeds from the Borrower or the Project. Notwithstanding anything herein to
the contrary, nothing herein shall limit, or be construed or deemed to limit,
the liability of any Non-Recourse Party under any Project Document to which such
Non-Recourse Party is in its individual capacity a party.

      IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed and delivered in the United States as of the date
set forth below.

                                       78

ORMAT LEYTE CO. LTD.                         EXPORT-IMPORT BANK OF THE
                                                UNITED STATES

By ORLEYTE COMPANY
      its General Partner

     By /s/ Patrick Francois                     By /s/ Indecipherable
        ----------------------------                ----------------------------
              (Signature)                                    (Signature)

     Name Patrick Francois                       Name
         ---------------------------                 ---------------------------
                (Print)                                        (Print)

     Title Vice President                        Title
          --------------------------                  --------------------------
                (Print)                                        (Print)

Date of Execution:  May 13, 1996

Eximbank Credit No. AP069721 Philippines

                                                                      SCHEDULE X

          1. Defined Terms. As used in any Financing Document (as defined
below), the following terms shall have the following meanings, except to the
extent otherwise defined in such Financing Document:

          "Accession Undertaking" shall mean the Accession Undertaking dated as
of February 15, 1996 among PNOC-EDC, Ormat Inc. and the Borrower.

          "Account" and "Accounts" shall mean, individually and collectively,
the Dollar Disbursement Account, the Dollar Project Control Account, the Service
Fee Account, the Philippines Peso Account, the Debt Reserve Cash Collateral
Account, the Default Subordinated Debt and Equity Proceeds Account and the
Contingency Account. For the avoidance of doubt, the terms "Account" and
"Accounts" shall not be deemed to refer to the Dollar Operating Cost Account,
the Blocked Account, the Administrative Agent Account or the Issuing Bank
Account.

          "Acquisition List" shall have the meaning specified in the Eximbank
Guarantee Agreement.

          "Administrative Agent" shall mean ING Bank, acting in its capacity as
administrative agent for the Lenders and the Issuing Bank, and its successors
(by merger, consolidation or otherwise) and permitted assigns acting in such
capacity.

          "Administrative Agent Account" shall mean the account of the
Administrative Agent (account number _______________) at ING Bank, P.O. Box
1800, HE 02.09, 1000 BV Amsterdam, the Netherlands, or such other account as the
Administrative Agent may designate in writing as such to the Lenders and the
Borrower.

          "Administrative Agent-Related Persons" shall mean ING Bank and any
successor administrative agent arising under Section 8.9 of the Lender Credit
Agreement, together with their respective Affiliates and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.

          "Advising Bank" shall mean The Chase Manhattan Bank, N.A., acting in
its capacity as advising bank of the Letters of Credit, and its successors and
permitted assigns acting in such capacity.

          "Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
that Person. As used in this definition of "Affiliate," the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract, or otherwise.

          "Affiliated Funding Collateral" shall have the meaning specified in
Section 2(j)(iii) of the Funding Agreement.

          "Affiliated Funding Entities" shall mean, collectively, Orleyte
Company and Ormat Philippines.

          "Affiliated Funding Letters of Credit" shall mean, collectively, the
Required Letter of Credit and the Standby Letter of Credit.

          "Affiliated Reimbursement Obligations" shall mean the obligations of
the Borrower to reimburse one or both of the Affiliated Funding Entities to the
extent such Person made funds available to reimburse the BOT Operation
Performance Security Issuer for payments under the BOT Operation Performance
Security.

          "Affiliated Subordinated Debt Service" shall mean, for any period, an
amount equal to the aggregate of principal and interest actually due on the
Affiliated Subordinated Loans during such period (whether by scheduled payment,
maturity, acceleration or otherwise).

          "Affiliated Subordinated Loans" shall mean, collectively, the Required
Subordinated Loans and any and all Standby Subordinated Loans, Post-Completion
Standby Subordinated Loans and Optional Subordinated Loans.

          "Affiliated Subordinated Obligations" shall mean the principal of and
interest on the Affiliated Subordinated Loans payable by the Borrower in
accordance with the Funding Agreement and the Subordinated Notes.

                                        2

          "Amsterdam Business Day" shall mean (i) any day that is not a
Saturday, a Sunday or a day on which commercial banks in Amsterdam are required
or authorized to be closed and (ii) when used in any respect relating to LIBOR,
any day described in clause (i) of this definition that is also a day on which
dealings may be carried out in the London inter-bank market.

          "Annual Budget" shall have the meaning specified in each of Section
6.1(e) of the Lender Credit Agreement and Section 7.01(e) of the Eximbank Credit
Agreement.

          "Applicable Law" shall mean any statute, law, regulation, ordinance,
rule, judgment, rule of common law, order, decree, Governmental Approval,
approval, concession, grant, franchise, license, agreement, directive,
guideline, policy, requirement, or other governmental restriction or any similar
form of decision of, or determination by, or any interpretation or
administration of any of the foregoing by, any Governmental Authority, whether
in effect as of the date of the Lender Credit Agreement or the Eximbank Credit
Agreement or thereafter and in each case as amended (including, without
limitation, any thereof pertaining to land use or zoning restrictions).

          "Applicable Percentage" shall mean, with respect to any Lender, a
fraction (expressed as a percentage) the numerator of which shall be the amount
of such Lender's Commitment and the denominator of which shall be an amount
equal to the Total Commitment.

          "Application for Funding" means a written application to the
Administrative Agent in the form of Schedule 2.2(a) of the Lender Credit
Agreement.

          "Approved Drawing Amount" shall mean, at any time, the aggregate
amount approved to be drawn under the Letter of Credit as set forth in any L/C
Notice issued by the Issuing Bank and in effect at such time. For purposes of
this definition only, an L/C Notice shall be deemed to be in effect for the
period commencing on the date it is issued pursuant to Section 3.4 of the Lender
Credit Agreement and ending on the Payment Date set forth therein.

          "Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement, dated as of April

                                        3

30, 1996, among the Borrower, Orda 6, Inc. and Ormat Philippines.

          "Assignment Collateral" shall have the meaning specified in Section
2.01(a) of Part C of the Mortgage, Assignment and Pledge Agreement.

          "Assignment Revenues" shall have the meaning specified in Section
2.01(a) of Part C of the Mortgage, Assignment and Pledge Agreement.

          "Attorney Costs" shall mean and include all reasonable fees and
disbursements of any law firm or other external counsel.

          "Auditors" shall mean SyCip, Gorres Velayo & Co. or such other firm of
independent public accountants as the Borrower may, with the consent of each of
the Required Lenders and Eximbank, from time to time appoint as auditors of the
Borrower.

          "Authority to Construct" shall mean the authority to construct
relating to the Project and required to be issued by the Department of
Environment and Natural Resources of the Republic, Environmental Quality
Division.

          "Availability Period" shall mean the period beginning on the Credit
Date and ending on (but excluding) the Maturity Date, subject to any extension
thereof which may be agreed to in writing among the Borrower, the Administrative
Agent, the Issuing Bank, the Lenders and Eximbank and to any termination thereof
pursuant to the provisions of the Lender Credit Agreement (including, without
limitation, any termination pursuant to Section 2.12 or Article 7 of the Lender
Credit Agreement).

          "Bank Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, withholdings, duties, fees, commissions or other charges,
of whatsoever nature, and all liabilities paid with respect thereto imposed by
any Governmental Authority or taxing or monetary authority thereof, other than
any tax imposed on or measured by the net income or capital of a Lender pursuant
to the laws of the jurisdiction of its place of incorporation or in which the
principal office or the office from which such Lender books its Loans is
located.

                                        4

          "Base Case Forecast" shall mean financial projections relating to the
operation of the Project, certified by a Financial Officer of the Borrower as
having been prepared in good faith and based on assumptions which the Borrower
considers to be reasonable, which assumptions shall be reasonably acceptable to
the Administrative Agent, Eximbank and the Independent Engineer.

          "Base Rate" shall mean, for any day, the rate of interest in effect
for such day as Bank Hapoalim B.M.'s base commercial lending rate for Dollar
denominated loans. (The base commercial lending rate is a rate set by Bank
Hapoalim B.M. based upon various factors including Bank Hapoalim B.M.'s costs
and desired return, general economic conditions and other factors.)

          "Blocked Account" shall mean the account of the Borrower (account
number ___________) at Collateral Trustee, or such other account as the
Administrative Agent may designate in writing to Eximbank, designated in the
Request for Disbursement to Borrower's Account delivered to the Administrative
Agent pursuant to Section 5.1(p) of the Lender Credit Agreement and with respect
to which the Borrower has issued irrevocable payment instructions pursuant to
Section 6.30(d) of the Lender Credit Agreement.

          "Board of Governors" shall mean the Board of Governors of the Federal
Reserve System or any successor thereto.

          "Board of Investments Approval" shall mean Certificate of Registration
No. 90-802 issued to PNOC-EDC by the Board of Investments of the Republic and
transferred to the Borrower, as amended and supplemented through May 13, 1996.

          "Borrower" shall mean Ormat Leyte Co. Ltd., a limited partnership
organized under the laws of the Republic.

          "Borrower Comp1etion Certificate" shall have the meaning provided in
the definition of Project Completion Date in this Schedule X.

          "BOT Agreement" shall mean the agreement entitled "Leyte Optimization
Project - BOT Agreement" dated August 4, 1995 entered into between Ormat Inc.
and PNOC-EDC, as assigned to the Borrower pursuant to the Accession

                                        5

Undertaking, and as amended by (i) the First Amendment to Leyte Optimization
Project BOT Agreement dated as of February 29, 1996 between PNOC-EDC and the
Borrower and (ii) the Second Amendment to Leyte Optimization Project BOT
Agreement dated as of April 1, 1996 between PNOC-EDC and the Borrower.

          "BOT Completion" shall have the meaning specified in Section 1.1 of
the Construction Contract.

          "BOT Completion Date" shall have the meaning specified in Section 1.1
of the Construction Contract.

          "BOT Construction Performance Security" shall mean the Construction
Performance Security described in Section 3.1 of the BOT Agreement.

          "BOT Construction Performance Security Issuer" shall mean the issuer
of the BOT Construction Performance Security.

          "BOT Operation Performance Security" shall mean the Operation
Performance Security described in Section 3.1 of the BOT Agreement.

          "BOT Operation Performance Security Issuer" shall mean the issuer of
the BOT Operation Performance Security.

          "Budget Category" means each of the eight (8) numbered categories set
forth in the Construction Budget as in effect on the Credit Date.

          "Business Day" shall mean (A) prior to the Lender Financing
Termination Date, (i) any day that is not a Saturday, a Sunday or a day on which
commercial banks in Amsterdam, New York or Tel Aviv are required or authorized
to be closed and (ii) when used in any respect relating to LIBOR, any day
described in clause (i) of this definition that is also a day on which dealings
may be carried out in the London inter-bank market and (B) after the Lender
Financing Termination Date, a New York Business Day.

          "Buyout" shall mean a buyout by PNOC-EDC of all of the Borrower's
right, title and interest in and to the Power Plant under Article 9 of the BOT
Agreement.

                                        6

          "Cash Equivalents" shall mean, as to any Person and subject to the
penultimate sentence of this definition, any of the following:

               (i) with respect to Dollars, (A) securities issued or directly
     and fully guaranteed or insured by the United States or any agency or
     instrumentality thereof (provided that the full faith and credit of the
     United States is pledged in support thereof) having maturities of not more
     than six months from the date of acquisition by such Person; (B) time
     deposits and certificates of deposit, with maturities of not more than six
     months from the date of acquisition by such Person, of any international
     commercial bank of recognized standing having capital and surplus in excess
     of $500,000,000 and having a rating on its commercial paper of at least A-l
     or the equivalent thereof by S&P or at least P-l or the equivalent thereof
     by Moody's; (C) commercial paper issued by any Person, which commercial
     paper is rated at least A-1 or the equivalent thereof by S&P or at least
     P-l or the equivalent thereof by Moody's and in each case maturing not more
     than six months after the date of acquisition by such Person; (D)
     investments in money market funds substantially all the assets of which are
     comprised of securities of the types described in clauses (A) and (B)
     above; (E) United States Securities and Exchange Commission registered
     money market mutual funds conforming to Rule 2a-7 of the Investment Company
     Act of 1940 in effect in the United States, that invest primarily in direct
     obligations issued by the United States Treasury and repurchase obligations
     backed by those obligations, and rated in the highest category by S&P and
     Moody's; (F) foreign currency deposit units in the Philippines which earn
     U.S. Dollar returns offered by commercial banks referred to in (B) above;
     and (G) any other Dollar investment which the Required Secured Parties
     agree in writing shall constitute a Dollar-denominated Cash Equivalent; and

               (ii) with respect to Pesos, (A) securities issued or directly and
     fully guaranteed or insured by the Republic or any agency or
     instrumentality thereof (provided that the full faith and credit of the
     Republic is pledged in support thereof); (B) time deposits and certificates
     of deposit of Philippine commercial banks with expanded commercial banking
     authority and

                                        7

     Philippine branches of foreign banks both of which to be approved by the
     Required Secured Parties at the time; (C) commercial paper issued by any
     Person, which commercial paper is rated at least A or CIB2 by the Credit
     Information Bureau Inc.; and (D) any other Peso investment which the
     Required Secured Parties agree in writing shall constitute a
     Peso-denominated Cash Equivalent.

          "Cash Receipts" shall mean the Borrower's revenues or income actually
received pursuant to the terms of the Project Documents or otherwise (other than
amounts required to be deposited in the Contingency Account), and including,
without limitation, (i) interest and other income earned and credited on the
amounts in the Dollar Project Control Account, (ii) Sales Proceeds and (iii)
amounts, if any, received by the Borrower under any and all interest rate swap
or cap agreements or currency swap agreements between the Borrower and any of
the Lender Financing Secured Parties (or any of their Affiliates).

          "Central Bank" shall mean the Bangko ___________ Pilipinas or any
Governmental Authority of the Republic which succeeds to the functions thereof.

          "Change in the Work" shall mean each of (i) a Change in the Work under
and as defined in the Construction Contract and (ii) a Change in the Work under
and as defined in the Supply Contract.

          "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute and all rules and regulations
promulgated thereunder.

          "Collateral" shall mean the Affiliated Funding Collateral, the
Assignment Collateral, the Mortgage Collateral and the Pledged Collateral.

          "Collateral Trust Agreement" shall mean the Collateral Trust
Agreement, dated as of May 13, 1996, among the Borrower, the Lenders, the
Issuing Bank, the Administrative Agent, the Affiliated Funding Entities, the
Collateral Trustee, and Eximbank.

          "Collateral Trustee" shall mean The Chase Manhattan Bank, N.A., acting
in its capacity as collateral trustee under the Collateral Trust Agreement, and
its successors (by

                                        8

merger, consolidation or otherwise) and permitted assigns in such capacity.

          "Collateral Proceeds" shall mean all monies due and to become due to
the Collateral Trustee for the benefit of the Secured Parties from the
Collateral and shall include, without limitation, all accounts, contract rights,
all rights and benefits whatsoever accruing to it under the Collateral and
including without limitation, all rights to, and rights to collect, proceeds due
in connection with the enforcement of the Collateral and the right to amend,
cancel, terminate and/or supplement the Collateral and all proceeds thereof as
defined in the Uniform Commercial Code of the State of New York.

          "Commitment" shall mean, for each Lender, the product of (i) the
percentage set forth opposite such Lender's name under the heading "%
Commitment" in Schedule I to the Lender Credit Agreement and (ii) $45,417,500,
as the same may be adjusted from time to time pursuant to the terms of the
Lender Credit Agreement.

          "Commitment Commission" shall have the meaning ascribed to such term
in Section 2.7(a) of the Lender Credit Agreement.

          "Consent Agreement" shall mean each of: (i) the PNOC-EDC Consent
Agreement; (ii) the Republic Consent Agreement; (iii) the Construction
Contractor Consent; (iv) the Construction Supplier Consent; (v) an
acknowledgment and consent agreement by Ormat substantially in the form of
Exhibit C to the Lender Credit Agreement and (vi) an acknowledgment and consent
agreement by Ormat International, Inc. substantially in the form of Exhibit D to
the Lender Credit Agreement.

          "Construction Budget" shall mean a budget, prepared by the Borrower,
certified by a Financial Officer of the Borrower and verified by the Independent
Engineer, of costs and expenses incurred or to be incurred by the Borrower prior
to the latest date on which the Maturity Date can be expected to occur to
construct and finance the construction of the Project in the manner contemplated
by the Project Documents.

          "Construction Contract" shall mean the Construction Contract, dated as
of April 30, 1996, between the Borrower and Orda 6, Inc. (which contract has
been assigned to Ormat

                                        9

Philippines pursuant to the Assignment and Assumption Agreement) as supplemented
and amended by the Keystone Agreement.

          "Construction Contractor" shall mean Ormat Philippines as
"Contractor", under and pursuant to the Assignment and Assumption Agreement and
the Construction Contract; provided, that "Construction Contractor" shall mean
Orda 6, Inc. as "Contractor" under and as defined in the Construction Contract
at any time that Orda 6, Inc. shall be obligated to perform the obligations of
the "Contractor" thereunder pursuant to Section 30 of the Construction
Contract.

          "Construction Contractor Consent" shall mean an acknowledgment and
consent agreement between Ormat Philippines and the Borrower and acknowledged by
the Collateral Trustee substantially in the form of Exhibit H to the Lender
Credit Agreement.

          "Construction Supplier" shall mean Orda 6, Inc., as "Supplier" under
and as defined in the Supply Contract.

          "Construction Supplier Consent" shall mean an acknowledgment and
consent agreement between Orda 6, Inc. and the Borrower and acknowledged by the
Collateral Trustee substantially in the form of Exhibit I to the Lender Credit
Agreement.

          "Consumer Price Index" shall mean the Consumer Price Index (all items)
for the United States, as published from time to time by the United States
Department of Labor Bureau of Labor Statistics; provided that if such Consumer
Price Index as published from time to time is unavailable, the Consumer Price
Index shall mean an index, selected by the Borrower with the consent of the
Administrative Agent, in substance substituted therefor.

          "Contingency Account" shall have the meaning specified in Section 3.05
of the Disbursement Agreement.

          "Contingency Costs" shall mean, collectively, (i) for any item or
category identified in the Construction Budget, an amount equal to the excess of
(A) the actual cost of such item or category to the Borrower over (B) the cost
of such item or category set forth in the Construction Budget and (ii) for any
cost incurred by the Borrower prior to the

                                       10

Maturity Date to construct and finance the construction of the Project which is
not accounted for in the Construction Budget, the actual amount of such cost
incurred by the Borrower.

          "Contingent O&M Amount" shall mean, at any time, the amount specified
(which amount shall not exceed 10% of the amount otherwise budgeted for
Operating and Maintenance Costs in the then-current Annual Budget), as a
separate line-item, in the then-current Annual Budget (approved in accordance
with each of Section 6.1(e) of the Lender Credit Agreement and Section 7.01(e)
of the Eximbank Credit Agreement) for Contingent Operating and Maintenance
Costs.

          "Contingent Obligation" shall mean, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings or payments;
(c) to purchase any materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other related document
or obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered, or (d) in respect of any Swap Contract.
The amount of any Contingent Obligation shall, in the case of Guaranty
Obligations, be deemed equal to the stated or determinable amount of the primary
obligation in

                                       11

respect of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof,
and in the case of other Contingent Obligations, shall be equal to the maximum
reasonably anticipated liability in respect thereof.

          "Contract Price" shall have the meaning set forth in the Eximbank
Utilization Procedures.

          "Control" shall have the meaning provided in Section 7.9 of the Lender
Credit Agreement and Section 9.09 of the Eximbank Credit Agreement.

          "Cooperation Period Commencement Date" shall mean the date on which
the Cooperation Period (as defined in the BOT Agreement) commences.

          "Credit Commitment Fee" shall have the meaning specified in Section
1.01 of the Eximbank Guarantee Agreement.

          "Credit Date" shall have the meaning specified in Section 5.1 of the
Lender Credit Agreement.

          "Credit Exposure Fee" shall have the meaning specified in the Eximbank
Credit Agreement.

          "Cross-Over Date" shall mean the date fifteen (15) days following the
first date on which the Senior Secured Principal Amount Outstanding, plus
accrued interest thereon and any liability of the Borrower for withholding taxes
with respect thereto equals or exceeds the Remaining Funding Amount less
$500,000.

          "Date Certain" shall mean June 15, 1998; provided that, (i) if on or
before such date, the Completion Date (as defined in the BOT Agreement) shall
have actually occurred pursuant to Section 6.1 of the BOT Agreement or have been
deemed to have occurred pursuant to Section 5.4(h) of the BOT Agreement or (ii)
if on June 15, 1998, Force Majeure (as defined in the BOT Agreement, the
Construction Contract or the Supply Contract) or a default by PNOC-EDC under the
BOT Agreement shall exist or shall have existed prior to June 15, 1998 for an
aggregate period in excess of 15 days, the Date Certain shall be extended for an
additional period terminating on March 15, 1999.

                                       12

          "Debt Reserve Annual Coverage Ratio" shall mean at any time the ratio,
calculated in accordance with generally accepted accounting principles in the
United States as of the date of this Agreement, of

          (i) the excess (if any) of

               (A)  the aggregate Cash Receipts received by the Borrower during
                    the period of four consecutive Quarters ending on or the
                    four consecutive Quarters most recently ended prior to such
                    date (other than (x) Pesos to be deposited into the
                    Philippines Peso Account pursuant to Section 3.02 (e) of the
                    Disbursement Agreement and (y) Pesos to be deposited in the
                    Service Fee Account pursuant to Section 3.02(c) thereof to
                    the extent not converted to Dollars and transferred to the
                    Dollar Project Control Account) over

               (B)  the sum of Operating and Maintenance Costs (other than
                    Peso-denominated Operating and Maintenance Costs) for such
                    period plus any amounts payable by the Borrower pursuant to
                    Section 12.8 of the Supply Contract (or any interest
                    thereon) during such period plus any casualty losses
                    incurred in excess of insurance proceeds received for such
                    period plus (without duplication) any payments made by the
                    Borrower during such period to PNOC-EDC under the BOT
                    Agreement (other than out of proceeds of any equity
                    contribution by the Affiliated Funding Entities or Optional
                    Subordinated Loans or loans giving rise to Affiliated
                    Reimbursement Obligations)

          to (ii) Senior Debt Service for such period.

          "Debt Reserve Cash Collateral Account" shall have the meaning
specified in Section 3.03 (a) of the Disbursement Agreement.

                                       13

          "Debt Service" shall mean, for any period, an amount equal to the sum
of all Senior Debt Service and Subordinated Debt Service for such period.

          "Deemed Completion BOT Completion Date" shall have the meaning
specified in Section 13.4 of the Construction Contract.

          "Default Equity Contributions" shall have the meaning specified in
Section 2(b)(iii) of the Funding Agreement.

          "Default Event" shall mean, (i) until the Lender Financing Termination
Date, the occurrence and continuance of a Lender Credit Event of Default and
(ii) from and after the Lender Financing Termination Date, the occurrence and
continuance of an Event of Default as defined in the Eximbank Credit Agreement.

          "Default Subordinated Debt and Equity Proceeds Account" shall have the
meaning specified in Section 3.04 of the Disbursement Agreement.

          "Default Subordinated Loans" shall have the meaning specified in
Section 2(b)(iii) of the Funding Agreement.

          "Defaulted Amount" shall mean the principal amount of any Loan or
portion thereof which any Lender, in default of its funding obligations under
the Lender Credit Agreement, fails to make available as required by the Lender
Credit Agreement.

          "Development Agreement" shall mean the Development Agreement dated as
of May 13, 1996 between the Borrower and Ormat.

          "Development Fee" shall mean the fee payable by the Borrower to Ormat
under the Development Agreement.

          "Disbursement Agreement" shall mean the Disbursement Agreement, dated
as of May 13, 1996, between the Borrower and the Collateral Trustee.

          "Dollar Disbursement Account" shall have the meaning specified in
Section 3.01 of the Disbursement Agreement.

                                       14

          "Dollar Operating Cost Account" shall have the meaning specified in
Section 3.02(b) of the Disbursement Agreement.

          "Dollar Project Control Account" shall have the meaning specified in
Section 3.02(a) of the Disbursement Agreement.

          "Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.

          "Drawing Approval" shall have the meaning specified in Section 2.2 of
the Lender Credit Agreement.

          "Effective Date" shall have the meaning specified in Section 9.13 of
the Lender Credit Agreement.

          "Emergency Operating Costs Amount" shall have the meaning specified in
Section 3.03(d) of the Disbursement Agreement.

          "Emergency Operating Costs Certificate" shall have the meaning
specified in Section 3.03(b) of the Disbursement Agreement.

          "Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law or any Governmental Approval issued under any
such Environmental Law (hereinafter "Claims"), including without limitation (i)
any and all Claims by any Governmental Authority for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.

          "Environmental Compliance Certificate" shall mean the Environmental
Compliance Certificate dated May 20, 1993, issued to the Philippine National Oil
Company by the Department of Environment and Natural Resources of the Republic.

                                       15

          "Environmental Law" shall mean any Applicable Law relating to the
environment, health, safety or Hazardous Materials.

          "EPDCI" shall mean EPDCI, a Japanese entity.

          "Equity Ratio" at any time shall mean the ratio of (i) net worth of
the Borrower at such time plus the aggregate principal amount then outstanding
of Affiliated Subordinated Loans to (ii) all Indebtedness of the Borrower at
such time, other than the aggregate amount then outstanding of all Affiliated
Subordinated Loans. The Equity Ratio shall be determined in accordance with
United States generally accepted accounting principles. For the avoidance of
doubt, the amount of the Development Fee (if any) paid to Ormat shall not at any
time be deducted from the amount specified in clause (i) of this definition.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.

          "ERISA Affiliate" shall mean (i) a corporation which is a member of a
controlled group of corporations with the Borrower within the meaning of Section
414(b) of the Code, (ii) a trade or business (including a sole proprietorship,
partnership, trust, estate or corporation) which is under common control with
the Borrower within the meaning of Section 414(c) of the Code or Section
4001(b)(l) of ERISA, (iii) a member of an affiliated service group with the
Borrower within the meaning of Section 414(m) of the Code or (iv) an entity
described in Section 414(o) of the Code.

          "Eurocurrency Liabilities" shall have the meaning set forth in
Regulation D of the Board of Governors, as in effect from time to time.

          "Event of Loss" shall mean any of the following events: (i) loss of
all or substantially all of any Plant or the use thereof due to destruction,
damage beyond economical repair or rendition of any Plant permanently unfit for
normal use for any reason whatsoever (other than if it is merely not
economically feasible to maintain, use or operate), (ii) anything which results
in an insurance settlement with respect to any Plant on the basis of a total
loss or constructive total loss and (iii) the condemnation or taking

                                       16

or requisition of title or use for an indefinite period or a period in excess of
four (4) months, by any Governmental Authority which constitutes the taking of
all or substantially all of any Plant.

          "Excluded Country" shall mean each country or nation with which
Eximbank is prohibited by applicable law or stated policy of the United States
from doing business, including, without limitation, each country or nation which
is subject to restrictions imposed by or under the Export-Import Bank Act of
1954, as amended, the Foreign Assistance Act of 1961, as amended, the Trade Act
of 1974, as amended, the Foreign Operations, Export Financing and Related
Programs Appropriations Act (as enacted, from time to time), the Iraq Sanctions
Act of 1990, applicable Executive Orders and applicable United Nations Security
Council Resolutions and other similar laws, regulations, restrictions, orders
and resolutions.

          "Eximbank" shall mean the Export-Import Bank of the United States, an
agency of the United States.

          "Eximbank Certificates" shall have the meaning specified in the
Eximbank Utilization Procedures.

          "Eximbank Completion Notice" shall have the meaning specified in the
definition of Project Completion Date in this Schedule X.

          "Eximbank Credit" shall have the meaning specified in the second
"WHEREAS" clause of the Eximbank Credit Agreement.

          "Eximbank Credit Agreement" shall mean the Credit Agreement, dated as
of May 13, 1996, between Eximbank and the Borrower.

          "Eximbank Debt Service" shall mean, for any period, an amount equal to
the aggregate of (i) principal and interest actually due (whether by scheduled
payment, maturity, acceleration or otherwise) on the Eximbank Credit or the
Loans (to the extent any interest in any Loans has been assigned to Eximbank
pursuant to the Eximbank Guarantee Agreement or otherwise) and (ii) any other
amounts (including, without limitation, indemnities, Guarantee Commitment Fee,
Credit Exposure Fee, Guarantee Exposure Fee, Extended Cover Commitment Fee,
Extended Cover Exposure Fee

                                       17

and fees payable to the Collateral Trustee pursuant to the Collateral Trust
Agreement) which the Borrower is obligated to pay during such period (whether by
scheduled payment, acceleration or otherwise) to Eximbank or the Collateral
Trustee pursuant to any of the Financing Documents (excluding payments to the
Accounts).

          "Eximbank Disbursement" shall mean the disbursement made under the
Eximbank Credit in accordance with the terms of the Eximbank Credit Agreement
and evidenced by the Eximbank Note.

          "Eximbank Disbursement Date" shall mean the date on which the Eximbank
Disbursement is made by Eximbank to the Borrower.

          "Eximbank Funding Conditions" shall mean the conditions precedent to
the occurrence of the Eximbank Disbursement.

          "Eximbank Guarantee Agreement" shall mean the Guarantee Agreement,
dated as of May 13, 1996, among Eximbank, the Lenders, the Collateral Trustee
and the Administrative Agent.

          "Eximbank Guarantee Effective Date" shall mean the date on which the
Eximbank Guarantee Agreement is effective pursuant to its terms.

          "Eximbank Note" shall have the meaning specified in the Eximbank
Credit Agreement.

          "Eximbank Secured Obligations" shall mean all amounts payable to
Eximbank or the Collateral Trustee by the Borrower pursuant to the terms of any
Financing Document, including without limitation (a) the principal of and
interest on the Eximbank Credit or the Loans (to the extent any interest in any
Loans has been assigned to Eximbank pursuant to the Eximbank Guarantee Agreement
or otherwise) and all other obligations and liabilities (including, without
limitation, indemnities, Guarantee Commitment Fee, Credit Exposure Fee,
Guarantee Exposure Fee, Extended Cover Commitment Fee, Extended Cover Exposure
Fee, fees payable to the Collateral Trustee under the Collateral Trust Agreement
and interest thereon) of the Borrower to Eximbank or the Collateral Trustee
incurred under, arising out of or in connection with the Eximbank Credit, the
Eximbank Credit

                                       18

Agreement, the Eximbank Note, the Eximbank Guarantee Agreement or any other
Financing Document; (b) any and all sums advanced by the Collateral Trustee
after the Lender Financing Termination Date or by Eximbank in order to preserve
the Collateral or preserve its security interest in the Collateral; and (c) in
the event of any proceeding for the collection or enforcement of the Eximbank
Secured Obligations, after a Default Event shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing or realizing on the Collateral, or of any
exercise by Eximbank or the Collateral Trustee of its rights under any of the
Financing Documents, together with reasonable attorneys' fees and court costs.

          "Eximbank Termination Date" shall mean the date on which the Borrower
shall have paid in full, in cash, all Eximbank Secured Obligations and the
commitment of Eximbank to make available the Eximbank Credit under the Eximbank
Credit Agreement has terminated, notwithstanding the survival on such date of
the Borrower's unaccrued obligations and liabilities under indemnities and
expense and other reimbursement provisions in any Financing Document.

          "Eximbank Utilization Procedures" shall have the meaning specified in
the Eximbank Guarantee Agreement.

          "Extended Cover Commitment Fee" shall have the meaning specified in
Section 1.01 of the Eximbank Guarantee Agreement.

          "Extended Cover Exposure Fee" shall have the meaning specified in
Section 3.04(c) of the Eximbank Guarantee Agreement.

          "Fees" shall mean all amounts payable pursuant to or referred to in
Sections 2.7(b), (c) and (d) of the Lender Credit Agreement.

          "Final Principal Amount" shall have the meaning specified in Section
6.30(b) of the Lender Credit Agreement.

          "Financed Portion" shall have the meaning specified in the Eximbank
Utilization Procedures.

          "Financial Officer" shall mean, (i) with respect to any Person (other
than the Borrower), the President, any Vice

                                       19

President, any Assistant Vice President, the Treasurer, any Assistant Treasurer
or a Director of such Person, and (ii) with respect to the Borrower, any officer
of the General Partner described in clause (i) of this definition or any
financial representative of the Borrower duly appointed by or on behalf of the
Borrower.

          "Financing Documents" shall mean the Lender Credit Agreement, the
Notes, the Security Documents, any and all interest rate swap or cap agreements
or currency swap agreements between the Borrower and any of the Lender Financing
Secured Parties (or any of their Affiliates), the Eximbank Guarantee Agreement,
the Eximbank Credit Agreement, the Eximbank Note, the Subordinated Notes, the
Post-Completion Ormat Guaranty and such other agreements and instruments
evidencing, securing or pertaining to the Commitments, the Eximbank Credit or
the Loans, as shall from time to time be executed and delivered to the Secured
Parties (or any of them) by (or on behalf of) the Borrower or any other Person.

          "Fiscal Year" shall mean the accounting year of the Borrower
commencing each year on January 1 and ending on the following December 31, or
such other accounting period of the Borrower as the Borrower may, with the
consent of the Required Secured Parties and Eximbank, from time to time
designate as the accounting year of the Borrower.

          "Foreign Cost" shall have the meaning specified in the Eximbank
Utilization Procedures.

          "FPA" shall mean the Federal Power Act of 1920, as amended.

          "Funding Accounts" shall mean, collectively, the Required Funding
Account and the Standby Funding Account.

          "Funding Agreement" shall mean the Funding Agreement of even date with
the Lender Credit Agreement, among the Affiliated Funding Entities, Ormat
International, Inc., the Borrower, the Administrative Agent and the Collateral
Trustee.

          "Funding Letters of Credit" shall have the meaning specified in
Section 2(k)(ii) of the Funding Agreement.

                                       20

          "Funding Percentage" shall mean, with respect to Orleyte Company, 99%
and, with respect to Ormat Philippines, 1%

          "General Partner" shall mean Orleyte Company, in its capacity as
general partner of the Borrower.

          "Good Faith Contest" means the contest of an item if the item is
diligently contested in good faith by appropriate proceedings timely instituted
and (i) adequate cash reserves or bonds in an amount reasonably satisfactory to
the Administrative Agent are established with respect to the contested item,
(ii) during the period of such contest, the enforcement of any contested item is
effectively stayed and (iii) such contest does not involve any material risk of
the sale, forfeiture or loss of any of the Collateral covered by the Security
Documents (other than the cash reserved pursuant to clause (i) above).

          "Governmental Approval" shall mean any action, order, authorization,
consent, approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority
including, without limitation, any agreements, undertakings, consents and
approvals executed or to be issued by the Republic (including, without
limitation, the Department of Environment and Natural Resources) and any agency
thereof as the Lenders or Eximbank shall reasonably deem necessary or
appropriate to fulfill the requirements of Article 26 of the BOT Agreement,
including without limitation the Environmental Compliance Certificate.

          "Governmental Authority" shall mean any nation, government,
governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body, domestic or
foreign, federal, state or local having jurisdiction over the matter or matters
in question.

          "Guarantee Commitment Fee" shall have the meaning specified in Section
1.01 of the Eximbank Guarantee Agreement.

          "Guarantee Exposure Fee" shall have the meaning specified in Section
3.04(a) of the Eximbank Guarantee Agreement.

                                       21

          "Guaranty Obligation" shall have the meaning specified in the
definition of "Contingent Obligation" in this Schedule X.

          "Hazardous Materials" shall mean (i) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (ii) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants" or "pollutants," or words of
similar import, under any applicable Environmental Law; and (iii) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any Governmental Authority of the Republic by reason of its
hazardous nature.

          "IDC" shall have the meaning specified in the Eximbank Utilization
Procedures.

          "IDC Financed Portion" shall have the meaning specified in the
Eximbank Utilization Procedures.

          "Incipient Default Event" shall mean any event, act or condition
which, with notice, lapse of time, or both, or the fulfillment of any other
requirement provided for in the definition of the relevant Default Event, would
constitute a Default Event.

          "Indebtedness" shall mean, as to any Person, without duplication, (a)
all Indebtedness For Borrowed Money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such

                                       22

agreement in the event of default are limited to repossession or sale of such
property); (f) all obligations with respect to capital leases; (g) all net
obligations with respect to Swap Contracts; (h) all indebtedness referred to in
clauses (a) through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; and (i) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (g) above. For the avoidance of doubt, the term "Indebtedness" shall not
include any liability or obligation of the Borrower under the Construction
Contract, the Supply Contract or the Keystone Agreement.

          "Indebtedness For Borrowed Money" shall mean, as to any Person,
without duplication, (i) all indebtedness (including principal, interest, fees
and charges) of such Person for borrowed money or for the deferred purchase
price of property or services (other than any deferral in connection with the
provision of credit in the ordinary course of business by any trade creditor or
utility), (ii) the available amount of all letters of credit issued for the
account of such Person other than letters of credit issued in connection with
trade transactions in the ordinary course of business, (iii) all liabilities
secured by any Lien on any property owned by such Person, whether or not such
liabilities have been assumed by such Person, (iv) the aggregate amount required
to be capitalized under leases under which such Person is the lessee and (v) all
guaranties and similar undertakings to assume or pay the Indebtedness For
Borrowed Money of other Persons.

          "Indemnified Liabilities" shall have the meaning specified in Section
9.3(a) of the Lender Credit Agreement.

          "Independent Engineer" shall mean Stone and Webster Engineering
Corporation and any replacement therefor appointed by the Required Secured
Parties and Eximbank.

          "Independent Engineer's Report" shall mean a report of the Independent
Engineer, dated the Credit Date and in form and substance satisfactory to the
Administrative Agent, the Issuing Bank, the Lenders and Eximbank, addressing
such matters as the Administrative Agent, the Issuing Bank, the

                                       23

Lenders and Eximbank may reasonably request, including but not limited to, (i)
the adequacy, completeness and acceptability of the technical criteria for the
Project contained in the Construction Contract and the Supply Contract, (ii) the
reasonableness of the construction and testing schedule for the Project, (iii)
the sufficiency of the acceptance test criteria and guaranteed levels for
electrical output, capacity, net heat rate, emissions and power levels contained
in the Construction Contract and the Supply Contract, (iv) the ability of the
Project when completed to meet all of the requirements set forth in the
Construction Contract, the Supply Contract and the BOT Agreement and (v) the
adequacy of subcontractors and equipment selected as of the Credit Date.

          "Information Memorandum" shall mean the Project Description included
in the Application to Eximbank, dated September 22, 1995, as amended and
supplemented, relating to the Project.

          "Insolvency Proceeding" shall mean (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; undertaken under U.S. Federal, state or foreign law, including
the Federal Bankruptcy Reform Act of 1978.

          "Insurance Consultant" shall mean Sedgwick James of Tennessee Inc. and
any replacement therefor appointed by the Required Secured Parties and Eximbank.

          "Insurance Contracts" shall mean the insurance contracts and policies
required pursuant to Sections 6.3(a) and 6.3(b) of the Lender Credit Agreement
and Sections 7.03(a) and 7.03(b) of the Eximbank Credit Agreement, any
substitutes therefor and any additional insurance contracts or policies required
under any of the Financing Documents.

          "Insurance Proceeds" shall have the meaning specified in Section
3.05(a) of the Disbursement Agreement.

          "Interest Payment Date" shall mean, (i) with respect to interest
accruing at any rate (excluding LIBOR) on

                                       24

any Loan, each Quarterly Date, (ii) with respect to interest accruing at LIBOR,
the final date of each Interest Period using LIBOR and (iii) with respect to
interest accruing at the Base Rate where the immediately succeeding Interest
Period is based on LIBOR, the final date of each Interest Period using the Base
Rate.

          "Interest Period" shall mean, in the first instance, the period
commencing on and including the date of a Loan and, in the case of each
subsequent, successive Interest Period applicable to such Loan commencing on the
last day of the immediately preceding Interest Period, and (subject to Section
2.5(a) of the Lender Credit Agreement) ending, (i) in the case of an Interest
Period based on LIBOR, (a) on the same date in the 1st, 2nd, 3rd, 6th or, if
available, 9th or 12th month thereafter, or (b) if necessary to avoid (I) having
more than six (6) Interest Periods outstanding at any one time or (II) paying
breakage costs in connection with the occurrence of the Eximbank Disbursement
Date, on any other date and (ii) in the case of an Interest Period based on the
Base Rate, on the next following Amsterdam Business Day, in each case counting
the first but not the last day of each such Interest Period.

          "Interest Rate" shall mean interest on Loans outstanding during the
relevant Interest Period, at a rate per annum equal to LIBOR for such Interest
Period plus 1.75%.

          "IRS" shall mean the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions.

          "Issuing Bank" shall mean ING Bank, acting in the capacity of issuing
bank of the Letters of Credit, and any successor or permitted assign in such
capacity that is a commercial bank acceptable to Eximbank.

          "Issuing Bank Account" shall mean the account of the Issuing Bank
(account number __________) at ING Bank, P.O. Box 1800, HE 02.09, 1000 BV,
Amsterdam, the Netherlands, or such other account as the Issuing Bank may
designate in writing as such to the Administrative Agent.

          "Items" shall have the meaning specified in the Eximbank Utilization
Procedures.

                                       25

          "Itochu" shall mean Itochu Corporation, a corporation organized and
existing under the laws of Japan.

          "Itochu MOU" shall mean the Memorandum of Understanding dated November
1, 1995 among Itochu, Ormat Inc. and Ormat International, Inc.

          "Keystone Agreement" shall mean the Agreement Regarding Security for
Turnkey Obligations dated as of April 30, 1996 among the Borrower, Orleyte
Company, Ormat Philippines, Ormat and Ormat International, Inc.

          "L/C Commitment" shall mean, at any time, with respect to each Lender,
the maximum amount that such Lender may be required to reimburse to the Issuing
Bank pursuant to Article 3 of the Lender Credit Agreement with respect to the
Total Letter of Credit at such time.

          "L/C Notice" shall have the meaning specified in Section 3.4 of the
Lender Credit Agreement.

          "L/C Termination Date" shall mean the date which is thirty (30) days
prior to the last day of the Availability Period.

          "Legal Opinions" shall mean the legal opinions to be provided under
Section 5.1(c) of the Lender Credit Agreement.

          "Lender Credit" shall have the meaning specified in the first WHEREAS
clause of the Lender Credit Agreement.

          "Lender Credit Agreement" shall mean the Credit Agreement, dated as of
May 13, 1996, among the Lenders, the Issuing Bank, the Administrative Agent and
the Borrower, together with all exhibits, annexes and schedules thereto, as the
same may be amended, modified or supplemented from time to time in accordance
with the terms thereof.

          "Lender Credit Default" shall mean any event, act or condition which,
with notice, lapse of time, or both, or the fulfillment of any other requirement
provided for in Article 7 of the Lender Credit Agreement, would constitute a
Lender Credit Event of Default.

                                       26

          "Lender Credit Event of Default" shall have the meaning specified in
Article 7 of the Lender Credit Agreement.

          "Lender Credit Permitted Indebtedness" shall have the meaning provided
in Section 6.17 of the Lender Credit Agreement.

          "Lender Credit Permitted Lien" shall have the meaning provided in
Section 6.18 of the Lender Credit Agreement.

          "Lender Financing Debt Service" means, for any period, an amount equal
to the aggregate of (i) principal and interest actually due on the Loans
(whether by scheduled payment, maturity, acceleration or otherwise) and (ii) any
other amounts (including, without limitation, indemnities, Commitment
Commission, Fees and fees payable to the Collateral Trustee pursuant to the
Collateral Trust Agreement) which the Borrower is obligated to pay during such
period (whether by scheduled payment, maturity, acceleration or otherwise) to
any of the Lender Financing Secured Parties pursuant to any of the Financing
Documents (excluding payments to the Accounts).

          "Lender Financing Secured Obligations" shall mean (i) all amounts
owing to any Lender Financing Secured Party pursuant to the terms of any
Financing Document, including without limitation (A) the principal of and
interest on the Loans, the face amount of the Letters of Credit and all other
obligations and liabilities (including, without limitation, indemnities,
Commitment Commission, Fees, fees payable to the Collateral Trustee under the
Collateral Trust Agreement and interest thereon) of the Borrower to the Lender
Financing Secured Parties incurred under, arising out of or in connection with
such Loans, the Letters of Credit, the Notes, the Lender Credit Agreement or any
other Financing Document; (B) any and all sums advanced by the Collateral
Trustee at its option and in its discretion prior to the Lender Financing
Termination Date or any other Lender Financing Secured Party in order to
preserve the Collateral or preserve its security interest in the Collateral; (C)
upon the making of any payment by Eximbank under the Eximbank Guarantee
Agreement, any amounts owing at any time by the Borrower to Eximbank under or
pursuant to the Eximbank Guarantee Agreement or the Eximbank Credit Agreement;
and (D) in the event of any proceeding for the collection or enforcement of

                                       27

the Lender Financing Secured Obligations, after a Default Event shall have
occurred and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by any Lender Financing Secured Party of its
rights under any of the Financing Documents, together with Attorney Costs and
court costs and (ii) any deferrals, renewals, extensions or refinancings of any
of the Loans or of any of the amounts described in the preceding clause (i).

          "Lender Financing Secured Parties" shall mean, collectively, the
Administrative Agent, the Lenders, the Issuing Bank, the Collateral Trustee and,
upon the making of any payment by Eximbank under or pursuant to the Eximbank
Guarantee Agreement, Eximbank.

          "Lender Financing Termination Date" shall mean the date on which the
Borrower shall have paid in full, in Dollars, all Lender Financing Secured
Obligations to the Lender Financing Secured Parties, the Letters of Credit shall
no longer be issued and outstanding and the Commitments shall have been
terminated, notwithstanding the survival on such date of the Borrower's
unaccrued obligations and liabilities under indemnities and expense and other
reimbursement provisions in any Financing Document.

          "Lenders" shall mean the financial institutions listed on Schedule I
to the Lender Credit Agreement and their respective successors and permitted
assigns.

          "Lending Office" shall mean with respect to each Lender and the
Issuing Bank, the office of such Lender and the Issuing Bank designated on
Schedule I to the Lender Credit Agreement or such other office as such Lender or
the Issuing Bank may from time to time notify the Borrower and the
Administrative Agent.

          "LIBOR" shall mean, (a) for any Interest Period referred to in clause
(i)(a) of the definition of the term "Interest Period", with respect to each
Loan (or portion thereof) that bears interest at a rate determined by reference
to LIBOR, the rate of interest per annum equal to (i) the rate (rounded upwards,
if necessary, to the nearest four decimal places) which is the offered rate at
or about 11:00 a.m. London time two (2) Amsterdam Business Days Prior to the
commencement of such Interest Period for Dollar

                                       28

deposits for a period equal to such Interest Period which appears on the display
designated as the British Bankers Association Interest Settlement Rate as quoted
on the Dow Jones/Telerate Monitor as Telerate Screen page no. 3750 (or such
other page or service as may replace page 3750 of such service (as the case may
be) for the purpose of so displaying the British Bankers Association's Interest
Settlement Rate for London interbank offered rates and, in the absence of any
such replacement page or service, such other page of such other service as ING
Bank and the Borrower may agree; or (ii) if no relevant rates appear on the
Telerate Screen or if the Telerate Screen is unavailable at the relevant time,
the arithmetic mean (rounded upwards, if necessary, to the nearest four decimal
places) of the respective rates quoted by the Reference Banks to ING Bank in the
London Interbank Market at or about 11:00 a.m. London time two (2) Amsterdam
Business Days prior to the commencement of such Interest Period for the offering
of Dollar deposits to ING Bank in an amount comparable to the amount upon which
interest is accruing, and for a period equal to such Interest Period for
delivery on the first day of that Interest Period; and for any Interest Period
referred to in clause (i)(b) of the definition of the term "Interest Period",
with respect to each Loan (or portion thereof) that bears interest at a rate
determined by reference to LIBOR, the rate of interest per annum equal to the
LIBOR rate equivalent for such Interest Period as determined by ING Bank, which
rate will be based on a linear interpolation between the standard LIBOR periods
that are closest in duration to such Interest Period.

          "LIBOR Overnight Rate" shall mean, as of any date, the rate of
interest per annum equal to (a) the rate (rounded upwards, if necessary, to the
nearest four decimal places) which is the offered rate at or about 11:00 a.m.
Amsterdam time on such date for Dollar deposits for a period equal to one day
which appears on the display designated as the British Bankers Association
Interest Settlement Rate as quoted on the Dow Jones/Telerate Monitor as Telerate
Screen page no. 3750 (or such other page or service as may replace page 3750 of
such service (as the case may be) for the purpose of so displaying the British
Bankers Association's Interest Settlement Rate for London interbank offered
rates and, in the absence of any such replacement page or service, such other
page of such other service as ING Bank and the Borrower may agree; or (b) if no
relevant rates appear on the Telerate Screen or if the Telerate Screen is
unavailable at the relevant time, the arithmetic mean (rounded upwards, if

                                       29

necessary, to the nearest four decimal places) of the respective rates quoted by
the Reference Banks to ING Bank in the London Interbank Market at or about 11:00
a.m. Amsterdam time on such date for the offering of Dollar deposits to ING Bank
for a period equal to one day in an amount comparable to the amount upon which
interest is accruing.

          "LIBOR Reserve Percentage" shall mean, for any day for any Interest
Period with respect to any Person the reserve percentage (expressed as a
decimal, rounded upward to the next l/100th of 1%) in effect on such day under
the regulations issued from time to time by the Board of Governors for
determining the reserve requirement (including any basic, special, marginal,
emergency, supplemental or other reserve requirement) with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term equal to such Interest Period.

          "Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever including,
without limitation, (i) any conditional sale or other title retention agreement,
any financing or similar statement or notice filed under any recording or notice
statute, and any lease having substantially the same effect as any of the
foregoing, and (ii) any designation (except as contemplated by the Lender Credit
Agreement and the Eximbank Credit Agreement) of loss payees or beneficiaries or
any similar arrangement under any insurance policy.

          "Liquidated Damages Proceeds" shall mean all amounts paid as
liquidated damages by Ormat under the Ormat EPC Guaranty and by Ormat
International, Inc. under the Ormat International, Inc. EPC Guaranty, the
proceeds of all drawings on the Supply Contract Letters of Credit and all
amounts paid as liquidated damages by the Construction Contractor under the
Construction Contract and by the Construction Supplier under the Supply
Contract.

          "Loans" shall mean the loans made by the Lenders pursuant to Article 2
and Article 3 of the Lender Credit Agreement.

          "Local Cost Financed Portion" shall have the meaning specified in the
Eximbank Utilization Procedures.

                                       30

          "Local Cost Item" shall have the meaning specified in the Eximbank
Utilization Procedures.

          "Long-Term Debt" shall mean, at any date, the aggregate of all those
component parts of Indebtedness For Borrowed Money which fall due or whose final
payment is due more than one year after the respective dates of the agreements
providing for such component parts of Indebtedness, but shall not include
Affiliated Subordinated Loans made or permitted to be made under the Funding
Agreement.

          "Maintenance Amount" shall have the meaning specified in Section
2.16(b)(i) of the Lender Credit Agreement.

          "Maintenance Amount Certification" shall have the meaning specified in
Section 2.16(b)(ii) of the Lender Credit Agreement.

          "MARAD" shall mean the U.S. Maritime Administration.

          "Material Adverse Effect" shall mean a material adverse effect on (i)
the ability of the Borrower, any Obligor or the Republic to observe and perform
its material obligations under any Project Document to which such Person is a
party in a timely manner, (ii) the operations, business, condition (financial or
otherwise), prospects or property of the Borrower or (iii) the rights or
interests of the Senior Secured Parties under the Lender Credit Agreement, the
Eximbank Credit Agreement, or under any of the other Financing Documents or on
any security interest granted pursuant thereto or the value thereof.

          "Material Modification" shall have the meaning specified in the
Eximbank Guarantee Agreement.

          "Maturity Date" shall mean the earliest to occur of (i) the Eximbank
Disbursement Date, (ii) the Date Certain and (iii) the date 30 days after the
satisfaction of the Eximbank Funding Conditions.

          "Mixed Letter of Credit" shall have the meaning specified in Section
3.1(a) of the Lender Credit Agreement.

          "Month" shall mean a calendar month.

                                       31

          "Monthly Budget" shall mean, with respect to any Month, the estimated
amount, when finalized, necessary to operate the Project for such Month, as set
forth in the Annual Budget for the Fiscal Year in which such Month occurs.

          "Moody's" shall mean Moody's Investors Service, Inc.

          "Mortgage, Assignment and Pledge Agreement" shall mean the Mortgage,
Assignment and Pledge Agreement to be entered into in substantially the form of
Exhibit G to the Lender Credit Agreement among the Borrower, Ormat Philippines,
Orleyte Company and the Collateral Trustee.

          "Mortgage Collateral" shall mean all collateral to be mortgaged by the
Borrower pursuant to Part B of the Mortgage, Assignment and Pledge Agreement.

          "Multiemployer Plan" shall mean a plan that is a multiemployer plan
within the meaning of Section 4001(a)(3) of ERISA to which either the Borrower
or any ERISA Affiliate is making, or has an obligation to make, contributions or
had made, or has been obligated to make, contributions since the date which is
six years immediately preceding the Credit Date.

          "NAPOCOR" shall mean The National Power Corporation, a corporation
organized and existing under the laws of the Republic.

          "Negotiation Date" shall mean the date on which the Issuing Bank finds
satisfactory all documents presented in connection with a drawing to be made
under any of the Letters of Credit and receives a Drawing Approval from the
Administrative Agent.

          "New York Business Day" shall mean (i) any day that is not a Saturday,
a Sunday or a day on which commercial banks in New York are required or
authorized to be closed and (ii) when used in any respect relating to LIBOR, any
day described in clause (i) of this definition that is also a day on which
dealings may be carried out in the London inter-bank market.

          "Non-Financed Project Costs" shall mean all Project Costs other than
Project Costs to be financed with the

                                       32

proceeds of the Loans or the proceeds of the Letters of Credit in accordance
with the Lender Credit Agreement.

          "Note" shall mean each of, and "Notes" shall mean all of, the
promissory notes executed and delivered by the Borrower pursuant to Section 2.4
of the Lender Credit Agreement.

          "O&M Parameters" shall mean the parameters governing the operation and
maintenance of the Project set forth in Schedule 7.07 (c) of the Eximbank Credit
Agreement.

          "O&M Support Undertaking" shall mean the Operations and Maintenance
Guaranty, dated as of May 13, 1996, among the Borrower, the Collateral Trustee
and Ormat International, Inc.

          "Obligor" shall mean (i) PNOC-EDC, (ii) until all obligations of Ormat
Philippines under the Construction Contract, the Assignment and Assumption
Agreement and the Keystone Agreement have been fully satisfied, Ormat
Philippines, (iii) until all obligations of Orda 6, Inc. under the Supply
Contract, the Construction Contract and the Keystone Agreement have been fully
satisfied, Orda 6, Inc., (iv) Ormat International, Inc., (v) until all
obligations of the Construction Contractor, the Construction Supplier, Ormat
International, Inc. and Ormat under or in respect of the Construction Contract,
the Supply Contract, the Keystone Agreement, the Ormat International, Inc. EPC
Guaranty, the Ormat EPC Guaranty, the Supply Contract Letters of Credit and the
Post-Completion Ormat Guaranty are fully satisfied, Ormat, (vi) until all
obligations of Ormat International, Inc. and the Affiliated Funding Entities
under or in respect of the Funding Agreement have been fully satisfied, the
Affiliated Funding Entities, (vii) the Borrower, (viii) the Partners and (ix)
the BOT Operation Performance Security Issuer.

          "Operating Agreements" shall mean (i) the BOT Agreement, (ii) the
Accession Undertaking, (iii) the Performance Undertaking, (iv) the Construction
Contract, (v) the Supply Contract, (vi) the BOT Operation Performance Security,
(vii) the Affiliated Funding Letters of Credit, (viii) the Ormat EPC Guaranty,
(ix) the Consent Agreements, (x) the Insurance Contracts, (xi) the Keystone
Agreement, (xii) the Ormat International, Inc. EPC Guaranty, (xiii) the BOT
Construction Performance Security, (xiv) the Governmental

                                       33

Approvals set forth in Schedule 4.11 to the Lender Credit Agreement and Schedule
5.01(t) to the Eximbank Credit Agreement and all other consents, approvals and
licenses obtained by or on behalf of the Borrower in connection with the
Project, including without limitation, the consents, licenses and approvals
described in Section 5.2(c) of the Lender Credit Agreement and Schedule 5.01(t)
to the Eximbank Credit Agreement, (xv) any other agreement, commitment or
understanding executed by or on behalf of the Borrower in connection with the
Project and designated as an Operating Agreement in a writing delivered to the
Borrower from the Administrative Agent pursuant to Section 6.1(g)(ii)(N) of the
Lender Credit Agreement and Section 7.01(g)(ii)(N) of the Eximbank Credit
Agreement, (xvi) the Supply Contract Letters of Credit, (xvii) the Assignment
and Assumption Agreement and (xviii) the O&M Support Undertaking.

          "Operating and Maintenance Costs" shall mean, for any period, the
amounts paid or payable by the Borrower during such period for the operation and
maintenance of the Power Plant (but excluding, without limitation, non-cash
items such as depreciation and amortization), including, without limitation,
payments in respect of premiums for Insurance Contracts and for the BOT
Operation Performance Security, property and other Taxes, payments under Swap
Contracts and options, general and administrative expenses, lease payments
permitted to be incurred by the Borrower in compliance with each of Section 6.16
of the Lender Credit Agreement and Section 8.04 of the Eximbank Credit Agreement
and payments in respect of Indebtedness of the Borrower which, at the time
incurred, was permitted to be incurred by the Borrower in compliance with each
of Section 6.17(d) of the Lender Credit Agreement and Section 8.05(e) of the
Eximbank Credit Agreement. Operating and Maintenance Costs do not include Debt
Service, principal, interest, fees or other amounts payable on, or with respect
to any other credit facility or arrangement of the Borrower or any amounts
payable by the Borrower pursuant to the Construction Contract, the Supply
Contract or the Keystone Agreement or any interest thereon.

          "Operation Date" shall mean, with respect to each Plant the earlier to
occur of (i) the date on which the Borrower certifies to PNOC-EDC that such
Plant is capable of operating in accordance with the Operating Parameters (as
defined in the BOT Agreement) and has successfully completed testing in
accordance with Article 5 of the BOT Agreement and

                                       34

(ii) the date on which the Completion Date (as defined in the BOT Agreement) of
such Plant shall have been deemed to have occurred pursuant to Section 5.4(h) of
the BOT Agreement.

          "Optional Subordinated Loans" shall mean the loans specified in
Section 2(d) of the Funding Agreement together with the loan (if any) from Ormat
to the Borrower pursuant to the Development Agreement.

          "Orda 6, Inc." shall mean Orda 6, Inc., a Delaware corporation.

          "Organization Documents" means, (i) for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation, and (ii) for any partnership, the partnership certificate and the
partnership agreement pursuant to which such partnership was formed.

          "Orleyte Company" shall mean Orleyte Company, a limited life company
organized under the laws of the Cayman Islands.

          "Ormat" shall mean Ormat Industries, Ltd., an Israeli corporation.

          "Ormat Inc." shall mean Ormat Inc., a Delaware corporation.

          "Ormat EPC Guaranty" shall mean the Guaranty dated as of April 30,
1996 among Ormat, the Borrower and the Collateral Trustee.

          "Ormat International, Inc." shall mean Ormat International, Inc., a
Delaware corporation.

          "Ormat International, Inc. EPC Guaranty" shall mean the Guaranty dated
as of April 30, 1996 among Ormat International, Inc., the Borrower and the
Collateral Trustee.

          "Ormat Philippines" shall mean Ormat Philippines, Inc., a limited life
company organized under the laws of the Cayman Islands.

                                       35

          "Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made under the Lender Credit Agreement or
any other Financing Document or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Financing Document,
other than any tax imposed on or measured by the net income or capital of a
Lender pursuant to the laws of the jurisdiction of its place of incorporation or
in which the principal office of such Lender or the office from which such
Lender books its Loans is located.

          "Partner" shall mean each of Orleyte Company and Ormat Philippines,
each in its respective capacity as a partner of the Borrower, and their
respective successors and permitted assigns, and any other partner properly
admitted into the Borrower, or its successors and permitted assigns.

          "Partnership Agreement" shall mean the Articles of Limited Partnership
of the Borrower, dated as of January 31, 1996, between Orleyte Company and Ormat
Philippines, pursuant to which the Partnership was formed.

          "Payment Date" shall have the meaning specified in Section 3.3 of the
Lender Credit Agreement.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.

          "Pension Plan" shall mean any pension plan within the meaning of
Section 3(2) of ERISA, including any multiemployer pension plan, which is
subject to the provisions of Title I and IV of ERISA or Section 412 of the Code
and which (i) is established, sponsored, maintained or administered by the
Borrower or any ERISA Affiliate or for which the Borrower or any ERISA Affiliate
has an obligation to contribute or any liability or in which the Borrower or any
ERISA Affiliate participates, or (ii) has at any time since the date which is
six years immediately preceding the Credit Date been established, sponsored,
maintained, or administered on behalf of employees of the Borrower or any of its
current or former ERISA Affiliates or for which the Borrower or any of its
current or former ERISA Affiliates had an obligation to contribute or any
liability or in which

                                       36

Borrower or any of its current or former ERISA Affiliates participated.

          "Performance Undertaking" shall mean the performance undertaking
relating to the Project, dated December 12, 1995 and signed by the Secretary of
Finance of the Republic on behalf of the Republic.

          "Permitted Indebtedness" shall mean, (i) prior to the Lender Financing
Termination Date, Lender Credit Permitted Indebtedness and (ii) thereafter,
Post-Completion Permitted Indebtedness.

          "Permitted Liens" shall mean, (i) prior to the Lender Financing
Termination Date, Lender Credit Permitted Liens and (ii) thereafter,
Post-Completion Permitted Liens.

          "Permitted Payment Date" shall mean each date specified as a "Payment
Date" for the Eximbank Credit pursuant to the Eximbank Credit Agreement.

          "Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.

          "Peso Depository Agent" shall have the meaning specified in Section
3.02(e) of the Disbursement Agreement.

          "Pesos" and the sign "P" shall mean the lawful currency of the
Republic.

          "Philippines Peso Account" shall have the meaning specified in Section
3.02(e) of the Disbursement Agreement.

          "Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, subject to Title I of ERISA, which (i) is established,
sponsored, maintained or administered by the Borrower or any ERISA Affiliate, or
for which the Borrower or any ERISA Affiliate has an obligation to contribute or
any liability or in which the Borrower or any ERISA Affiliate participates, or
(ii) has since the date which is six years immediately preceding the Credit Date
been established, sponsored, maintained or administered for employees of the
Borrower or any of its current or former ERISA Affiliates or for which the
Borrower or any of its current or former ERISA Affiliates had an obligation to

                                       37

contribute or any liability or in which the Borrower or any of its current or
former ERISA Affiliates participated.

          "Plant" shall mean any of Plant A, Plant B, Plant C and Plant D.

          "Plant A" shall mean a geothermal power plant with a total gross
capacity of 12.45 MW, to be located in the Mahanagdong "A" area of the island of
Leyte, Philippines and constructed pursuant to the BOT Agreement.

          "Plant B" shall mean a geothermal power plant with a total gross
capacity of 6.25 MW, to be located in the Mahanagdong "B" area of the island of
Leyte, Philippines and constructed pursuant to the BOT Agreement.

          "Plant C" shall mean a geothermal power plant with a total gross
capacity of 16.95 MW, to be located in the Tonganon area of the island of Leyte,
Philippines and constructed pursuant to the BOT Agreement.

          "Plant D" shall mean a geothermal power plant with a total gross
capacity of 13.35 MW, to be located in the Malitbog area of the island of Leyte,
Philippines and constructed pursuant to the BOT Agreement.

          "Pledged Interests" shall have the meaning provided in Section 1 of
Part D of the Mortgage, Assignment and Pledge Agreement.

          "Pledgors" shall have the meaning specified in the preamble to the
Mortgage, Assignment and Pledge Agreement.

          "PNOC-EDC" shall mean PNOC-Energy Development Corporation, a
wholly-owned subsidiary of the Philippine National Oil Company, organized and
existing under the laws of the Republic.

          "PNOC-EDC Consent Agreement" shall mean the Acknowledgment and Consent
Agreement among PNOC-EDC, the Borrower and the Collateral Trustee, substantially
in the form of Exhibit B to the Lender Credit Agreement.

          "Post-Completion Ormat Guaranty" shall mean the Guaranty to be dated
as of the Eximbank Disbursement Date among Ormat, the Borrower and the
Collateral Trustee, if required to be executed and delivered pursuant to

                                       38

Section 5.02(p) of the Eximbank Credit Agreement, substantially in the form of
Annex C to the Eximbank Credit Agreement.

          "Post-Completion Permitted Indebtedness" shall have the meaning
provided in Section 8.05 of the Eximbank Credit Agreement.

          "Post-Completion Permitted Lien" shall have the meaning provided in
Section 8.01 of the Eximbank Credit Agreement.

          "Post-Completion Standby Equity Contribution" shall have the meaning
specified in Section 2(c)(iii) of the Funding Agreement.

          "Post-Completion Standby Funding Amount" shall mean an amount equal to
the Standby Funding Amount less the aggregate amount of all Standby Equity
Contributions and Standby Subordinated Loans which Ormat International, Inc.
shall have been obligated to cause the Affiliated Funding Entities to make on or
prior to the Lender Financing Termination Date pursuant to Sections 2(c)(i) and
(ii) of the Funding Agreement.

          "Post-Completion Standby Subordinated Loan" shall have the meaning
specified in Section 2(c)(iii) of the Funding Agreement.

          "Post-Completion Standby Support Period" shall have the meaning
specified in Section 2(c)(iii) of the Funding Agreement.

          "Post-Completion Trigger Event" shall mean any Event of Default set
forth in Section 9.01, 9.03(a), 9.05, 9.06, 9.08, 9.09, 9.11, 9.12 or 9.13 of
the Eximbank Credit Agreement.

          "Power Plant" shall mean, collectively, Plant A, Plant B, Plant C and
Plant D.

          "Power Purchase Agreement" shall have the meaning specified in Article
1 of the BOT Agreement.

          "Proceeds" shall mean the Sales Proceeds, the Cash Receipts, the
Insurance Proceeds, the Liquidated Damages Proceeds and the Collateral Proceeds.

                                       39

          "Production Cost" shall have the meaning specified in the Eximbank
Utilization Procedures.

          "Progress Equity Contributions" shall have the meaning specified in
Section 2(b)(i) of the Funding Agreement.

          "Progress Subordinated Loans" shall have the meaning specified in
Section 2(b)(i) of the Funding Agreement.

          "Prohibited Transaction" shall mean any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code which is not exempt under
Section 408 of ERISA or Section 4975(c) of the Code.

          "Project" shall mean the Power Plant, the Site, all auxiliary
facilities, utilities and the sites thereof and the construction, equipping,
placing into operation and operation of the Power Plant and such other
facilities and utilities.

          "Project Completion Date" shall mean the date, determined as provided
below, on which the following shall have occurred:

          (i) The following requirements shall have been satisfied and the
     Borrower shall have delivered to the Collateral Trustee, the Administrative
     Agent, Eximbank and the Independent Engineer a certificate (the "Borrower
     Completion Certificate") in form and substance satisfactory to the
     Administrative Agent and Eximbank, signed by an authorized representative
     of the Borrower, certifying that:

               (A) The Power Plant is capable of operating in accordance with
          the Operating Parameters (as defined in the BOT Agreement) and has
          successfully completed testing in accordance with Article 5 of the BOT
          Agreement and the Completion Date (as so defined) in respect of each
          of Plant A, Plant B, Plant C and Plant D has been achieved, attaching,
          with respect to each of the four plants, true, complete and correct
          copies of (i) the certificate of the Borrower to PNOC-EDC as to the
          foregoing matters contemplated by the definition of "Completion Date"
          in Section 1.1 of the BOT Agreement and (ii) the certificate of the

                                       40

          Construction Contractor or the Borrower to PNOC-EDC as to the
          foregoing matters contemplated by Section 13.3 of the Construction
          Contract.

               (B) The Construction Contractor (or other contractor designated
          by the Borrower and satisfactory to Eximbank) has completed all
          Performance Tests (as defined in the Construction Contract) and the
          other tests provided for in Exhibit E to the Construction Contract,
          and the Power Plant has achieved a Net Power Plant Steam Rate (as so
          defined, adjusted as provided in Section 3.2.2 of Exhibit E to the
          Construction Contract) of no more than 105% of the Guaranteed Net
          Power Plant Steam Rate (as so defined), 95% of the Net Deliverable
          Capacity Guarantee (as so defined) and 100% of the Reliability
          Guarantee (as so defined) attaching a true, complete and correct copy
          of the Notice of Substantial Completion (as so defined) for each
          Plant.

               (C) Either (i) Final Acceptance (as defined in the Construction
          Contract) has occurred and the Borrower has received all other
          documents and information submitted by the Construction Contractor to
          the Borrower pursuant to Section 13.7 of the Construction Contract
          attaching true, complete and correct copies of the Notice of Final
          Acceptance (as so defined) or (ii) Eximbank shall have notified the
          Borrower, the Administrative Agent and the Collateral Trustee in
          writing that none of the items remaining on the Punchlist (as so
          defined) at the time of such notice are, in the judgment of Eximbank,
          material to the completion and operation of the Project or the ability
          of the Borrower to observe and perform its obligations under the
          Eximbank Credit Agreement and the Project Documents in a timely
          manner.

               (D) No provision of (i) the BOT Agreement relating to the
          Operating Parameters, the testing provided for in Article 5 thereof or
          the Completion Date or (ii) the Construction Contract relating to the
          Performance Tests, the Performance Guarantees, Exhibit E thereto or
          Final Acceptance, has in either case been amended or otherwise
          modified without the prior written consent of Eximbank.

                                       41

               (E) All payments for contractors' work and equipment having a
          material impact on the ability of the Project to operate in the manner
          contemplated by the Construction Contract and the BOT Agreement have
          been settled in full, other than immaterial amounts in dispute or
          amounts that have been fully bonded by the Borrower by a bond issuer
          satisfactory, and under documentation satisfactory in form and
          substance, to Eximbank.

               (F) No property, assets or revenues of the Borrower are subject
          to any Liens, except for Permitted Liens.

               (G) No Default or Event of Default (as defined in the Eximbank
          Credit Agreement) shall exist and be continuing or would exist, after
          giving effect to the Eximbank Disbursement, and no other Default Event
          or Incipient Default Event shall exist and be continuing, and in any
          such case have not been waived.

               (H) The representations and warranties of the Borrower contained
          in Article 4 of the Lender Credit Agreement and Section 6 of the
          Eximbank Credit Agreement (other than the representations made in
          Section 4.7(c) of the Lender Credit Agreement and Section 6.01(g)(ii)
          of the Eximbank Credit Agreement) and of any Obligor which is an
          Affiliate of the Borrower and contained in the other Project Documents
          (other than Insurance Contracts, Governmental Approvals or any other
          agreement, commitment or understanding referred to in subsection (xv)
          of the definition of "Operating Agreements" in this Schedule X) are
          true and correct in all material respects with the same effect as
          though such representations and warranties had been made on and as of
          the date of the Borrower Completion Certificate, except where
          expressed to be made as of an earlier date.

               (I) Each of the Governmental Approvals set forth in Parts A and B
          of Schedule 5.01(t) to the Eximbank Credit Agreement has been duly
          obtained or made, is validly issued, is in full force and effect, is
          not subject to appeal, is held in the name of the Person identified in
          said Schedule and is free from conditions or requirements compliance

                                       42

          with which is reasonably likely to have a Material Adverse Effect or
          which the Borrower does not reasonably expect to be able to satisfy.
          There is no proceeding pending or, to the best knowledge of the
          Borrower, threatened which is reasonably likely to result in the
          rescission, termination, material modification, suspension or
          determination of invalidity or lack of effectiveness of any such
          Governmental Approval.

               (J) The Borrower is in compliance with all Applicable Laws in
          respect of the conduct of its business and the ownership of its
          property (including Applicable Laws relating to environmental
          standards and controls).

               (K) The Borrower shall have arranged for the delivery of and
          PNOC-EDC shall have accepted the BOT Operation Performance Security.

          (ii) The Borrower shall have delivered to Eximbank, together with the
     Borrower Completion Certificate, a legal opinion of Sycip Salazar Hernandez
     & Gatmaitan (or, if such counsel are not available to deliver such opinion,
     such other Philippine counsel to the Borrower satisfactory to Eximbank),
     dated as of the date of the Borrower Completion Certificate, with respect
     to the matters specified in Paragraphs (F) and (I) of the Borrower
     Completion Certificate.

          (iii) The Independent Engineer has certified to Eximbank (with copies
     to the Borrower and the Administrative Agent) (x) that all substantive work
     under the terms of each of the Construction Contract and the Supply
     Contract is complete and in compliance with the Construction Contract and
     the Supply Contract and the design scope document, including any amendments
     or change orders effected in accordance with the Financing Documents, and
     (y) as to the matters set forth in Paragraphs (A), (B) and (C) of the
     Borrower Completion Certificate. Such certificate shall identify all change
     orders, amendments, modifications or waivers "requested and granted
     pursuant to the terms of the Construction Contract or the Supply Contract.

          (iv) Eximbank shall have delivered to the Borrower and the Collateral
     Trustee a written notice (the

                                       43

     "Eximbank Completion Notice") stating that the Borrower Completion
     Certificate is acceptable to Eximbank (it being understood that Eximbank
     shall respond as to the acceptability of the Borrower Completion
     Certificate without unreasonable delay).

The Project Completion Date shall be deemed to occur as of the date of the
Eximbank Completion Notice or, if not dated, as of the date of receipt thereof
by the Collateral Trustee. In the event Eximbank issues to the Collateral
Trustee a written objection (the "Eximbank Objection") to the Borrower
Completion Certificate, the Project Completion Date shall not be deemed to occur
until such objection, which shall be made in good faith and shall be based on
the grounds of any of the matters referred to in the Borrower Completion
Certificate or clause (ii) or (iii) above, is withdrawn in writing by Eximbank
and all the requirements set forth in clauses (i) through (iv) above have been
fully satisfied or until the Borrower has provided Eximbank with a reply to, or
evidence refuting, such Eximbank Objection, which reply or evidence shall be, in
the reasonable view of Eximbank, satisfactory, in which case Eximbank shall
promptly withdraw in writing such Eximbank Objection. In the event the
Independent Engineer provides to the Collateral Trustee a written statement (the
"Independent Engineer's Statement") identifying the reasons for not providing
the certification required pursuant to paragraph (iii) above, the Project
Completion Date shall not be deemed to occur until the Independent Engineer
issues such certification and all the other requirements set forth in paragraphs
(i) through (iv) above have been fully satisfied. In the event that:

     (x) the Collateral Trustee has not received, within forty (40) days of
     receipt by the Collateral Trustee of a Borrower Completion Certificate,
     from Eximbank a written notice stated to be an Eximbank Objection, and

     (y) the Collateral Trustee has not received, within such forty day period,
     a written statement identified to the Collateral Trustee by the Independent
     Engineer or by Eximbank as an Independent Engineer's Statement,

then, upon issuance by the Collateral Trustee of a "Final Notice of Deemed
Project Completion" to Eximbank and the Borrower, the conditions contained in
paragraphs (i) through (iv) shall be deemed satisfied and the Project Completion
Date shall be deemed to have occurred as of the later of the

                                       44

date of receipt of such Notice by Eximbank and the Borrower and the "Deemed
Project Completion Date" specified in such Notice.

          "Project Costs" shall mean all costs of the Borrower up to amounts
reflected in the respective Budget Categories contained in the Construction
Budget to complete the construction of the Project in accordance with the
Project Documents; such costs and expenses shall include, without limitation (or
duplication) all amounts payable under the Construction Contract (other than
bonuses, if any, payable to the Construction Contractor pursuant to the
Construction Contract) and the Supply Contract (other than bonuses, if any,
payable to the Construction Supplier) of the Supply Contract), the Contract
Price of all Items, the Development Fee, working capital, consulting fees of the
Independent Engineer and the Insurance Consultant, the amount of the Guarantee
Commitment Fee, Guarantee Exposure Fee, Extended Cover Commitment Fee, Extended
Cover Exposure Fee (if any), legal fees and disbursements, interest, Fees and
Commitment Commission.

          "Project Documents" shall mean each of the Financing Documents and the
Operating Agreements.

          "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended.

          "Purchase Contract" shall have the meaning specified in the Eximbank
Utilization Procedures.

          "Quarter" shall mean a calendar quarter.

          "Quarterly Budget and Reconciliation" shall have the meaning specified
in Section 2.01 of the Disbursement Agreement.

          "Quarterly Date" shall mean (A) prior to the Lender Financing
Termination Date, (i) the last Amsterdam Business Day of each December, March,
June and September and (ii) the Maturity Date and (B) after the Lender Financing
Termination Date (i) the 30th day of each December, March, June and September
occurring prior to the Senior Debt Termination Date and (ii) the Senior Debt
Termination Date.

          "Reconciliation Threshold" shall have the meaning specified in Section
2.01 of the Disbursement Agreement.

                                       45

          "Reference Banks" means National Westminster Bank plc, Barclays Bank
plc, Bank of Tokyo and Bankers Trust Company, or other banks or financial
institutions which ING Bank may notify to the Borrower for this purpose after
consultation with the Borrower.

          "Remaining Funding Amount" shall mean, as of any date, the excess of
(i) the Required Funding Amount over (ii) the aggregate amount of all Required
Subordinated Loans and Required Equity Contributions made on or prior to such
date.

          "Replacement Lender" shall mean a financial institution that (i) has
agreed to acquire and assume all or part of a Lender's proportionate share of
the Loans or its Commitment, (ii) is reasonably satisfactory to the Required
Lenders, (iii) is satisfactory to the Borrower in its sole discretion, (iv) if
any of the Letters of Credit is outstanding, is satisfactory to the Issuing Bank
in its sole discretion, (v) is eligible for the coverage of the Guarantee (as
defined in the Eximbank Guarantee Agreement) under the laws, rules, regulations
and policies of Eximbank and (vi) has been approved by Eximbank (if such
financial institution is not one of the Lenders listed in Schedule I to the
Lender Credit Agreement).

          "Representative Agreement" shall mean the Representative Agreement to
be entered into between the Administrative Agent and the Independent Engineer
for their benefit and for the benefit of the Issuing Bank, the Lenders and
Eximbank, and acknowledged and agreed to by the Borrower.

          "Republic" shall mean the Republic of the Philippines.

          "Republic Consent Agreement" shall mean the Acknowledgment and Consent
Agreement among the Department of Finance of the Republic on behalf of the
Republic, the Borrower and the Collateral Trustee, substantially in the form of
Exhibit A to the Lender Credit Agreement.

          "Request for Letter of Credit Approval" shall have the meaning
specified in the Eximbank Utilization Procedures.

          "Required Equity Contributions" shall mean, collectively, the Progress
Equity Contributions and any and all Default Equity Contributions.

                                       46

          "Required Funding Amount" shall mean $16,705,045.

          "Required Lenders" shall mean, at any time, Lenders holding at such
time at least 66 2/3% of (i) prior to the Credit Date, the Total Commitment and
(ii) on and after the Credit Date, the Total Loans.

          "Required Letter of Credit" shall have the meaning specified in
Section 2(k)(i) of the Funding Agreement.

          "Required Reserves" shall have the meaning specified in Section
2.5(e) of the Lender Credit Agreement.

          "Required Secured Parties" shall mean, subject to Section 9.17 of the
Lender Credit Agreement, (i) initially and until the Credit Date, the holders of
at least 66 2/3% of the sum of the Total Commitment and (ii) at any time on or
after the Credit Date and prior to the Senior Debt Termination Date, the holders
at such time of at least 66 2/3% of the Senior Secured Principal Amount
Outstanding, and (iii) at any time on or after the Senior Debt Termination Date
and prior to the Termination Date, the holders at such time of at least 66-2/3%
of the Subordinated Secured Principal Amount Outstanding.

          "Required Subordinated Loans" shall mean, collectively, the Progress
Subordinated Loans and any and all Default Subordinated Loans.

          "Restricted Payment" shall have the meaning provided in Section 8.03
of the Eximbank Credit Agreement.

          "S&P" shall mean Standard & Poor's Corporation.

          "Sales" shall mean all sales by the Borrower of electricity to
PNOC-EDC or any other Person under the BOT Agreement or otherwise.

          "Sales Proceeds" shall mean all monies due and to become due to the
Borrower from all Sales and all monies due and to become due to the Borrower on
account of the payment by PNOC-EDC of Capacity Payments and Energy Fees (each
such term as defined in the BOT Agreement) as required by Section 2.2 of the BOT
Agreement and shall include, without limitation, all accounts, contract rights
and all rights and benefits whatsoever accruing to the Borrower under the BOT
Agreement and including, without limitation, all rights to,

                                       47

and rights to collect, proceeds due in connection with the sale of electricity
under the BOT Agreement and the right to amend, cancel, terminate and/or
supplement the BOT Agreement and all proceeds thereof as defined in the Uniform
Commercial Code of the State of New York.

          "Scheduled Completion Date" shall have the meaning specified in
Section 1.1 of the Supply Contract and Section 1.1 of the Construction Contract.

          "Secured Obligations" shall mean, collectively, the Senior Secured
Obligations and the Subordinated Secured Obligations.

          "Secured Parties" shall mean, collectively, the Senior Secured Parties
and the Subordinated Secured Parties.

          "Security" shall mean (i) the Security Documents, (ii) the power or
powers of attorney provided for in any of the Security Documents, (iii) the
benefits and/or assignment of benefits under the Insurance Contracts pursuant
thereto or any other Project Document, together with (iv) all rights, powers and
remedies of the Secured Parties (or any of them) under the Security Documents as
well as such other security, liens, rights, powers and remedies as may be
created or granted by the Borrower, Ormat, Ormat International, Inc., Ormat
Philippines or Orleyte Company in favor of the Collateral Trustee for the
benefit of the Secured Parties, or in favor of the Secured Parties (or any of
them) at a later date under any other agreement with the Borrower, Ormat, Ormat
International, Inc., Ormat Philippines or Orleyte Company; together with the
rights, benefits and remedies of the Secured Parties (or any of them), inherent
thereto or provided for herein or therein.

          "Security Documents" shall mean the Disbursement Agreement, the
Mortgage, Assignment and Pledge Agreement, the Collateral Trust Agreement and
the Funding Agreement.

          "Security Interest" shall have the meaning specified in Section 2(j)
(iii) of the Funding Agreement.

          "Senior Debt Service" shall mean, for any period, an amount equal to
the aggregate of (without duplication) Lender Financing Debt Service, Eximbank
Debt Service and Senior Permitted Debt Service for such period.

                                       48

          "Senior Debt Termination Date" shall mean the later to occur of (i)
the Lender Financing Termination Date and (ii) the Eximbank Termination Date.

          "Senior Permitted Debt Service" shall mean, for any period, an amount
equal to the aggregate of all amounts which the Borrower is obligated to pay
during such period to any Senior Permitted Indebtedness Holder on account of any
Senior Permitted Indebtedness.

          "Senior Permitted Indebtedness" shall mean, collectively (i) any
Unsecured Senior Working Capital Indebtedness and (ii) Indebtedness of the
Borrower which, at the time incurred, was permitted to be incurred by the
Borrower in compliance with each of Section 6.17(e) of the Lender Credit
Agreement and Section 8.05(e) of the Eximbank Credit Agreement.

          "Senior Permitted Indebtedness Holders" shall mean, collectively, (i)
any Senior Working Capital Lenders and (ii) the holders of Indebtedness of the
Borrower described in clause (ii) of the definition of the term "Senior
Permitted Indebtedness" in this Schedule X.

          "Senior Secured Obligations" shall mean, collectively, the Lender
Financing Secured Obligations and the Eximbank Secured Obligations.

          "Senior Secured Parties" shall mean, collectively, the Administrative
Agent, the Collateral Trustee, the Lenders, the Issuing Bank, Eximbank and the
respective successors and permitted assigns of such Persons, excluding the
Collateral Trustee with respect to the giving of (i) any consents under the
Lender Credit Agreement and (ii) any instructions, advice or indemnity under any
Project Document where the Collateral Trustee is the recipient of such
instructions, advice or indemnity.

          "Senior Secured Principal Amount Outstanding" shall mean, at any time,
the sum of the aggregate principal amounts of (i) the Loans outstanding at such
time, (ii) without duplication of clause (i), the amount (if any) paid by
Eximbank to the Lenders pursuant to the Eximbank Guarantee Agreement and (iii)
the Eximbank Credit outstanding at such time.

                                       49

          "Senior Working Capital Lenders" shall mean one or more banks to whom
the Borrower has incurred any liability in respect of any Unsecured Senior
Working Capital Indebtedness.

          "Service Fee Account" shall have the meaning specified in Section
3.02(c) of the Disbursement Agreement.

          "SFRI Fees" shall have the meaning specified in Section 3.02(c) of
the Disbursement Agreement.

          "Short-term Debt" shall mean, at any date, all Indebtedness of the
Borrower other than Long-term Debt.

          "Site" shall mean the "Site" as defined in the BOT Agreement.

          "Standby Equity Contribution" shall have the meaning specified in
Section 2(c)(i) of the Funding Agreement.

          "Standby Funding Account" shall have the meaning specified in Section
2(j)(ii) of the Funding Agreement.

          "Standby Funding Amount" shall mean $2 million.

          "Standby Letter of Credit" shall have the meaning specified in Section
2(k)(ii) of the Funding Agreement. The Lenders have approved The Industrial
Development Bank of Israel Ltd. as the issuer of the Standby Letter of Credit.

          "Standby Subordinated Loan" shall have the meaning specified in
Section 2(c)(i) of the Funding Agreement.

          "Subordinated Debt Service" shall mean, for any period, an amount
equal to the sum of Third Party Subordinated Debt Service, Affiliated
Subordinated Debt Service and Subordinated Working Capital Debt Service for such
period.

          "Subordinated Debt Termination Date" shall mean the date on which the
Borrower shall have paid in full all Subordinated Secured Obligations.

          "Subordinated Indebtedness" means, collectively Subordinated Secured
Working Capital Indebtedness, Third

                                       50

Party Subordinated Indebtedness and Affiliated Subordinated Loans.

          "Subordinated Note" and "Subordinated Notes" shall have the respective
meanings specified in Section 2(e) of the Funding Agreement.

          "Subordinated Secured Obligations" shall mean, collectively, the Third
Party Subordinated Obligations, the Affiliated Subordinated Obligations and the
Working Capital Subordinated Secured Obligations.

          "Subordinated Secured Parties" shall mean, collectively, the
Affiliated Funding Entities (but only to the extent of the amount of the
Affiliated Subordinated Obligations), the Third Party Subordinated Lenders and
the Subordinated Working Capital Lenders.

          "Subordinated Secured Principal Amount Outstanding" shall mean, at any
time, the sum of the aggregate principal amounts of (i) the Affiliated
Subordinated Loans outstanding at such time, (ii) Third Party Subordinated
Indebtedness outstanding at such time and (iii) Subordinated Working Capital
Loans outstanding at such time.

          "Subordinated Secured Working Capital Indebtedness" shall mean
indebtedness of the Borrower (including the principal amount of any loan
advanced to the Borrower and the face amount of any letter of credit issued for
the account of the Borrower (such amounts, to the extent advanced, the
"Subordinated Working Capital Loans") and any and all interest, fees, premiums
and other charges on either of the foregoing) which is incurred for money
borrowed from one or more banks solely for working capital purposes, payments on
which indebtedness is subordinated to (i) the prior payment in full of the
Lender Financing Secured Obligations on the terms set forth in Schedule 6.17(c)
to the Lender Credit Agreement and (ii) the prior payment in full of the
Eximbank Secured Obligations on the terms set forth in Schedule 8.05(c) to the
Eximbank Credit Agreement.

          "Subordinated Working Capital Debt Service" shall mean, for any
period, an amount equal to the aggregate of all amounts which the Borrower is
obligated to pay during such period (whether by scheduled payment, maturity,
acceleration or otherwise) to any Subordinated Working Capital Lender on

                                       51

account of any Working Capital Subordinated Secured Obligations.

          "Subordinated Working Capital Lenders" shall mean one or more banks to
whom the Borrower has incurred any liability in respect of any Subordinated
Secured Working Capital Indebtedness and who are reasonably acceptable to the
Required Lenders and the Collateral Trustee.

          "Subordinated Working Capital Loans" shall have the meaning specified
in the definition of the term "Subordinated Secured Working Capital
Indebtedness" in this Schedule X.

          "Subordinated Working Capital Termination Date" shall mean the date on
which the Borrower shall have paid in full, in cash, all Working Capital
Subordinated Secured Obligations and the commitment of each Subordinated Working
Capital Lender shall have been terminated.

          "Subsidiary" shall mean, as to any Person, (i) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or one
or more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.

          "Substantial Completion" shall have the meaning specified in Section
1.1 of the Construction Contract.

          "Supplier" shall have the meaning specified in the Eximbank
Utilization Procedures.

          "Supply Contract" shall mean the Supply Contract dated as of April 30,
1996 between the Borrower and the Construction Supplier, as supplemented and
amended by the Keystone Agreement.

          "Supply Contract Letters of Credit" shall mean, collectively, (i) the
Letter of Credit (as defined in the Keystone Agreement) to be issued for the
benefit of the Collateral Trustee for the account of Ormat pursuant to

                                       52

Section 3.1 of the Keystone Agreement and (ii) the Retention Letter of Credit
(as defined in the Keystone Agreement) to be issued for the benefit of the
Collateral Trustee for the account of Ormat pursuant to Section 3.1 of the
Keystone Agreement. The Lenders have approved Bank Hapoalim B.M. as the issuer
of the Letter of Credit referred to in clause (i) of the preceding sentence and
The Industrial Development Bank of Israel Ltd. as the issuer of the Retention
Letter of Credit referred to in clause (ii) of the preceding sentence.

          "Surety Instruments" shall mean all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.

          "Swap Contracts" shall mean swap agreements (as such term is defined
in Section 101 of the Federal Bankruptcy Reform Act of 1978) and any other
agreements or arrangements designed to provide protection against fluctuations
in interest or currency exchange rates or commodity prices.

          "Taxes" shall mean any taxes, levies, imposts, duties or other
charges, of whatsoever nature, imposed by the Republic or any political
subdivision or taxing authority thereof.

          "Tel Aviv Business Day" shall mean (i) any day that is not a Saturday,
a Sunday or a day on which commercial banks in Tel Aviv are required or
authorized to be closed and (ii) when used in any respect relating to LIBOR, any
day described in clause (i) of this definition that is also a day on which
dealings may be carried out in the London inter-bank market.

          "Termination Date" shall mean the later to occur of (i) the Senior
Debt Termination Date and (ii) the Subordinated Debt Termination Date.

          "Termination Event" shall mean: (i) any "Reportable Event" described
in Section 4043(b) of ERISA, other than an event for which the 30 day notice
requirement is met under Section .13, .14, .18, .19 or .20 of PBGC Regulation
Section 2615; (ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial employer" within
the meaning of Section 4001(a)(2) of ERISA; (iii) the filing of intent to
terminate a Pension Plan, the treatment of a Pension Plan

                                       53

amendment as a termination under Section 4041 of ERISA, the appointment of a
trustee with respect thereto, or the termination of a Pension Plan; (iv) the
institution of proceedings to terminate a Pension Plan or to appoint a trustee
with respect to a Pension Plan by the PBGC; (v) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of a lien pursuant to Section 412 of the Code or Section 302
or 4068 of ERISA; (vii) the complete or partial withdrawal under Section 4201 or
4204 of ERISA from a Multiemployer Plan; (viii) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan under
Section 4241 or 4245 of ERISA; or (ix) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.

          "Third Party Subordinated Debt Service" shall mean, for any period, an
amount equal to the aggregate of all amounts which the Borrower is obligated to
pay during such period (whether by scheduled payment, maturity, acceleration or
otherwise) to any Third Party Subordinated Lender on account of any Third Party
Subordinated Indebtedness.

          "Third Party Subordinated Indebtedness" shall mean indebtedness of the
Borrower (including principal, interest, fees, premiums and other charges
thereon) in an aggregate principal amount not to exceed $2.5 million at any
time, payments of principal, interest and premium on which is subordinated to
(i) the prior payment in full of the Lender Financing Secured Obligations on the
terms set forth in Schedule 6.17(c) to the Lender Credit Agreement and (ii) the
prior payment in full of the Eximbank Secured Obligations on the terms set forth
in Schedule 8.05(c) to the Eximbank Credit Agreement.

          "Third Party Subordinated Lender" shall mean one or more Persons, none
of whom is an Affiliate of the Borrower or any of its Affiliates, to whom the
Borrower has incurred any liability in respect of any Third Party Subordinated
Indebtedness.

          "Third Party Subordinated Obligations" shall mean all amounts payable
by the Borrower to any Third Party

                                       54

Subordinated Lender in respect of Third Party Subordinated Indebtedness.

          "Total Commitment" shall mean, at any time, the sum of the Commitments
of each Lender.

          "Total Letter of Credit" shall mean, at any time, the stated amount of
the Mixed Letter of Credit less the aggregate amount of all drawings made
thereunder as at such time.

          "Total Loans" shall mean, at any time, the aggregate principal amount
of all Loans outstanding at such time.

          "Total Unutilized Commitment" shall mean, at any time, the Total
Commitment at such time less (i) the Total Loans at such time and (ii) the Total
Letter of Credit at such time, which amount of Total Letter of Credit shall
include the stated amount of the Letter of Credit requested to be opened by the
Borrower at such time.

          "United States" shall mean the United States of America.

          "Unsecured Senior Working Capital Indebtedness" shall mean
indebtedness of the Borrower (including the principal amount of any loan
advanced to the Borrower and the face amount of any letter of credit issued for
the account of the Borrower (such amounts, to the extent advanced, the
"Unsecured Senior Working Capital Loans") and any and all interest, fees,
premiums and the other charges on either of the foregoing) which (i) is not
secured by any Lien, (ii) is incurred for money borrowed from one or more banks
solely for working capital purposes and (iii) on the date incurred, was
permitted to be incurred by the Borrower in compliance with each of Section
6.17(b) of the Lender Credit Agreement and Section 8.05(c) of the Eximbank
Credit Agreement.

          "U.S. Content" shall have the meaning specified in the Eximbank
Utilization Procedures.

          "Utilization" shall mean the making of a Loan or the issuance of any
of the Letters of Credit pursuant to the terms of the Lender Credit Agreement.

                                       55

          2. Principles of Construction. (a) The meanings set forth for defined
terms in this Schedule X or in any Financing Document shall be equally
applicable to both the singular and plural forms of the terms defined.

          (b) All references in any Financing Document to clauses, sections,
articles, schedules, annexes and exhibits are to clauses, sections, articles,
schedules and exhibits in or to such Financing Document unless otherwise
specified therein. The words "hereof," "herein" and "hereunder" and words of
similar import when used in a Financing Document shall refer to such Financing
Document as a whole and not to any particular provision of such Financing
Document.

          (c) All accounting terms not specifically defined in a Financing
Document shall be construed in accordance with generally accepted accounting
principles in conformity with those used in the preparation of the financial
statements referred to in Section 6.1 of the Lender Credit Agreement and Section
7.01 of the Eximbank Credit Agreement except as otherwise provided in such
Financing Document.

          (d) References in any Financing Document to any statute, decree or
regulation shall be construed as a reference to such statute, law, decree or
regulation as reenacted, redesignated, amended or extended from time to time
and references in any Financing Document to any document or agreement shall be
deemed to include references to such document or agreement as amended, varied,
supplemented or replaced from time to time.

          (e) References to any representation by the Borrower, by any Obligor
which is an Affiliate of the Borrower or by the Sponsor or by any officer
thereof being to the best of such Person's knowledge shall be deemed to be to
the best of such Person's knowledge after due inquiry.

          (f) If any amount to be determined or measured pursuant to any of the
Financing Documents relates to a transaction in a currency other than Dollars,
such determination shall be made by converting such currency by reference to the
buying spot market rate of exchange on the date of such transaction.

          (g) References to any Person or Persons shall be construed as a
reference to any permitted successors or permitted assigns of such Person or
Persons.

                                       56

          (h) The headings of the articles, sections and subsections in any
Financing Document are included for convenience only and shall not in any way
affect the meaning or construction of any provision of such Financing Document.

          (i) References in any Financing Document or this Schedule X to any
Financing Document shall be construed as a reference to such Financing Document,
together with all schedules, exhibits and annexes thereto.

                                       57

                                                            Schedule 5.01(b) to
                                                       Eximbank Credit Agreement

                                 LEGAL OPINIONS

Section A

1.   Opinion of Perkins Coie, New York Counsel to the Borrower, Ormat
     Industries, Ltd., Ormat International, Inc., Orleyte Company and Ormat
     Philippines, Inc.

2.   Opinion of SyCip, Salazar, Hernandez & Gatmaitan, Philippine Counsel to the
     Borrower, Orleyte Company and Ormat Philippines, Inc.

3.   Opinion of SyCip, Salazar, Hernandez & Gatmaitan, Philippine Counsel to the
     Borrower as required by Section 5.0l(o) of the Eximbank Credit Agreement

4.   Opinion of Israeli Counsel to Ormat industries, Ltd.

5.   Opinion of Cayman Islands Counsel to Orleyte Company and Ormat Philippines,
     Inc.

6.   Opinion of Counsel to PNOC-Energy Development Corporation

7.   Opinion of Secretary of Justice of the Republic of the Philippines
     regarding the validity, enforceability and binding effect of the
     Performance Undertaking

8.   Opinion of Secretary of Justice of the Republic of the Philippines
     regarding the validity, enforceability and binding effect of the Republic
     Consent Agreement

9.   Opinion of Castillo Laman Tan Pantaleon & San Jose, Philippine Counsel to
     Eximbank

10.  Opinion of Special Regulatory Counsel to the Borrower, Ormat industries,
     Ltd., Ormat International, Inc., Orleyte Company and Ormat Philippines,
     Inc. and other Ormat Entities

Section B

1.   Opinion of Perkins Coie, New York Counsel to the Botrower, Ormat
     Industries, Ltd., Ormat International, Inc., Orleyte Company and Ormat
     Philippines, Inc.

2.   Opinion of SyCip, Salazar, Hernandez & Gatmaitan, Philippine Counsel to the
     Borrower, Ormat Industries, Ltd., Ormat International, Inc., Orleyte
     Company and Ormat Philippines, Inc.

3.   Opinion of Cayman Islands Counsel to Orleyte Company and Ormat Philippines,
     Inc.

4.   Opinion of Israeli Counsel to Ormat Industries, Ltd.

                                       -2-

                                                             Schedule 5.01(t) to
                                                       Eximbank Credit Agreement

                         LIST OF GOVERNMENTAL APPROVALS
                        FOR THE PROJECT AND ITS FINANCING

A.   GOVERNMENT APPROVALS TO BE OBTAINED PRIOR TO FIRST DISBURSEMENT

     1.   CENTRAL BANK OF THE PHILIPPINES

          1.1  Approval of (i) the foreign currency loans to be made to the
               Borrower by me Lenders, (ii) the direct disbursements of foreign
               loans, and (iii) the financial guarantees by foreign banks and
               financial institutions of the Borrower's obligations.

          1.2  Registration of the build-operate-transfer scheme under the BOT
               Agreement.

          1.3  Certification that the terms and provisions of each of the Lender
               Credit Agreement and the Eximbank Credit Agreement (the "Loan
               Agreements") are substantially in order and conform with the
               terms and conditions of the approval of the Central Bank.

          1.4  Registration in coordination with the Securities and Exchange
               Commission ("SEC") of the direct foreign equity investments in
               each of Orleyte Company and Ormat Philippines, Inc. (the
               "Partners").

     2.   BOARD OF INVESTMENTS ("BOI")

          2.1  (i) Approval of the transfer of the first phase/50MW of the
               registration of PNOC-EDC as a pioneer enterprise under the
               Omnibus Investments Code of 1987 in connection with the 440MW
               Leyte Geothermal Project under Certificate of Registration No.
               90-802, dated September 30, 1991, to the Borrower, (ii)
               annotation of such transfer in the said Certificate of
               Registration, and (iii) compliance with the conditions for such
               transfer.

          2.2  Confirmation mat in the event of foreclosure of the security over
               the Borrower or its assets, prior notice to the BOI shall be
               deemed substantial compliance with the condition of prior BOI
               permission for transfer of ownership/control over the enterprise,

                                        1

          2.3  Waiver of compliance by the Borrower with the 10% public
               participation requirement.

          2.4  Extension of the benefit of tax and duty-free importation of
               capital equipment until September, 1998.

     SECURITIES AND EXCHANGE COMMISSION

          3.1  SEC Certificate of Registration No. AP096-O0338, dated February
               14, 1996, in favor of the Borrower, approving the formation of
               the Borrower as a limited partnership under the laws of the
               Philippines and granting it the authority to do business in the
               Philippines.

          3.2  SEC Certificate of Registration No. AP096-014, dated January
               26, 1996, in favor of the Orleyte Company, approving its
               establishment of a branch office and granting it the authority to
               do business in the Philippines.

          3.3  SEC Certificate of Registration No. AP096-015, dated January
               26, 1996, in favor of Ormat Philippines, Inc., approving its
               establishment of a branch office and granting it the authority to
               do business in die Philippines.

     OFFICE OF THE PRESIDENT/DEPARTMENT OF FINANCE

          4.1  Performance Undertaking executed on December 12, 1995 by the
               Undersecretary of Finance to Ormat Inc. and its successors and
               assigns to guarantee the performance by PNOC-EDC of its
               obligations under the BOT Agreement.

          4.2  Full powers authorization issued by the President of the Republic
               on July 19, 1995, confirming the authority of Honorable Nazario
               C. Vasquez, President of PNOC-EDC to execute the BOT Agreement
               and authorizing Honorable Roberto F. De Ocampo, Secretary of
               Finance, Honorable Romeo L. Bernardo, Undersecretary of Finance,
               or Honorable Ma. Cecilia G. Soriano, Undersecretary of Finance,
               to execute the Performance Undertaking and any other deed or
               document which may be necessary or proper for the purpose of
               implementing such Performance Undertaking.

                                        2

          4.3  Republic Acknowledgment and Consent Agreement executed by the
               Department of Finance, consenting to the security and other
               arrangements required by the lenders of the Borrower.

     5.   DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES
          ("DENR")

          5.1  Environmental Compliance Certificate, dated May 20, 1993, in
               favor of PNOC-EDC and the Project (the "ECC").

          5.2  Confirmation of the Environmental Management Bureau, dated July
               31, 1995, stating that the Project is covered by the ECC.

          5.3  Certification that the Sites are on public land, not subject to
               any private rights, and are located within the Leyte Geothermal
               Reservation.

     6.   PNOC-EDC

          6.1  Resolutions of PNOC-EDC board of directors authorizing the
               execution, delivery and performance by PNOC-EDC of the BOT
               Agreement, the PNOC-EDC Consent Agreement and the Accession
               Undertaking, certified by the Corporate Secretary of PNOC-EDC.

          6.2  Power Purchase Agreement between NAPOCOR and PNOC-EDC, dated
               March 4, 1994 (as amended).

          6.3  Resolutions of the respective boards of directors of PNOC-EDC and
               NAPOCOR authorizing the execution, delivery and performance of
               the Power Purchase Agreement.

          6.4  Certificate from PNOC-EDC, duly notarized, confirming PNOC-EDC's
               right to use the Site and that the Borrower has the right to use
               the Site until the Transfer Date (as defined in the BOT
               Agreement).

     7.   NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY

          7.1  Certification, dated November 21, 1995, of the approval given on
               November 14, 1995 of the Project as a high priority economic
               project for power development for purposes of the Uniform
               Currency Act.

                                        3

          7.2  Confirmation, dated November 2, 1995, of the approval of the
               Project by the Investment Coordination Committee.

     8.   DEPARTMENT OF ENERGY

          8.1  Accreditation of the Borrower as a Block Power Production
               Facility under Executive Order 215.

     9.   REGIONAL DEVELOPMENT COUNCIL FOR REGION VIII

          9.1  Endorsement and Approval of the Leyte "A" Geothermal Project
               pursuant to Resolution No. 11, s. 1992 and Resolution No. 8, s.
               1994.

     10.  LOCAL GOVERNMENTS

          10.1 Approval of the Project by the affected Sanguniang Barangay(s),
               Sanguniang Bayan, Ormoc City and Provincial Government.

     11.  BUREAU OF INTERNAL REVENUE

          11.1 Documentary stamp tax on Project Documents and the Financing
               Documents.

          11.2 Registration of the Borrower, including VAT registration and
               obtainment of taxpayer identification number and VAT
               identification number.

          11.3 Registration of the Borrower's books of account, invoices and
               official receipts.

          11.4 Registration of the Borrower as a withholding agent, including
               obtainment of withholding agent's identification number.

     12.  LAND TRANSPORTATION OFFICE

          12.1 Registration of vehicles, if any.

          12.2 Registration of the chattel mortgage on motor vehicles, if any,
               constituting "Present Chattel" as defined in the Mortgage,
               Assignment and Pledge.

     13.  REGISTER OF DEEDS

          13.1 Registration of the Mortgage with the appropriate branch of the
               Register of Deeds of Leyte.

                                        4

     14.  NATIONAL ELECTRIFICATION ADMINISTRATION ("NEA") AND ENERGY REGULATORY
          BOARD ("ERB")

          14.1 NEA opinion, dated September 6, 1995, issued to PNOC-EDC
               confirming that the operation by the Borrower of the Plants will
               not constitute a public utility so as to require a franchise,
               certificate of public convenience and other similar license.

          14.2 ERB opinion, dated August 31, 1995, issued to PNOC confirming
               that the operation by the Borrower of the Plants will not
               constitute a public utility so as to require a franchise,
               certificate of public convenience and other similar licenses.

     15.  PHILIPPINE CONTRACTOR'S ACCREDITATION BOARD

          15.1 EPC Contractor's Accreditation.

B.   GOVERNMENT APPROVALS PERTAINING TO LATER STAGES OF CONSTRUCTION AND
     OPERATION OF THE PROJECT AND TO BE OBTAINED AT A LATER DATE

     1.   DEPARTMENT OF LABOR AND EMPLOYMENT

          1.1  Permit to install and operate internal combustion engines, boiler
               and pressure vessels, if applicable.

          1.2  Permit for electrical installation.

          1.3  Working permits for alien employees of the Borrower.

     2. BOARD OF INVESTMENTS

          2.1  Certificate(s) of Authority to import capital equipment.

          2.2  Specific authorization to employ non-Filipinos as supervisors of
               the Borrower.

     3.   CENTRAL BANK OF THE PHILIPPINES

          3.1  (i) Notation of each loan disbursement and (ii) registration of
               the loans after full disbursement or termination of commitment.

          3.2  Compliance with specific terms and conditions of the approval
               letter to the Central Bank.

                                        5

          3.3  Authority to purchase foreign exchange from the local banking
               system to service registered obligations of the Borrower outside
               of the approved schedule of payments, assignment of rights and
               obligations of the Borrower under the Loan Agreements, amendment
               of any provision of the Loan Agreements affecting the terms and
               conditions upon which Central Bank approval was obtained, or
               voluntary buy-out of the Plants under the BOT Agreement (if
               applicable).

     4.   DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

          4.1  Authority to construct.

          4.2  Permit to operate the Plant, including the industrial waste
               disposal site (if applicable).

          4.3  Permit to cut trees from Forestry Sector, if necessary.

     5.   LOCAL GOVERNMENT PERMITS

          5.1  Mayor's permit.

          5.2  Engine, boiler and electrical permits.

          5.3  Local building permit(s), including zoning and land use
               verification, permit for demolition, sanitary or plumbing
               permits, electrical permit, fencing permit, sidewalk permit and
               fire safety inspection permit and certificate of occupancy.

     6.   COMMISSION ON IMMIGRATION AND DEPORTATION

          6.1  Visas of foreign nationals employed by the Borrower.

     7.   BUREAU OF INTERNAL REVENUE

          7.1  File monthly tax returns of income tax withheld from employees.

          7.2  File corporate income tax returns annually.

          7.3  File monthly and annual returns of income taxes withheld, if any,
               from third parties.

          7.4  File application for Tax Treaty Relief with the Law Division of
               the Bureau of Internal Revenue not later than 15 days before date
               of affected payment.

                                        6

     8.   SOCIAL SECURITY SYSTEM

          8.1  Register the Borrower as an employer and obtain a Social Security
               System employer identification number.

          8.2  Register employees with the Social Security System and remit
               monthly contributions.

     9.   REGISTER OF DEEDS/LAND TRANSPORTATION OFFICE

          9.1  Registration of periodic Mortgage Supplements, as required under
               the Mortgage, Assignment and Pledge Agreement.

     10.  INSURANCE COMMISSION

          10.1 (i) Approval of cut-through clauses or (ii) submission of
               cut-through clauses of the insurance policies and acceptance
               thereof.

          10.2 Submission and acceptance of insurance policies.

     11.  DEPARTMENT OF ENERGY

          11.1 Confirmation of compliance with RA 7638 (Electrification Fund).

     12.  SECURITIES AND EXCHANGE COMMISSION

          12.1 Submission of General information Statements for each of the
               Partners.

                                        7

                                                             Schedule 6.0l(h) to
                                                       Eximbank Credit Agreement

                                   LITIGATION

                                      None.

                                                             Schedule 6.0l(t) to
                                                       Eximbank Credit Agreement

                           FOREIGN EXCHANGE APPROVALS

1.   Central Bank of the Philippines

     1.1  Approval of (i) the foreign currency loans to be made to the Borrower
          by the Lenders, (ii) the direct disbursements of foreign loans, and
          (iii) the financial guarantees by foreign banks and financial
          institutions of the Borrower's obligations.

     1.2  Registration of the build-operate-transfer scheme under the BOT
          Agreement.

     1.3  Certification that the terms and provisions of each of the Lender
          Credit Agreement and the Eximbank Credit Agreement (the "Loan
          Agreements") are substantially in order and conform with the terms and
          conditions of the approval of the Central Bank.

     1.4  Registration in coordination with the Securities and Exchange
          Commission of the direct foreign equity investments in each of Orleyte
          Company and Ormat Philippines, Inc.

     1.5  (i) Notation of each loan disbursement and (ii) registration of the
          loans after full disbursement or termination of commitment.

     1.6  Compliance with specific terms and conditions of the approval letter
          to the Central Bank.

     1.7  Authority to purchase foreign exchange from the local banking system
          to service registered obligations of the Borrower outside of the
          approved schedule of payments, assignment of rights and obligations of
          the Borrower under the Loan Agreements, amendment of any provision of
          the Loan Agreements affecting the terms and conditions upon which
          Central Bank approval was obtained, or voluntary buy-out of the Plants
          under the BOT Agreement (if applicable).

                                                             Schedule 6.01(u) to
                                                       Eximbank Credit Agreement

                               CONSTRUCTION BUDGET
                                (IN U.S. DOLLARS)

================================================================================
Supply Contract                                                      $37,366,000
--------------------------------------------------------------------------------
Construction Contract                                                  5,134,000
--------------------------------------------------------------------------------
Spares                                                                 2,000,000
--------------------------------------------------------------------------------
Interest During Construction                                           3,118,133
--------------------------------------------------------------------------------
Financing Costs, Legal and Advisors                                    5,223,716
--------------------------------------------------------------------------------
Project Administration                                                   300,000
--------------------------------------------------------------------------------
Debt Service and Working Capital Reserves                              4,481,540
--------------------------------------------------------------------------------
Contingencies                                                          4,500,000
--------------------------------------------------------------------------------
   TOTAL                                                             $62,123,389
================================================================================

                                                                Schedule 7.03 to
                                                       Eximbank Credit Agreement

                                 [TO BE REVISED]

                                  SCHEDULE 7.03

                   SCHEDULE OF MINIMUM INSURANCE REQUIREMENTS

Section A - Borrower's Insurance during Construction Period

The program will include the following forms of cover.

(a)  All statutorily required coverage, and ganeral liability coverage

(b)  Workers compensation coverage including U.S. workers compensation as
     necessary

(c)  Automobile liability and physical damage coverage, with respect to
     automobiles at the Site, if any, with the Collateral Trustee,
     Administrative Agent and Secured Parties as an additional insured

Such insurance shall be in full force and effect from and after the earlier of
(i) the date on which coverage is required to be maintained by law and (ii) the
date on which exposure to the risk covered by such insurance arises, and at
least 30 days prior to such date, the Borrower shall have furnished to the
Administrative Agent certificates (including confirmation of premium payments
then due) together with copies of the policies as soon as available (provided
that if copies of any such policy cannot be delivered within 60 days of the
effective date of the policy, then drafts of the policy shall be delivered
within such 60 day period, and copies of the actual policy ) from the Borrower's
insurance broker, which certificates and polices shall be in accordance with
Section 6.3 of the Lender Credit Agreement and Section 7.03 of the Eximbank
Credit Agreement.

Section B - Insurance of Construction Supplier and Construction Contractor

All Insurance referred to in this Section B as being kept in force by the
Construction Supplier or the Construction Contractor shall be endorsed to the
effect that the Borrower, the Collateral Trustee, the Administrative Agent and
the Secured Parties and such other Persons as the Borrower may specify in
writing shall be included as named insureds thereon and shall be fully
indemnified in respect of claims covered by such insurance that may be made
against the Borrower, tbe Collateral Trustee, the Administrative Agent and the
Secured Parties or such other Persons arising out of the execution of the
Project work or in connection with the Supply contract and the Construction
Contract. Collateral Trustee shall be sole loss payee, in such loss payable form
acceptable to Administrative Agent, for all insurance set forth in B-1 and
sections(a) through(d) in B-2, with such policies endorsed to make loss proceeds
payable to Collateral Trustee and/or its assigns in US dollars unless otherwise
designated by Collateral Trustee.

                                        1

Sub-Section B-1 - For the Construction Supplier Only

Without limiting the obligations, responsibilities and liabilities of the
Construction Supplier and Construction Contractor under the Supply Contract and
the Construction Contract, the Construction Supplier shall effect and maintain
at its own expense for the benefit of and in the joint names of the Borrower,
the Construction Supplier, the Construction Contractor, the Collateral Trustee,
the Administrative Agent and the Secured Parties, and Such Other Persons as the
Borrower may elect, The following Insurance;

(a)  Ocean Marine Cargo Insurance ("OM") covering imports of plant, equipment,
     machinery and materials to the Site.

     Cover is to be on the basis of Institute Cargo Clause (A) plus War, Strike,
     Riot and Civil Commotion and should include a minimum of 60 days storage on
     Site. The 60 days storage provision may be included in the Contactors All
     Risk Insurance. The sum insured with respect to each shipment shall not be
     less than the value of all plant, equipment and supplies, plus insurance
     and freight (CIF), with respect to each shipment.

     The only permissible cancellation is as follows: (i) cancellation on 7
     days' notice of coverage for war and strikes; (ii) cancellation on 48
     hours' notice for strikes preventing passage to or from the United States.
     The policy may be subject to the Five Powers Clause.

     The OM policy shall carry a 50/50 hidden damage provision

     Subject to Section D, the Construction Supplier shall have obtained such OM
     coverage on or prior to the date that is 30 days prior to the scheduled
     departure of the first shipment of plant equipment, machinery or materials
     to the Site. At least 30 days prior to such date, the Construction Supplier
     shall have furnished to the Administrative Agent a certificate (including
     confirmation of premium payment then due and compliance with the terms and
     conditions of Section B-l) together with copies of the policy as soon as
     available (provided that if copies of such policy cannot be delivered
     within 60 days of the effective date of the policy, then drafts of the
     policy shall be delivered within such 60 day period, and copies of the
     actual policy will be delivered in no event later than 90 days after the
     effective date of the policy) from the Construction Suppliers's insurance
     broker, which certificate and policy shall be in accordance with Section
     6.3 of the Lender Credit Agreement and Section 7.03 of the Eximbank Credit
     Agreement.

(b)  Construction Supplier's Other Insurance

     In addition to the insurance referred to herein, the Construction Supplier
     shall maintain policies of insurance to the satisfaction of and in the
     format approved by the Borrower and

                                        2

     the Administrative Agent, and to be maintained for such periods as the
     Borrower may require, to indemnify the Construction Supplier against loss
     or damage to the project work and to the works in the course of manufacture
     off-site, and effects therefrom resulting from defects in the design.

     Subject to Section D, the Construction Supplier shall have obtained each of
     such other insurance on or prior to the date on which the exposure to the
     risk covered thereby arises, and at least 30 days prior to such date, the
     Construction Supplier shall have furnished to the Administrative Agent a
     certificate (including confirmation of premium payments then due and
     compliance with the terms and conditions of Section B-1) together with
     copies of the policy as soon as available (provided that if copies of any
     such policy cannot be delivered within 60 days of the effective date of the
     policy, then drafts of the policy shall be delivered within such 60 day
     period, and copies of the actual policy will be delivered in no event later
     than 90 days after the effective date of the policy) from the Construction
     Supplier's insurance broker, which certificate and policy shall be in
     accordance with Section 6.3 of the Lender Credit Agreement and Section 7.03
     of the Eximbank Credit Agreement,

Sub-Section B2 - For Both the Construction Supplier and Construction Contractor

Without limiting the obligations, responsibilities and liabilities of the
Construction Supplier and Construction Contractor under the Supply Contract and
the Construction Contract, the Construction Contractor or the Construction
Supplier shall effect and maintain, or cause to be maintained, at its own
expense for the benefit of and in the joint names of the Borrower, the
Construction Supplier, the Construction Contractor and Subcontractors (as
defined in the Construction Contract) contracting directly with the Construction
Contractor, the Collateral Trustee, the Administrative Agent and the Secured
Parties, and such other persons as the Borrower may elect, the following
insurance:

(a)  Contractors All Risks ("CAR") Insurance covering loss or damage to the
     Project works during the construction and testing/commissioning periods.

     The policy will include the interest of all parties concerned in the
     Project, and is to be on as broad a basis as possible including full
     coverage for riot, strike and civil strife perils, earthquake, volcanic
     eruption, flood and storm (e.g., typhoon) losses. Sublimits are permissible
     for items such as debris removal, express freight, air freight; overtime,
     etc. Cover is to be coordinated with the expiration of ocean transit
     insurance and should include any partial or pre-operational phase until, at
     the option of the Borrower, BOT Completion or Substantial Completion (each
     as defined in the Construction Contract); such date, the "Operational
     Insurance Date". Also to be included are full cover for testing, inland
     transit exposures and extended maintenance cover for the Warranty Periods
     (as defined in the Supply Contract and the Construction Contract). No
     cancellation

                                        3

     provision is permitted other than as follows: (i) for non payment of
     premium and (ii) cancellation for riot and strike cover on no less than 14
     days' notice (and the Construction contractor or the Construction Supplier
     will use reasonable efforts to negotiate a period of longer than 14 days).

     Coverage for damage due to faulty design shall be included to the extent
     coverage is available. The sum insured should be on a full replacement cost
     basis and should include any "free issue" supplied to the Construction
     Supplier and the Construction Contractor such as start up electricity
     costs, etc.

     The policy and/or separate policies shall also include a third party
     liability section with a minimum limit of liability of US$15,000,000 and
     should include full cross liabilities. The jurisdiction shall be worldwide
     including USA & Canada. Deductible levels shall be negotiable between the
     Borrower and the Construction Supplier/Contractor, subject to a maximum
     level of US$100,000 for each claim occurrence.

     The CAR policy shall carry a 50/50 hidden damage provision

     The Construction Contractor or the Construction supplier shall have
     obtained such CAR coverage on or prior to the date on which the exposure to
     the risk covered by the CAR coverage arises. At least 30 days prior to the
     earlier of (i) the Cross-Over Date and (ii) the date on which exposure to
     the risk covered by such insurance arises, the Construction Contractor or
     the Construction Supplier shall have furnished to the Administrative Agent
     a certificate (including confirmation of premium payments then due and
     compliance with the terms and conditions of Section B-2) together with
     copies of the policy as soon as available (provided that if copies of any
     such policy cannot be delivered within 60 days of the effective date of the
     policy, then drafts of the policy shall be delivered within such 60 day
     period, and copies of the actual policy will be delivered in no event later
     than 90 days after the effective date of the policy) from the Construction
     Supplier's or the Construction Contractor's (as the case may be) insurance
     broker, which certificate and policy shall be in accordance with Section
     6.3 Of the Lender Credit Agreement and Section 7.03 Of the Eximbank Credit
     Agreement.

(b)  Business Interruption Insurance covering loss of revenues/increased costs
     due to delay in start up of the Project as a result of damage during
     transit to site and during construction, testing and commissioning.

     (i)  Marine Delay in Start Up ("MDSU") coverage

     (ii) Advanced Loss of Profits ("ALOP") coverage

                                        4

     The insured sum shall be based on an indemnity period of nine (9) months
     for back pressure turbines and twelve (12) months for the condensing
     turbine for interest charges (including additional interest in the event of
     principal rescheduling as a result of an admissible claim under the policy)
     and fixed expenses.

     The indemnity period shall be twelve (12) months for MDSU and for ALOP.

     Scope of cover is to be "All Risks" including fire, lightning, explosion,
     riot, strike, civil commotion, port blockage, malicious damage, earthquake,
     volcanic eruption, full storm perils and flood. Port blockage coverage may
     be issued separately if is not included in the "OM" policy.

     Deductible are to be no more than 45 days for ALOP and 30 days for MDSU.

     The Construction Contractor or the Construction Supplier shall have
     obtained the (i) MDSU coverage at the same time, in the same manner and
     subject to the same conditions as specified for the Ocean Marine Cargo
     Insurance, and (ii) the ALOP coverage at the same time, in the same manner
     and subject to the same conditions as specified for the Contractors All
     Risk insurance/

(c)  Terrorism and Sabotage ("T&S") insurance covering loss or damage to the
     Project Works during the construction and testing/commissioning periods and
     business interruption loss doe to delay in startup of the Project resulting
     from Terrorism and Sabotage. A separate T&S policy is not required if (i)
     equivalent coverages are provided under other insurance policies required
     in the Lender Credit Agreement or the Eximbank Credit Agreement or
     otherwise provided for the Project or (ii) such risk is allocated to
     another Person under any Project Document.

     The sum insured for this insurance shall be US$25 million on a combined
     single loss limit for both property damage and business interruption.

     Deductible levels shall be negotiable between the Borrower, the
     Construction Supplier/Contractor and the Administrative Agent subject to a
     maximum level of US$100,000 for each claim occurrence.

     Subject to Section D, the Construction Contractor or the Construction
     Supplier shall have obtained such T&S coverage on or prior to the date on
     which the exposure to the risk covered by the T&S coverage arises. At least
     30 days prior to the earlier of (i) the Cross-Over Date and (ii) the date
     on which exposure to the risk covered by such insurance arises, the
     Construction Contractor or the Construction Supplier shall have furnished
     to the Administrative Agent a certificate (including confirmation of
     premium payments then due and compliance with the terms and conditions of
     Section B-2) together with copies of

                                        5

     the policy as soon as available (provided that if copies of any such policy
     cannot be delivered within 60 days of the effective date of the policy,
     then drafts of the policy shall be delivered within such 60 day period, and
     copies of the actual policy will be delivered in no event later than 90
     days after the effective date of the policy) from the Construction
     Supplier's or the Construction Contractor's (as the case may be) insurance
     broker, which certificate and policy shall be in accordance with Section
     6.3 of the Lender Credit Agreement and Section 7.03 of the Eximbank Credit
     Agreement.

(d)  Construction Equipment

     Insurance against all loss or damage from whatsoever cause arising in
     respect of construction equipment, if any, financed from project sources
     brought onto or destined for the Site for use in the execution of the
     Project Works, to the full replacement value of such equipment.

(e)  Insurance against Accidents to Workers

     The Construction Supplier and the Construction Contractor shall maintain
     employer's liability in an amount not less than US$250,000 and, to the
     extent required by Applicable Law, workers' compensation insurance during
     the whole time that any persons are employed by them on Site in connection
     with the Project.

(f)  Motor, Marine and Aviation Insurance

     The Construction Contractor shall at all material times keep in force for
     itself and on behalf of the Construction Supplier the following additional
     insurances in as far as they may be applicable;

     (i)  Policies of motor insurance in respect of all mechanically propelled
          vehicles used on public highways or in say circumstances such as to be
          liable for compulsory motor insurance in accordance with the laws of
          the Republic of the Philippines.

     (ii) Marine policies in respect of all floating craft and pier or marine
          platforms, if applicable, covering loss of or to such items and
          liability arising out of their use to include not only the hull value
          thereof but also the cost of removing the same in the event of
          sinking, whether or not the same is declared a total loss, and
          including protection and indemnity and third party liability cover to
          an amount equal to the hull value and estimated cost of removal in the
          event of sinking, or US$5,000,000, whichever be the greater.

                                        6

     (iii) Policies of aircraft insurance in respect of all aircraft owned,
          hired or chartered for use, if any, and Hull and Aviation liability
          shall be arranged. The limit of liability shall not be less than
          US$5,000,000 per occurrence.

(g)  Conditions

     (i)  Policies to be in such form and with such insurers as reasonably
          acceptable to Borrower and Administrative Agent

     (ii) Construction Contractor and/or Construction Supplier, as may be the
          case, shall endeavor to obtain, to the extent commercially available
          at reasonable rates, leaders' loss payable wording to the effect that
          the interests of the Borrower, Administrative Agent, Collateral
          Trustee and the Secured Parties shall not be invalidated by any action
          or inaction of the Construction, Construction Supplier or any other
          Person and of any breach or violation by the Construction Contractor
          or Construction Supplier or any other Person or any warranties,
          declarations or conditions in such policies.

     (iii) Unless specified otherwise above, all policies shall be endorsed to
          require 60 day notice of cancellation (10 days for nonpayment of
          premium), by certified mail to Borrower and Administrative Agent.

Subject to Section D, the Construction Contractor or the Construction Supplier
shall have obtained the insurances described in the foregoing paragraphs (d)
through (f) on or prior to the date on which the exposure to the risk covered
thereby arises, and at least 30 days prior to such date, the Construction
Contractor or the Construction Supplier shall have furnished to the
Administrative Agent a certificate (including confirmation of premium payments
then due and compliance with the terms and conditions of Section 6-2]) together
with copies of the policies as soon as available (provided that if copies of
such policies cannot be delivered within 60 days of the effective date of the
policies, then drafts of the policies shall be delivered within such 60 day
period, and copies of the actual policies will be delivered in no event later
than 90 days after the effective date of the policies) from the Construction
Supplier's or the Construction Contractor's (as the case may be) insurance
broker, which certificate and policies shall be in accordance with Section 6.3
of the Lender Credit Agreement and Section 7.03 of the Eximbank Credit
Agreement.

Section C - Operational Insurance

All insurance referred to in this Section C as being kept in force by the
Borrower shall be endorsed to the effect that the Administrative Agent, the
Collateral Trustee, the Secured Parties and such other Persons as the
Administrative Agent may specify in writing shall be included as named insureds
thereon and shall be fully indemnified in respect of claims covered by such

                                        7

insurance that may be made against the Administrative Agent, the Collateral
Trustee, and the Secured Parties or such other Persons arising out of the
operation of the Project. Collateral Trustee shall be sole loss payee, in such
loss payable form acceptable to Administrative Agent (if prior to the Leader
Financing Termination Date) or Eximbank (if after the Lender Financing
Termination date), for all insurance set forth in (a) through (d), with such
policies endorsed to make loss proceeds payable to Collateral Trustee and/or its
assigns in US dollars unless otherwise designated by Collateral Trustee.

Subject to Section D, the program will include the following forms of cover:

(a)  Material Damage Insurance

     It shall cover any physical loss of or damage to the completed Project of
     an all risks basis.

     The properties insured shall include (i) all buildings, structures, plant,
     equipment, machinery and other real property for which Borrower is
     responsible or on which the Plant is located, (a) stock of fuel, chemicals,
     spare parts and supplies, if applicable, owned or controlled by the
     Borrower or for which the Borrower is responsible and (iii) all other
     properties for which Borrower is responsible.

     The sum insured shall be on a full replacement costs as new basis, i.e.
     with no allowance for depreciation and obsolescence.

     The perils insured shall include, but not be limited to:

     o    fire & lightning

     o    storm, hurricanes, typhoon

     o    flood

     o    earthquake, volcanic eruptions

     o    falling aircraft

     o    malicious damage

     o    not, strike and civil strife

     o    terrorism and sabotage

     Sublimits are permissible for catastrophic perils insurance (i.e. cover for
     damage caused by storm, hurricane, typhoon, flood, earthquake and volcanic
     eruption and terrorism and sabotage). Such sublimits shall be agreed upon
     by the Borrower and the Administrative Agent (if prior to the Lender
     Financing Termination Date) or Eximbank (if after the Leader Financing
     Termination Date), based upon the insurance for such perils then
     commercially available and feasible in the commercial insurance market and
     upon the risk

                                        8

     profile for the Project with respect to such perils. However, the Borrower
     shall use reasonable efforts to obtain cover for a limit of US$25,000,000.

     Deductibles for such insurance are not to exceed US$250,000, subject to
     higher deductibles for catastrophic perils, to the extent commercially
     reasonable and economically feasible.

     Notwithstanding the above, the Collateral Trustee, the Administrative Agent
     and the Secured Parties shall preserve their right to request the Borrower
     to increase the sub-limit of catastrophic perils insurance to the total sum
     insured subject to availability at commercially reasonable terms.

(b)  Business Interruption Insurance resulting from Material Damage

     It shall cover loss of revenues and additional costs or working as a result
     of interruption in the operation of the completed project following
     material damage Insured under the Material Damage Insurance.

     The basis of insurance (or sum insured) shall Include all ongoing fixed
     expenses i.e., salaries, interest charges, principal repayments, net
     profits, etc. for a period of nine months as respects the back pressure
     steam turbines and twelve months as respects the condensing turbine.

     The indemnity period of this business interruption insurance shall be
     twelve (12) months.

     The business interruption waiting period (deductible) shall not exceed 45
     days.

(c)  Machinery Breakdown Insurance

     It shall cover all physical loss or damage to mechanical and electrical
     equipment of the Project resulting from breakdown or derangement.

     The insurance value under this policy shall be fixed on a full replacement
     cost as new basis i.e. with no allowance for depreciation or obsolescence,

     Deductibles for such machinery breakdown insurance are not to exceed
     US$250,000.

(d)  Business Interruption Insurance resulting from Machinery Breakdown

     It shall cover loss of revenue and additional costs of working as a result
     of interruption in the operation of the completed project following
     machinery breakdown of the plant and machinery insured under the Machinery
     Breakdown Insurance.

                                        9

     The basis of insurance (or sum insured) shall include all ongoing fixed
     expenses i.e., salaries, interest charges, principal repayments, net
     profits, etc. for a period of nine months as respects the back pressure
     steam turbines and twelve months as respects the condensing turbine.

     The indemnity period of this business interruption insurance shall be
     twelve months.

     The business interruption waiting period (deductible) shall not exceed 45
     days.

(e)  Public Liability Insurance

     It shall cover all legal liabilities to third parties for injury or damage
     resulting from operation of the completed Project. This insurance shall
     cover liability caused by sudden and accidental pollution or contamination
     due to unintended and unexpected occurrences, subject to such coverage
     being commercially available on commercially reasonable terms.

     The insurance limit shall be not less that US$1,000,000 per occurrence and
     in the aggregate during the period of insurance. The jurisdiction shall be
     worldwide including USA & Canada.

(f)  Other Insurances

     These shall include, to the extent applicable,

     (i)  All statutorily required coverage

     (ii) Workers' Compensation coverage including U.S. Worker's Compensation as
          necessary, including employers' liability unless covered under public
          liability

     (iii) Automobile liability and physical damage coverage (with Collateral
          Trustee as an additional named insured, if appropriate). Such
          insurance shall be in an amount satisfactory to meet all statutory
          requirements, but in no event less than US$100,000.

     (iv) Umbrella or Excess Liability for the Public liability Insurance
          together with (ii) (employers' liability) and (iii) above. This shall
          provide a total limit of indemnity at US$14,000,000 per occurrence and
          in the aggregate.

     (v)  Aviation liability arising out of the ownership, hiring or chartering
          for use of any aircrafts, if applicable. The limit of liability shall
          not be less than US$5,000,000 per occurrence, or as may be otherwise
          determined to be appropriate. Borrower shall also certify full
          replacement value as respects damage to the hull.

                                       10

                                                             Schedule 7.07(c) to
                                                       Eximbank Credit Agreement

                       LEYTE OPTIMIZATION O & M PARAMETERS

     These O&M Parameters (the "Parameters") are intended to be used by Ormat
Leyte Co. Ltd. ("Ormat Leyte") in the operation of its Leyte Optimization
geothermal power project in the Philippines.

     Capitalized terms not otherwise defined herein have the meanings ascribed
to them in Schedule X to the Credit Agreement, dated as of April 30, 1996, among
Ormat Leyte, WIG Bank as Issuing Bank, and as Administrative Agent, and the
financial institutions listed in Schedule I thereto.

ARTICLE 1. DEFINITIONS

     1.1 Emergency means an event occurring at the Power Plant which poses
actual or imminent risk of serious personal injury, physical damage, violation
of a material Governmental Approval or loss of material contractual rights of
Ormat Leyte requiring, in the good faith determination of Ormat Leyte, immediate
preventative or remedial action by Ormat Leyte and for which no practical
opportunity for consultation with the Secured Parties exists.

     1.2 Operating Budget means the budget prepared pursuant to Section 3.1
hereof and in accordance with the Lender Credit Agreement and the Eximbank
Credit Agreement, respectively.

     1.3 Required Services means the services Ormat Leyte is required to perform
or cause to be performed under these Parameters as defined in Section 2.1.

ARTICLE 2. OPERATION AND MAINTENANCE

     2.1 Ormat Leyte shall perform or cause to be performed by subcontractors,
continuous operation and maintenance of the Power Plant, such as to provide the
following services (all of which constitute the "Required Services"):

          (a) Obtain, maintain and comply in all material respects with
governmental permits, licenses and approvals required to be held in order to
perform the Required Services.

          (b) Establish or procure, to the extent not already provided as part
of the Power Plant as constructed or as part of the original spare parts
inventory, adequate operation, maintenance and storage facilities; tools,
equipment, supplies and spare parts inventories; security and safety systems and
plans, any necessary or desirable special safety gear for personnel; and such
other facilities and systems as may be necessary or desirable for operating and
maintaining the Power Plant under these O&M Parameters.

          (c) Establish a system for maintaining the initial inventory of spare
parts, tools, equipment, consumables and supplies and maintain such inventory as
required for normal operation and maintenance activities.

          (d) Directly or indirectly employ and train personnel who will be
qualified and experienced to perform the Required Services and to coordinate
operations of the Power Plant as required under the BOT Agreement.

          (e) Obtain, prior to the performance of any on-site activities, and
maintain the insurance policies required under the Project Documents, without
prejudicing the rights of each of Ormat Leyte and any other Ormat entity to
provide independently for its own additional insurance coverage.

          (f) Designate or cause to be designated a qualified plant manager to
supervise and direct the performance of the Required Services hereunder.

          (g) Prepare (and provide copies thereof to Independent Engineer) and
implement complete written operating and maintenance procedures.

          (h) Coordinate scheduled maintenance outages of the Power Plant with
the purchasers of power as required under the BOT Agreement.

          (i) Maintain at the Power Plant accurate and up-to-date operating logs
and records regarding the operating and maintenance of the Power Plant which
shall detail, among other things, power output, other operating data, spare
parts and materials consumption, repairs performed and status of equipment as
well as any information that may be required from time to time under the Project
Documents or by any Governmental Authority.

          (j) Operate and maintain the Power Plant in accordance with generally
accepted prudent industry practices, the BOT Agreement requirements regarding
output, steam rates and bonus/penalty provisions, and relevant Applicable Laws
binding and enforceable upon the Power Plant.

                                       -2-

          (k) Implement and regularly update an equipment repair and preventive
maintenance program that meets the specifications of the equipment manufacturers
and Operation and Maintenance Manuals.

          (1) Provide all technical support and other services reasonable and
necessary for operation and maintenance of the Power Plant.

          (m) Provide reasonable safety and security measures for the Power
Plant.

          (n) Recommend Power Plant modifications, capital repairs, replacements
and improvements.

          (o) For each of the generating units of the Power Plant;

               (i) Continuously record the gross generator output (in kW).

               (ii) Read and record at the beginning and end of each PNOC-EDC
          time period as may be reasonably designated by PNOC-EDC cumulative
          gross generator power output (in kWh) to the transmission line and to
          PNOC-EDC steamfield operations and prepare and submit invoices
          therefore; and

               (iii) Check the PNOC-EDC payment each month against these data.
          If additional instrumentation is needed to verify the accuracy of the
          PNOC-EDC payments, engineer, procure and install such instrumentation.

          (p) Coordinate and implement all manufacturers' requirements for plant
data reports and diligently pursue warranty claims,

          (q) Coordinate and prosecute contractor, subcontractor and vendor
warranties and guaranties and claims against insurance carriers for payment of
claims, liabilities or losses in connection with the Power Plant or its
construction or operation carried by such insurance.

          (r) Endeavor to maintain good community relations.

          (s) Provide all reports of Power Plant operation and maintenance to
the extent required by the Financing Documents and such other reports as may be

                                       -3-

required by any Governmental Authority regarding the Power Plant, with copies to
the Administrative Agent, the Independent Engineer and Eximbank.

          (t) Produce Power Plant data in the proper formats that are necessary
for reporting to any Governmental Authority for purposes of permitting and
licensing, with copies to the Administrative Agent, the Independent Engineer and
Eximbank.

          (u) Provide such reports as may be required by the Eximbank Credit
Agreement.

          (v) Open and maintain bank accounts (to the extent permitted by the
Lender Credit Agreement and the Eximbank Credit Agreement) and perform cash
management functions in connection with the operation of the Power Plant,
including the payment of all costs, expenses, rentals and taxes incurred in
connection with the management of the Power Plant.

          (w) Exercise all rights of Ormat Leyte under the Project Documents,
including, without limitation, the Construction Contract, the Supply Contract
and the BOT Agreement.

          (x) Provide the services and perform the obligations that Ormat Leyte
is then obligated to provide and perform under the Project Documents, including,
without limitation, the Construction Contract, the Supply Contract and the BOT
Agreement.

          (y) Prepare an emergency response plan for the Power Plant, provide a
copy to the Independent Engineer and maintain such plan in a current status,

          (z) Verify the annual calibration of PNOC-EDC's revenue meters.

          (aa) Establish and maintain a complete inventory of the Power Plant
including but not limited to those items outlined herein and review and update
the inventory at least semi-annually.

          (bb) Provide in accordance with the Operating Budget all materials,
supplies, equipment, vehicles and other items necessary for the operation and
maintenance of the Power Plant, which are in addition to the Power Plant as
constructed and the original spare parts inventory provided for the Power Plant

          (cc) Provide all tools, safety equipment and clothing required for
operation and maintenance activities.

                                       -4-

          (dd) Maintain permanent furnished office facilities and maintenance
building.

          (ee) Maintain and operate the Power Plant and perform its obligations
hereunder such that the warranties of the Construction Contractor under Section
17 of the Construction Contract, and of the Construction Supplier under Section
15 of the Supply Contract, shall remain in full force and effect.

     2.2 If, as a result of an Emergency, Ormat Leyte reasonably believes it is
necessary to perform services outside the scope of the Operating Budget then in
effect, Ormat Leyte may perform such reasonably necessary services for so long
as the Emergency continues, shall request reimbursement therefor in accordance
with the Disbursement Agreement, and shall provide notice of such performance to
Independent Engineer, the Administrative Agent and Eximbank.

ARTICLE 3. OPERATING BUDGET

     3.1 Ormat Leyte shall prepare budgets in accordance with the requirements
of the Financing Documents.

     3.2 Ormat Leyte shall perform all Required Services in accordance with the
Operating Budget. Should Ormat Leyte determine during the course of the year
that it cannot in good faith operate and maintain the Power Plant within the
Operating Budget, Ormat Leyte shall prepare a proposed revised Operating Budget
in accordance with the applicable provisions of the Financing Documents,
together with the necessary supplementary materials, setting forth in reasonable
detail the reasons for the inability of Ormat Leyte to perform the services
contemplated hereunder within the Operating Budget.

ARTICLE 4. STANDARD OF CARE

     4.1 Ormat Leyte shall perform its obligations under these O&M Parameters in
accordance with applicable industry standards and in a good, workmanlike and
commercially reasonable manner and in accordance with the applicable provisions
of the Financing Documents. Ormat Leyte shall exercise such care, skill and
diligence as a prudent business entity engaged in the business of managing and
operating a geothermal power plant would exercise for the advancement and
protection of its own economic interests.

                                       -5-

     4.2 Ormat Leyte shall use all reasonable and practical efforts (a) to
maximize Power Plant energy output, (b) to minimize Power Plant downtime, and
(c) to operate the Power Plant in such a manner that it shall comply with all
safety and other requirements of insurance policies in effect with respect to
the Power Plant or any part thereof.

     4.3 Ormat Leyte's management personnel for operations may be assigned to
the Power Plant on a part-time basis as is reasonably necessary to satisfy Ormat
Leyte's obligations and may also be assigned to work on other projects in which
Ormat Leyte or its affiliates are involved.

     4.4 Ormat Leyte shall use its best efforts to obtain warranties for
equipment, services, or materials provided by manufacturers, contractors,
suppliers and vendors fulfilling Ormat Leyte's obligations under these
Parameters and shall comply with all applicable warranties and guarantees
presented by such persons.

     4.5 Notwithstanding any other provision of these Parameters, Ormat Leyte
will consult, upon request, with any independent experts appointed by the
Secured Parties and Senior Permitted Indebtedness Holders to review any matter
pertaining directly or indirectly to the Required Services and Ormat Leyte shall
provide them with access to the Power Plant and shall make available to such
experts all information, reports, logs and other documents, and shall make Ormat
Leyte's personnel available for consultation with such experts.

                                       -6-

                                                             Schedule 8.05(c) to
                                                       Eximbank Credit Agreement

                               SUBORDINATION TERMS

          The indebtedness evidenced by this instrument (herein called the
"Junior Debt") is subordinated and subject in right of payment to the prior
indefeasible payment in full in U.S. Dollars of all the Senior Debt, as defined
herein, of Ormat Leyte Co. Ltd., a limited partnership organized and existing
under the laws of the Republic of the Philippines (the "Borrower"). Each holder
of this instrument, by its acceptance hereof, agrees to and shall be bound by
all the provisions hereof.

          As used herein, the term "Senior Debt" shall mean, collectively, (i)
all Eximbank Secured Obligations (as defined in the Eximbank Credit Agreement
referred to below), including, without limitation, all indebtedness, obligations
and liabilities of the Borrower to the Export-Import Bank of the United States
("Eximbank") arising out of or in connection with the Credit Agreement, dated as
of May 13, 1996, by and between the Borrower and Eximbank (as the same may be
amended or supplemented from time to time, the "Eximbank Credit Agreement"),
including, without limitation, all principal, premium (if any), fees and
interest on all loans made to the Borrower under the Eximbank Credit Agreement
(whether or not contemplated as of the date hereof), and any and all renewals,
extensions and refinancings thereof, and any interest and guarantee fees, at the
rates specified in the Eximbank Credit Agreement, accruing subsequent to the
commencement of bankruptcy, insolvency or similar proceedings with respect to
the Borrower, whether or not such interest is an allowable claim in any such
proceedings; and (ii) all indebtedness, obligations and liabilities of the
Borrower to Eximbank or any other person arising out of or in connection with
any other document or agreement evidencing or securing the Senior Secured
Obligations and the Senior Permitted Indebtedness (as such terms are defined in
the Eximbank Credit Agreement.)

          No payment on account of principal of, premium (if any) or interest on
the Junior Debt shall be made unless and until all the Senior Debt has been
indefeasibly paid in full in U.S. Dollars except to the extent provided in
Section 3.02(d)(ii) of the Disbursement Agreement and Sections 8.03, 8.18 and
8.19 of the Eximbank Credit Agreement.

          Upon (i) any acceleration of the principal amount due on the Junior
Debt or (ii) any payment or distribution of assets of the Borrower of any kind
or character, whether in cash, property or securities, to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Borrower, whether voluntary or involuntary or upon bankruptcy, insolvency,
receivership or other proceedings, then and in any such event all principal,
premium (if any) and interest and all other amounts due or to become due upon
all the Senior Debt shall first be paid in full before any holder of any Junior
Debt shall be entitled to retain any assets so paid or distributed in respect of
the Junior Debt (for principal, premium (if any), interest or otherwise); and,
upon any such dissolution or winding up or liquidation or reorganization, any
payment or distribution of assets of the Borrower of any kind or character,
whether in cash, property or securities, to which any holder of any Junior Debt
would be entitled, but for the provisions hereof, shall be paid by the Borrower

or any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or by the holders of any Junior Debt
if received by them, directly to the Collateral Trustee (as defined in the
Eximbank Credit Agreement) for the benefit of the holders of the Senior Debt,
to the extent necessary to pay all the Senior Debt in full, after giving effect
to any concurrent payment or distribution to or for the holders of the Senior
Debt, before any payment or distribution is made to any holder of any of the
Junior Debt.

          The holder of this instrument hereby irrevocably authorizes and
empowers (without imposing any obligation on) the Collateral Trustee, under the
circumstances set forth in the immediately preceding paragraph, to demand, sue
for, collect and receive every such payment or distribution described therein
and give acquittance therefor, to file claims and proofs of claims in any
statutory or nonstatutory proceeding, to vote the full amount of the Junior Debt
evidenced by this instrument in its sole discretion in connection with any
resolution, arrangement, plan of reorganization, compromise, settlement or
extension and to take all such other action (including, without limitation, the
right to participate in any composition of creditors and the right to vote the
full amount of the junior Debt evidenced by this instrument at creditors'
meetings for the election of trustees, acceptances of plans and otherwise), in
the name of each holder of any of the Junior Debt evidenced by this instrument
or otherwise, as the Collateral Trustee may deem necessary or desirable for the
enforcement of the subordination provisions of this instrument. Without limiting
the foregoing, the holder of this instrument acknowledges, inter alia, that at
any time prior to the Secured Debt Termination Date, in order to preserve the
value of the Collateral (as defined in the Eximbank Credit Agreement) for the
benefit of holders of the Senior Debt or otherwise, the Collateral Trustee may,
and shall be fully authorized to, in the exercise of the rights granted to it
hereunder, vote the interests of the holders of the Junior Debt in favor of any
plan, restructuring or reorganization of the affairs of the Borrower in a manner
that protects the interests of unsecured creditors of the Borrower at the
expense of the interests of the holders of the Junior Debt. The holder of this
instrument shall execute and deliver to the Collateral Trustee all such further
instruments confirming the foregoing authorization, and all such powers of
attorney, proofs of claim, assignments of claim and other instruments, and shall
take all such other action as may be requested by the Collateral Trustee in
order to enable the Collateral Trustee to enforce all claims upon or in respect
of the Junior Debt evidenced by this instrument.

          No holder of this instrument shall, without the prior written consent
of the holders of the Senior Debt, have any right to accelerate the maturity
of, or institute any proceedings to enforce, any indebtedness evidenced by
this instrument unless and until the Senior Debt Termination Date (as defined in
the Eximbank Credit Agreement) shall have occurred.

          After the Senior Debt Termination Date shall have occurred, the holder
or holders of the Junior Debt shall be subrogated to the rights of the holders
of the Senior Debt to receive payments or distributions of cash, property or
securities of the Borrower applicable to the Senior Debt until the principal of,
premium (if any), interest on and all other amounts due or to become due with
respect to the Junior Debt shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior Debt of
any cash, property or securities to which the holder or holders of the Junior
Debt would be entitled but for the provisions hereof, and no payment over
pursuant to these provisions to the holders of the Senior Debt by any holder of
the Junior Debt shall,

                                       -2-

as among the Borrower, its creditors (other than holders of the Senior Debt) and
the holder or holders of the Junior Debt, be deemed to be a payment by the
Borrower to or on account of the Senior Debt. No payments or distributions to
the holders of the Senior Debt which such holder or holders of the Junior Debt
shall be entitled to receive pursuant to such subrogation shall, as among the
Borrower, its creditors (other than holders of the Senior Debt) and the holder
or holders of the Junior Debt, be deemed to be a payment by the Borrower to or
on account of the Junior Debt.

          If any payment or distribution of assets of the Borrower of any kind
or character, whether in cash, property or securities, under the circumstances
described in the fourth paragraph hereof or in violation of Section 3.02(d)(ii)
of the Disbursement Agreement shall be received by any holder of the Junior Debt
before all Senior Debt is paid in full, such payment or distribution will be
held in trust for the benefit of, and shall be paid over to, the Collateral
Trustee for application to the payment of the Senior Debt until all the Senior
Debt shall have been paid in full.

          Nothing contained in this instrument is intended to or shall impair as
among the Borrower, its creditors (other than the holders of the Senior Debt),
and the holders of the Junior Debt, the obligation of the Borrower, which is
absolute and unconditional, to pay to the holders of the Junior Debt, as and
when the same shall become due and payable in accordance with its terms, or to
affect the relative rights of the holders of the Junior Debt and creditors of
Borrower other than the holders of the Senior Debt.

          Each holder of this instrument by its acceptance hereof authorizes and
directs the Borrower on its behalf to take such further action as may be
necessary or appropriate to effectuate the subordination provided herein and
appoints the Borrower its attorney-in-fact for any and all such purposes.

          The subordination effected by these provisions, and the rights of the
holders of the Senior Debt, shall not be affected by (i) any amendment of, or
addition or supplement to, or refinancing under or of, the Eximbank Credit
Agreement or any of the other agreements or documents evidencing or securing any
Senior Debt, (ii) any exercise or nonexercise of any right, power or remedy
under or in respect of the Eximbank Credit Agreement or any of the other
agreements or documents evidencing or securing any Senior Debt, or (iii) any
waiver, consent, release, indulgence, extension, renewal, refinancing,
modification, delay or other action, inaction or omission, in respect of the
Eximbank Credit Agreement or any of the other agreements or documents evidencing
or securing any Senior Debt; whether or not any holder of the Junior Debt shall
have had notice or knowledge of any of the foregoing.

                                       -3-

                                                                         ANNEX A
                                                    TO EXIMBANK CREDIT AGREEMENT

                               ORMAT LEYTE CO. LTD

                                 PROMISSORY NOTE

$__________________.00                                        ____________, 199_
                                                              New York, New York

     FOR VALUE RECEIVED, ORMAT LEYTE CO. LTD., [ADDRESS] (the "Maker") by this
promissory note (the "Note") promises to pay to the order of the Export-Import
Bank of the United States ("Eximbank") at the Federal Reserve Bank of New York,
in the City of New York, State of New York, United States of America, the
principal sum of ____________________________________ ($______________________),
in lawful currency of the United States of America, in installments as provided
below, and to pay at said office interest in like currency on the principal
balance hereof from time to time outstanding, at an interest rate per annum
equal to [___]%.

     The principal of this Note is payable in [thirty-eight (38)] approximately
equal installments, the first of which shall be due and payable on ____________.
The remaining installments of principal shall be due and payable quarterly
thereafter on January 30, April 30, July 30 and October 30 of each year (each, a
"Payment Date"). On the last payment date the Maker shall repay the entire
principal amount hereof then outstanding.

     Interest on this Note is payable on March 30, June 30, September 30 and
December 30 of each year, upon any prepayment hereon (to the extent accrued
thereon), at maturity (whether by acceleration or otherwise) and after maturity
on demand. Interest shall be computed on the basis of the actual number of days
elapsed (including the first day but excluding the last day), using a 365-day
year.

     If any amount of principal or accrued interest on this Note is not paid in
full when due (whether at stated maturity, by acceleration or otherwise), the
Maker shall pay to Eximbank on demand interest on such unpaid amount (to the
extent permitted by applicable law) for the period from the date such amount was
due (the "Payment Default Date") until such amount shall have been paid in full,
at an interest rate per annum equal to the higher of: (i) the then-applicable
New Borrowing Rate (such rate shall remain in effect until such amount is paid
in full); or (ii) the rate specified in the first paragraph above plus one
percent (1.0%) per annum. For purposes hereof, "New Borrowing Rate" shall mean
the rate specified on the Commerce Department Economic Bulletin Board, under the
heading "Interest Rate for Credit Reform Act", for the year and calendar quarter
in which the Payment Default Date occurs, and under the "Maturity Ranges"
category which covers the total period of repayment described above.

     The Maker hereby waives demand, diligence, presentment, protest or notice
of every kind, and warrants to the holder that all action and approvals required
for the execution and delivery hereof as a legal, valid and binding obligation
of the undersigned, enforceable in accordance with the terms hereof, have been
duly taken and obtained.

     This is the Note referred to in Section 3.07(a) of the Eximbank Credit
Agreement dated as of May 13, 1996 by and among the Maker and the Export-Import
Bank of the United States. This Note is entitled to the benefits of, and is
governed in all respects by, the terms of the Eximbank Credit Agreement, which
Eximbank Credit Agreement, among other things, contains provisions for the
payment of principal and interest (including default interest) hereon without
set-off, counterclaim, deduction, withholding on account of taxes levied or
imposed under the laws of the Government of the Republic of the Philippines (or
any other jurisdiction from which payments required hereunder are made),
restrictions and conditions of whatever nature, and for acceleration of the
maturity hereof upon the happening of certain stated events. The principal
amount hereof may be prepaid in accordance with the terms of the Eximbank Credit
Agreement. All payments received hereunder shall be applied in accordance with
the order of priority set forth in Section 3.09 of the Eximbank Credit
Agreement.

     THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK OF THE UNITED STATES OF AMERICA.

                                          ORMAT LEYTE CO. LTD.

                                             By ORLEYTE COMPANY
                                                its General Partner

                                                By
                                                   -----------------------------
                                                            (Signature)
                                                Name
                                                     ---------------------------
                                                             (Print)
                                                Title
                                                      --------------------------
                                                             (Print)

                                        2

                                                                         ANNEX B
                                                    TO EXIMBANK CREDIT AGREEMENT

            REQUEST FOR EXIMBANK DISBURSEMENT TO ACCOUNT OF BORROWER

                                                      ____________________, 19__

Export-Import Bank of the United States
811 Vermont Avenue, N.W.
Washington, D.C. 20571

Attention: Credit Administration Division

Subject: Eximbank Credit No. AP069721 - Philippines
         Ormat Leyte Co. Ltd. ("Borrower")

Ladies and Gentlemen:

     In accordance with the terms and conditions of the credit agreement dated
as of ___________________, 1996 ("Agreement"), between the Borrower and the
Export-Import Bank of the United States ("Eximbank"), we hereby request Eximbank
to make the Eximbank Disbursement to the Borrower in the amount of U.S.
$__________, to retain from the proceeds of such Eximbank Disbursement the
Credit Exposure Fee in the amount of $________________ payable to Eximbank and
to pay the balance of such proceeds in the amount of $_______________ to
[SPECIFY ACCOUNT].(1)

     We enclose a duly completed Reconciliation Certificate in the form of
Exhibit 1 hereto, attaching true, correct and complete photocopies of all
Eximbank Certificates issued by Eximbank in connection with the above-referenced
Eximbank Credit. As evidenced by the enclosed letter in the form of Exhibit 2
hereto, the Administrative Agent has agreed to deliver to Eximbank original
copies of the aforesaid Eximbank Certificates as specified in such letter no
later that five (5) days after the date of the requested Eximbank Disbursement.

     We certify that (i) as of the date of this request, no Incipient Default
Event, Default Event, Default or Event of Default exists or will exist after
giving effect to the requested Eximbank Disbursement and (ii) as of the date of
this request, the representations and warranties made by us in the Agreement are
true and correct in all material respects.

----------
(1) Account specified under Section 2.8(a) of the Lender Credit Agreement.

     Unless otherwise provided herein, the defined terms used in this Request
for Eximbank Disbursement shall have the respective meanings specified in the
Agreement.

                                        Very truly yours,

                                        ORMAT LEYTE CO. LTD.

                                           By ORLEYTE COMPANY
                                              its General Partner

                                              By
                                                 -------------------------------
                                                           (Signature)
                                              Name
                                                   -----------------------------
                                                               (Print)
                                              Title
                                                    ----------------------------
                                                               (Print)

Enclosures
   Reconciliation Certificate
   Copies of Eximbank Certificates
   Letter of Administrative Agent re: Original Eximbank
   Certificates

                                       -2-

                                                                         ANNEX B
                                                    TO EXIMBANK CREDIT AGREEMENT
                                                                       Exhibit 1

                                                      ____________________, 19__

                           RECONCILIATION CERTIFICATE

Export-Import Bank of the United States
811 Vermont Avenue, N.W.
Washington, D.C. 20571

Attention: Credit Administration Division

Subject: Eximbank Credit No. AP069721 - Philippines
         Ormat Leyte Co. Ltd. ("Borrower")

Ladies and Gentlemen:

     In accordance with the terms and conditions of the Eximbank Credit
Agreement dated as of _________________, 1996 (the "Agreement") between the
Borrower and the Export-Import Bank of the United States ("Eximbank"), and as
required by the Request for Eximbank Disbursement to Account of Borrower to
which this Reconciliation Certificate is attached, we hereby deliver this
Reconciliation Certificate.

     1. We enclose true, correct and complete photocopies of all Eximbank
Certificates issued by Eximbank in connection with the above-specified Eximbank
Credit, details regarding which are set forth below:

                 Reconciliation of Eximbank Certificates

PART A. Eximbank Certificates Authorizing Eximbank Disbursement

          No.       Date           Amount
          ---       ----           ------

     1.
                                   ------
     2.
                                   ------
     3.
                                   ------
                    [etc.]
                                   ------
                    Total PART A   $
                                    -----

                                                                         ANNEX B
                                                                       Exhibit 1
                                                                          Page 2

PART B. Eximbank Certificates Approving Letter of Credit

     1.   L/C No.        L/C Amount $        Certif. Date 00/00/00
                  -----              -----

          L/C Drawings   Date                Amount
          ------------   ----                ------
          1.
                                             ------
          2.
                                             ------
          3.
                                             ------
                         [etc.]
                                             ------
                         Total PART B        $
                                             ------

PART C. The following IDC Disbursements were made under Annex B-3 of the
        Eximbank Utilization Procedures:

          Date   Amount   Exposure Fee   Total Amount
          ----   ------   ------------   ------------
          1.
                 ------   ------------   ------------
          2.
                 ------   ------------   ------------
          3.
                 ------   ------------   ------------

                         [etc.]

                         Total PART C    $
                                         ------------

PART D. The following is the total
        amounts of PARTS A, B and C
        above:                           $
                                         ============

                                                                         ANNEX B
                                                                       Exhibit 1
                                                                          Page 3

          Unless otherwise provided herein, the defined terms used in this
Reconciliation Certificate shall have the respective meanings specified in the
Agreement.

                                        Very truly yours,

                                        ORMAT LEYTE CO. LTD.

                                        By ORLEYTE COMPANY
                                           its General Partner

                                        By
                                           -------------------------------------
                                                       (Signature)

                                        Name
                                            ------------------------------------
                                                         (Print)

                                        Title
                                             -----------------------------------
                                                         (Print)

                                                                         ANNEX B
                                                    TO EXIMBANK CREDIT AGREEMENT
                                                                       Exhibit 2

                    [FORM OF ADMINISTRATIVE AGENT'S LETTER]

Export-Import Bank of the United States
811 Vermont Avenue, N.W.
Washington, D.C. 20571

Attention: Credit Administration Division

Subject: Eximbank Credit No. AP069721 - Philippines
         Ormat Leyte Co. Ltd. ("Borrower")

Ladies and Gentlemen:

     We understand that the Borrower has submitted a Request for Eximbank
Disbursement to Account of Borrower ("Borrower's Request") under the
above-referenced credit established by the Export-Import Bank of the United
States ("Eximbank") in accordance with the Eximbank Credit Agreement dated as of
__________, 1996 (the "Agreement"), between the Borrower and Eximbank. As
required by the Agreement, we hereby acknowledge that the photocopies of the
Eximbank Certificates attached to the Borrower's Request, details of which are
specified in the Reconciliation Certificate attached hereto, are true, correct
and complete copies of all Eximbank Certificates that have been issued by
Eximbank to us in our capacity as "Administrative Agent" under the Lender Credit
Agreement. We agree to deliver the original Eximbank Certificates no more than
five (5) days after the Disbursement Date of the requested Eximbank
Disbursement.

     Unless otherwise provided herein, the capitalized terms used and not
defined in this Request for Eximbank Disbursement shall have the respective
meanings specified in the Agreement.

                                        ING BANK,
                                           as Administrative Agent

                                        By:
                                            ------------------------------------
                                            (Signature of Authorized
                                            Representative)

                                        Title:
                                              ----------------------------------
                                                           (Print)

                                        Name:
                                             -----------------------------------
                                                           (Print)

                                                                ANNEX C
                                                                   TO
                                                       EXIMBANK CREDIT AGREEMENT

                    [FORM OF POST-COMPLETION ORMAT GUARANTY]

                                    GUARANTY

                          DATED AS OF____________, 199_

                                       BY

                              ORMAT INDUSTRIES LTD.

                               FOR THE BENEFIT OF

                              ORMAT LEYTE CO. LTD.

                                       AND

                         THE CHASE MANHATTAN BANK, N.A.,

                              AS COLLATERAL TRUSTEE

     GUARANTY (this "Guaranty"), dated as of ___________, 199__ made by ORMAT
INDUSTRIES LTD., a corporation organized and existing under the laws of Israel
(the "Guarantor"), in favor of ORMAT LEYTE CO. LTD., a limited partnership
organized under the laws of the Republic of the Philippines (the "Borrower"),
and THE CHASE MANHATTAN BANK, N.A., as the Collateral Trustee. Capitalized terms
used herein and not otherwise defined have the meanings given thereto in the
Eximbank Credit Agreement (as defined below).

                                   WITNESSETH:

     WHEREAS, the Borrower and the Export-Import Bank of the United States
entered into the Eximbank Credit Agreement dated as of May 13, 1996 (the
"Eximbank Credit Agreement") pursuant to which Eximbank agreed, inter alia, to
make the Eximbank Disbursement to the Borrower, subject to the terms and
conditions of the Eximbank Credit Agreement;

     WHEREAS, it is a condition precedent to the Eximbank Disbursement that this
Guaranty be executed and delivered as of the date of the Eximbank Disbursement;
and

     WHEREAS, this Guaranty is dated as of the date of the Eximbank Disbursement
(the "Eximbank Disbursement Date");

     NOW, THEREFORE, the parties hereto agree as follows:

     SECTION 1. Guaranty. (a) The Guarantor hereby irrevocably and
unconditionally (as primary obligor and not as surety) guarantees to the
Borrower, the Collateral Trustee and their respective successors and assigns the
prompt payment in full of any and all amounts owing to the Borrower and/or the
Collateral Trustee by Ormat International, Inc. and/or the Affiliated Funding
Entities pursuant to Section 2(c)(iii) of the Funding Agreement (such
obligations of Ormat International, Inc. and/or the Affiliated Funding Entitles
herein referred to as the "Guaranteed Obligations"). The Guarantor shall, upon
notice by the Borrower or the Collateral Trustee, so provided in Section 11
hereof, forthwith pay or cause to be paid such Guaranteed Obligations, without
regard to any exercise or nonexercise by the Borrower or the Collateral Trustee
of any right, remedy (including, without limitation, termination), power,
privilege or other action under or in respect of the Funding Agreement against
Ormat International, Inc.

     (b) The Guarantor agrees to reimburse the Borrower and the Collateral
Trustee on demand for any and all expenses (including reasonable counsel fees
and expenses) incurred by the Borrower or the Collateral Trustee, as the case
may be, in enforcing or attempting to enforce any rights under this Guaranty,
provided that the Guarantor shall have no obligation to reimburse the Borrower
or the Collateral Trustee, as the case may

be, if, in any action or proceeding brought by the Borrower or the Collateral
Trustee giving rise to such demand for reimbursement, the Guarantor shall have
prevailed on the merits, provided further that the amount of any such
reimbursement obligations shall bear interest at the past due rate set forth in
Section 3.02(b) of the Eximbank Credit Agreement (i) if the Collateral Trustee
or the Borrower, as the case may be, shall make demand therefor within ten (10)
days after the incurrence of such expenses commencing on the date of incurrence
thereof or (ii) if the Collateral Trustee or the Borrower, as the case may be,
shall make demand therefor more than ten (10) days after the incurrence of such
expenses, commencing with the demand by the Collateral Trustee or the Borrower,
as the case may be, therefor.

     SECTION 2. Guaranty Absolute. (a) The liability of the Guarantor under this
Guaranty shall be absolute and unconditional, and this Guaranty shall remain in
full force and effect irrespective of, and shall not be affected by:

     (i)  any lack of validity or enforceability of the Funding Agreement, or
          any other agreement or instrument relating thereto;

     (ii) any amendment to, waiver of or consent to, departure from or failure
          to exercise any right, remedy, power or privilege under or in respect
          of, the Funding Agreement, including, without limitation, modification
          of times for payment;

     (iii) any exchange, release or nonperfection of any collateral, or any
          release or amendment or waiver of or consent to departure from any
          other guaranty of or security for the performance of all or any part
          of the Guaranteed Obligations;

     (iv) any acceptance of any new or additional instrument, document,
          agreement, security or guaranty in connection with all or any part of
          the Guaranteed Obligations;

     (v)  any acceptance of partial payments on die Guaranteed Obligations;

     (vi) any reconveyance, abandonment, subordination, exchange, substitution,
          transfer, compoundment, compromise or enforcement of all or any part
          of the Guaranteed Obligations or any release or amendment or waiver of
          or consent to departure from any security or guaranty therefor, or any
          application of any such security or any direction of the order or
          manner of sale thereof (or any bid and purchase at any such sale), as
          the Borrower and the Collateral Trustee in their discretion may
          determine;

                                       -2-

     (vii) any waiver, release, termination or liquidation of all or any part of
          the Guaranteed Obligations which was not expressly agreed to in
          writing or consented to in writing by the Collateral Trustee and the
          Borrower or which was in connection with any matter described in
          clause (xii) below;

     (viii) any assignment of this Guaranty in whole or in part by the Borrower
          or the Collateral Trustee in accordance with Section 13 hereof;

     (ix) any cure by the Borrower, the Collateral Trustee or any Senior Secured
          Parties of any default by Ormat International, Inc. in the performance
          of its obligations under the Funding Agreement;

     (x)  any change in Applicable Laws (as defined in the Funding Agreement)
          relating to the validity or enforceability of this Guaranty;

     (xi) any of (a) the insolvency, bankruptcy (whether voluntary or
          involuntary), reorganization, dissolution or liquidation of, or
          similar event with respect to, Ormat International, Inc. or any of the
          Affiliated Funding Entities or (b) any change in ownership (whether
          direct or indirect) of Ormat International, Inc. or any of the
          Affiliated Funding Entities or the Borrower or (c) any sale or lease
          by the Borrower or any of the Affiliated Funding Entities of all or
          substantially all of their respective assets; and

     (xii) any other circumstances of a similar or different nature which might
          otherwise constitute a defense available to the Guarantor as a
          guarantor.

     (b) This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment to the Borrower or the Collateral
Trustee by Ormat International, Inc. or any Affiliated Funding Entity in respect
of any Guaranteed Obligation under the Funding Agreement or by the Guarantor
hereunder is rescinded or must otherwise be returned by the Borrower or the
Collateral Trustee upon the insolvency, bankruptcy, reorganization, dissolution
or liquidation of Ormat International, Inc., any Affiliated Funding Entity or
otherwise, all as though such payment had not been made. Notwithstanding
anything to the contrary herein contained, in no event shall the Guarantor be
liable under this Guaranty (other than with respect to the foregoing sentence
and amounts payable pursuant to Sections l(b), 7 and 8 hereof) or in respect of
the Funding Agreement, assuming the Funding Agreement is enforceable in
accordance with its terms (except as limited by principles of equity), (i) to an
extent greater than Ormat International, Inc. or the Affiliated Funding
Entities, respectively, under the Funding Agreement in respect of the Guaranteed
Obligations, (ii) to the extent the Collateral

                                       -3-

Trustee and the Borrower have expressly agreed in writing or consented to in
writing any waiver, release, termination or liquidation of all or any part of
the Guaranteed Obligations (other than any such consent or agreement in
connection with any matter described in clause (xi) of Section 2(a) hereof), or
(iii) to the extent the Guaranteed Obligations are fully satisfied by full
payment thereof.

     SECTION 3. Waiver. The Guarantor hereby waives all promptness, presentment,
diligence, and notice with respect to the Guaranteed Obligations or this
Guaranty (except for the notice contemplated in Section 1(a) hereof) and any
requirement that the Borrower or the Collateral Trustee exhaust any right, power
or remedy or take any action against or with respect to Ormat International,
Inc., or any other person or entity or any properly, and all suretyship defenses
of every nature under the law of the State of New York and other states. The
Guarantor agrees that all payments under this Guaranty shall be made free and
clear of all set-offs and counterclaims and the Guarantor hereby waives any
right to withhold or deduct any amounts from payment under this Guaranty on the
basis of any rights of set-off or any counterclaim.

     SECTION 4. Independent Obligations. The obligations of the Guarantor
hereunder are independent of the obligations of any other guarantor or any other
person or entity, and the Borrower and the Collateral Trustee may enforce any of
their respective rights hereunder independently of any other right or remedy
that the Borrower and the Collateral Trustee may at any time hold with respect
to the Guaranteed Obligations or any security or offer guaranty therefor.
Without limiting the generality of the foregoing, the Borrower or the Collateral
Trustee may bring a separate action against the Guarantor without first
proceeding against Ormat International, Inc., any other guarantor or any other
person or entity, or any security held by the Borrower or the Collateral
Trustee, and regardless of whether Ormat International, Inc. or any other
guarantor or any other person or entity is joined in any such action. The rights
of the Borrower and the Collateral Trustee hereunder shall not be exhausted by
any action taken by the Borrower or the Collateral Trustee with respect to this
Guaranty until all of the Guaranteed Obligations have been fully paid.

     SECTION 5. Reasonableness and Effect of Waiver. The Guarantor warrants and
agrees that each of the waivers set forth in this Guaranty is made with full
knowledge of its significance and consequences and that, under the
circumstances, such waivers are reasonable and not contrary to public policy or
law.

     SECTION 6. Arrangements Regarding Payments. All payments to be made by the
Guarantor under this Guaranty shall be made in lawful money of the United States
of America, directly to the Collateral Trustee, into the Dollar Project Control
Account (which, as of the date hereof, is account no. ________________
(reference: __________) at The Chase Manhattan Bank, N.A.), or to such other
account as the Collateral Trustee

                                      -4-

may from time to time specify as the Dollar Project Control Account in writing
to the Guarantor, and shall be accompanied by a notice from the Guarantor
stating that such payments are made under this Guaranty.

     SECTION 7. Taxes. The Guarantor covenants and agrees that (a) all payments
by the Guarantor under or in respect of this Guaranty and the Funding Agreement
shall be made free and clear of and without reduction by reason of any present
or future income, stamp and other taxes or charges whatsoever imposed, withheld,
levied or collected by Israel or any political subdivision or taxing authority
thereof on or in respect of this Guaranty or the Funding Agreement or the
registration, notarization or other formalization thereof or any payments in
respect thereof (collectively, "Taxes"), all of which shall be paid by the
Guarantor for its own account, prior to the date on which penalties attach
thereto; (b) the Guarantor shall indemnify the Borrower and the Collateral
Trustee against, and reimburse the Borrower and the Collateral Trustee on demand
for, any Taxes with respect to any amount payable by the Guarantor hereunder and
any interest or penalties thereon; (c) in the event that the Guarantor is
required by applicable law, decree or regulation to deduct or withhold any Taxes
from any amounts payable on, under or in respect of this Guaranty or the Funding
Agreement, the Guarantor shall pay, on demand of the Borrower or the Collateral
Trustee, such additional amount or amounts as may be required, after such
deduction or withholding, to enable the Borrower and the Collateral Trustee to
receive from the Guarantor an amount equal to the full amount stated to be
payable hereunder; (d) the Guarantor shall furnish to the Borrower and the
Collateral Trustee satisfactory tax receipts in respect of any payment of Taxes
within thirty (30) days after the respective due dates therefor; and (e) the
covenants and agreements of the Guarantor under this Section 7 shall survive the
termination of the Funding Agreement and this Guaranty.

     SECTION 8. Judgment. If for the purpose of obtaining a judgment in any
court with respect to any obligation of the Guarantor's hereunder, it shall
become necessary for the Borrower or the Collateral Trustee to convert into any
other currency any amount in U.S. Dollars due hereunder, then such conversion
shall be made at the buying spot rate at exchange for freely transferable U.S.
Dollars at the close of business on the date the Guarantor shall make payment to
the Borrower or the Collateral Trustee in satisfaction of such judgment, at the
place where such payment is made. If pursuant to any such judgment, conversion
shall be made on a date other than the date payment is made, and there shall
occur a change between such rate of exchange prevailing on such conversion date
and that prevailing on the date of payment, then the Guarantor agrees to pay
such additional amounts, if any, as may be necessary to ensure that the amount
paid is the amount in such other currency that, when converted at the current
rate of exchange on the date of payment, is the amount then due under this
Guaranty in U.S. Dollars. Any amount due from the Guarantor under this Section 8
shall be due as a separate debt and is not to

                                       -5-

be affected by or merged into any judgment being obtained for any other sums due
under or in respect of this Guaranty.

     SECTION 9. Consent to Jurisdiction; Waiver of Immunities. (a) THE GUARANTOR
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
SITTING IN THE STATE OF NEW YORK, UNITED STATE OF AMERICA, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, AND THE GUARANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH STATE OR FEDERAL COURT. THE GUARANTOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.

     (b) The Guarantor hereby irrevocably appoints CT Corporation System (the
"Process Agent"), with an office on the date hereof at 1633 Broadway, New York,
New York 10019, as its agent to receive on behalf of the Guarantor and its
property, service of copies of the summons and complaint and any other process
that may be served in any such action or proceeding. Such service may be made by
mailing or delivering a copy of such process to the Guarantor in care of the
Process Agent at the Process Agent's above address, and the Guarantor hereby
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternative method of service, the Guarantor hereby
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the Guarantor at its
address specified in Section 11 hereof. The Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
permitted by law.

     (c) Nothing in this Section 9 shall affect the right of the Borrower or the
Collateral Trustee to serve legal process in any other manner permitted by law
or affect the right of the Borrower or the Collateral Trustee to bring any
action or proceeding against the Guarantor or its property in the courts of any
other jurisdiction.

     (d) To the extent that the Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty.

     SECTION 10. Amendments. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the Guarantor therefrom shall in any
event be

                                      -6-

effective unless the same shall be in writing and signed by the Borrower and the
Collateral Trustee, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

     SECTION 11. Addresses for Notices. All notices and other communications to
any party hereto provided for hereunder shall be in writing and mailed or
communicated by facsimile or delivered to such party at the address indicated on
the signature pages affixed hereto, or as to any such person at such other
address as shall be designated by such person in a written notice to the other
persons referred to above. All such notices and other communications shall, when
mailed or communicated by facsimile transmission, respectively, be effective on
the tenth Business Day after being deposited in the mail addressed as aforesaid
or when such facsimile transmission is confirmed. With respect to any notice to
the Guarantor hereunder, a copy shall also be sent in the manner specified above
to Robert E. Giles, Perkins Coie, 1201 Third Avenue, 40th floor, Seattle, WA
98101-3099, facsimile no. (206) 583-8500.

     SECTION 12. No Waiver; Remedies. No failure on the part of the Borrower or
the Collateral Trustee to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof or the exercise of any other right operate as a waiver thereof
or of any other right, power or remedy hereunder or under any related documents
or instruments. The remedies herein provided are cumulative and are not
exclusive of any remedies provided by law.

     SECTION 13. Continuing Guaranty; Assignments. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect with respect to the
Guarantor's guaranty of the performance of the Guaranteed Obligations until
expiration as provided in Section 20, (b) be binding upon the Guarantor and its
successors and (c) inure to the benefit of and be enforceable by the Borrower,
the Collateral Trustee and their successors, transferees and assigns. The
Guarantor shall have no right, power or authority to delegate all or any of its
obligations hereunder. The Guarantor hereby expressly agrees that each of the
Borrower and the Collateral Trustee may assign all or any of its rights
hereunder without the Guarantor's approval to any person or entity to which the
Collateral Trustee has assigned its rights under the Funding Agreement pursuant
to the conditions set forth in the Funding Agreement. The Collateral Trustee or
any such assignee shall notify the Guarantor in writing of each such assignment
made pursuant to this Section 13. In the event of any such assignment,
references herein to "the Collateral Trustee" shall be deemed to include
references to the relevant assignee.

     SECTION 14. Notifications, Clearances, Etc. The Guarantor hereby agrees
that it will use its best efforts to obtain any and all appropriate
notifications to and clearances from, or licenses to the Israeli Government as
may be required at such time as the Guarantor takes action to perform the
Guaranteed Obligations pursuant to this Guaranty, it

                                      -7-

being understood that under the current law of Israel, no notification to,
clearance from or license of the Israeli Government is required with respect to
payment in respect of the Guaranteed Obligations. Further, if the Guarantor
shall be unsuccessful in obtaining the appropriate notifications, clearances or
licenses to perform the Guaranteed Obligations, it shall, to the extent
permitted by applicable law, pay money to cause the performance of the
Guaranteed Obligations.

     SECTION 15. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK, THE
UNITED STATES OF AMERICA, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES THEREOF.

     SECTION 16. Counterparts. This Guaranty may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the signatories hereto may execute this Guaranty by
signing such counterpart.

     SECTION 17. Severability. If any provision or provisions of this Guaranty
shall be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.

     SECTION 18. Headings. The section headings appearing herein are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Guaranty.

     SECTION 19. Complete Agreement. This Guaranty represents the final and
complete agreement of the parties hereto, and all prior negotiations,
representations, understandings and writings and statements of any nature are
hereby replaced in their entirety by the terms of this Guaranty.

     SECTION 20. Expiration. This Guaranty shall expire and have no further
force and effect upon the earliest to occur of: (i) payment in full or other
satisfaction of the Guaranteed Obligations, (ii) _________, ___ [INSERT THE LAST
DAY OF THE POST-COMPLETION STANDBY SUPPORT PERIOD PLUS 15 DAYS] in the event
that the Collateral Trustee shall not have made a request to Ormat
International, Inc., to cause the funding of the Post-Completion Standby Funding
Amount on or prior to _________, ___ [INSERT THE LAST DAY OF THE POST-COMPLETION
STANDBY SUPPORT PERIOD], or (iv) the Eximbank Credit Termination Date.

                                      -8-

     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer duly authorized as of the date first above
written.

ORMAT INDUSTRIES LTD.

By:
    ------------------------------------
    Title:

Addresses for Notices:

Attention:
           -----------------------------
Tel:
     -----------------------------------
Fax:
     -----------------------------------
Telex:
       ---------------------------------

Accepted:

ORMAT LEYTE CO. LTD.

By Orleyte Company,
Its General Partner

By:
    ------------------------------------
    Title:

Addresses for Notices:

Attention:
           -----------------------------
Tel:
     -----------------------------------
Fax:
     -----------------------------------
Telex:
       ---------------------------------

                                      -9-

THE CHASE MANHATTAN BANK, N.A., as Collateral Trustee

By:
    ------------------------------------
    Title:

Addresses for Notices:

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

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

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

Attention:
           -----------------------------
Tel:
     -----------------------------------
Fax:
     -----------------------------------
Telex:
       ---------------------------------

                                      -10-Exhibit 10.1.7

                              ORMAT FUNDING CORP.,
                                  AS THE Issuer

                              BRADY POWER PARTNERS
                           STEAMBOAT DEVELOPMENT CORP.
                            STEAMBOAT GEOTHERMAL LLC
                                 ORMAMMOTH INC.
                                   ORNI 1 LLC
                                   ORNI 2 LLC
                                   ORNI 7 LLC,
                                  AS GUARANTORS

                                   ORMESA LLC

                                  $190,000,000

                8 1/4% SENIOR SECURED NOTES DUE DECEMBER 30, 2020

                                    INDENTURE

                          DATED AS OF FEBRUARY 13, 2004

                         UNION BANK OF CALIFORNIA, N.A.,
                                   AS TRUSTEE

                                TABLE OF CONTENTS

                                                                                                              Page
                                                                                                              ----

ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
         Section 1.01       Definitions..........................................................................1
         Section 1.02       Other Definitions...................................................................34
         Section 1.03       Trust Indenture Act Provisions......................................................35
         Section 1.04       Rules of Construction...............................................................35

ARTICLE II THE SENIOR SECURED NOTES.............................................................................36
         Section 2.01       Form Generally......................................................................36
         Section 2.02       Legends on Restricted Notes.........................................................38
         Section 2.03       Amount of Senior Secured Notes......................................................38
         Section 2.04       Denominations.......................................................................39
         Section 2.05       Execution, Authentication, Delivery and Dating......................................39
         Section 2.06       Temporary Senior Secured Notes......................................................41
         Section 2.07       Registration, Registration of Transfer and Exchange.................................41
         Section 2.08       Mutilated, Destroyed, Lost and Stolen Senior Secured Notes..........................48
         Section 2.09       Payments; Interest Rights Preserved.................................................49
         Section 2.10       Persons Deemed Owners...............................................................50
         Section 2.11       Cancellation........................................................................51
         Section 2.12       Computation of Interest.............................................................51
         Section 2.13       Certification Forms.................................................................51
         Section 2.14       CUSIP Numbers.......................................................................51
         Section 2.15       Issuance of Additional Notes........................................................52

ARTICLE III REDEMPTION AND PREPAYMENT...........................................................................52
         Section 3.01       Notices to Trustee..................................................................52
         Section 3.02       Selection of Senior Secured Notes to Be Redeemed....................................52
         Section 3.03       Notice of Redemption................................................................53
         Section 3.04       Effect of Notice of Redemption......................................................54
         Section 3.05       Deposit of Redemption Price.........................................................54
         Section 3.06       Senior Secured Notes Redeemed in Part...............................................54
         Section 3.07       Optional Redemption.................................................................55
         Section 3.08       Mandatory Redemption................................................................55

ARTICLE IV COVENANTS............................................................................................57
         Section 4.01       Payment of Senior Secured Notes.....................................................57
         Section 4.02       Maintenance of Office or Agency.....................................................57
         Section 4.03       Reporting Requirements..............................................................58
         Section 4.04       Delivery of Notices to Trustee......................................................59
         Section 4.05       Stay, Extension and Usury Laws......................................................59

                                                                                                              Page
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         Section 4.06       Restrictions on Sale of Assets......................................................59
         Section 4.07       Insurance...........................................................................60
         Section 4.08       Governmental Approvals; Title.......................................................61
         Section 4.09       Limitation on Nature of Business....................................................61
         Section 4.10       Prohibition on Merger or Other Fundamental Changes..................................61
         Section 4.11       Restricted Payments.................................................................61
         Section 4.12       Revenue Account.....................................................................61
         Section 4.13       Transactions with Affiliates........................................................62
         Section 4.14       Exercise of Rights..................................................................63
         Section 4.15       Termination or Amendment to Material Project Documents..............................63
         Section 4.16       Additional Project Documents........................................................63
         Section 4.17       Performance of Project Documents....................................................64
         Section 4.18       Limitations on Indebtedness.........................................................64
         Section 4.19       Limitation on Indebtedness of Subsidiaries..........................................66
         Section 4.20       Limitations on Guarantees...........................................................66
         Section 4.21       Prohibitions on Other Obligations or Assignments....................................66
         Section 4.22       Books and Records, Inspection.......................................................67
         Section 4.23       Maintenance of Existence............................................................67
         Section 4.24       Additional Documents; Filings and Recordings........................................67
         Section 4.25       Dividend and Other Payment Restrictions Affecting Subsidiaries......................67
         Section 4.26       Budget And Expenditures.............................................................68
         Section 4.27       Limitation on Liens.................................................................68
         Section 4.28       Compliance With Laws................................................................68
         Section 4.29       Operation and Maintenance...........................................................69
         Section 4.30       Additional Subsidiaries; Bank Accounts..............................................69
         Section 4.31       Maintenance of Water Supply; Access Rights..........................................69
         Section 4.32       No Abandonment......................................................................69
         Section 4.33       Consents to Assignment of Unassigned Leases Additional Project Documents............69
         Section 4.34       Loans...............................................................................69
         Section 4.35       Amendments to Organizational Documents..............................................69
         Section 4.36       Removal of Independent Consultant...................................................70
         Section 4.37       Payments for Consent................................................................70
         Section 4.38       Limitations on Ormesa...............................................................70
         Section 4.39       Limitation on Issuance and Sale of Capital Stock of Subsidiaries....................70
         Section 4.40       Maintenance of Qualifying Facility Status...........................................71
         Section 4.41       Payment of taxes and claims.........................................................71
         Section 4.42       Repayment of Ormesa Credit Agreement................................................71
         Section 4.43       Provision of Additional Liens.......................................................71
         Section 4.44       Galena Re-powering..................................................................71
         Section 4.45       Title Policies......................................................................71
         Section 4.46       Preservation of Liens...............................................................71
         Section 4.47       Title Reports.......................................................................72

                                      -ii-

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ARTICLE V DEFAULTS AND REMEDIES.................................................................................72
         Section 5.01       Events of Default...................................................................72
         Section 5.02       Enforcement of Remedies.............................................................74
         Section 5.03       Other Remedies......................................................................76
         Section 5.04       Waiver of Past Defaults.............................................................77
         Section 5.05       Control by Majority.................................................................77
         Section 5.06       Limitation on Suits.................................................................77
         Section 5.07       Rights of Holders of Senior Secured Notes to Receive Payment........................78
         Section 5.08       Collection Suit by Trustee..........................................................78
         Section 5.09       Trustee May File Proofs of Claim....................................................78
         Section 5.10       Priorities..........................................................................78
         Section 5.11       Undertaking for Costs...............................................................79

ARTICLE VI TRUSTEE..............................................................................................79
         Section 6.01       Duties of Trustee...................................................................79
         Section 6.02       Rights of Trustee...................................................................80
         Section 6.03       Individual Rights of Trustee........................................................81
         Section 6.04       Trustee's Disclaimer................................................................82
         Section 6.05       Notice of Defaults..................................................................82
         Section 6.06       Reports by Trustee to Holders of the Senior Secured Notes...........................82
         Section 6.07       Compensation and Indemnity..........................................................83
         Section 6.08       Replacement of Trustee..............................................................84
         Section 6.09       Successor Trustee by Merger, etc....................................................85
         Section 6.10       Eligibility; Disqualification.......................................................85
         Section 6.11       Preferential Collection of Claims Against the Issuer................................85
         Section 6.12       Receipt of Documents................................................................86

ARTICLE VII LEGAL DEFEASANCE AND COVENANT DEFEASANCE............................................................86
         Section 7.01       Option to Effect Legal Defeasance or Covenant Defeasance............................86
         Section 7.02       Legal Defeasance and Discharge......................................................86
         Section 7.03       Covenant Defeasance.................................................................87
         Section 7.04       Conditions to Legal or Covenant Defeasance..........................................87
         Section 7.05       Deposited Money and Government Securities to be Held in Trust;
                            Other Miscellaneous Provisions......................................................88
         Section 7.06       Repayment to Issuer.................................................................89
         Section 7.07       Reinstatement.......................................................................89

ARTICLE VIII AMENDMENT, SUPPLEMENT AND WAIVER...................................................................90
         Section 8.01       Without Consent of Holders of Senior Secured Notes..................................90
         Section 8.02       With Consent of Holders of Senior Secured Notes.....................................90
         Section 8.03       Revocation and Effect of Consents...................................................92
         Section 8.04       Notation on or Exchange of Senior Secured Notes.....................................93
         Section 8.05       Trustee to Sign Amendments, etc.....................................................93
         Section 8.06       Execution of Supplemental Indentures................................................93

                                     -iii-

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         Section 8.07       Effect of Supplemental Indentures...................................................93
         Section 8.08       Conformity with Trust Indenture Act.................................................93
         Section 8.09       Reference in Senior Secured Notes to Supplemental Indentures........................93

ARTICLE IX GUARANTEE............................................................................................94
         Section 9.01       Agreement to Guarantee..............................................................94
         Section 9.02       Execution and Delivery of Guarantee.................................................95
         Section 9.03       Guarantors May Consolidate, etc. on Certain Terms...................................96
         Section 9.04       Covenants of the Guarantors and Ormesa..............................................96

ARTICLE X MISCELLANEOUS.........................................................................................96
         Section 10.01      Trust Indenture Act Controls........................................................96
         Section 10.02      Notices ............................................................................97
         Section 10.03      Communication by Holders of Senior Secured Notes with Other
                            Holders of Senior Secured Notes.....................................................98
         Section 10.04      Certificate and Opinion as to Conditions Precedent..................................98
         Section 10.05      Statements Required in Certificate or Opinion.......................................98
         Section 10.06      Rules by Trustee and Agents.........................................................99
         Section 10.07      No Personal Liability of Directors, Officers, Employees and Stockholders............99
         Section 10.08      Governing Law.......................................................................99
         Section 10.09      Submission to Jurisdiction..........................................................99
         Section 10.10      Waiver of Jury Trial................................................................99
         Section 10.11      No Adverse Interpretation of Other Agreements......................................100
         Section 10.12      Successors.........................................................................100
         Section 10.13      Severability.......................................................................100
         Section 10.14      Counterpart Originals..............................................................100
         Section 10.15      Table of Contents, Headings, etc...................................................100

EXHIBITS

Exhibit A-1:    FORM OF SENIOR SECURED NOTE
Exhibit A-2:    FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B:      FORM OF CERTIFICATE OF TRANSFER
Exhibit C:      FORM OF CERTIFICATE OF EXCHANGE
Exhibit D:      SUBORDINATION PROVISIONS
Exhibit E:      FORM OF DEED OF TRUST
Exhibit F:      FORM OF GUARANTEE
Exhibit G:      FORM OF SUPPLEMENTAL INDENTURE

                                      -iv-

                  INDENTURE dated as of February 13, 2004 among Ormat Funding
Corp., a Delaware corporation (including its successors and permitted assigns,
the "Issuer"), Brady Power Partners, a Nevada general partnership ("Brady"),
Steamboat Development Corp., a Utah corporation ("Steamboat Development"),
Steamboat Geothermal LLC, a Delaware limited liability company ("Steamboat
Geothermal"), OrMammoth Inc., a Delaware corporation ("OrMammoth"), ORNI 1 LLC,
a Delaware limited liability company ("ORNI 1"), ORNI 2 LLC, a Delaware limited
liability company ("ORNI 2"), ORNI 7 LLC, a Delaware limited liability company
("ORNI 7"), Ormesa LLC and Union Bank of California, N.A., a national banking
association, as trustee (the "Trustee").

                  The Issuer, the Guarantors (as defined) and the Trustee agree
as follows for the benefit of each other and for the equal and ratable benefit
of the Holders of the 8 1/4% Senior Secured Notes due December 30, 2020, any
Additional Notes (as defined below) and the Exchange Notes (as defined below)
issued pursuant to the Registration Rights Agreement:

                                   ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

                  Section 1.01 Definitions.

                  "Acceptable Letter of Credit" means one or more irrevocable
standby letters of credit available for the purpose of drawing in accordance
with the Depositary Agreement, and any extensions thereof or any substitute
letter of credit therefor in the stated amount contained in such extension or
substitute, subject to the limitations set forth in, and permitting draws
thereon as contemplated by the Depositary Agreement, (i) issued to the
Depositary Agent (for the benefit of the Secured Parties entitled to the
benefits of the applicable Account) by a commercial bank having a long-term
unsecured senior debt rating of at least Investment Grade, (ii) payable in
immediately available U.S. Dollar funds on any Business Day, (iii) with a
minimum term of at least one year, (iv) providing for the amount thereof to be
available to the Depositary Agent in multiple drawings conditioned only upon
presentation of sight drafts accompanied by the applicable certificate in the
form attached to such letter of credit or if the issuing bank ceases to be an
Eligible Letter of Credit Provider, (v) transferable to any successor Depositary
Agent, the Collateral Agent or a successor Collateral Agent (or if not
transferable provides for the amount thereof to be drawn upon by the Depositary
Agent upon appointment of a successor Depositary Agent or Collateral Agent),
(vi) governed by the laws of the State of New York or California, (vii) does not
constitute Indebtedness (directly or indirectly) of the Issuer or any of its
Subsidiaries, and is not secured by a Lien on any of the properties of the
Issuer or any of its Subsidiaries, and the Issuer certifies to such in an
Officer's Certificate and (viii) which provides that it may be drawn not more
than thirty days prior to its expiration in the entire amount to be then drawn
if the issuing bank does not provide a written extension of the same to the
Depositary Agent at least 30 days prior to its then scheduled expiration date.

                  "Accounts" means the accounts established under the Depositary
Agreement.

                                                                          Page 2

                  "Additional Notes" means any Senior Secured Notes (other than
Initial Notes), if any, issued under this Indenture in accordance with Sections
2.05 and 2.15 hereof.

                  "Additional Project Document" means any contract or agreement
entered into after the Closing Date in respect of the ownership, construction,
operation, maintenance, modification or administration of a Project that is
material to the Issuer or one or more Projects (including a Qualified Project),
other than a Financing Document. The replacement of a Project Document that is
not a Material Project Document shall be deemed not to be an Additional Project
Document.

                  "Administrative Costs" means all of the Issuer's obligations,
now or hereafter existing, to pay administrative fees, costs and expenses to any
trustee or agent of the Holders of the Senior Secured Notes or any Permitted
Additional Senior Lender, including the Collateral Agent, the Depositary, and
the Trustee (including, without limitation, the reasonable fees and expenses of
counsel, agents and experts).

                  "Affiliate" means, with respect to a Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such first Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

                  "Agent" means any Registrar, Paying Agent or co-registrar.

                  "Agent Member" has the meaning set forth in Section
2.07(c)(v)(B) of this Indenture.

                  "Annual Period" means the twelve month period commencing on
January 1st of each year and ending on December 31st of each year.

                  "Applicable Law" means any constitution, statute, law, rule,
regulation, ordinance, judgment, order, decree or Governmental Approval, or any
published directive or requirement which has the force of law, or other
governmental restriction which has the force of law, or any determination by, or
interpretation of any of the foregoing by, any judicial authority, applicable to
and/or binding on a given Person or any Plant, as the context may require,
whether in effect as of the Closing Date or thereafter and in each case as
amended.

                  "Authentication Order" means a written order or request signed
in the name of the Issuer by the President, a Vice President, the Treasurer or
the Assistant Treasurer, and delivered to the Trustee.

                  "Authorized Officer" or "Authorized Representative" of any
Person means the individual or individuals authorized to act on behalf of such
Person by the board of directors, managing member, management committee, board
of control or any other governing body of

                                      -2-

                                                                          Page 3

such Person as designated from time to time in a certificate of such Person with
specimen signatures.

                  "Board of Directors" means:

                  (1) with respect to a corporation, the board of directors of
         the corporation or any committee thereof duly authorized to act on
         behalf of such board;

                  (2) with respect to a partnership, the board of directors of
         the general partner of the partnership or any committee duly authorized
         and empowered to take action on behalf of such partnership by the
         partnership agreement of such partnership;

                  (3) with respect to a limited liability company, the managing
         member or members or any controlling committee of managing members
         thereof; and

                  (4) with respect to any other Person, the board or committee
         of such Person serving a similar function.

                  "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.

                  "Brady" means Brady Power Partners, a Nevada general
partnership.

                  "Brady-BLM Geothermal Resources Lease N-10922" means that
certain Lease for Geothermal Resources N-10922, dated October 1, 1975, between
Brady and the United States of America through the Bureau of Land Management of
the Department of the Interior.

                  "Brady-BLM Geothermal Resources Lease N-40353" means that
certain Lease for Geothermal Resources N-40353, dated April 1, 1986, between
Brady and the United States of America through the Bureau of Land Management of
the Department of the Interior.

                  "Brady-BLM Geothermal Resources Lease N-40355" means that
certain Lease for Geothermal Resources N-40355, dated July 1, 1986, between
Brady and the United States of America through the Bureau of Land Management of
the Department of the Interior

                  "Brady-BLM Geothermal Resources Lease N-46566" means that
certain Lease for Geothermal Resources N-46566 between Brady and the United
States of America through the Bureau of Land Management of the Department of the
Interior, dated October 1, 1975.

                  "Brady/Desert Peak 1 Interconnection Agreement" means that
certain Service Connections, Meters and Customer's Facility Exhibit to the Brady
Project Power Purchase Agreement, between Brady (as successor to Nevada
Geothermal Power Partners) and Sierra Pacific Power Company.

                                      -3-

                                                                          Page 4

                  "Brady Operation and Maintenance Agreement" means that certain
Operation and Maintenance Agreement, dated January 1, 2002, between Brady,
Western States and Ormat Nevada as Western States' agent.

                  "Brady Plant" means two geothermal power generating plants
located in Churchill County, Nevada (including the Desert Peak 1 Plant) and
having a gross generating capacity of 32 MW.

                  "Brady Project Power Purchase Agreement" means that certain
Long Term Agreement for the Purchase and Sale of Electricity, dated October 5,
1990, between Brady (as successors to Nevada Geothermal Power Partners) and
Sierra Pacific Power Company, as amended by that certain Amendment to Long Term
Agreement for the Purchase and Sale of Electricity, dated July 12, 1991, as
modified by that certain Settlement Agreement, dated February 16, 2001, between
Sierra Pacific Power Company and Brady, and as further amended by that certain
Amendment No. 2 to Long Term Agreement for the Purchase and Sale of Electricity,
dated June 24, 2002.

                  "Brady Settlement Agreement" means that certain Settlement
Agreement, dated May 1, 2002, among Brady, ORNI 1 LLC, ORNI 2 LLC, Ormat Nevada,
Ormat Technologies, and ConAgra Foods, Inc.

                  "Business Day" means any day other than a Saturday or Sunday
or other day on which banks in New York, New York or Nevada are authorized or
required by law or executive order to remain closed.

                  "Capital Expenditures" means any expenses that are capitalized
on the Issuer's balance sheet in accordance with GAAP.

                  "Capital Stock" means:

                  (1) in the case of a corporation, corporate stock;

                  (2) in the case of an association or business entity, any and
         all shares, interests, participations, rights or other equivalents
         (however designated) of corporate stock;

                  (3) in the case of a partnership or limited liability company,
         partnership interests (whether general or limited) or membership
         interests; and

                  (4) any other interest or participation that confers on a
         Person the right to receive a share of the profits and losses of, or
         distributions of assets of, the issuing Person including all warrants,
         options or other rights to acquire any of the foregoing, but excluding
         from all of the foregoing any debt securities convertible into or
         exchangeable for Capital Stock, whether or not such debt securities
         include any right of participation with Capital Stock.

                                      -4-

                                                                          Page 5

                  "Cash Flow Available for Debt Service" means, for any period,
(a) all revenues (including interest, Delay Liquidated Damages, and the proceeds
of any business interruption insurance but excluding any other insurance
proceeds and any other similar non-recurring receipts) received in such period
and deposited in the Revenue Account, less (b) the sum of (x) Operating and
Maintenance Expenses for such period plus (y) Administrative Costs payable to
the Trustee, the Collateral Agent, the Depositary and any other trustee or agent
of the Secured Parties for such period, all as computed on a cash basis.

                  "Certificated Note" shall mean a certificated Senior Secured
Note registered in the name of the Holder thereof and issued in accordance with
Section 2.07 hereof, substantially in the form of Exhibit A-1/A-2 hereto except
that such Senior Secured Note shall not bear the Global Note Legend and shall
not have the "Schedule of Exchanges of Interests in the Global Note" attached
thereto.

                  "Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the Issuer's and the Issuer's
Subsidiaries' assets, taken as a whole; (ii) the adoption of a plan relating to
the Issuer's liquidation or dissolution; (iii) the consummation of any
transaction or series of related transactions (including, without limitation,
any merger or consolidation) the result of which is that any Person other than
Ormat Nevada or a Related Party, becomes the "beneficial owner" (as such term is
defined Rule 13d-3 and Rule 13d-5 under the Exchange Act) directly or
indirectly, of 50% or more of the Issuer's voting power; or (iv) the
consummation of any transactions or series of related transactions the result of
which is that Ormat Nevada and the Related Parties cease to collectively own,
directly or indirectly, more than 50% of the Issuer's economic or voting
interest; provided, however, that notwithstanding the foregoing, a Change of
Control will not be deemed to have occurred if (x) prior to giving effect to the
reduction in Ormat Nevada's and/or the Related Parties' collective voting or
economic interests in the Issuer, such reduction has been approved by holders of
at least 66% of the Senior Secured Notes or (y) prior to giving effect to any
other Person becoming the beneficial owner of 50% or more of the Issuer's voting
power pursuant to clause (iii) hereof, the transaction resulting in such change
in beneficial ownership is approved by holders of at least 66% of the Senior
Secured Notes.

                  "Clearstream" means Citibank, N.A., as operator of Clearstream
Banking, S.A.

                  "Closing Date" means February 13, 2004.

                  "Code" means the U.S. Internal Revenue Code of 1986, as
amended.

                  "Collateral" means all collateral pledged, or in respect of
which a lien is granted, pursuant to this Indenture or the Security Documents.

                                      -5-

                                                                          Page 6

                  "Collateral Agency Agreement" means that certain Collateral
Agency Agreement among the Issuer, each of the Issuer's Subsidiaries, the
Collateral Agent, the Trustee and the Depositary.

                  "Collateral Agent" means Union Bank of California, N.A., as
collateral agent for the benefit of the Secured Parties, together with its
successors and assigns.

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

                  "Commercial Operation" means, in connection with the Galena
Re-powering, the achievement of certain operational and capability criteria
specified for "commercial operation" in the Galena Power Purchase Agreement.

                  "Commercial Operation Date" means, in connection with the
Galena Re-powering, the date upon which Commercial Operation is achieved.

                  "ConAgra Lease" means that certain Lease, dated May 1, 2002,
between Brady and ConAgra Foods, Inc.

                  "Consolidated OG I Plant Connection Agreements" means the OG I
Plant Connection Agreement, the OG IH Plant Connection Agreement, and the OG IE
Plant Connection Agreement.

                  "Contractor" means Ormat Nevada in its capacity as contractor
if and when the Galena Re-powering Contract is executed.

                  "Contractor Guarantor" means Ormat Technologies.

                  "Control Agreements" means (i) each Control Agreement executed
and delivered by the Collateral Agent, the Issuer, certain of the Issuer's
Subsidiaries and the bank or institution where the Issuer's checking accounts
permitted to be established under this Indenture are held and (ii) each Control
Agreement executed and delivered by the Collateral Agent, the Issuer and certain
of the Issuer's Subsidiaries in connection with the Security Documents.

                  "Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 4.02 hereof or such other address as
to which the Trustee may give notice to the Issuer.

                  "Custodian" means, initially, the Trustee, and its successors
and assigns or any other custodian performing similar functions.

                                      -6-

                                                                          Page 7

                  "Debt Service Coverage Ratio" means, for any period, the ratio
of (i) the sum of all Cash Flow Available for Debt Service for such period to
(ii) the aggregate payments of scheduled or accelerated (in accordance with the
terms of the Financing Documents) principal, interest, premium, and Liquidated
Damages, if any, required to be made under this Indenture and other Financing
Documents and in connection with all other Permitted Indebtedness (other than
Subordinated Debt) for such period.

                  "Debt Service Reserve Account" means the account of such name
created under the Depositary Agreement.

                  "Debt Service Reserve Letter of Credit" means an Acceptable
Letter of Credit that may be drawn in accordance with Section 3.4 of the
Depositary Agreement.

                  "Debt Service Reserve Requirement" means, as of any date of
calculation, an amount equal to the projected principal, interest and, to the
extent that a Registration Default has occurred and is continuing, Liquidated
Damages due on the Senior Secured Notes during the succeeding six-month period.

                  "Deeds of Trust" means, collectively, (i) that certain Deed of
Trust, Assignment of Rents, Security Agreement, and Fixture Filing, dated as of
the Closing Date, executed by Steamboat Geothermal, as grantor, for the benefit
of the Collateral Agent, as beneficiary, (ii) on or after the Ormesa Support
Date, that certain Deed of Trust, Assignment of Rents, Security Agreement, and
Fixture Filing, to be executed by Ormesa, as Trustor, for the benefit of the
Collateral Agent, as beneficiary, (iii) that certain Deed of Trust, Assignment
of Rents, Security Agreement, and Fixture Filing, to be executed by Steamboat
Development, as grantor, for the benefit of the Collateral Agent, as
beneficiary, in the event the respective Resource Lease Consent is obtained,
(iv) that certain Deed of Trust, Assignment of Rents, Security Agreement, and
Fixture Filing, to be executed by Brady Power Partners as grantor, for the
benefit of the Collateral Agent, as beneficiary, to the extent any necessary
Resource Lease Consents are obtained, (v) a Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing to be executed by Mammoth-Pacific, if the
Issuer or any Guarantor acquires that portion of the Capital Stock of
Mammoth-Pacific that the Issuer and the Guarantors do not own on the Closing
Date or the Issuer and the Guarantors otherwise acquire control of 100% of the
ownership interest of the Mammoth Plant, and (vi) a Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing, or the equivalents thereof, to be
executed by the Issuer or a Subsidiary of the Issuer that acquires a Qualified
Project.

                  "Default" means an event or condition that, with the giving of
notice or lapse of time, or any combination thereof, would become an Event of
Default.

                  "Delay Liquidated Damages" means amounts to be paid by the
Contractor pursuant to Section 11.1 of the Galena Re-powering Contract.

                                      -7-

                                                                          Page 8

                  "Depositary Agent" means Union Bank of California, N.A., as
Depositary under the Depositary Agreement, together with its successors and
assigns.

                  "Depositary Agreement" means the Deposit and Disbursement
Agreement, dated as of the Closing Date, among the Issuer, each of the Issuer's
Subsidiaries (other than Ormesa prior to the Ormesa Support Date), the
Collateral Agent, the Depositary and the Securities Intermediary.

                  "Depository" means, with respect to the Senior Secured Notes
issuable or issued in whole or in part in global form, DTC, and any and all
successors thereto appointed as depository hereunder and having become such
pursuant to the applicable provision of this Indenture.

                  "Desert Peak 1 Plant" means the geothermal generating plant
located in Churchill County, Nevada, owned by Brady and providing, as of the
Closing Date, net generating capacity of 6.1 MW.

                  "Desert Peak Sublease" means that certain sublease, dated as
of or before the Closing Date, between Brady and Western States Geothermal
Company.

                  "Distribution Account" means the account of such name created
under the Depositary Agreement.

                  "Distribution Conditions" has the meaning set forth in Section
3.8(b) of the Depositary Agreement.

                  "Distribution Date" means any Business Day on or within 60
days after a Scheduled Payment Date, on which the Issuer may make a Restricted
Payment in accordance with the terms of this Indenture.

                  "Distribution Suspense Account" means the account of such name
created under the Depositary Agreement.

                  "Dollars" and "$" means lawful money of the United States.

                  "DTC" means The Depository Trust Company.

                  "Eligible Letter of Credit Provider" means a U.S. commercial
bank(s) or financial institution(s) or a U.S. branch of a foreign commercial
bank(s) or financial institution(s) with an investment grade rating (provided
that any such rating shall not be based solely on such bank's or financial
institution's foreign currency rating at such time).

                  "Eminent Domain Proceeds" means all amounts and proceeds
(including instruments) received by the Issuer or any Guarantor in respect of
any Event of Eminent Domain.

                                      -8-

                                                                          Page 9

                  "Energy Services Agreement" means that certain Energy Services
Agreement, dated February 11, 2003, between Imperial Irrigation District and
Ormesa.

                  "Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear system.

                  "ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended.

                  "Event of Abandonment" means, with respect to a Plant, the
suspension or cessation for a period of at least 120 consecutive days of all or
substantially all of the operational and maintenance activities at such Plant;
provided, however, that any such suspension or cessation that arises from an
Event of Loss, a requirement of law, an event of force majeure, curtailment or
failure to be dispatched, or other bona fide business reasons shall not
constitute an Event of Abandonment, in each case, so long as the Issuer or the
Issuer's applicable Subsidiaries are taking commercially reasonable actions to
overcome or mitigate the effects of the cause of suspension or cessation so that
maintenance and/or operations, as the case may be, can be resumed. Any period of
cessation or suspension shall end on the date that operation and maintenance
activities of a substantial nature are resumed.

                  "Event of Default" means the occurrence of any of the events
set forth under Section 5.01 hereof.

                  "Event of Eminent Domain" means any compulsory transfer or
taking or transfer under threat of compulsory transfer or taking of any material
part of the Collateral or a Project by any Governmental Authority.

                  "Event of Loss" means an event which causes all or a portion
of the Project to be damaged, destroyed or rendered unfit for normal use for any
reason whatsoever, other than an Event of Eminent Domain or a Title Event.

                  "Exchange Act" means the U.S. Securities Exchange Act of 1934,
as amended.

                  "Exchange Notes" means (i) the 8 1/4% Senior Secured Notes due
2020, registered under the Securities Act, issued pursuant to this Indenture in
connection with an Exchange Offer pursuant to the Registration Rights Agreement
and (ii) Additional Notes, if any, issued pursuant to a registration statement
filed with the SEC under the Securities Act.

                  "Exchange Offer" means the exchange and issuance by the
Issuer, pursuant to the Registration Rights Agreement, of a principal amount of
Exchange Notes (which will be registered pursuant to the Exchange Offer
Registration Statement) equal to the outstanding principal amount of Initial
Notes or Additional Notes, as the case may be, tendered by Holders thereof in
connection with such exchange and issuance.

                                      -9-

                                                                         Page 10

                  "Exchange Offer Registration Statement" has the meaning set
forth in the Registration Rights Agreement.

                  "Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal fund transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day on
such transactions received by the issuing bank from three federal funds brokers
of recognized standing selected by it.

                  "FERC" means the Federal Energy Regulatory Commission and any
successor agency thereto.

                  "Final Acceptance" means, in connection with the Galena
Re-powering, that the Contractor has (i) satisfied or is deemed to have
satisfied all of the requirements for Final Acceptance set forth in Section 7.1
of the Galena Re-powering Contract, and (ii) delivered to ORNI 7 the final
waivers and releases of Liens.

                  "Final Acceptance Date" means, in connection with the Galena
Re-powering Contract, the date upon which the Contractor has achieved Final
Acceptance.

                  "Final Completion" means, with respect to the Galena
Re-powering, that both (a) Final Acceptance has occurred, as certified by the
Issuer and concurred with by the Independent Engineer and (b) that Commercial
Operation has occurred, as certified by the Issuer and confirmed by the Galena
Power Purchaser.

                  "Final Completion Date" means, with respect to the Galena
Re-powering, the date upon which both (a) Final Acceptance has occurred, as
certified by the Issuer and concurred with by the Independent Engineer and (b)
Commercial Operation has occurred, as certified by the Issuer and confirmed by
the Galena Power Purchaser.

                  "Final Maturity Date" means the latest stated maturity date of
any of the Senior Secured Notes.

                  "Financing Documents" means the Senior Secured Notes, the
Guarantees (including those issued pursuant to the Exchange Offer, if and when
issued), this Indenture, the Security Documents, the Note Purchase Agreement,
the Registration Rights Agreement, the Exchange Notes, the Letters of Credit and
any other credit or security agreement executed by a Financing Entity in respect
of a Project.

                  "Financing Entity" means the Issuer, the Guarantors and Ormat
Nevada.

                                      -10-

                                                                         Page 11

                  "Fleetwood Geothermal Resources Sublease" means that certain
Geothermal Resources Sublease, dated May 31, 1991, between Steamboat
Development, as subtenant, and Fleetwood Corporation, as sublandlord, as amended
by the amendment dated June 11, 1991.

                  "Fluid Supply Agreement" means that certain Fluid Supply
Agreement, dated December 15, 2003, between Brady and Western States Geothermal
Company.

                  "FPA" means the Federal Power Act, as amended.

                  "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect as of the relevant date of
determination.

                  "Galena Power Purchaser" means the party purchasing power from
Steamboat Geothermal under the Galena Power Purchase Agreement.

                  "Galena Power Purchase Agreement" means a power purchase
agreement between ORNI 7 and either Sierra Pacific Power Company or Nevada Power
Company, providing for a price of not less than $.052 kWh (escalating by one
percent (1%) on an annual basis) and containing terms no less favorable than
those set forth under "Description of Our Principal Contracts -- Steamboat
Complex -- Galena Re-powering Documents -- Galena Power Purchase Agreement," in
the Offering Memorandum, including without limitation, the obligation of ORNI 7
to deliver electrical energy in the amounts consistent with an expected
generation based on a nominal net capacity of 18 MW.

                  "Galena Re-powering" means the upgrading of the Steamboat
Geothermal Plant with the intent to achieve a minimum net electrical output of
18 MW through the replacement of certain equipment at the Steamboat Geothermal
Plant and the possible addition of geothermal resources from the Steamboat
Development Plant.

                  "Galena Re-powering Account" means the account of such name
created under the Depositary Agreement.

                  "Galena Re-powering Contract" means the Engineering,
Procurement and Galena Re-powering Contract dated as of the Closing Date between
the Contractor and ORNI 7.

                  "Galena Re-powering Letter of Credit" means an Acceptable
Letter of Credit having, at all times while such letter of credit is in effect,
an amount available to be drawn that, when added to that amount then on deposit
in the Galena Re-powering Account, is not less than the Galena Re-powering
Requirement at such time.

                                      -11-

                                                                         Page 12

                  "Galena Re-powering Performance Redemption" has the meaning
set forth in Section 3.08(d) of this Indenture.

                  "Galena Re-powering Requirement" means $19,400,000, or if
amounts have been previously withdrawn from the Galena Re-powering Account
pursuant to the Depositary Agreement the greater of an amount equal to (i)
$19,400,000 less the sum of the amounts that have been previously withdrawn from
the Galena Re-powering Account and (ii) the remaining amount the Independent
Engineer certifies is necessary to achieve the Final Completion Date with
respect to the Galena Re-powering; provided, however, that if additional amounts
are required to be deposited within the Galena Re-powering Account as a result
of this clause (ii), the Issuer shall be permitted to transfer amounts from the
Distribution Suspense Account into the Galena Re-powering Account in order to
satisfy such requirement.

                  "Geothermal Consultant" means Geothermex, Inc. or another
widely recognized independent geothermal engineering firm retained by the Issuer
as Geothermal Consultant.

                  "Geothermal Resources Leases" means the Sierra Pacific
Geothermal Resources Lease, the Guisti Geothermal Resources Lease, the Fleetwood
Geothermal Resources Sublease, the Magma Geothermal Resources Lease, the
Mammoth-BLM Geothermal Resources Lease CA 11667, the Mammoth-BLM Geothermal
Resources Lease CA 14408, the Ormesa-BLM Geothermal Resources Lease CA 964, the
Ormesa-BLM Geothermal Resources Lease CA 966, the Ormesa-BLM Geothermal
Resources Lease CA 1903, the Ormesa-BLM Geothermal Resources Lease CA 6217, the
Ormesa-BLM Geothermal Resources Lease CA 6218, the Ormesa-BLM Geothermal
Resources Lease CA 6219, the Ormesa-BLM Geothermal Resources Lease CA 17568, the
Railway Geothermal Resources Lease, the ConAgra Lease, the Brady-BLM Geothermal
Resources Lease N-10922, the Brady-BLM Geothermal Resources Lease N-46566, the
Brady-BLM Geothermal Resources Lease N-40353, and the Brady-BLM Geothermal
Resources Lease N-40355.

                  "G1 Power Purchase Agreement" means that certain Amended and
Restated Power Purchase and Sales Agreement, dated December 2, 1986, between
Mammoth-Pacific and Southern California Edison, as amended by that certain
Amendment No. 1 to the Amended and Restated Power Purchase and Sales Agreement,
dated May 18, 1990.

                  "G2 Interconnection Facilities Agreement" means that certain
Interconnection Facilities Agreement, attached to that certain Amendment No. 1 -
Power Purchase Contract as Appendix A, dated October 27, 1989, between
Mammoth-Pacific and Southern California Edison.

                  "G2 Power Purchase Agreement" means that certain Power
Purchase Contract, dated April 15, 1985, between Mammoth-Pacific and Southern
California Edison, as amended by that certain Amendment No. 1 - Power Purchase
Contract, dated October 27, 1989, and as amended further by that certain
Amendment No. 2 - Power Purchase Contract, dated December 20, 1989.

                                      -12-

                                                                         Page 13

                  "G3 Interconnection Facilities Agreement" means that certain
Interconnection Facilities Agreement, dated October 27, 1989, between
Mammoth-Pacific and Southern California Edison.

                  "G3 Power Purchase Agreement" means that certain Power
Purchase Contract, dated April 16, 1985, between Mammoth-Pacific (as successor
to Santa Fe Geothermal, Inc.), and Southern California Edison, as amended by
that certain Amendment No. 1 to the Power Purchase Contract, dated October 27,
1989, between Mammoth-Pacific and Southern California Edison and as amended
further by that certain Amendment No. 2 - Power Purchase Contract, dated
December 20, 1989.

                  "Global Note Legend" means the legend set forth in Exhibit
A-1/A-2 hereto.

                  "Global Notes" shall mean a Senior Secured Note that evidences
all or part of the Senior Secured Notes and bears the appropriate legend set
forth in Exhibit A-1/A-2 (or such legend as may be contemplated by Section 2.02
for such Senior Secured Notes).

                  "Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.

                  "Governmental Approvals" means all governmental approvals,
authorizations, consents, decrees, permits, waivers, privileges and filings with
or from all Governmental Authorities required to be obtained or made for the
ownership, construction, operation and maintenance of a Project.

                  "Governmental Authority" means the government of any federal,
state, municipal or other political subdivision in which the Projects are
located, and any other government or political subdivision thereof exercising
jurisdiction over the Projects or any of their assets or any party to any of the
Project Documents, including all agencies and instrumentalities of such
governments and political subdivisions.

                  "Guarantee" means each guarantee by a Guarantor of the
Issuer's obligations under the Financing Documents pursuant to Article IX or
another writing pursuant to which a Guarantor agrees to be bound by the terms
applicable to Guarantors set forth in Article IX.

                  "Guarantor" means (i) each of Brady, Steamboat Development,
Steamboat Geothermal, OrMammoth, the ORNI Entities and their respective
successors and assigns and (ii) from and after the date of such execution, any
of the Issuer's other direct or indirect Subsidiaries that execute a Guarantee
(including without limitation, in connection with the acquisition of a Qualified
Project) in accordance with the provisions of Sections 4.30 and 4.38 of this
Indenture and their respective successors and assigns.

                  "Guisti Geothermal Resources Lease" means that certain
Geothermal Resources Lease, dated June 27, 1988 among Steamboat Development,
Bernice Guisti, Judith Harvey and

                                      -13-

                                                                         Page 14

Karen Thompson, as Trustees and Beneficiaries of the Guisti Trust, as amended by
that certain Amendment to Geothermal Resources Lease dated January 1992, and
that certain Second Amendment to Geothermal Resources Lease dated June 25, 1993.

                  "Hazardous Substance" means any substance, pollutant or
contaminant now or hereafter included in such (or any similar) term under any
state, federal or local ordinance, statute, law or regulation now in effect or
hereafter enacted or amended.

                  "Holder" means a Person in whose name a Senior Secured Note is
registered in the register maintained pursuant to Section 2.07(a).

                  "IID Water Supply Agreement" means that certain Amended and
Restated Water Supply Agreement, dated March 6, 1990, between Ormesa (as
successor to Trigor Geothermal Corporation) and the Imperial Irrigation
District.

                  "Indebtedness" of any Person means, at any date, without
duplication:

                  (i)      all obligations of such Person for borrowed money;

                  (ii) all obligations of such Person evidenced by bonds,
         debentures, notes or other similar instruments (excluding "deposit
         only" endorsements on checks payable to the order of such Person);

                  (iii) all obligations of such Person to pay the deferred
         purchase price of property or services (except accounts payable and
         similar obligations arising in the ordinary course of business shall
         not be included herein);

                  (iv) all obligations of such Person as lessee under capital
         leases to the extent required to be capitalized on the books of such
         Person in accordance with GAAP;

                  (v) all obligations of such Person under conditional sale or
         other title retention agreements relating to property or assets
         purchased by such Person;

                  (vi) all Indebtedness of others secured by (or for which the
         holder of such indebtedness has an existing right, contingent or
         otherwise, to be secured by) any Lien on property owned or acquired by
         such Person, whether or not the obligations secured thereby have been
         assumed;

                  (vii) all obligations of such Person in respect of interest
         rate swaps, collars or caps and other interest rate protection
         arrangements, foreign currency exchange agreements, commodity exchange,
         commodity future, commodity forward or commodity option agreements, or
         other interest or exchange rate or commodity hedging arrangements;

                                      -14-

                                                                         Page 15

                  (viii) all obligations of such Person as an account party in
         respect of letters of credit and bankers' acceptances; and

                  (ix) all obligations of others of the type referred to in
         clauses (i) through (viii) above guaranteed by such Person, whether or
         not secured by a Lien or other security interest on any asset of such
         Person.

                  "Indenture" means this Indenture, as amended or supplemented
from time to time.

                  "Independent Consultant" means the Independent Engineer, the
Insurance Consultant and the Geothermal Consultant.

                  "Independent Engineer" means Stone & Webster Management
Consultants, Inc., or another widely recognized independent engineering firm
retained as Independent Engineer by the Issuer.

                  "Initial Galena Re-powering Withdrawal Conditions" has the
meaning set forth in Section 3.5(d) of the Depositary Agreement.

                  "Initial Notes" means $190,000,000 in aggregate principal
amount of 8 1/4% Senior Secured Notes due 2020 issued under this Indenture on
the Closing Date.

                  "Initial Purchaser" means Lehman Brothers Inc.

                  "Insurance Consultant" means Marsh USA, Inc., or its
successors; provided that such successor is another nationally recognized
independent insurance consultant.

                  "Interconnection Agreements" means the Steamboat 1/1A
Interconnection Agreement, Steamboat 2/3 Interconnection Agreement, the Mammoth
Interconnection Facilities Agreements, the Ormesa Interconnection Agreements,
and the Brady/Desert Peak 1 Interconnection Agreement.

                  "Interest Payment Date" means each June 30 and December 30
commencing June 30, 2004 and concluding on the Final Maturity Date.

                  "Investment Grade" means a rating of Baa3 or better by Moody's
and BBB- or better by S&P (or an equivalent rating by another nationally
recognized credit rating agency if one or more of such corporations are not in
the business of rating long-term obligations of commercial banks at the time of
issuance); provided, that such rating is not on review for possible downgrade or
on negative watch by any such agency.

                  "Investments" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course

                                      -15-

                                                                         Page 16

of business), purchases or other acquisitions for consideration of Indebtedness,
Capital Stock or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

                  "Kilowatt" or "KW" means one thousand watts.

                  "Kilowatt-hours" or "kWh" means a unit of electrical energy
equal to one kilowatt of energy supplied or taken from an electric circuit
steadily for one hour.

                  "Letter of Credit" means the Debt Service Reserve Letter of
Credit, the Galena Re-powering Letter of Credit or the Ormesa Repayment Letter
of Credit, as the case may be.

                  "Letter of Transmittal" means the letter of transmittal to be
prepared by the Issuer and sent to all Holders of the Initial Notes and
Additional Notes for use by such Holders in connection with the Exchange Offer.

                  "Lien" means any mortgage, pledge, hypothecation, assignment,
mandatory deposit arrangement, encumbrance, security interest, charge, lien
(statutory or other), preference, priority or other collateral agency agreement
of any kind or nature whatsoever which has the substantial effect of
constituting a security interest, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same effect as any of the foregoing and the filing of any
financing statement or similar instrument under the Uniform Commercial Code or
comparable law of any jurisdiction, domestic or foreign.

                  "Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.

                  "Loss Proceeds" means all proceeds from an Event of Loss
received by the Issuer or any Guarantor, including, without limitation,
insurance proceeds or other amounts actually received, except proceeds of
business interruption insurance.

                  "Magma Geothermal Resources Lease" means that certain
Geothermal Lease, dated August 31, 1983, between Mammoth-Pacific and Magma Power
Company, as amended by amendments dated April 30, 1987, January 1, 1990, and
April 12, 1991.

                  "Make-Whole Premium" means a premium equal to the excess, if
any, of (a) the present value of all scheduled principal and interest payments
on all Senior Secured Notes to be redeemed (discounted at a rate equal to the
yield to maturity of U.S. Treasury securities having an average life equal to
the Remaining Average Life of the Senior Secured Notes, plus 50 basis points)
over (b) the principal amount of the Senior Secured Notes to be redeemed.

                  "Mammoth-BLM Geothermal Resources Lease CA 11667" means that
certain Geothermal Resources Lease CA 11667, dated March 1, 1982, between
Mammoth-Pacific and the United States of America through the Bureau of Land
Management of the Department of the Interior.

                                      -16-

                                                                         Page 17

                  "Mammoth-BLM Geothermal Resources Lease CA 14408" means that
certain lease for Geothermal Resources CA 14408, dated February 1, 1985, between
Mammoth-Pacific and the United States of America through the Bureau of Land
Management of the Department of the Interior.

                  "Mammoth-BLM Site License" means that certain License for
Electric Power Plant Site CA 21918, dated July 26, 1989, between Mammoth-Pacific
and the United States of America through the Bureau of Land Management of the
Department of the Interior.

                  "Mammoth Enhancement" means the investment in additional
equipment and other enhancements at the Mammoth Project that are designed to
increase output at the Mammoth Plant by 3.6 MW.

                  "Mammoth Enhancement Redemption" has the meaning set forth in
Section 3.08(e) of this Indenture.

                  "Mammoth Interconnection Facilities Agreements" means the G2
Interconnection Facilities Agreement and the G3 Interconnection Facilities
Agreement.

                  "Mammoth Operation and Maintenance Agreement" means that
certain Plant Operating Services Agreement, dated January 1, 1995, between Ormat
Nevada (as successor to Pacific Power Plant Operations) and Mammoth-Pacific.

                  "Mammoth-Pacific" means Mammoth-Pacific, L.P. (California), a
California limited partnership.

                  "Mammoth-Pacific LP Agreement" means that certain Amended and
Restated Agreement of Limited Partnership of Mammoth-Pacific dated January 26,
1990, among CD Mammoth Lakes I, Inc., CD Mammoth Lakes II, Inc. and OrMammoth,
as amended by the amendment dated June 13, 1995.

                  "Mammoth Plant" means the three geothermal power generating
plants, denominated the G1, G2 and G3 plants located in Mammoth Lakes,
California that are owned by Mammoth-Pacific (and in which OrMammoth has a 50%
partnership interest) and having a gross generating capacity of 35 MW.

                  "Mammoth Power Purchase Agreements" means the G1 Power
Purchase Agreement, the G2 Power Purchase Agreement and the G3 Power Purchase
Agreement.

                  "Material Adverse Effect" means a material adverse effect on
(i) the Issuer's or any of the Issuer's Subsidiaries' results of operations or
financial condition (taken as a whole), (ii) the validity or priority of the
Liens on the Collateral or Guarantees, (iii) the Issuer's or any of the Issuer's
Subsidiaries' ability (taken as a whole) to observe and perform any of the
Issuer's or any of the Issuer's Subsidiaries' material obligations under the
Transaction Documents to which the Issuer or any of the Issuer's Subsidiaries is
a party or (iv) the ability of the

                                      -17-

                                                                         Page 18

Trustee or the Collateral Agent to enforce any of the payment or other material
obligations of the Issuer, any Guarantor or Ormat Nevada under the Financing
Documents to which the Issuer, the Guarantors or Ormat Nevada are parties, as
the case may be.

                  "Material Project Documents" means the Power Purchase
Agreements, the Operation and Maintenance Agreements, the Interconnection
Agreements, the Geothermal Resources Leases, the Site Licenses, the
Mammoth-Pacific LP Agreement, the IID Water Supply Agreement, the Fluid Supply
Agreement, the Desert Peak Sublease, the Brady Settlement Agreement, the Galena
Re-powering Contract and any Additional Project Document.

                  "Megawatt" or "MW" means one million watts.

                  "Megawatt-hours" or "MWh" means one thousand KWh.

                  "Meyburg Geothermal Resources Lease" means that certain
Geothermal Resources Lease, between ORNI 7, as lessee, and ORNI 6, as lessor.

                  "Moody's" means Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and assigns.

                  "Net Available Amount" means, with respect to any proceeds,
such proceeds net of the related Collection Expenses.

                  "Note Purchase Agreement" means the Note Purchase Agreement
among the Issuer, the Guarantors and the Initial Purchaser for the sale and
purchase of the Senior Secured Notes.

                  "Offering" means the offering of the Senior Secured Notes
described herein.

                  "Offering Memorandum" means that certain offering memorandum
dated February 6, 2004, relating to the offer of the Senior Secured Notes for
sale.

                  "Officer's Certificate" means a certificate signed by the
Issuer's Authorized Representative.

                  "OG I Plant Connection Agreement" means that certain Plant
Connection Agreement for the Ormesa Geothermal Plant, dated October 1, 1985,
between Ormesa (as successor to Ormesa Geothermal) and the Imperial Irrigation
District.

                  "OG I Power Purchase Agreement" means that certain Power
Purchase Contract, dated July 18, 1984, between Ormesa (as successor to Republic
Geothermal, Inc.) and Southern California Edison, as amended by that certain
Amendment No. 1 to the Power Purchase Contract, dated December 23, 1988, between
Ormesa (as successor to Ormesa Geothermal) and Southern California Edison.

                                      -18-

                                                                         Page 19

                  "OG I Transmission Service Agreement" means that certain
Transmission Service Agreement for the Ormesa I, Ormesa IE and Ormesa IH
Geothermal Power Plants, dated October 3, 1989, between Ormesa (as successor to
Ormesa Geothermal) and the Imperial Irrigation District.

                  "OG IE Plant Connection Agreement" means that certain Plant
Connection Agreement for the Ormesa IE Geothermal Power Plant, dated October 21,
1988, between Ormesa (as successor to Ormesa IE) and the Imperial Irrigation
District.

                  "OG IH Plant Connection Agreement" means that certain Plant
Connection Agreement for the Ormesa IH Geothermal Power Plant, dated October 3,
1989, between Ormesa (as successor to Ormesa IH) and the Imperial Irrigation
District.

                  "OG II Plant Connection Agreement" means that certain Plant
Connection Agreement for the Ormesa Geothermal Plant No. 2, dated May 26, 1987,
between Ormesa (as successor to Ormesa Geothermal II) and the Imperial
Irrigation District.

                  "OG II Power Purchase Agreement" means that certain Power
Purchase Contract, dated June 13, 1984, between Ormesa (as successor to Ormat
Systems Inc.) and Southern California Edison.

                  "OG II Transmission Service Agreement" means that certain
Transmission Service Agreement for the Ormesa II Geothermal Power Plant, dated
August 25, 1987, between Ormesa (as successor to Ormesa Geothermal II) and the
Imperial Irrigation District.

                  "Operating and Maintenance Expenses" means, for any period,
all amounts disbursed by or on behalf of the Issuer or any Subsidiary of the
Issuer in such period for operation, maintenance, administration, repair (other
than repair done in response to a casualty event), or improvement of a Project,
including, without limitation, premiums on insurance policies, property and
other taxes, litigation expenses and costs, payments under leases, royalty and
other land use agreements, and fees, expenses, and any other payments required
under the Project Documents; provided, "Operating and Maintenance Expenses"
shall not include (i) any payment made in respect of the Financing Documents or
with respect to any Indebtedness, (ii) any payment or dividends or other
distributions to Ormat Nevada or any of the Issuer's other Affiliates other than
payments under Project Documents, (iii) any tax paid or payable by any of the
Issuer's direct or indirect equity owners with respect to the Issuer's income or
receipts or (iv) any amounts for construction related to the Galena Re-powering.

                  "Operating Budget" means the annual budget of Operating and
Maintenance Expenses for the Projects, as prepared in good faith by the Issuer
for each fiscal year, or part thereof, of the Issuer, showing such costs by
category and, where applicable, by Project.

                  "Operating Subsidiaries" means all of the Issuer's
Subsidiaries other than OrMammoth unless OrMammoth purchases the partnership
interests of Mammoth-Pacific it does not currently own.

                                      -19-

                                                                         Page 20

                  "Operation and Maintenance Agreements" means the Steamboat
Complex Operation and Maintenance Agreement, the Mammoth Operation and
Maintenance Agreement, the Ormesa Operation and Maintenance Agreement, and the
Brady Operation and Maintenance Agreement.

                  "Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to the Issuer, any
Affiliate of the Issuer or the Trustee.

                  "Organizational Documents" means as to any Person, the
articles of incorporation, by laws, partnership agreement, limited liability
company agreement, operating agreement or other organizational or governing
documents of such Person.

                  "OrMammoth" means OrMammoth Inc., a Delaware corporation.

                  "Ormat Nevada" means Ormat Nevada Inc., a Delaware
corporation.

                  "Ormat Nevada Subordinated Loan" means a subordinated Credit
Agreement between the Issuer and Ormat Nevada that constitutes Subordinated
Debt.

                  "Ormat Technologies" means Ormat Technologies, Inc., a
Delaware corporation.

                  "Ormesa" means Ormesa LLC, a Delaware limited liability
company.

                  "Ormesa-BLM Geothermal Resources Lease CA 964" means the
Geothermal Resources Lease CA 964, dated September 1, 1974, between Ormesa and
the United States of America through the Bureau of Land Management of the
Department of the Interior.

                  "Ormesa-BLM Geothermal Resources Lease CA 966" means the
Geothermal Resources Lease CA 966, dated August 1, 1974, between Ormesa and the
United States of America through the Bureau of Land Management of the Department
of the Interior.

                  "Ormesa-BLM Geothermal Resources Lease CA 1903" means the
Geothermal Resources Lease CA 1903, dated September 1, 1974, between Ormesa and
the United States of America through the Bureau of Land Management of the
Department of the Interior.

                  "Ormesa-BLM Geothermal Resources Lease CA 6217" means the
Geothermal Resources Lease CA 6217, dated July 1, 1979, between Ormesa and the
United States of America through the Bureau of Land Management of the Department
of the Interior.

                  "Ormesa-BLM Geothermal Resources Lease CA 6218" means the
Geothermal Resources Lease CA 6218, dated July 1, 1979, between Ormesa and the
United States of America through the Bureau of Land Management of the Department
of the Interior.

                                      -20-

                                                                         Page 21

                  "Ormesa-BLM Geothermal Resources Lease CA 6219" means the
Geothermal Resources Lease CA 6219, dated July 1, 1979, between Ormesa and the
United States of America through the Bureau of Land Management of the Department
of the Interior.

                  "Ormesa-BLM Geothermal Resources Lease CA 17568" means the
Geothermal Resources Lease CA 17568, dated July 1, 1979, between Ormesa and the
United States of America through the Bureau of Land Management of the Department
of the Interior.

                  "Ormesa-BLM Site License CA 17129" means that certain License
for Electric Power Plant Site CA 17129, dated August 21, 1985, between Ormesa
and the United States of America through the Bureau of Land Management of the
Department of the Interior.

                  "Ormesa-BLM Site License CA 20172" means that certain License
for Electric Power Plant Site CA 20172, dated July 21, 1987, between Ormesa and
the United States of America through the Bureau of Land Management of the
Department of the Interior.

                  "Ormesa-BLM Site License CA 22079" means that certain License
for Electric Power Plant Site CA 22079, dated July 24, 1989, between Ormesa and
the United States of America through the Bureau of Land Management of the
Department of the Interior.

                  "Ormesa-BLM Site License CA 22405" means that certain License
for Electric Power Plant Site CA 22405, dated June 7, 1988, between Ormesa and
the United States of America through the Bureau of Land Management of the
Department of the Interior.

                  "Ormesa-BLM Site License CA 24678" means that certain License
for Electric Power Plant Site CA 24678, dated September 18, 1989, between Ormesa
and the United States of America through the Bureau of Land Management of the
Department of the Interior.

                  "Ormesa Credit Agreement" means the Credit Agreement dated
December 31, 2002 among Ormesa, United Capital as Administrative Agent and
Collateral Agent, and the lenders party thereto from time to time.

                  "Ormesa Interconnection Agreements" means the Consolidated OG
I Plant Connection Agreements, the OG I Transmission Service Agreement, the OG
II Plant Connection Agreement and the OG II Transmission Service Agreement.

                  "Ormesa Loan Repayment Account" means the account of such name
created under the Depositary Agreement.

                  "Ormesa Operation and Maintenance Agreement" means that
certain Operation and Maintenance Agreement, dated April 15, 2002, between
Ormesa and Ormat Nevada.

                  "Ormesa Plant" means the six geothermal power generating
plants located in East Mesa, Imperial Valley, California, owned by Ormesa and
having a gross generating capacity of 94 MW.

                                      -21-

                                                                         Page 22

                  "Ormesa Power Purchase Agreements" means the OG I Power
Purchase Agreement and the OG II Power Purchase Agreement.

                  "Ormesa Repayment Letter of Credit" means an Acceptable Letter
of Credit having, at all times such letter of credit is in effect, an amount
available to be drawn that, when added to the amount of cash then on deposit in
the Ormesa Loan Repayment Account, is in an amount not less than the Ormesa
Repayment Requirement.

                  "Ormesa Repayment Requirement" means an amount equal to
$15,500,000, which is equal to the aggregate principal amount outstanding under
the Ormesa Credit Agreement on the Closing Date less cash on deposit in the
"debt service reserve account" under the Ormesa Credit Agreement and amounts
actually repaid under the Ormesa Credit Agreement in 2004; provided, however,
that with respect to the aggregate principal amount paid on September 30, 2004,
such amount shall not be reduced to an amount less than 102% of the remaining
aggregate principal amount outstanding under the Ormesa Credit Agreement less
cash on deposit in the "debt service reserve account" under the Ormesa Credit
Agreement on such date.

                  "Ormesa Support Date" means the earliest to occur of (i)
January 31, 2005; (ii) any other date as of which the amount payable in respect
of the Ormesa Credit Agreement has been paid in full; and (iii) any other date
as of which Ormesa is no longer prohibited from granting liens pursuant to the
Ormesa Credit Agreement.

                  "ORNI 6" means ORNI 6 LLC, a Delaware limited liability
company.

                  "ORNI 7" means ORNI 7 LLC, a Delaware limited liability
company.

                  "ORNI Entities" means ORNI 1 LLC, a Delaware limited liability
company, ORNI 2 LLC, a Delaware limited liability company and ORNI 7.

                  "Outstanding" in connection with the Senior Secured Notes,
means, as of the time in question, all Senior Secured Notes authenticated and
delivered under this Indenture, except (i) Senior Secured Notes theretofore
canceled or required to be canceled under this Indenture; (ii) Senior Secured
Notes for which provision for payment shall have been made in accordance with
this Indenture; and (iii) Senior Secured Notes in substitution for which other
Senior Secured Notes have been authenticated and delivered pursuant to this
Indenture.

                  "Overdue Principal" shall mean, as of any Payment Date, all
principal of any Senior Secured Note which has become due and payable and not
been punctually paid or duly provided for when and as due and payable, whether
as a result of insufficient available funds or otherwise.

                  "Paying Agent" has the meaning set forth in Section 2.07(a) of
this Indenture.

                  "Payment Date" means any Interest Payment Date or Principal
Payment Date.

                                      -22-

                                                                         Page 23

                  "Performance Guarantee Tests" means the performance tests
conducted in accordance with the Galena Re-powering Contract to demonstrate and
verify that the Steamboat Geothermal Facility has satisfied the Performance
Guarantees and certain other performance criteria.

                  "Performance Guarantees" has the meaning given in the Galena
Re-powering Contract.

                  "Performance Liquidated Damages" means the liquidated damages
payable by the Contractor to Steamboat Geothermal pursuant to the Galena
Re-powering Contract as a consequence of the failure of the Steamboat Geothermal
Facility to meet certain of the Performance Guarantees.

                  "Permitted Additional Senior Lender" means a holder of any
Senior Secured Obligations other than the Senior Secured Notes.

                  "Permitted Indebtedness" has the meaning set forth in Section
4.18 of this Indenture.

                  "Permitted Investments" means an investment in any of the
following: (i) direct obligations of the Department of the Treasury of the
United States of America; (ii) obligations of any federal agencies which
obligations are backed by the full faith and credit of the United States of
America; (iii) commercial paper rated in any one of the two highest rating
categories by Moody's or S&P; (iv) investment agreements with banks (foreign and
domestic), broker/dealers, and other financial institutions rated at the time of
bid in any one of the three highest rating categories by Moody's and S&P; (v)
repurchase agreements with banks (foreign and domestic), broker/dealers, and
other financial institutions rated at the time of bid in any one of the three
highest rating categories by Moody's and S&P, provided, that (1) collateral is
limited to the securities specified in clauses (i) and (ii) above, (2) the
margin levels for collateral must be maintained at a minimum of 102% including
principal and interest, (3) the Collateral Agent shall have a first priority
perfected security interest in the collateral, (4) the collateral will be
delivered to a third party custodian, designated by the Issuer, acting for the
benefit of the Collateral Agent and all fees and expenses related to collateral
custody will be the responsibility of the Issuer, (5) the collateral must have
been or will be acquired at the market price and marked to market weekly and
collateral level shortfalls cured within 24 hours and (6) unlimited right of
substitution of collateral is allowed provided that substitution collateral must
be permitted collateral substituted at a current market price and substitution
fees of the custodian shall be paid by the Issuer; (vi) forward purchase
agreements delivering securities specified in clauses (i) and (iii) above with
banks (foreign and domestic), broker/dealers, and other financial institutions
maintaining a long-term rating on the day of bid no lower than investment grade
by both S&P and Moody's (such rating may be at either the parent or subsidiary
level); and (vii) money market funds rated "AAAm" or "AAAm-G" or better by S&P.

                                      -23-

                                                                         Page 24

                  "Permitted Liens" means (a) the rights and interests of the
Collateral Agent and any other Secured Party as provided in the Financing
Documents; (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 Projects, the sites of the Project
or any easements, as the case may be, title thereto or any interest therein and
shall not interfere in any material respect with the use of any Project, any
Project sites or any easements, (ii) 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 or (iii) adequate reserves have been provided therefor to the extent
required by and in accordance with GAAP; (c) materialmen'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 any Project, either for amounts not yet due or
for amounts being contested in good faith and by appropriate proceedings so long
as (i) the Issuer reasonably determines that such proceedings shall not involve
any substantial danger of the sale, forfeiture or loss of any Project, any
Project sites or any easements, as the case may be, title thereto or any
interest therein and shall not interfere in any material respect with the use or
disposition of any Project, any Project sites or any easements, or (ii) a bond
or adequate cash reserves have been provided therefor to the extent required by
and in accordance with GAAP; (d) Liens arising out of judgments or awards 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) title exceptions as reflected in the Title Policies
other than delinquent taxes and monetary liens which are to be paid on the
Closing Date; (f) Liens, deposits or pledges to secure statutory obligations;
(g) Liens, deposits or pledges to secure performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or for purposes of
like general nature in the ordinary course of its business, not to exceed $5
million in the aggregate at any time, and with any such Lien to be released as
promptly as practicable; (h) other Liens incident to the ordinary course of
business that are not incurred in connection with the obtaining of any loan,
advance or credit and that do not in the aggregate materially impair the use of
the Issuer's or the Issuer's Subsidiaries' property or assets or the value of
such property or assets for the purposes of such business; (i) involuntary Liens
as contemplated by the Financing Documents and the Project Documents (including
a lien of an attachment or execution) securing a charge or obligation on any of
the Issuer's property, either real or personal, whether now or hereafter owned,
in the aggregate sum of less than $3 million; (j) until the Ormesa Support Date,
the Liens in favor of the lenders under the Ormesa Credit Agreement; and (k)
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 Issuer's business.

                  "Person" means any individual, sole proprietorship,
corporation, partnership, joint venture, limited liability partnership, limited
liability company, trust, unincorporated association, institution, Governmental
Authority or any other entity.

                                      -24-

                                                                         Page 25

                  "Place of Payment" when used with respect to the Senior
Secured Notes, shall mean the office or agency maintained pursuant to Section
4.02.

                  "Plants" means the Brady Plant, the Ormesa Plant, the
Steamboat Geothermal Plant, the Steamboat Development Plant, the Mammoth Plant
and geothermal power generating facilities acquired after the Closing Date that
constitute Qualified Projects.

                  "Pledge and Security Agreements" means each of the Pledge and
Security Agreements, to be executed by the Issuer, each of the Guarantors and
the Collateral Agent.

                  "Power Purchase Agreements" means the Steamboat 1 Plant Power
Purchase Agreement, the Steamboat 1A Plant Power Purchase Agreement, the
Steamboat 2/3 Project Power Purchase Agreements, the Galena Power Purchase
Agreement, the Mammoth Power Purchase Agreements, the Ormesa Power Purchase
Agreements, the Brady Project Power Purchase Agreement and any power purchase
agreements relating to a Qualified Project at the time such Qualified Project is
acquired by the Issuer or a Guarantor.

                  "Predecessor Notes" with respect to any particular Senior
Secured Note, shall mean any previous Senior Secured Note evidencing all or a
portion of the same debt as that evidenced by such particular Senior Secured
Note; for the purposes of this definition, any Senior Secured Note authenticated
and delivered pursuant to Section 2.08 in lieu of a lost, destroyed or stolen
Senior Secured Note shall be deemed to evidence the same debt as the lost,
destroyed or stolen Senior Secured Note.

                  "Principal Payment Date" when used with respect to any Senior
Secured Obligations means the date on which all or a portion of the principal of
such Senior Secured Obligations become due and payable as provided in this
Indenture or any other agreement governing such Senior Secured Obligations,
whether on a scheduled date for payment of principal, on a Redemption Date, the
Final Maturity Date, a date of declaration of acceleration, or otherwise.

                  "Private Placement Legend" means the legend referenced in
Section 2.02 to be placed on all Senior Secured Notes issued under this
Indenture except where otherwise permitted by the provisions of this Indenture.

                  "Project" means each Plant together with the related Project
Documents, governmental approvals relating to the Plant or Project Documents,
and any other item relating to the Plant, including any improvements to, and the
operation of the Plant and all activities related thereto.

                  "Project Costs" means, with respect to the Galena Re-powering,
without duplication, all costs and expenses paid, incurred or to be incurred by
Steamboat Geothermal to complete the development, design, engineering,
acquisition, construction, assembly, inspection, testing, completion and
start-up of the Galena Re-powering in the manner contemplated under the Galena
Re-powering Contract, including, without limitation, (i) Operating and
Maintenance

                                      -25-

                                                                         Page 26

Expenses of the Galena Re-powering prior to Final Acceptance, (ii) amounts
payable in respect of options for, or the granting of, necessary easements,
(iii) amounts payable in respect of obtaining or maintaining Governmental
Approvals, and (iv) amounts payable in respect of acquiring initial spare parts.

                  "Project Documents" means the Material Project Documents and
any additional agreements relating to the Projects.

                  "Projections" means certain projections at the Closing Date of
the Projects' revenues and the costs associated therewith including certain
assumptions by the Issuer.

                  "Prudent Industry Practices" shall mean, at a particular time,
(i) any of the practices, methods and acts engaged in or approved by a
significant portion of the electricity generating industry operating in the
United States at such time, or (ii) with respect to any matter to which clause
(i) does not apply, any of the practices, methods and acts which, in the
exercise of reasonable judgment at the time the decision was made, could have
been expected to accomplish the desired result at a reasonable cost consistent
with good business practices, reliability, safety and expedition. "Prudent
Industry Practice" is not intended to be limited to the optimum practice, method
or act to the exclusion of all others, but rather to be a spectrum of possible
practices, methods or acts having due regard for, among other things,
manufacturers' warranties and the requirements of any Governmental Authority of
competent jurisdiction.

                  "PUHCA" means the Public Utility Holding Company Act of 1935,
as amended.

                  "Punch List Items" means those items which must be completed
by the Contractor under the Galena Re-powering Contract after achieving the
Final Acceptance Date, performance of which will not interrupt, disrupt or
interfere to any significant extent with the operation of the Steamboat
Geothermal Facility.

                  "QIB means a "qualified institutional buyer" as defined in
Rule 144A.

                  "Qualified Project" means a (a) a fully constructed and
operational geothermal power plant located within the United States of America
(other than the Mammoth Project), (b) as to which electricity will be sold under
long-term power purchase agreements that have been approved by the applicable
public utility commission or similar governmental body with a counterparty that
has a long-term issuer rating of not less than BBB- by S&P and Baa3 by Moody's
and (c) is acquired by the Issuer or a Guarantor and the Collateral Agent is
granted a first priority pledge of all of the Capital Stock of any Guarantor
that acquires such Qualified Project or the Guarantor acquiring such Qualified
Project provides a first priority lien with respect to collateral with respect
to such Qualified Project that is consistent with that set forth under the
second paragraph of "Description of the Notes--Security" in the Offering
Memorandum.

                  "Qualifying Facility" means a facility which is a qualifying
facility within the meaning of the Public Utility Regulatory Policies Act of
1978 (and all rules and regulations

                                      -26-

                                                                         Page 27

adopted thereunder) and which meets the criteria defined in Title 18, Code of
Federal Regulations, Sections 292.201 through 292.207.

                  "Quarterly Period" means each calendar quarter; provided,
however, that the first Quarterly Period shall commence on the Closing Date and
shall end on March 31, 2004.

                  "Railway Geothermal Resources Lease" means that certain
Geothermal Resource Lease (SPL-6292), dated October 10, 1984, between Brady, as
tenant, and The Burlington Northern and Santa Fe Railway Company, as landlord,
as amended by the amendment dated December 5, 1991.

                  "Redemption Account" means the account of such name created
under the Depositary Agreement.

                  "Redemption Date" means the date on which the Issuer redeems
or shall redeem any Senior Secured Notes in accordance with this Indenture.

                  "Registrar" has the meaning specified in Section 2.07(a).

                  "Registration Default" has the meaning set forth in Section 5
of the Registration Rights Agreement.

                  "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date, by and among the Issuer and the
Guarantors and the other parties named on the signature pages thereof, as such
agreement may be amended, modified or supplemented from time to time and, with
respect to any Additional Notes, one or more registration rights agreements
among the Issuer and the Guarantors and the other parties thereto, as such
agreements may be amended, modified or supplemented from time to time, relating
to rights given by the Issuer to the purchasers of Additional Notes to register
such Additional Notes under the Securities Act.

                  "Regular Record Date" for the interest or principal payable on
any Payment Date on the Senior Secured Notes means the date specified for that
purpose as contemplated by Section 2.09 (whether or not a Business Day).

                  "Regulation S" means Regulation S under the Securities Act.

                  "Regulation S Global Note" means the Temporary Regulation S
Global Note or the Regulation S Unrestricted Global Note, as applicable.

                  "Regulation S Unrestricted Global Note" has the meaning
specified in Section 2.01.

                  "Related Party" means (a) Ormat Industries, Ltd. and Ormat
Technologies, Inc., (b) any direct or indirect controlling stockholder or
controlling member or a more than 50%

                                      -27-

                                                                         Page 28

owned subsidiary of Ormat Nevada or (c) any trust, corporation, partnership,
limited liability company or other entity, of which the beneficiaries,
stockholders, partners, members or Persons holding more than a 50% controlling
interest are Ormat Nevada and/or such other Persons referred to in the
immediately preceding clause (a) or (b).

                  "Remaining Average Life" means, with respect to any Senior
Secured Note, the principal of which is to be redeemed (the "Called Principal"),
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment (as
defined below) with respect to such Called Principal by (b) the number of years
(calculated to the nearest one-twelfth year) that will elapse between the date
on which such Called Principal is to be redeemed (the "Settlement Date") and the
scheduled due date of such Remaining Scheduled Payment. For purposes of this
definition, the term "Remaining Scheduled Payments" means, with respect to the
Called Principal of any Senior Secured Note, all payments of such Called
Principal and interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal were
made prior to its scheduled due date.

                  "Renewable Energy Credits" means all renewable energy credits,
offsets or other benefits allocated, assigned or otherwise awarded or certified
to the Issuer or any of the Issuer's Subsidiaries by any Governmental Authority
in connection with any of the Projects; provided, that the foregoing shall not
include any federal, state, and/or local production tax credits and/or
investment tax credits specific to investments in renewable energy production
and delivery facilities (if any) or any environmental credits, offsets, or other
similar benefits allocated, assigned or otherwise awarded to the Issuer or any
of the Issuer's Subsidiaries by any Governmental Authority or received in any
other manner based in whole or in part on the fact that any of the Projects
constitutes a "renewable energy system" (as defined under any Applicable Law) or
the like, including emissions credits or allowances, such as credits available
because such Project does not produce carbon dioxide or other emissions when
generating electric energy.

                  "Required Holders" means, at any time, Persons that at such
time hold not less than 51% in aggregate principal amount of the Outstanding
Senior Secured Notes.

                  "Resource Lease Consents" means (i) with respect to ORNI 1,
LLC, ORNI 2, LLC, and Brady the consents of each of David P. Frase, Timothy
Frase and Stacey Frase, and James W. Roberts, Trustee of the James W. Roberts
Revocable Trust dated August 24, 1996 under the Grant of Easement Agreement,
dated March 27, 1998; and of The Burlington Northern and Santa Fe Railway
Company under the Railway Geothermal Resources Lease, and (ii) with respect to
ORNI 7, LLC and Steamboat Development the consents of each of Fleetwood
Corporation under the Fleetwood Geothermal Resources Lease; Dorothy A. Towne and
the Trust of Dorothy A. Towne under a geothermal resources lease dated May 31,
1991; and Bernice Guisti, Judith Harvey, and Karen Thompson, Trustees and
Beneficiaries of the Guisti Trust under the Guisti Geothermal Resources Lease.

                                      -28-

                                                                         Page 29

                  "Responsible Officer" means, with respect to knowledge of any
default under this Indenture, the chief executive officer, president, chief
financial officer, general counsel, principal accounting officer, treasurer,
assistant treasurer, or any vice president of the Issuer, or other officer of
the Issuer who in the normal performance of his or her operational duties would
have knowledge of the subject matter relating to such default.

                  "Responsible Trust Officer" means, when used with respect to
the Trustee, the Depositary or the Collateral Agent, any officer within the
Corporate Trust Office of the Trustee, the Depositary or the Collateral Agent
(or any successor group of the Trustee, Depositary or Collateral Agent, as
applicable) including any Managing Director, Principal, Vice President,
Assistant Vice President, Secretary, Assistant Secretary, Treasurer, Assistant
Treasurer, Controller, General Counsel, Associate Corporate Counsel or any other
officer of the Trustee, the Depositary or the Collateral Agent customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.

                  "Restoration Sub-Account" means one or more accounts of such
name created under the Depositary Agreement in connection with an Event of Loss
or Event of Eminent Domain.

                  "Restricted Global Note" has the meaning set forth in Section
2.01 hereto.

                  "Restricted Note" has the meaning specified in Section 2.02.

                  "Restricted Payment" means, with respect to any Person, (i)
the declaration and payment of distributions, dividends or any other payment
made in cash, property, obligations or other notes, (ii) any payment of the
principal of, or interest or premium, if any, on, any Subordinated Debt, (iii)
the making of any loans or advances to any Affiliate (other than Permitted
Indebtedness), (iv) any purchase, redemption, acquisition or retirement for
value (including, without limitation in connection with any merger or
consolidation of the Issuer) of any of the Issuer's Capital Stock or (v) any
Investment in any Person other than a Guarantor; provided, however, that the
term "Restricted Payments" shall not include (v) proceeds of this offering in
the amount of $78,500,000 utilized for the acquisition of Steamboat Development,
$33,500,000 utilized for the acquisition of a 50% interest in Mammoth-Pacific
and the repayment of $14,500,000 due to Ormat Nevada, (w) cash released from any
Account as a result of the provision of an Acceptable Letter of Credit as
provided for in the Financing Documents, (x) cash released from the Ormesa Loan
Repayment Account as permitted under Section 3.7(b) of the Depositary Agreement,
(y) payments made to any Affiliate of such Person for goods and services
purchased or procured in accordance with the terms of this Indenture or (z) the
use of proceeds from Indebtedness incurred in accordance with (I) clause (b)(y)
under Section 4.18 hereof to purchase that portion of the of the Capital Stock
of Mammoth-Pacific that the Issuer does not own as of the Closing Date or (II)
clause (h) under Section 4.18 hereof to purchase a Qualified Project.

                                      -29-

                                                                         Page 30

                  "Restricted Period" has the meaning set forth in Section 2.01.

                  "Revenue Account" means the account of such name created under
the Depositary Agreement.

                  "Rule 144" means Rule 144 promulgated under the Securities
Act.

                  "Rule 144A" means Rule 144A promulgated under the Securities
Act.

                  "Rule 144A Global Note" means restricted, permanent global
notes in fully registered form issued to qualified institutional buyers under
Rule 144A.

                  "Rule 903" means Rule 903 promulgated under the Securities
Act.

                  "Rule 904" means Rule 904 promulgated under the Securities
Act.

                  "Scheduled Payment Date" means each June 30 and December 30,
commencing on June 30, 2004 and ending on December 30,
2020.

                  "SEC" means the United States Securities and Exchange
Commission.

                  "Secured Parties" means the Trustee, the Holders, the
Collateral Agent, the holders of additional Permitted Indebtedness (other than
Permitted Indebtedness of the type described in clause (vi) in the definition
thereof), in each case to the extent such party (or an agent on such party's
behalf) is or becomes a party to the Collateral Agency Agreement.

                  "Securities Act" means the United States Securities Act of
1933, as amended.

                  "Securities Intermediary" means Union Bank of California,
N.A., until a successor replaces it in accordance with the applicable provisions
of the Depositary Agreement and thereafter means the successor serving
thereunder in such capacity.

                  "Security Documents" means, collectively, the Depositary
Agreement, the Deeds of Trust, the Collateral Agency Agreement, the Pledge and
Security Agreements, the Control Agreements, the Third Party Consents and any
other document providing for any lien of the Secured Parties, pledge,
encumbrance, mortgage or security interest on any or all of the Issuer's assets
or the ownership interests thereof or the Issuer's Subsidiaries' assets and the
ownership interests thereof.

                  "Senior Secured Notes" means the Initial Notes and, unless the
context otherwise requires, the Additional Notes including any Exchange Notes.

                  "Senior Secured Obligations" means, collectively, without
duplication: (i) all of the Issuer's Indebtedness, financial liabilities and
obligations, of whatsoever nature and however evidenced (including, but not
limited to, principal, interest, premium, fees, reimbursement

                                      -30-

                                                                         Page 31

obligations, penalties, indemnities and legal and other expenses, whether due
after acceleration or otherwise) to the Secured Parties in their capacity as
such under the applicable Financing Document or any other agreement, document or
instrument evidencing, securing or relating to such Indebtedness, financial
liabilities or obligations, in each case, direct or indirect, primary or
secondary, fixed or contingent, now or hereafter arising out of or relating to
any such agreements; (ii) any and all sums advanced by the Collateral Agent in
order to preserve the Collateral or preserve its security interest in the
Collateral; and (iii) in the event of any proceeding for the collection or
enforcement of the obligations described in clauses (i) and (ii) above, after an
Event of Default has occurred and is continuing and unwaived, the expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the Collateral Agent of
its rights under the Security Documents, together with reasonable attorneys'
fees and court costs.

                  "Series Supplemental Indenture" means an indenture
supplemental to this Indenture entered into by the Issuer, the Trustee and the
Guarantors, if applicable, for the purpose of establishing, in accordance with
this Indenture, the title, form and terms of Senior Secured Notes of any series.

                  "Shelf Registration Statement" means the shelf registration
statement issued by the Issuer in connection with the offer and sale of Senior
Secured Notes pursuant to a Registration Rights Agreement.

                  "Sierra Pacific Geothermal Resources Lease" means that certain
Geothermal Resources Lease, dated November 18, 1983, between Steamboat
Geothermal and Sierra Pacific Power Company, as amended by the amendments dated
January 7, 1985, October 29, 1988, and October 2, 1989.

                  "Site Licenses" means the Mammoth-BLM Site License, the
Ormesa-BLM Site License CA 17129, the Ormesa-BLM Site License CA 22405, the
Ormesa-BLM Site License CA 24678, the Ormesa-BLM Site License CA 22079, and the
Ormesa-BLM Site License CA 20172.

                  "Special Record Date" for the payment of any Overdue Interest
or Overdue Principal shall mean a date fixed by the Trustee pursuant to Section
2.09.

                  "Steamboat Complex Operation and Maintenance Agreement" means
that certain Amended and Restated Operation and Maintenance Agreement, dated
December 8, 2003, among ORNI 7, LLC, Steamboat Geothermal LLC, Steamboat
Development (as of the Closing Date) and Ormat Nevada, Inc.

                  "Steamboat Development" means Steamboat Development, a Utah
corporation.

                  "Steamboat Development Plant" means the two geothermal power
generating plants located in Steamboat Hills, Nevada, having a gross generating
capacity of 32 MW and owned by Steamboat Development

                                      -31-

                                                                         Page 32

                  "Steamboat Geothermal" means Steamboat Geothermal LLC, a
Delaware limited liability company.

                  "Steamboat Geothermal Plant" means the two geothermal power
generating plants located in Steamboat Hills, Nevada, having a gross generating
capacity of 10 MW and owned by Steamboat Geothermal.

                  "Steamboat 1 Plant Power Purchase Agreement" means that
certain Agreement for the Purchase and Sale of Electricity, dated November 18,
1983, between Steamboat Geothermal LLC (as successor to Geothermal Development
Associates) and Sierra Pacific Power Company, as amended by that certain
Amendment to Agreement for the Purchase and Sale of Electricity, dated March 6,
1987.

                  "Steamboat 1A Plant Power Purchase Agreement" means that
certain Long-Term Agreement for the Purchase and Sale of Electricity, dated
October 29, 1988, between Steamboat Geothermal LLC (as successor to Far West
Capital, Inc.) and Sierra Pacific Power Company.

                  "Steamboat 2 Plant Power Purchase Agreement" means that
certain Long-Term Agreement, dated January 24, 1991, between Steamboat
Development (as successor to Far West Capital, Inc.) and Sierra Pacific Power
Company, as amended by that certain Amendment to Long-Term Agreement, dated
October 29, 1991, and as further amended by that certain Amendment to Long-Term
Agreement, dated October 29, 1992.

                  "Steamboat 1/1A Interconnection Agreement" means that certain
Special Facilities Agreement, dated October 29, 1988, between Sierra Pacific
Power Company and Steamboat Geothermal (as successor to Far West Capital, Inc.).

                  "Steamboat 2/3 Interconnection Agreement" means that certain
Special Facilities Agreement, dated April 24, 1992, between Sierra Pacific Power
Company and Steamboat Development (as successor to Far West Capital, Inc.).

                  "Steamboat 2/3 Project Power Purchase Agreements" means the
Steamboat 2 Plant Power Purchase Agreement and the Steamboat 3 Plant Power
Purchase Agreement.

                  "Steamboat 3 Plant Power Purchase Agreement" means that
certain Long-Term Agreement for the Purchase and Sale of Electricity, dated
January 18, 1991, between Steamboat Geothermal Development (as successor to Far
West Capital, Inc.) and Sierra Pacific Power Company.

                  "Subordinated Debt" means Indebtedness incurred pursuant to a
Subordinated Loan Agreement.

                  "Subordinated Debt Provider" means a Person providing loans
pursuant to a Subordinated Loan Agreement.

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                                                                         Page 33

                  "Subordinated Loan Agreement" means a binding agreement
providing nonrecourse, unsecured debt financing to the Issuer on the terms and
conditions set forth in Exhibit D to this Indenture.

                  "Subsidiary" means, with respect to any specified Person:

                  (1) any corporation, association or other business entity of
         which more than 50% of the total voting power of shares of Capital
         Stock entitled (without regard to the occurrence of any contingency and
         after giving effect to any voting agreement or stockholders' agreement
         that effectively transfers voting power) to vote in the election of
         directors, managers or trustees of the corporation, association or
         other business entity is at the time owned or controlled, directly or
         indirectly, by that Person or one or more of the other Subsidiaries of
         that Person (or a combination thereof); and

                  (2) any partnership (a) the sole general partner or the
         managing general partner of which is such Person or a Subsidiary of
         such Person or (b) the only general partners of which are that Person
         or one or more Subsidiaries of that Person (or any combination
         thereof).

                  "Third Party Consents" means each consent to assignment, among
certain counterparties to a Material Project Document, the Issuer and/or the
Issuer's applicable Subsidiary and the Collateral Agent.

                  "TIA" means the Trust Indenture Act of 1939 (15
U.S.C. (sections) 77aaa-77bbbb) as in effect on the date on which this Indenture
is qualified under the TIA.

                  "Title Event" means the existence of any defect of title or
Lien or encumbrance on a Project (other than Permitted Liens) in effect on the
Closing Date that entitles the Collateral Agent to make a claim under the policy
or policies of title insurance required pursuant to the Financing Documents.

                  "Title Event Proceeds" means all amounts and proceeds
(including instruments) in respect of any Title Event.

                  "Title Policies" means (i) each of the mortgagee title
insurance policies delivered by a title company of national standing or its
Affiliates insuring to the Lien of the Deeds of Trust or (ii) for those Projects
which do not have Deeds of Trust, the preliminary title report delivered by a
title company of national standing or its Affiliates.

                  "Transaction Documents" means the Project Documents and the
Financing Documents.

                  "Trustee" means Union Bank of California, N.A., until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter means the successor serving thereunder in such
capacity.

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                                                                         Page 34

                  "Unassigned Leases" means (i) that certain Grant of Easement
between David P. Frase, Timothy Frase and Stacey Frase, and James W. Roberts,
Trustee of the James W. Roberts Revocable Trust, dated August 24, 1996, as
grantor, and Brady Power, as grantee, dated March 27, 1998; (ii) the Railway
Geothermal Resources Lease; (iii) the Fleetwood Geothermal Resources Sublease;
(iv) that certain Geothermal Resources Lease dated May 31, 1991 between Dorothy
A. Towne and the Trust of Dorothy A. Towne, as landlord, and Fleetwood
Corporation, as tenant; and (v) that certain Geothermal Resources Lease dated
June 27, 1988, as amended by that certain Amendment to Geothermal Resources
Lease dated January 1992, and that certain Second Amendment to Geothermal
Resources Lease dated June 25, 1993 between Bernice Guisti, Judith Harvey, and
Karen Thompson, Trustees and Beneficiaries of the Guisti Trust, as landlord, and
Steamboat Development Corp., as tenant.

                  "Unrestricted Global Note" means a permanent global Senior
Secured Note in the form of Exhibit A-1 attached hereto that bears the Global
Note Legend and that has the "Schedule of Exchanges of Interests in the Global
Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing Senior Secured Notes that
do not bear the Private Placement Legend.

                  "U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.

                  "Work" means all obligations, duties and responsibilities
undertaken by the Contractor and its subcontractors in accordance with the
Galena Re-powering Contract, including the design, engineering, manufacturing,
procurement, construction, start-up and performance testing of the Galena Plant
in connection with the Galena Re-powering.

                  "Wholly Owned Subsidiary" of any specified Person means a
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) will at
the time be owned by such Person or by one or more Wholly Owned Subsidiaries of
such Person.

                  Section 1.02 Other Definitions.

                 Term                                        Defined in Section

                 "Affiliate Transaction" ...................        4.13
                 "Applicable Procedures" ...................    2.07(c)(v)(B)
                 "Beneficial Owner" ........................        4.03
                 "Checking Account".........................        4.30
                 "Combined Brady Output" ...................       4.06(c)
                 "Covenant Defeasance"......................        7.03
                 "Debtor Relief Law"........................        5.01
                 "Issuer"...................................      Preamble
                 "Legal Defeasance".........................        7.02

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                 "Overdue Interest".........................        2.09
                 "Temporary Regulation S Global Note".......        2.01
                 "Transfer" ................................       2.07(b)
                 "Trustee"..................................      Preamble
                 "Withdrawal Certificate" ..................        4.42

                  Section 1.03 Trust Indenture Act Provisions. Whenever this
Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture.

                  The following TIA terms used in this Indenture have the
following meanings:

                  "indenture securities" means the Senior Secured Notes;

                  "indenture security holder" means a Holder of a Senior Secured
Note;

                  "indenture to be qualified" means this Indenture;

                  "indenture trustee" or "institutional trustee" means the
Trustee; and

                  "obligor" on the Senior Secured Notes means the Issuer and any
successor obligor upon the Senior Secured Notes.

                  All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.

                  Section 1.04 Rules of Construction. Unless the context
otherwise requires:

                  (a) a term has the meaning assigned to it;

                  (b) an accounting term not otherwise defined has the meaning
         assigned to it in accordance with GAAP;

                  (c) "or" is not exclusive;

                  (d) words in the singular include the plural, and in the
         plural include the singular;

                  (e) references to a Person shall include such Person's
         permitted successors and assigns;

                  (f) provisions apply to successive events and transactions;

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                                                                         Page 36

                  (g) unless otherwise expressly specified, any agreement,
         contract or document defined or referred to herein shall mean such
         agreement, contract or document as in effect as of the date hereof, as
         the same may thereafter be amended, supplemented and/or otherwise
         modified from time to time in accordance with the terms of this
         Indenture and the other Transaction Documents and shall include any
         agreement, contract or document in substitution or replacement of any
         of the foregoing entered into in accordance with the terms of this
         Indenture and the other Transaction Documents; and

                  (h) references to sections of or rules under the Securities
         Act shall be deemed to include substitute, replacement or successor
         sections or rules adopted by the SEC from time to time.

                                   ARTICLE II

                            THE SENIOR SECURED NOTES

                  Section 2.01 Form Generally. The Senior Secured Notes of each
series shall be in substantially the form set forth in Exhibit A-1/A-2 or in
such other form as shall, subject to Section 2.05, be established by or pursuant
to an Officer's Certificate of the Issuer or in one or more Series Supplemental
Indentures relating to the Senior Secured Notes of such series, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or
Depository therefor or as may, consistently herewith, be determined by the
officers executing such Senior Secured Notes as evidenced by their execution
thereof.

                  The Certificated Notes shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the Authorized Officers executing such Certificated Notes, as
evidenced by their execution of such Certificated Notes.

                  Restricted Notes shall bear the applicable legends as set
forth in Exhibit A-1/A-2 and as provided in Section 2.02.

                  Senior Secured Notes offered and sold in their initial
distribution in reliance on Rule 144A shall be issued in the form of one or more
Global Notes (each a "Restricted Global Note") in definitive, fully registered
form without interest coupons, substantially in the form set forth in Exhibit
A-1, or in such other form as shall, subject to Section 2.05, be established by
or pursuant to an Officer's Certificate of the Issuer or in one or more
indentures supplemental hereto, with such applicable legends as are provided for
in Exhibit A-1. Such Global Notes shall be registered in the name of the
Depository for such Global Notes or its nominee and deposited with the Trustee,
at the Corporate Trust Office of the Trustee, as custodian for such Depository,
duly executed on behalf of the Issuer and authenticated by the Trustee as herein
provided. The aggregate principal amount of any Restricted Global Note may from
time to time be increased or

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                                                                         Page 37

decreased by adjustments made on the records of the Trustee, as custodian for
the Depository for such Global Note, as provided in Section 2.07, which
adjustments shall be conclusive as to the aggregate principal amount of any such
Global Notes. Except as agreed by the Issuer, no Restricted Global Note shall be
issued except as provided in this paragraph to evidence Senior Secured Notes
offered and sold in their initial distribution in reliance on Rule 144A.

                  Senior Secured Notes offered and sold in their initial
distribution in reliance on Regulation S shall be issued initially in the form
of one or more temporary Global Notes (a "Temporary Regulation S Global Note")
in definitive, fully registered form without interest coupons, substantially in
the form set forth in Exhibit A-2, or in such other form as shall, subject to
Section 2.05, be established by or pursuant to an Officer's Certificate of the
Issuer or in one or more indentures supplemental hereto, with such applicable
legends as are provided for in Exhibit A-2. Such Temporary Regulation S Global
Notes shall be registered in the name of the Depository for such Global Notes or
its nominee and deposited with the Trustee, at the Corporate Trust Office of the
Trustee, as custodian for such Depository, duly executed by the Issuer and
authenticated by the Trustee as herein provided, for credit to the respective
accounts of beneficial owners of such Global Notes (or to such other accounts as
they may direct) at Euroclear or Clearstream. Beneficial interests in any
Temporary Regulation S Global Note may be held only through Euroclear or
Clearstream. Within a reasonable period of time after the expiration of the
Restricted Period (as defined below), any Temporary Regulation S Global Note
will be exchanged for a permanent Regulation S Global Note (the "Regulation S
Unrestricted Global Note," and together with the Temporary Regulation S Global
Note, the "Regulation S Global Note") substantially in the form set forth in
Exhibit A-1 with such applicable legends as are provided for in Exhibit A-1, but
without the Restricted Notes legend set forth in Exhibit A-1, upon delivery to
the Depository of certification of non-United States ownership and compliance
with Regulation S. The Regulation S Unrestricted Global Note will be deposited
with the Trustee at the Corporate Trust Office of the Trustee, as custodian for
the Depository and registered in the name of the nominee of the Depository.
Clearstream and Euroclear will hold beneficial interests in the Regulation S
Unrestricted Global Note on behalf of their participants through their
respective depositories, which in turn will hold such beneficial interests in
the Regulation S Unrestricted Global Note in participants' securities accounts
in the depositories' names on the books of the Depository. The aggregate
principal amount of any Temporary Regulation S Global Note and any Regulation S
Unrestricted Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository
for such Global Note, as provided in Section 2.07, which adjustments shall be
conclusive as to the aggregate principal amount of any such Global Note. As used
herein, the term "Restricted Period", with respect to Global Notes offered and
sold in reliance on Regulation S, means the period of 40 consecutive days
beginning on and including the later of (i) the day on which the Senior Secured
Notes are first offered to persons other than distributors (as defined in
Regulation S) in reliance on Regulation S (according to a written notice to the
Issuer and the Trustee by the underwriter(s), if any, of the offering of such
Senior Secured Notes) and (ii) the date of the closing of the offering of such
Senior Secured Notes. Except as agreed by the Issuer, no Temporary Regulation S
Global Note or Regulation S Unrestricted Global Note shall

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                                                                         Page 38

be issued except as provided in this paragraph to evidence such Senior Secured
Notes offered and sold in their initial distribution in reliance on Regulation
S.

                  Section 2.02 Legends on Restricted Notes. All Senior Secured
Notes issued pursuant to this Indenture (including Senior Secured Notes issued
upon registration of transfer, in exchange for or in lieu of such Senior Secured
Notes) shall be "Restricted Notes" and shall bear the applicable legend(s)
setting forth restrictions on transfer provided in Exhibit A-1/A-2 (the "Private
Placement Legend"); provided, however, that the term "Restricted Notes" shall
not include (i) Temporary Regulation S Global Notes or Regulation S Unrestricted
Global Notes, (ii) Senior Secured Notes as to which such restrictive legend(s)
shall have been removed pursuant to Section 2.07 and (iii) Senior Secured Notes
issued upon registration of transfer of, in exchange for, or in lieu of, Senior
Secured Notes that are not Restricted Notes.

                  Section 2.03 Amount of Senior Secured Notes. The aggregate
principal amount of Senior Secured Notes which may be outstanding at any time is
unlimited, subject to compliance with Section 4.18 hereof.

                  The Senior Secured Notes may be issued in one or more series.
There shall be established in one or more Series Supplemental Indentures, prior
to the issuance of Senior Secured Notes of any series:

                  (a) the title of the Senior Secured Notes of such series
         (which shall distinguish the Senior Secured Notes of such series from
         all other Senior Secured Notes) and the form or forms of Senior Secured
         Notes of such series;

                  (b) any limit upon the aggregate principal amount of the
         Senior Secured Notes of such series that may be authenticated and
         delivered under this Indenture (except for Senior Secured Notes
         authenticated and delivered upon registration of transfer of, or in
         exchange for, or in lieu of, other Senior Secured Notes of such series
         pursuant to Sections 2.06, 2.07, 2.08, 3.06 or 8.09 and except for
         Senior Secured Notes that, pursuant to the last paragraph of Section
         2.05, are deemed never to have been authenticated and delivered
         hereunder);

                  (c) the date or dates on which the principal of the Senior
         Secured Notes of such series is payable, the amounts of principal
         payable on such date or dates and the Regular Record Date for the
         determination of Holders to whom principal is payable; and the date or
         dates on or as of which the Senior Secured Notes of such series shall
         be dated, if other than as provided in Section 2.05;

                  (d) the rate or rates at which the Senior Secured Notes of
         such series shall bear interest, or the method by which such rate or
         rates shall be determined, the date or dates from which such interest
         shall accrue, the interest payment dates on which such interest shall
         be payable and the Regular Record Date for the determination of Holders
         to

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                                                                         Page 39

         whom interest is payable; and the basis of computation of interest, if
         other than as provided in Section 2.12;

                  (e) if other than as provided in Section 4.02, the place or
         places where (i) the principal of, interest and Liquidated Damages, if
         any, on Senior Secured Notes of such series shall be payable, (ii)
         Senior Secured Notes of such series may be surrendered for registration
         of transfer or exchange and (iii) notices and demands to or upon the
         Issuer in respect of the Senior Secured Notes of such series and this
         Indenture may be served;

                  (f) the price or prices at which, the period or periods within
         which and the terms and conditions upon which Senior Secured Notes of
         such series may be redeemed, in whole or in part, at the option of the
         Issuer;

                  (g) the obligation, if any, of the Issuer to redeem, purchase
         or repay Senior Secured Notes of such series pursuant to any sinking
         fund or analogous provision or at the option of a Holder thereof and
         the price or prices at which and the periods or periods within which
         and the terms and conditions upon which Senior Secured Notes of such
         series shall be redeemed, purchased or repaid, in whole or in part,
         pursuant to such obligations;

                  (h) if other than minimum denominations of $1,000 and any
         integral multiple of $1,000 in excess thereof, the denominations in
         which Senior Secured Notes of such series shall be issuable;

                  (i) the restrictions or limitations, if any, on the transfer
         or exchange of the Senior Secured Notes of such series;

                  (j) the obligation, if any, of the Issuer to file a
         registration statement with respect to the Senior Secured Notes of such
         series or to exchange the Senior Secured Notes of such series for
         Senior Secured Notes registered pursuant to the Securities Act;

                  (k) any other terms of such series (which terms shall not be
         inconsistent with the provisions of this Indenture); and

                  (l) any trustees, authenticating or paying agents, warrant
         agents, transfer agents or registrars with respect to the Senior
         Secured Notes of such series.

                  Section 2.04 Denominations. The Senior Secured Notes shall be
issuable only in registered form without coupons and in denominations of $1,000
and any integral multiple of $1,000 in excess thereof. Any repayments (either
scheduled or pursuant to any redemption) of any Senior Secured Note shall be
made only in the denomination or integral multiple thereof set forth above.

                  Section 2.05 Execution, Authentication, Delivery and Dating.
The Senior Secured Notes shall be executed on behalf of the Issuer by an
Authorized Representative of the

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                                                                         Page 40

Issuer. The signature of any of these officers on the Senior Secured Notes may
be manual or facsimile.

                  Senior Secured Notes bearing the manual or facsimile signature
of individuals who were at the time of execution the Authorized Representative
of the Issuer shall bind the Issuer, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Senior Secured Notes or did not hold such offices at the date
of such Senior Secured Notes.

                  At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Senior Secured Notes (with
Guarantees endorsed thereon), if applicable, of any series executed by the
Issuer to the Trustee for authentication, together with a Authentication Order
for the authentication and delivery of such Senior Secured Notes, and the
Trustee in accordance with the Authentication Order shall authenticate and
deliver such Senior Secured Notes. The Trustee shall authenticate and deliver:
(i) on the Closing Date, an aggregate principal amount of $190,000,000 8 1/4%
Senior Secured Notes Due 2020, (ii) Additional Notes for an original issue in an
aggregate principal amount specified in an Authentication Order pursuant to this
Section 2.05 and (iii) Exchange Notes for issue only in an Exchange Offer
pursuant to a Registration Rights Agreement, for a like principal amount of
Initial Notes or Additional Notes, in each case upon an Authentication Order of
the Issuer signed by an Authorized Officer of the Issuer. Such order will
specify the amount of the Senior Secured Notes to be authenticated and the date
on which the original issue of the Senior Secured Notes is to be authenticated.
If the form or terms of the Senior Secured Notes have been established by or
pursuant to an Officer's Certificate of the Issuer or a Supplemental Indenture
as permitted by Section 2.01 in authenticating such Senior Secured Notes, and
accepting any additional responsibilities under this Indenture in relation to
such Senior Secured Notes, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating,

                  (a) that such form has been established in conformity with the
provisions of this Indenture;

                  (b) that such terms have been established in conformity with
the provisions of this Indenture; and

                  (c) that such Senior Secured Notes, when authenticated and
delivered by the Trustee and issued by the Issuer in the manner and subject to
any conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Issuer, enforceable against the Issuer in
accordance with their terms (subject to customary qualifications or exceptions).

                  The Trustee shall not be required to authenticate such Senior
Secured Notes if the issue of such Senior Secured Notes pursuant to this
Indenture will affect the Trustee's own rights, duties or immunities under the
Senior Secured Notes and this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee.

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                                                                         Page 41

                  Except as otherwise provided in the Series Supplemental
Indenture relating to the Senior Secured Notes of a series, each Senior Secured
Note of such series shall be dated the date of its authentication.

                  No Senior Secured Note shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Senior Secured Note a certificate of authentication substantially in the
form provided for herein executed by the Trustee by manual signature of an
Authorized Officer, and such certificate upon any Senior Secured Note shall be
conclusive evidence, and the only evidence, that such Senior Secured Note has
been duly authenticated and delivered hereunder. Notwithstanding the foregoing,
if any Senior Secured Note shall have been authenticated and delivered hereunder
but never issued and sold by the Issuer, and the Issuer shall deliver such
Senior Secured Note to the Trustee for cancellation as provided in Section 2.11,
for all purposes of this Indenture such Senior Secured Note shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.

                  Section 2.06 Temporary Senior Secured Notes. Pending the
preparation of definitive Senior Secured Notes, the Issuer may execute, and upon
Authentication Order the Trustee shall authenticate and deliver, temporary
Senior Secured Notes which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Senior Secured Notes in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers of the Issuer executing the same may determine, as
evidenced by their execution of such Senior Secured Notes.

                  If temporary Senior Secured Notes are issued, the Issuer will
cause definitive Senior Secured Notes to be prepared without unreasonable delay.
After the preparation of definitive Senior Secured Notes, the temporary Senior
Secured Notes shall be exchangeable for definitive Senior Secured Notes upon
surrender of the temporary Senior Secured Notes at the office or agency of the
Issuer in a Place of Payment, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Senior Secured Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor one
or more definitive Senior Secured Notes of any authorized denominations and of
like tenor and aggregate principal amount. Until so exchanged, the temporary
Senior Secured Notes shall in all respects be entitled to the same benefits
under this Indenture as definitive Senior Secured Notes.

                  Section 2.07 Registration, Registration of Transfer and
Exchange.

                  (a) General. The Issuer shall cause to be kept at the
Corporate Trust Office of the Trustee a register in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the
registration of Senior Secured Notes and for transfers of Senior Secured Notes.
The Trustee is hereby appointed "Registrar" for the purpose of registering
Senior Secured Notes and transfers of Senior Secured Notes as herein provided.
The Issuer also shall cause to be kept an office or agency where Senior Secured
Notes may be presented for payment

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                                                                         Page 42

("Paying Agent") and where notices and demands to or upon the Issuer in respect
of the Senior Secured Notes may be served.

                  Notwithstanding anything to the contrary set forth herein, the
Trustee shall not be required and shall have no obligation to monitor compliance
with any federal or state securities laws.

                  Upon surrender for registration of transfer of any Senior
Secured Note at the office or agency of the Issuer in a Place of Payment, the
Issuer shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Senior Secured
Notes, of any authorized denominations and of like tenor and aggregate principal
amount.

                  At the option of the Holder, Senior Secured Notes may be
exchanged for other Senior Secured Notes, of any authorized denominations and of
like tenor and aggregate principal amount, upon surrender of the Senior Secured
Notes to be exchanged at such office or agency. Whenever any Senior Secured
Notes are so surrendered for exchange, the Issuer shall execute, and the Trustee
shall authenticate and deliver, the Senior Secured Notes which the Holder making
the exchange is entitled to receive.

                  All Senior Secured Notes issued upon any registration of
transfer or exchange of Senior Secured Notes shall be the valid obligations of
the Issuer, evidencing the same debt, and entitled to the same benefits under
this Indenture as the Senior Secured Notes surrendered upon such registration of
transfer or exchange.

                  Every Senior Secured Note presented or surrendered for
registration of transfer or for exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Registrar duly executed by the Holder thereof or his attorney
duly authorized in writing.

                  No service charge shall be made for any registration of
transfer or exchange of Senior Secured Notes, but the Issuer may require payment
of a sum sufficient to cover any tax or other governmental charge that maybe
imposed in connection with any registration of transfer or exchange of Senior
Secured Notes, other than exchanges pursuant to Section 2.06 or Section 3.06 not
involving any transfer.

                  If the Senior Secured Notes are to be redeemed in part, the
Issuer shall not be required (A) to issue, register the transfer of, or
exchange, any Senior Secured Notes during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Senior Secured Notes selected for redemption under Section 3.03 and ending
at the close of business on the day of such mailing or (B) to register the
transfer of or exchange any Senior Secured Note so selected for redemption in
whole or in part, except the unredeemed portion of any Senior Secured Note being
redeemed in part.

                  (b) Restricted Notes.

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                                                                         Page 43

                  Every Restricted Note shall be subject to the restrictions on
offers, Transfers and exchanges provided in the applicable legend(s) required to
be set forth on the face of each Restricted Note pursuant to Exhibit A-1/A-2 and
Section 2.02, unless such restrictions on Transfer shall be waived by the
written consent of the Issuer, and the Holder of each Restricted Note, by such
Holder's acceptance thereof, agrees to be bound by such restrictions on
Transfer. Whenever any Restricted Note is presented or surrendered for
registration of Transfer or for exchange for a Senior Secured Note registered in
a name other than that of the Holder, such Restricted Note must be accompanied
by an appropriately completed certificate in substantially the form set forth in
Exhibit B, in the case of Transfer, or, in the case of any exchange, Exhibit C
or as contemplated by Section 2.13(c) (which may be attached to or set forth in
the Restricted Note), appropriately completed, dated the date of such surrender
and signed by the Holder of such Restricted Note, as to compliance with such
restrictions on Transfer, unless the Issuer shall have notified the Trustee in
writing pursuant to this Section 2.07 that there is an effective registration
statement under the Securities Act with respect to such Restricted Note. The
Registrar shall not be required to accept for such registration of Transfer or
exchange any Restricted Note not so accompanied by a properly completed
certificate.

                  Except as otherwise provided in the preceding paragraph, if
Senior Secured Notes are issued upon the Transfer, exchange or replacement of
Senior Secured Notes bearing a legend or legends setting forth restrictions on
Transfer, or if a request is made to remove such legend(s) on a Senior Secured
Note, the Senior Secured Notes so issued shall bear such legend(s) or such
legend(s) shall not be removed, as the case may be, unless the transferor
delivers to the Issuer such satisfactory evidence (which may include an opinion
of independent counsel experienced in matters of United States securities law as
may be reasonably satisfactory to the Issuer), as may be reasonably required by
the Issuer, that neither such legend(s) nor the restrictions on Transfer set
forth therein are required to ensure that Transfers thereof comply with the
provisions of Rule 144A or Rule 144 or Regulation S or that such Senior Secured
Notes are not restricted securities within the meaning of Rule 144. Upon
provision of such satisfactory evidence to the Issuer, the Trustee, at the
written direction of the Issuer set forth in an Officer's Certificate of the
Issuer, shall authenticate and deliver a Senior Secured Note that does not bear
such legend(s). In the absence of bad faith on its part, the Trustee may
conclusively rely upon such direction of the Issuer in authenticating and
delivering a Senior Secured Note that does not bear such legend(s).

                  After a Transfer of any Initial Notes pursuant to and during
the period of the effectiveness of a Shelf Registration Statement with respect
to such Initial Notes, all requirements pertaining to legends relating to the
restrictions on Transfer relating to the Securities Act on such Initial Note
will cease to apply, the requirements requiring that any such Initial Note
issued to certain Holders be issued in global form will cease to apply, and a
certificated Initial Note or an Initial Note in global form, in each case
without restrictive Transfer legends, will be available to the transferee of the
Holder of such Initial Notes upon exchange of such transferring Holder's
certificated Initial Note or appropriate directions to Transfer such Holder's
interest in the Global Note, as applicable.

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                                                                         Page 44

                  Upon the consummation of an Exchange Offer with respect to the
Initial Notes, all requirements pertaining to such Initial Notes that Initial
Notes issued to certain Holders be issued in global form will still apply with
respect to Holders of such Initial Notes that do not exchange their Initial
Notes, and Exchange Notes in certificated or global form, in each case without
the restrictive securities legend relating to the restrictions on Transfer
relating to the Securities Act set forth in Exhibit A-1/A-2 hereto will be
available to Holders that exchange such Initial Notes in such Exchange Offer.

                  Upon registration of Transfer of or exchange of Senior Secured
Notes that are no longer Restricted Notes, the Issuer shall execute, and the
Trustee shall authenticate and deliver, a Senior Secured Note that does not bear
restrictive legends.

                  As used in this Section 2.07(b), the term "Transfer"
encompasses any sale, pledge or other transfer of any Senior Secured Notes
referred to herein.

                  (c) Global Notes. This Section 2.07(c) shall apply to Global
Notes.

                  (i) Each Global Note authenticated under this Indenture shall
         be registered in the name of the Depository designated for such Global
         Note or a nominee thereof and delivered to such Depository or a nominee
         thereof or custodian therefor, and each such Global Note shall
         constitute a single Global Note for all purposes of this Indenture. The
         Senior Secured Notes may be represented by one or more Global Notes,
         and such Global Notes may be Restricted Global Notes, Temporary
         Regulation S Global Notes or Regulation S Unrestricted Global Notes, or
         any combination thereof.

                  (ii) Notwithstanding any other provision in this Indenture, no
         Global Note may be exchanged in whole or in part for Senior Secured
         Notes registered, and no transfer of a Global Note in whole or in part
         may be made, in the name of any Person other than the Depository for
         such Global Note or a nominee thereof unless (A) such Depository (1)
         has notified the Issuer that it is unwilling or unable to continue as
         Depository for such Global Note or (2) has ceased to be a clearing
         agency registered under the Exchange Act, and, in either case, a
         successor Depository is not appointed within 90 days thereof, (B) the
         Issuer executes and delivers to the Trustee a Authentication Order
         providing that such Global Note shall be so transferable, registrable
         and exchangeable, or (C) there shall have occurred and be continuing an
         Event of Default with respect to the Global Notes. Any Global Note
         exchanged pursuant to subclause (A) above shall be so exchanged in
         whole and not in part and any Global Note exchanged pursuant to
         subclause (B) or (C) above may be exchanged in whole or from time to
         time in part as directed by the Depository for such Global Note.
         Notwithstanding any other provision in this Indenture, a Global Note to
         which the restriction set forth in the second preceding sentence shall
         have ceased to apply may be transferred only to, and may be registered
         and exchanged for Senior Secured Notes registered only in the name or
         names of, such Person or Persons as the Depository for such Global Note
         shall have directed and no transfer thereof other than such a transfer
         may be registered.

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                                                                         Page 45

                  (iii) Subject to clause (ii) above, any exchange of a Global
         Note for other Senior Secured Notes may be made in whole or in part,
         and all Senior Secured Notes issued in exchange for a Global Note or
         any portion thereof shall be registered in such name or names as the
         Depository for such Global Note shall direct.

                  (iv) Every Senior Secured Note authenticated and delivered
         upon registration of transfer of, or in exchange for or in lieu of, a
         Global Note or any portion thereof, whether pursuant to this Section
         2.07, Section 2.06, 2.09 or 3.06 or otherwise shall be authenticated
         and delivered in the form of, and shall be, a Global Note, unless such
         Senior Secured Note is registered in the name of a Person other than
         the Depository for such Global Note or a nominee thereof.

                  (v) Notwithstanding any other provision of this Indenture or
         of the Senior Secured Notes, transfers of interests in a Global Note of
         the kind described in Section 2.01 and in subclauses (B), (C), (D) and
         (E) of this clause (v) below shall be made only in accordance with this
         clause (v), and all transfers of an interest in a Temporary Regulation
         S Global Note shall comply with subclause (F) of this clause (v). The
         provisions of this clause (v) providing for transfers of Senior Secured
         Notes or beneficial interests in Global Notes to Persons who wish to
         take delivery in the form of beneficial interests in a Restricted
         Global Note, Temporary Regulation S Global Note or Regulation S
         Unrestricted Global Note shall only apply if there is a Restricted
         Global Note, Temporary Regulation S Global Note or Regulation S
         Unrestricted Global Note, as the case may be.

                           (A) Transfer of Global Note. A Global Note may not be
                  transferred, in whole or in part to any Person other than the
                  Depository or a nominee thereof, and no such transfer to any
                  such other Person may be registered; provided that this
                  subclause (A) shall not prohibit any transfer of a Senior
                  Secured Note that is issued in exchange for a Global Note but
                  is not itself a Global Note. No transfer of a Senior Secured
                  Note to any Person shall be effective under this Indenture or
                  the Senior Secured Notes unless and until such Senior Secured
                  Note has been registered in the name of such Person. Nothing
                  in this Section 2.07 shall prohibit or render ineffective any
                  transfer of a beneficial interest in a Global Note effected in
                  accordance with the other provisions of this Section
                  2.07(c)(v).

                           (B) Restricted Global Note to Regulation S Global
                  Note. If the holder of a beneficial interest in a Restricted
                  Global Note wishes at any time to transfer such interest to a
                  person who wishes to take delivery thereof in the form of a
                  beneficial interest in a Regulation S Global Note, such
                  transfer may be effected, subject to the rules and procedures
                  of the Depository for such Global Note, Euroclear and
                  Clearstream, in each case to the extent applicable (the
                  "Applicable Procedures"), only in accordance with the
                  provisions of this Section 2.07(c)(v)(B). Upon receipt by the
                  Trustee, as Registrar, at the Corporate Trust Office of (1)
                  written instructions given in accordance with the Applicable
                  Procedures from a member of, or participant in, the Depository
                  for such Restricted Global Note (each, an "Agent Member")
                  directing the Trustee to credit or cause to be credited to a
                  specified Agent Member's account a beneficial interest in a
                  Regulation S Global Note in a principal amount equal to that
                  of the beneficial interest in the Restricted Global Note to be
                  so transferred, (2) a written order given in accordance with
                  the Applicable

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                                                                         Page 46

                  Procedures containing information regarding the account of
                  the Agent Member (and the Euroclear or Clearstream account,
                  as the case may be) to be credited with, and the account of
                  the Agent Member to be debited for, such beneficial interest
                  and (3) an appropriately completed certificate in
                  substantially the form set forth in or contemplated by
                  Section 2.13(a) given by the holder of such beneficial
                  interest, the Trustee, as Registrar, shall instruct the
                  Depository for such Notes to reduce the principal amount of
                  the Restricted Global Note, and to increase the principal
                  amount of the Regulation S Global Note, by the principal
                  amount of the beneficial interest in the Restricted Global
                  Note to be so transferred, and to credit or cause to be
                  credited to the account of the Person specified in such
                  instructions (which shall be the Agent Member for Euroclear
                  or Clearstream or both, as the case may be) a beneficial
                  interest in the Regulation S Global Note having a principal
                  amount equal to the amount by which the principal amount of
                  the Restricted Global Note was reduced upon such transfer.

                           (C) Regulation S Global Note to Restricted Global
                  Note. If the holder of a beneficial interest in a Regulation S
                  Global Note wishes at any time to transfer such interest to a
                  Person who wishes to take delivery thereof in the form of a
                  beneficial interest in a Restricted Global Note, such transfer
                  may be effected, subject to the Applicable Procedures, only in
                  accordance with this Section 2.07(c)(v)(C). Upon receipt by
                  the Trustee, as Registrar, at the Corporate Trust Office of
                  (1) written instructions given in accordance with the
                  Applicable Procedures from an Agent Member directing the
                  Trustee, as Registrar, to credit or cause to be credited to a
                  specified Agent Member's account a beneficial interest in the
                  Restricted Global Note equal to that of the beneficial
                  interest in the Regulation S Global Note to be so transferred,
                  (2) a written order given in accordance with the Applicable
                  Procedures containing information regarding the account of the
                  Agent Member to be credited with, and the account of the Agent
                  Member (or, if such account is held for Euroclear or
                  Clearstream, the Euroclear or Clearstream account, as the case
                  may be) to be debited for, such beneficial interest and (3)
                  with respect to a transfer of a beneficial interest in the
                  Regulation S Global Note, an appropriately completed
                  certificate in substantially the form set forth in or
                  contemplated by Section 2.13(b) given by the holder of such
                  beneficial interest, the Trustee, as Registrar, shall instruct
                  the Depository for such Regulation S Global Note to reduce the
                  principal amount of the Regulation S Global Note and to
                  increase the principal amount of the Restricted Global Note,
                  by the principal amount of the beneficial interest in the
                  Regulation S Global Note to be so transferred, and to credit
                  or cause to be credited to the account of the

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                                                                         Page 47

                  Person specified in such instructions a beneficial interest
                  in the Restricted Global Note having a principal amount
                  equal to the amount by which the principal amount of the
                  Regulation S Global Note was reduced upon such transfer.

                           (D) Restricted Note (other than a Restricted Global
                  Note) to Global Note. If the Holder of a Restricted Note
                  (other than a Restricted Global Note) wishes at any time to
                  transfer such Restricted Note to a Person who wishes to take
                  delivery thereof in the form of a beneficial interest in a
                  Restricted Global Note or an Unrestricted Global Note, such
                  transfer may be effected, subject to the Applicable
                  Procedures, only in accordance with this Section
                  2.07(c)(v)(D). Upon receipt by the Trustee, as Registrar, at
                  the Corporate Trust Office of (1) the Restricted Note to be
                  transferred, (2) written instructions given in accordance with
                  the Applicable Procedures from an Agent Member directing the
                  Trustee to credit or cause to be credited to a specified Agent
                  Member's account a beneficial interest in the Restricted
                  Global Note or the Unrestricted Global Note, as the case may
                  be, in a principal amount equal to the principal amount of the
                  Restricted Note to be so transferred, (3) a written order
                  given in accordance with the Applicable Procedures containing
                  information regarding the account of the Agent Member (and, in
                  the case of any transfer pursuant to Regulation S, the
                  Euroclear or Clearstream account for which such Agent Member's
                  account is held or, if such account is held for Euroclear or
                  Clearstream, the Euroclear or Clearstream account, as the case
                  may be) to be credited with such beneficial interest and (4)
                  an appropriately completed certificate in substantially the
                  form set forth in or contemplated by Section 2.13(c) (which
                  may be attached to or set forth in the Restricted Note), the
                  Trustee, as Registrar, shall cancel the Restricted Note, the
                  Issuer shall execute, and the Trustee shall authenticate and
                  deliver, a new Definitive Note for the principal amount, if
                  any, of the Restricted Note not so transferred, registered in
                  the name of the Holder transferring such Restricted Note, and
                  the Trustee shall instruct the Depository for such Notes to
                  increase the principal amount of the Restricted Global Note or
                  the Unrestricted Global Note, as the case may be, by the
                  principal amount of the Restricted Note so transferred, and to
                  credit or cause to be credited to the account of the Person
                  specified in such instructions (which, in the case of any
                  increase of the principal amount of an Unrestricted Global
                  Note as the result of a transfer pursuant to Regulation S,
                  shall be the Agent Member for Euroclear or Clearstream or
                  both, as the case may be) a corresponding principal amount of
                  the Restricted Global Note or the Unrestricted Global Note.
                  The transfer of a Restricted Note to a Person who wishes to
                  take delivery thereof in the form of a beneficial interest in
                  an Unrestricted Global Note may be effected only in accordance
                  with Regulation S or Rule 144A (as evidenced by the
                  certificate delivered pursuant to Section 2.13(c)).

                           (E) Other Exchanges. In the event that a Global Note
                  or any portion thereof is exchanged for Senior Secured Notes
                  other than Global Notes, the Trustee, as Registrar, shall
                  instruct the Depository for the Global Note to reduce

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                                                                         Page 48

                  the principal amount of the Global Note by the principal
                  amount of the Notes other than Global Notes issued upon such
                  exchange. Such other Notes may in turn be exchanged (on
                  transfer or otherwise) for beneficial interests in a Global
                  Note (if any are then outstanding) only in accordance with
                  such procedures, which shall be substantially consistent
                  with the provisions of subclauses (A) through (D) above
                  (including the certification requirements intended to insure
                  that transfers of beneficial interests in a Global Note
                  comply with Rule 144A, Rule 144 or Regulation S, as the case
                  may be) and any other procedures as may be from time to time
                  adopted by the Issuer and the Trustee.

                           (F) Interests in Temporary Regulation S Global Note
                  to be Held Through Euroclear or Clearstream. Until the
                  termination of the Restricted Period with respect to Senior
                  Secured Notes represented by a Temporary Regulation S Global
                  Note, interests in any Temporary Regulation S Global Note may
                  be held only through Agent Members acting for and on behalf of
                  Euroclear and Clearstream, provided that this subclause (F)
                  shall not prohibit any transfer in accordance with subclause
                  (D) of this Section 2.07(c)(v).

                  Section 2.08 Mutilated, Destroyed, Lost and Stolen Senior
Secured Notes. If any mutilated Senior Secured Note is surrendered to the
Trustee, the Issuer shall execute and, upon the Issuer's written request, the
Trustee shall authenticate and deliver a new definitive Senior Secured Note, of
like tenor and aggregate principal amount and equal face amount of principal,
registered in the same manner, dated the date of its authentication and bearing
interest from the date to which interest has been paid on such Senior Secured
Note, in exchange and substitution for such Senior Secured Note (upon surrender
and cancellation thereof); provided, that the applicant for such new Senior
Secured Note shall furnish to the Issuer and to the Trustee such reasonable bond
or indemnity as may be required by them to save each of them harmless.

                  If there shall be delivered to the Issuer and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any Senior
Secured Note and (b) such bond or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Issuer or the Trustee that such Senior Secured Note has been
acquired by a bona fide purchaser, the Issuer shall execute and, upon the
Issuer's request, the Trustee shall authenticate and deliver a new definitive
Senior Secured Note, of like tenor and aggregate principal amount and equal face
amount of principal registered in the same manner, dated the date of its
authentication and bearing interest from the date to which interest has been
paid on such Senior Secured Note, in lieu of and substitution for such Senior
Secured Note.

                  In case any such mutilated, destroyed, lost or stolen Senior
Secured Note has become or is about to become due and payable, the Issuer in its
discretion may, instead of issuing a new Senior Secured Note, pay such Senior
Secured Note (without surrender thereof, except in the case of a mutilated
Senior Secured Note) if the applicant for such payment shall furnish to the
Issuer and the Trustee such reasonable bond or indemnity as they may require to
save each of

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                                                                         Page 49

them harmless, and in case of destruction, loss or theft, evidence to the
satisfaction of the Issuer and the Trustee of the destruction, loss or theft of
such Senior Secured Note.

                  Upon the issuance of any new Senior Secured Note under this
Section 2.08, the Issuer may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith.

                  Every new Senior Secured Note issued pursuant to this Section
2.08 in lieu of any destroyed, lost or stolen Senior Secured Note shall
constitute an original additional contractual obligation of the Issuer, whether
or not the destroyed, lost or stolen Senior Secured Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Senior Secured
Notes duly issued hereunder.

                  The provisions of this Section 2.08 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Senior
Secured Notes.

                  Section 2.09 Payments; Interest Rights Preserved. Interest on
any Senior Secured Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Senior Secured Note (or one or more Predecessor Senior Secured Notes)
is registered at the close of business on the Regular Record Date for such
interest.

                  Any interest or Liquidated Damages on any Senior Secured Note
which is payable; but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Overdue Interest") shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date by virtue of
having been such Holder, and such Overdue Interest may be paid by the Issuer, at
its election in each case, as provided in clause (a) or (b) below:

                  (a) The Issuer may elect to make payment of any Overdue
Interest to the Persons in whose names the Senior Secured Notes (or their
respective Predecessor Notes) are registered at the close of business on a
Special Record Date for the payment of such Overdue Interest, which shall be set
in the following manner. The Issuer shall notify the Trustee in writing of the
amount of Overdue Interest proposed to be paid on each Senior Secured Note and
the date of the proposed payment, and at the same time the Issuer shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Overdue Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Overdue Interest as in this clause (a) provided. Thereupon, the Issuer
shall fix a Special Record Date for the payment of such Overdue Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly, in the name
and at the expense of the Issuer, mail a written notice of the proposed

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                                                                         Page 50

payment of such Overdue Interest and the Special Record Date therefor to be
given to each Holder of Senior Secured Notes, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such Overdue
Interest and the Special Record Date therefor having been so mailed, such
Overdue Interest shall be paid to the Persons in whose names the Senior Secured
Notes (or their respective Predecessor Notes) are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following clause (b).

                  (b) The Issuer may make payment of any Overdue Interest on the
Senior Secured Notes in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Senior Secured Notes may
be listed, and upon such notice as may be required by such exchange, if, after
notice given by the Issuer to the Trustee of the proposed payment pursuant to
this clause (b), such manner of payment shall be deemed practicable by the
Trustee.

                  Subject to the foregoing provisions of this Section 2.09, each
Senior Secured Note delivered under this Indenture upon registration of transfer
of, or in exchange for, or in lieu of, any other Senior Secured Note shall carry
the rights to interest accrued and unpaid, and to accrue, which were carried by
such other Senior Secured Note.

                  All payments of principal, premium, or Liquidated Damages, if
any, and interest on Senior Secured Notes will be made by check or, with respect
to Senior Secured Notes the Holders of which have provided the Issuer with wire
transfer instructions, will be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof. Unless such designation
is revoked in writing, any designation made by such Holder with respect to such
Senior Secured Notes will remain in effect with respect to any future payments
with respect to such Senior Secured Notes payable to such Holder. The Issuer
will indemnify and hold the Trustee and the Paying Agent harmless against any
loss, liability or expense (including attorneys' fees) resulting from any act or
omission to act on the part of the Trustee, the Paying Agent or any such Holder
in connection with any such designation or which the Paying Agent or Trustee may
incur as a result of making any payment in accordance with any such designation.

                  All payments of principal, premium or Liquidated Damages, if
any, on the Senior Secured Notes shall be made upon presentation and surrender
thereof at the office or agency of the Issuer maintained for such purpose in the
Borough of Manhattan, The City of New York.

                  Section 2.10 Persons Deemed Owners. Prior to due presentment
of a Senior Secured Note for registration of transfer, the Issuer, the Trustee
and any agent of the Issuer or the Trustee shall treat the Person in whose name
such Senior Secured Note is registered as the owner of such Senior Secured Note
for the purpose of receiving payment of principal of and any premium or
Liquidated Damages and (subject to Section 2.09) any interest on such Senior
Secured Note and for all other purposes whatsoever, whether or not such Senior
Secured Note be overdue, and neither the Issuer, the Trustee nor any agent of
the Issuer or the Trustee shall be affected by notice to the contrary.

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                                                                         Page 51

                  Section 2.11 Cancellation. All Senior Secured Notes
surrendered for payment, redemption, registration of transfer or exchange shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Issuer may at any time deliver to the
Trustee for cancellation any Senior Secured Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and may deliver to the Trustee (or to any other Person for delivery to the
Trustee for cancellation) any Senior Secured Notes previously authenticated
hereunder which the Issuer has not issued and sold, and all Senior Secured Notes
so delivered shall be promptly canceled by the Trustee. No Senior Secured Notes
shall be authenticated in lieu of or in exchange for any Senior Secured Notes
canceled as provided in this Section 2.11, except as expressly permitted by this
Indenture. All canceled Senior Secured Notes held by the Trustee shall be
disposed of as directed by an Authentication Order.

                  Section 2.12 Computation of Interest. Except as otherwise
provided in the Series Supplemental Indenture relating to the Senior Secured
Notes of a series, interest on the Senior Secured Notes of such series shall be
computed on the basis of a 360-day year comprised of twelve 30-day months.

                  Section 2.13 Certification Forms. (a) Whenever any
certification is to be given by a beneficial owner of a portion of a Restricted
Global Note pursuant to Section 2.07(c)(v)(D) in connection with the initial
transfer of a beneficial interest in a Restricted Global Note to a Person who
wishes to take delivery thereof in the form of a beneficial interest in a
Regulation S Global Note, such certification shall be provided substantially in
the form set forth in Exhibit C hereto.

                  (b) Whenever any certification is to be given by a beneficial
owner of a portion of a Regulation S Global Note pursuant to Section
2.07(c)(v)(D) in connection with the initial transfer of a beneficial interest
in the Regulation S Global Note to a Person who wishes to take delivery thereof
in the form of a beneficial interest in the Restricted Global Note, such
certification shall be provided substantially in the form set forth in Exhibit C
hereto.

                  (c) Whenever any certification is to be given by a beneficial
owner of a Restricted Note or Holder of a Restricted Note (other than a
Restricted Global Note) pursuant to Section 2.07(b) in connection with the
transfer or exchange of a Restricted Note, such certification shall be provided
substantially in the form set forth in Exhibit B (which may be attached to or
set forth on the Restricted Note).

                  Section 2.14 CUSIP Numbers. The Issuer in issuing the Senior
Secured Notes may use "CUSIP" or "ISIN" numbers (if then generally in use), and,
if so, the Trustee shall use "CUSIP" or "ISIN" numbers in notices of redemption
as a convenience to Holders; provided that the Trustee shall assume no
responsibility for the accuracy of such numbers and any such redemption shall
not be affected by any defect in or omission of such numbers.

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                                                                         Page 52

                  Section 2.15 Issuance of Additional Notes. The Issuer shall be
entitled, subject to its compliance with Section 4.18 hereof, to issue
Additional Notes under this Indenture with identical terms as the Initial Notes
issued on the Closing Date, other than with respect to the date of issuance and
issue price. The Initial Notes issued on the Closing Date, any Additional Notes
and all Exchange Notes issued in exchange therefor will be treated as a single
class for all purposes under this Indenture.

                  With respect to any Additional Notes, the Issuer will set
forth in a resolution of the Board of Directors of the Issuer and an Officers'
Certificate, copies of which will be delivered to the Trustee, the following
information:

                  (i) the aggregate principal amount of such Additional Notes to
         be authenticated and delivered pursuant to this Indenture;

                  (ii) the issue price, the issue date and the CUSIP number of
         such Additional Notes; provided, however, that no Additional Notes may
         be issued at a price that would cause such Additional Notes to have
         "original issue discount" within the meaning of Section 1273 of the
         Internal Revenue Code of 1986, as amended; and

                  (iii) whether such Additional Notes will be Transfer
         Restricted Securities or will be issued in the form of Exchange Notes.

                                  ARTICLE III

                            REDEMPTION AND PREPAYMENT

                  Section 3.01 Notices to Trustee. If the Issuer elects to
redeem Senior Secured Notes pursuant to the optional redemption provisions of
Section 3.07 hereof, it shall furnish to the Trustee and Paying Agent, at least
30 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of
Senior Secured Notes to be redeemed and (iv) the redemption price.

                  Section 3.02 Selection of Senior Secured Notes to Be Redeemed.
If less than all of the Senior Secured Notes are to be redeemed at any time,
selection of Senior Secured Notes for redemption will be made by the Trustee on
a pro rata basis; provided that no Senior Secured Notes of $1,000 or less will
be redeemed in part. Notices of redemption will be mailed by first class mail at
least 30 but not more than 60 days before the Redemption Date to each Holder of
Senior Secured Notes to be redeemed at its registered address. Notices of
redemption may not be conditional. If any Senior Secured Note is to be redeemed
in part only, the notice of redemption that relates to such Senior Secured Note
will state the portion of the principal amount thereof to be redeemed. A new
Senior Secured Note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the Holder thereof upon cancellation of the
original Senior Secured Note. Senior Secured Notes called for redemption become
due on

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                                                                         Page 53

the date fixed for redemption. Unless the Issuer defaults in payment of the
redemption price, interest and Liquidated Damages, if any, will cease to accrue
on Senior Secured Notes or portions of them called for redemption on and after
the Redemption Date.

                  The Trustee shall promptly notify the Issuer in writing of the
Senior Secured Notes selected for redemption and, in the case of any Senior
Secured Note selected for partial redemption, the principal amount thereof to be
redeemed. Senior Secured Notes and portions of Senior Secured Notes selected
shall be in denominations of $1,000 and integral multiples of $1,000; except
that if all of the Senior Secured Notes of a Holder are to be redeemed, the
entire outstanding amount of Senior Secured Notes held by such Holder, even if
not a multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Senior Secured Notes called
for redemption also apply to portions of Senior Secured Notes called for
redemption.

                  Section 3.03 Notice of Redemption. At least 30 days but not
more than 60 days before a Redemption Date, the Issuer shall mail or cause to be
mailed, by first class mail, a notice of redemption to each Holder whose Senior
Secured Notes are to be redeemed at its registered address.

                  The notice shall identify the Senior Secured Notes to be
redeemed and shall state:

                  (a) the Redemption Date;

                  (b) the redemption price;

                  (c) if any Senior Secured Note is being redeemed in part, the
portion of the principal amount of such Senior Secured Note to be redeemed and
that, after the redemption date upon surrender of such Senior Secured Note, a
new Senior Secured Note or Senior Secured Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Senior
Secured Note;

                  (d) the name, address and telephone number of the Paying
Agent;

                  (e) that Senior Secured Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;

                  (f) that, unless the Issuer defaults in making such redemption
payment, interest and Liquidated Damages, if any, on Senior Secured Notes called
for redemption ceases to accrue on and after the Redemption Date;

                  (g) the paragraph of the Senior Secured Notes and/or Section
of this Indenture pursuant to which the Senior Secured Notes called for
redemption are being redeemed; and

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                  (h) the CUSIP number (provided that the Issuer may state that
no representation is made as to the correctness or accuracy of the CUSIP number,
if any, listed in such notice or printed on the Senior Secured Notes).

                  At the Issuer's request, the Trustee or the Paying Agent shall
give the notice of redemption in the Issuer's name and at its expense; provided,
however, that the Issuer shall have delivered to the Trustee, at least 45 days
prior to the redemption date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.

                  Section 3.04 Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.03 hereof, Senior Secured
Notes called for redemption become irrevocably due and payable on the Redemption
Date at the redemption price. A notice of redemption may not be conditional.

                  Section 3.05 Deposit of Redemption Price. One Business Day
prior to the Redemption Date, the Issuer shall deposit with the Trustee or with
the Paying Agent (other than the Issuer or an Affiliate of the Issuer) money
sufficient to pay the redemption price of and accrued interest and Liquidated
Damages, if any, on, all Senior Secured Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Issuer any money
deposited with the Trustee or the Paying Agent by the Issuer in excess of the
amounts necessary to pay the redemption price of, and accrued interest and
Liquidated Damages, if any, on, all Senior Secured Notes to be redeemed.

                  If the Issuer complies with the provisions of the preceding
paragraph and the other provisions of this Article III, on and after the
Redemption Date, interest and Liquidated Damages, if any, shall cease to accrue
on the Senior Secured Notes or the portions of Senior Secured Notes called for
redemption. If a Senior Secured Note is redeemed on or after an interest record
date but on or prior to the related Interest Payment Date, then any accrued and
unpaid interest and Liquidated Damages, if any, shall be paid to the Person in
whose name such Senior Secured Note was registered at the close of business on
such record date. If any Senior Secured Note called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Issuer to
comply with the preceding paragraph, interest and Liquidated Damages, if any,
shall be paid on the unpaid principal, from the Redemption Date until such
principal is paid, and to the extent lawful on any interest, and Liquidated
Damages, if any, not paid on such unpaid principal, in each case at the rate and
in the manner provided in the Senior Secured Notes and in Section 4.01 hereof.

                  Section 3.06 Senior Secured Notes Redeemed in Part. Upon
surrender of a Senior Secured Note that is redeemed in part, the Issuer shall
issue and, upon the Issuer's written request, the Trustee shall authenticate for
the Holder at the expense of the Issuer a new Senior Secured Note equal in
principal amount to the unredeemed portion of the Senior Secured Note
surrendered.

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                                                                         Page 55

                  Section 3.07 Optional Redemption.

                  (a) The Senior Secured Notes shall be redeemable at the
Issuer's option at any time and from time to time, in whole or in part, upon not
less than 30 nor more than 60 days' notice to the Trustee and each Holder of
Senior Secured Notes, at a redemption price equal to the outstanding principal
amount thereof plus accrued interest and Liquidated Damages, if any, plus the
Make-Whole Premium, such redemption price to be set forth in the notice to the
Trustee. In no event shall the sum of the redemption price plus the Make-Whole
Premium ever be less than 100% of the Senior Secured Notes being redeemed plus
accrued and unpaid interest thereon to the Redemption Date. Unless the Issuer
defaults in payment of the redemption price, on and after the Redemption Date
interest and Liquidated Damages, if any, shall cease to accrue on the Senior
Secured Notes or portions thereof called for redemption.

                  (b) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.

                  Section 3.08 Mandatory Redemption.

                  (a) The Senior Secured Notes shall be subject to mandatory
redemption, in whole or in part, at a redemption price equal to the principal
amount of the Senior Secured Notes being redeemed plus accrued and unpaid
interest and Liquidated Damages, if any, to the Redemption Date, if the Issuer
or any Subsidiary receives more than $5.0 million of Loss Proceeds or Eminent
Domain Proceeds because of an Event of Loss or an Event of Eminent Domain and:

                  (i) the Issuer determines that all or such portion of the
         applicable Plant cannot be rebuilt, repaired or restored to permit
         operations on a commercially reasonable basis, or the Issuer determines
         not to rebuild, repair or restore the applicable Plant or such portion,
         in which case the Issuer shall have to use the Net Available Amount of
         such proceeds for such redemption; or

                  (ii) only a portion of the applicable Plant is capable of
         being rebuilt, repaired or restored on a commercially reasonable basis
         and the Issuer determines to so rebuild, repair or restore, in which
         case the Issuer will have to use only the amount of such Loss Proceeds
         or Eminent Domain Proceeds not used to rebuild, repair or restore such
         Plant for such redemption, except as set forth in the immediately
         following paragraph.

                  If the Issuer or any Subsidiary receives less than $5 million
of Loss Proceeds or Eminent Domain Proceeds or has less than $5 million
remaining after rebuilding, repairing or restoring a portion of the applicable
Plant because of an Event of Loss or Event of Eminent Domain the Issuer will
cause such amounts to be deposited into the Revenue Account.

                  (b) If the Issuer or any Subsidiary (a) receives more than
$5.0 million of Title Event Proceeds in connection with a Title Event and is
unable to remedy the Title Event, or (b) has more than $5.0 million of Title
Event Proceeds remaining after remedying the Title Event, the Issuer will have
to use the Net Available Amount of such proceeds, to the extent not

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                                                                         Page 56

used to cure the Title Event, on a pro rata basis to redeem the Senior Secured
Notes at a redemption price equal to the principal amount of the Senior Secured
Notes being redeemed plus accrued and unpaid interest and Liquidated Damages, if
any, to the Redemption Date. If the Issuer or any Subsidiary receives less than
$5 million of Title Event Proceeds in connection with a Title Event or has less
than $5 million remaining after remedying a Title Event the Issuer will cause
such amounts to be deposited into the Revenue Account.

                  (c) If on or prior to September 30, 2005, the Issuer has not
satisfied the Initial Galena Re-powering Account Withdrawal Conditions, then the
Issuer will have to use the proceeds of the Galena Re-powering Account to redeem
Senior Secured Notes at a price equal to 101% of the principal amount of Senior
Secured Notes being redeemed plus accrued and unpaid interest and Liquidated
Damages, if any, to the Redemption Date.

                  (d) If Final Completion is not achieved by March 31, 2006 or
the Galena Re-powering does not result in a minimum net electrical output of 18
MW as determined in accordance with performance tests conducted pursuant to the
Galena Re-powering Contract (as certified by the Independent Engineer), then
from and after March 31, 2006, the Issuer will not be able to make any
Restricted Payments until the Issuer has used any amounts the Issuer receives as
Performance Liquidated Damages and amounts in the Distribution Suspense Account
to redeem or has otherwise redeemed (a "Galena Re-powering Performance
Redemption") Senior Secured Notes in an amount equal to the product of (x)
$1,100,000 times (y) the difference between (i) 18 MW minus (i) the actual
number of Megawatts of the Galena Re-powering as demonstrated by the Performance
Guarantee Tests and certified by the Independent Engineer. The Issuer will
redeem the Senior Secured Notes in connection with a Galena Re-powering
Performance Redemption at a price equal to 101% of the principal amount of the
Senior Secured Notes required to be redeemed plus accrued and unpaid interest
and Liquidated Damages, if any, to the Redemption Date.

                  (e) If, as of January 1, 2006, the Mammoth Enhancement has not
improved the net electrical output of the Mammoth Plant by at least 3.6 MW (as
certified by the Independent Engineer), then from and after January 1, 2006, the
Issuer will not be able to make any Restricted Payments until the Issuer has
used amounts in the Distribution Suspense Account to redeem or has otherwise
redeemed (a "Mammoth Enhancement Redemption") Senior Secured Notes in an amount
equal to the product of (x) $1,100,000 times (y) the difference between (i) 3.6
MW minus (ii) the actual number of Megawatts that the Mammoth Enhancement
increases the net electrical output of the Mammoth Plant. The Issuer shall
redeem the Senior Secured Notes in connection with a Mammoth Enhancement
Redemption at a price equal to 101% of the principal amount of the Senior
Secured Notes required to be redeemed plus accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date.

                  In the event that any Senior Secured Obligations (other than
the Senior Secured Notes) are required to be redeemed before their scheduled
maturity pursuant to documents governing such Senior Secured Obligations for any
reason not otherwise giving rise to a redemption of the Senior Secured Notes,
the Issuer shall offer to repurchase the Senior Secured

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                                                                         Page 57

Notes on a pro rata basis with the other Senior Secured Obligations as are
required to be redeemed at a redemption price equal to the principal amount of
the Senior Secured Notes the Issuer offers to repurchase plus accrued and unpaid
interest and Liquidated Damages, if any, to the Redemption Date, but without any
premium.

                  Other than as specifically provided in this Section 3.08, any
purchase or redemption pursuant to this Section 3.08 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 hereof.

                                   ARTICLE IV

                                    COVENANTS

                  The Issuer and each of the Issuer's Subsidiaries (other than
Ormesa LLC, which shall only be subject to these covenants prior to the Ormesa
Support Date to the extent compliance therewith would not violate the Ormesa
Credit Agreement) shall be subject to the following covenants.

                  Section 4.01 Payment of Senior Secured Notes. The Issuer shall
pay or cause to be paid the principal of, premium, if any, interest and
Liquidated Damages, if any, on the Senior Secured Notes on the dates and in the
manner provided on Exhibits A-1 and A-2 attached hereto including the Schedule
of Principal Payments set forth on Schedule I attached thereto. Principal,
premium, if any, interest and Liquidated Damages, if any, shall be considered
paid on the date due if the Paying Agent, if other than the Issuer or a
Subsidiary or an Affiliate thereof, holds as of 10:00 a.m. Eastern Time on the
due date money deposited by the Issuer in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, interest
and Liquidated Damages, if any, then due.

                  The Issuer shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Senior Secured Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) and
Liquidated Damages, if any, at the same rate to the extent lawful.

                  Section 4.02 Maintenance of Office or Agency. The Issuer shall
maintain in the Borough of Manhattan, the City of New York, and in such other
places, if any, as shall be specified for the Senior Secured Notes of any series
in the related Series Supplemental Indenture an office or agency (which may be
an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Senior Secured Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon the Issuer in
respect of the Senior Secured Notes and this Indenture may be served. The Issuer
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Issuer shall fail
to maintain any such required office or agency or shall fail to

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furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.

                  The Issuer may also from time to time designate one or more
other offices or agencies where the Senior Secured Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Issuer of its obligation to maintain an office or agency
in the Borough of Manhattan, the City of New York for such purposes. The Issuer
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.

                  The Issuer hereby designates the Corporate Trust Office of the
Trustee as the initial office or agency of the Issuer where the Senior Secured
Notes may be presented or surrendered in accordance with the foregoing.

                  Section 4.03 Reporting Requirements. Whether or not required
by the SEC, so long as any Senior Secured Notes are outstanding, the Issuer
shall furnish to the Trustee for mailing to the Holders (directly to any
Beneficial Owner (as such term is defined Rule 13d-3 and Rule 13d-5 under the
Exchange Act) with notice of ownership on file with the Trustee), within the
time periods specified in the SEC's rules and regulations:

                  (a) all quarterly and annual financial information that would
         be required to be contained in a filing with the SEC on Forms 10-Q and
         10-K if the Issuer were required to file such Forms, including a
         "Management's Discussion and Analysis of Financial Conditions and
         Results of Operations" and, with respect to the annual information
         only, a report on the annual financial statements by the Issuer's
         certified independent accountants; and

                  (b) all current reports that would be required to be filed
         with the SEC on Form 8-K if the Issuer were required to file such
         reports.

In addition, following the consummation of the Exchange Offer contemplated by
the Registration Rights Agreement, whether or not required by the SEC, the
Issuer shall file a copy of all of the information and reports referred to in
clauses (1) and (2) above with the SEC for public availability within the time
periods specified in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to prospective
investors upon request. In addition, the Issuer and the Guarantors agree that
they shall furnish to the Holders and to prospective investors, upon the request
of such Holders, the information required to be delivered pursuant to Rule
144(d)(4) under the Securities Act so long as the Senior Secured Notes are not
freely transferable under the Securities Act.

Notwithstanding the foregoing, the Issuer shall not be required to present
financial information (i) for itself or any Subsidiary for any period prior to
September 30, 2003 that is not presented in

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the Offering Memorandum or (ii) pursuant to Rule 3-16 of Regulation S-X, in each
case, unless required to do so by the SEC in connection with the Exchange Offer.

                  The receipt by the Trustee of any such reports and documents
pursuant to this Section 4.03 shall not constitute notice or constructive notice
of any information contained in such documents or determinable from information
contained in such documents, including the Issuer's compliance with any
covenants hereunder (as to which the Trustee is entitled to rely exclusively on
an Officers' Certificate).

                  Section 4.04 Delivery of Notices to Trustee. The Issuer shall,
and shall cause each of its Subsidiaries to, so long as any of the Senior
Secured Notes are outstanding, deliver to the Trustee and the Collateral Agent,
forthwith upon any officer becoming aware of any Default, Event of Default,
Event of Loss, Event of Eminent Domain or Title Event or, an Officers'
Certificate specifying with particularity any such Default, Event of Default,
Event of Loss, Event of Eminent Domain or Title Event and, if applicable, what
action the Issuer is taking or proposes to take with respect thereto.

                  Section 4.05 Stay, Extension and Usury Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
its obligations under this Indenture and the Senior Secured Notes; and the
Issuer (to the extent it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.

                  Section 4.06 Restrictions on Sale of Assets. The Issuer shall
not nor shall the Issuer permit any of its Subsidiaries to sell, lease (as
lessor) or transfer (as transferor) any property or assets (other than to a
Guarantor) except:

              (a) in the ordinary course of business; or

              (b) property which is worn out, obsolete or no longer useful or
necessary in connection with the operation of a Project as certified by the
Issuer, including the 50% undivided interest of Mammoth-Pacific in those certain
BLM geothermal resource leases CA 14414, CA 14405, CA 14406, CA 14407 and CA
11672 or the interest of Steamboat Development in that certain BLM Right of Way
N-77428 or as a result of the lapse of geothermal leases due to the failure to
commence commercial production of geothermal resources under such leases; or

              (c) property comprising the Desert Peak 1 Plant and related real
estate rights if the Issuer improves the output of the other facility currently
located at the Brady Plant or adds a facility on the Brady site so that the
overall output of the facilities located at Brady equals or exceeds the
aggregate of (i) the then current output of the Desert Peak 1 Plant plus (ii)
the current

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output of the other facility currently located at the Brady Plant (the aggregate
of (i) and (ii) referred to as the "Combined Brady Output"); provided, that
prior to any such sale, lease or transfer, (i) the Geothermal Consultant shall
have certified that after giving effect to such sale, lease or transfer, the
Brady Plant has the necessary geothermal resources to enable the Brady Plant to
produce the Combined Brady Output through the Final Maturity Date (subject to
normal geothermal resource degradation in an amount no worse than that which is
projected for the Desert Peak 1 Plant) and (ii) the power purchase agreement
pursuant to which the Brady Plant operates at such time continues to be in full
force and effect after giving effect to such sale, lease or transfer and
provides for delivery of output not less than the Combined Brady Output.

                  The Collateral Agent shall be obligated to release the Lien of
the Security Documents upon the Issuer's transfer of any property or assets in
compliance with this covenant and receipt by the Collateral Agent of an
Officer's Certificate stating that such transfer is in compliance with this
covenant.

                  Section 4.07 Insurance. The Issuer shall, and shall cause each
of its Subsidiaries to, maintain or cause to be maintained business interruption
insurance, casualty insurance, including flood and earthquake coverage, and
primary and excess liability insurance, as well as customary worker's
compensation (upon hiring of employees) and automobile insurance and such other
insurance, if any, as is generally carried by companies engaged in similar
businesses and owning similar properties in the same general areas and financed
in a similar manner. To the extent any such casualty insurance covers both the
Issuer, its Subsidiaries and/or a Project, on the one hand, and any other owner
and/or plant, on the other hand, the Issuer shall ensure that it has
specifically designated as applicable solely to it, its Subsidiaries and the
Projects "all risk" property insurance coverage in an amount based upon the
estimated full replacement value of the Plants (provided that earthquake and
flood coverages may be subject to an annual aggregate limit with respect to the
Issuer and its Affiliates' facilities of not less than $5 million with respect
to flood and $10 million with respect to earthquake) and business interruption
insurance in an amount of not less than the maximum fixed expenses projected
over any four month period during the succeeding twelve month period (including,
without limitation, debt service expenses). The Issuer shall not, nor shall the
Issuer permit any of its Subsidiaries to, reduce or change such insurance
coverages if the Insurance Consultant determines that such reduction or
cancellation would not be reasonable under the circumstances and the insurance
coverages sought to be reduced or changed are available on commercially
reasonable terms or that another level of coverage greater than that proposed by
the Issuer is available on commercially reasonable terms (in which case such
coverage may be reduced to the higher of such available levels). The Issuer
shall, and the Issuer shall cause each of its Subsidiaries (other than Ormesa
prior to the Ormesa Support Date) to, cause the Collateral Agent to be named as
loss payee and/or as an additional insured, as appropriate; all insurance
policies shall provide for at least 30 days' written notice to the Collateral
Agent of a cancellation (except cancellation due to failure to pay premiums,
which may be on no less than 10 days prior written notice to the Collateral
Agent) or reduction in the amount of coverage or of a material change in
coverage.

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                  Section 4.08 Governmental Approvals; Title. The Issuer shall,
and shall cause each of its Subsidiaries to, at all times (i) obtain and
maintain in full force and effect the Governmental Approvals and other consents
and approvals required at any time in connection with the Issuer's business and
(ii) preserve and maintain good and valid title to our properties and assets
(subject to no Liens other than Permitted Liens), except in each case where the
failure to do so in clause (i) or (ii) could not reasonably be expected to have
a Material Adverse Effect.

                  Section 4.09 Limitation on Nature of Business. The Issuer
shall not, and shall not permit or cause any of its Subsidiaries to, engage or
enter into any business other than, directly or indirectly the ownership,
operation and maintenance of the Plants and activities incidental thereto.

                  Section 4.10 Prohibition on Merger or Other Fundamental
Changes. The Issuer shall not, nor shall it permit any of its Subsidiaries to,
enter into any transaction of merger or consolidation, sell all or substantially
all of its or their respective assets to any other Person (other than a merger,
consolidation or sale to or into the Issuer or any of the Guarantors), change
its or their respective forms of organization or its or their respective
businesses, liquidate or dissolve its or their self (or suffer any liquidation
or dissolution) or discontinue its or their respective businesses. The Issuer
shall not, nor shall it permit any of its Subsidiaries to, purchase or otherwise
acquire all or substantially all of the assets of any other Person (other than
(x) the acquisition of the Capital Stock of Mammoth-Pacific that the Issuer does
not own as of the Closing Date, (y) an acquisition by the Issuer or a Guarantor
of assets of another Guarantor and (z) the acquisition of a Qualified Project in
accordance with the terms of this Indenture).

                  Section 4.11 Restricted Payments. The Issuer shall not, nor
shall it permit or cause any of its Subsidiaries to, make any Restricted
Payments, except (i) if the Issuer meets the Distribution Conditions set forth
in Section 3.8(b) of the Depositary Agreement and has satisfied Sections 3.08
(d) and (e) hereof, if applicable, and (ii) Restricted Payments made by any of
its Subsidiaries; provided, that such Restricted Payments in the case of clause
(ii) are made to the Issuer or a Guarantor.

                  Section 4.12 Revenue Account. The Issuer shall, and it shall
cause each of its Subsidiaries (other than Ormesa prior to the Ormesa Support
Date) to, take all actions as may be necessary to cause all revenues actually
received by them from the Projects or otherwise to be deposited in the Revenue
Account to the extent required by the Depositary Agreement. The Issuer shall,
and shall cause its Subsidiaries (other than Ormesa prior to the Ormesa Support
Date) to (x) provide irrevocable written instruction to each power purchaser
related to a Project, to pay all revenues paid under power purchase agreements
with respect to the Projects directly into the Revenue Account (other than with
respect to the Mammoth Plant; provided, however, if at any time the Issuer or
any Guarantor acquires that portion of the Capital Stock of Mammoth-Pacific that
the Issuer does not own as of the Closing Date or the Issuer otherwise acquires
control of 100% of the Mammoth Project, the Issuer shall, or the Issuer shall
cause such Guarantor, as the case may be, to arrange for all revenues paid under
power purchase agreements with respect to the Mammoth Project to be paid
directly into the Revenue Account), (y) use

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                                                                         Page 62

commercially reasonable efforts to arrange for all other revenues to be paid
directly into the Revenue Account and (z) cause any other revenues received by
the Issuer or any of its Subsidiaries to be promptly paid into the Revenue
Account.

                  Section 4.13 Transactions with Affiliates. The Issuer shall
not, and shall not permit any of its Subsidiaries to, make any payment to, or
sell, lease, transfer or otherwise dispose of any of its respective properties
or assets to, or purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any of its respective Affiliates (each,
an "Affiliate Transaction"), unless:

                  (a) the Affiliate Transaction is on terms that are no less
         favorable to the Issuer or the relevant Subsidiary than those that
         would have been obtained in a comparable transaction by the Issuer or
         such Subsidiary with an unrelated Person; and

                  (b) the Issuer delivers to the Trustee:

                           (i) with respect to any Affiliate Transaction or
                  series of related Affiliate Transactions involving aggregate
                  consideration in excess of $5 million, a resolution of the
                  Board of Directors set forth in an Officers' Certificate
                  certifying that such Affiliate Transaction complies with this
                  covenant and that such Affiliate Transaction has been approved
                  by a majority of the Board of Directors; and

                           (ii) with respect to any Affiliate Transaction or
                  series of related Affiliate Transactions involving aggregate
                  consideration in excess of $25 million, a positive opinion as
                  to the fairness to the Issuer of such Affiliate Transaction
                  from a financial point of view issued by an accounting,
                  appraisal or investment banking firm of national standing. The
                  Trustee shall have no obligation to review the fairness
                  opinion, but shall hold such opinion for the benefit of the
                  Holders.

                  The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of the prior
paragraph:

                  (a) any employment agreement, employee benefit plan, officer
         and director indemnification agreement or any similar arrangement
         entered into by the Issuer or any of its Subsidiaries in the ordinary
         course of business;

                  (b) transactions between or among the Issuer and/or its
         Wholly-Owned Subsidiaries;

                  (c) payment of reasonable directors' fees to Persons who are
         not otherwise Affiliates of the Issuer;

                  (d) Restricted Payments that do not violate the provisions of
         Section 4.11 of this Indenture;

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                                                                         Page 63

                  (e) loans or advances to employees in the ordinary course of
         business not to exceed $1.0 million in the aggregate at any one time
         outstanding;

                  (f) transactions pursuant to written agreements with the
         Issuer's Affiliates in place as of the date of this Indenture;

                  (g) the transfer of the 50% undivided interest of OrMammoth in
         those certain BLM geothermal resource leases CA 14414, CA 14405, CA
         14406, CA 14407 and CA 11672 or the interest of Steamboat Development
         in that certain BLM Right of Way N-77428 to any Affiliate of the
         Issuer;

                  (h) any amendments, modifications or replacements of, or
         waivers under, any written agreement described under clause (f) of this
         paragraph that is not a Material Project Document; provided that no
         such amendment, modification or waiver alters any such agreement in a
         manner than is materially adverse to the interests of Holders; and

                  (i) any agreement to do anything set forth in items (a)
         through (h) of this paragraph.

                  Section 4.14 Exercise of Rights. The Issuer shall not, and
shall not permit any of its Subsidiaries to, exercise, or fail to exercise, its
or their respective rights under the Project Documents in a manner which could
reasonably be expected to result in a Material Adverse Effect with respect to
the Issuer or the applicable Subsidiary. The Issuer shall, and shall cause each
of its Subsidiaries to, diligently pursue all rights to distributions or
dividends and Loss Event Proceeds, Eminent Domain Proceeds and Title Proceeds
upon the occurrence of a Loss Event, an Event of Eminent Domain or a Title
Event, as the case may be.

                  Section 4.15 Termination or Amendment to Material Project
Documents. The Issuer shall not, and shall not permit any of its Subsidiaries
to, terminate, amend in any material adverse respect, replace, modify in any
material adverse respect or assign, other than pursuant to the Security
Documents (or consent to any of the foregoing) any of the Material Project
Documents to which the Issuer or they are a party, provided that (x) Material
Project Documents may be terminated so long as the Issuer enters into one or
more replacement agreements, and (y) the Issuer's Subsidiaries may terminate
Material Project Documents with respect to the rights and obligations of the
Desert Peak 1 Plant if the Issuer improves the output of the Brady Plant and
otherwise complies with the provisions set forth in Section 4.06(c) of this
Indenture.

                  Section 4.16 Additional Project Documents. The Issuer shall
not, and shall not permit any of its Subsidiaries to, enter into any Additional
Project Documents (a) if entering into such document could reasonably be
expected to result in a Material Adverse Effect, provided, however, that nothing
in the foregoing is intended to preclude the Issuer or any of its Subsidiaries
from entering into agreements to sell Renewable Energy Credits in connection
with any Project as contemplated by the terms of the Project Documents or
required by Applicable Law or (b) if entering into any such Additional Project
Document constituting power purchase agreements,

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fuel supply and transportation agreements, transmission agreements and other
agreements, contracts or other arrangements for the purchase of fuel for, or the
sale of electricity from, the Project results in the breach of, or conflict with
the terms of, any then-existing power purchase agreement.

                  Section 4.17 Performance of Project Documents. The Issuer
shall, and shall cause each of its Subsidiaries to, perform and observe their
respective covenants and obligations under all of the Project Documents, except
where the failure to do so could not reasonably be expected to result in a
Material Adverse Effect. Section 4.18 Limitations on Indebtedness. The Issuer
shall not create, incur or suffer to exist any Indebtedness except the following
Indebtedness (collectively, "Permitted Indebtedness"):

                  (a) Indebtedness represented by the Senior Secured Notes to be
         issued on the Closing Date and the Exchange Notes to be issued pursuant
         to the Registration Rights Agreement;

                  (b) Indebtedness incurred by the Issuer to (x) make capital
         improvements to a Project that are required by law or the terms of the
         Project Documents, and (y) purchase that portion of the Capital Stock
         of Mammoth-Pacific that the Issuer does not own as of the Closing Date;
         provided, that:

                           (i) no Default or Event of Default has occurred and
                  is continuing at the time such Indebtedness is proposed to be
                  incurred or would result from the incurrence of such
                  additional Indebtedness; and

                           (ii) (1) the Issuer's calculations demonstrate that
                  after giving effect to the incurrence of such additional
                  Indebtedness, the minimum projected Debt Service Coverage
                  Ratio for each Annual Period (each such period taken as a
                  single accounting period) following the Quarterly Period in
                  which such additional Indebtedness is incurred through the
                  Final Maturity Date (provided, however, (x) with respect to
                  Indebtedness incurred within one year of the Final Maturity
                  Date, the period tested shall be a period commencing on the
                  first day of the Quarterly Period immediately following such
                  incurrence and ending on the Final Maturity Date, and (y) with
                  respect to the Annual Period in which such Indebtedness is
                  incurred (unless such Indebtedness is incurred on the first
                  day of such Annual Period), the first period tested shall be
                  the period commencing with the first day of the Quarterly
                  Period immediately following such incurrence and ending on the
                  last day of the Annual Period in which such Indebtedness is
                  incurred), shall not be less than 1.40 to 1.0; and (2) the
                  Issuer shall have delivered a certificate to the Collateral
                  Agent confirming the foregoing clause (b)(i) and clause
                  (b)(ii)(1) and stating that the Capital Expenditures proposed
                  by the Issuer conform to such legal or Project Document
                  requirements;

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                  (c) Indebtedness incurred by the Issuer to make discretionary
         capital improvements to a Project, provided, that:

                           (i) no Default or Event of Default has occurred and
                  is continuing at the time such Indebtedness is proposed to be
                  incurred or would result from the incurrence of such
                  additional Indebtedness; and

                           (ii) (1) the Issuer's calculations demonstrate that
                  (x) the minimum projected Debt Service Coverage Ratio for each
                  Annual Period through the Final Maturity Date and (y) the
                  average projected Debt Service Coverage Ratio for the Annual
                  Periods through the Final Maturity Date, equals or exceeds the
                  projected Debt Service Coverage Ratio for the corresponding
                  Annual Period or Annual Periods, as the case may be,
                  immediately prior to the incurrence of such additional
                  Indebtedness and the making of any such capital improvement
                  (provided, however, (i) with respect to Indebtedness incurred
                  within one year of the Final Maturity Date, the period tested
                  shall be a period commencing on the first day of the Quarterly
                  Period immediately following such incurrence and ending on the
                  Final Maturity Date, and (ii) with respect to the Annual
                  Period in which such Indebtedness is incurred (unless such
                  Indebtedness is incurred on the first day of such Annual
                  Period), the first period tested shall be the period
                  commencing with the first day of the Quarterly Period
                  immediately following such incurrence and ending on the last
                  day of the Annual Period in which such Indebtedness is
                  incurred) and (2) the Issuer shall have delivered a
                  certificate to the Collateral Agent confirming the foregoing
                  clause (c)(i) and clause (c)(ii)(1);

                  (d) additional Indebtedness incurred by the Issuer not to
         exceed an aggregate principal amount outstanding at any time of $10
         million;

                  (e) Subordinated Debt;

                  (f) Indebtedness incurred by the Issuer in order to refinance
         existing Indebtedness incurred pursuant to clause (b), (c) or (e)
         above, provided, (1) such refinancing Indebtedness has an average life
         equal to or greater than the average life of the Indebtedness being
         refinanced, (2) the aggregate amount of such refinancing Indebtedness
         does not exceed the principal amount of the Indebtedness being
         refinanced and (3) to the extent that the original incurrence of the
         refinanced Indebtedness was subject to certain conditions and
         requirements pursuant to this Indenture, such refinancing Indebtedness
         shall comply with all of the conditions and requirements applicable to
         the refinanced Indebtedness;

                  (g) Indebtedness outstanding under the Ormesa Credit Agreement
         prior to the Ormesa Support Date; and

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                  (h) additional Senior Secured Notes issued by the Issuer to
         purchase not more than one Qualified Project through the Final Maturity
         Date of the Senior Secured Notes; provided, that:

                           (i) no Default or Event of Default has occurred and
                  is continuing at the time such Indebtedness is proposed to be
                  incurred or would result from the incurrence of such
                  additional Indebtedness;

                           (ii) no Indebtedness (other than the Senior Secured
                  Notes and Subordinated Debt issued under the Ormat Nevada
                  Subordinated Loan) is incurred or assumed in connection with
                  the purchase of the Qualified Project;

                           (iii) (1) the Issuer's calculations demonstrate that
                  the minimum projected Debt Service Coverage Ratio for each
                  Annual Period (each such period taken as a single accounting
                  period) following the Quarterly Period in which such
                  additional Indebtedness is incurred through the Final Maturity
                  Date (provided, however, (i) with respect to Indebtedness
                  incurred within one year of the Final Maturity Date, the
                  period tested shall be the period commencing on the first day
                  of the Quarterly Period immediately following such incurrence
                  and ending on the Final Maturity Date, and (ii) with respect
                  to the Annual Period in which such Indebtedness is incurred
                  (unless such Indebtedness is incurred on the first day of such
                  Annual Period), the first period tested shall be the period
                  commencing with the first day of the Quarterly Period
                  immediately following such incurrence and ending on the last
                  day of the Annual Period in which such Indebtedness is
                  incurred), shall not be less than 1.55 to 1.0, and (2) the
                  Issuer shall have delivered a certificate to the Collateral
                  Agent confirming the foregoing clauses (h)(i), (h)(ii), and
                  clause (h)(iii)(1) and stating that the Project acquired is a
                  Qualified Project.

                  Section 4.19 Limitation on Indebtedness of Subsidiaries. The
Issuer shall not permit any of its Subsidiaries to create, incur or suffer to
exist any Indebtedness other than (i) Indebtedness owed to the Issuer
represented by an intercompany note and (ii) Indebtedness represented by the
Guarantees.

                  Section 4.20 Limitations on Guarantees. The Issuer shall not,
and shall not permit any of its Subsidiaries to, contingently or otherwise, be
or become liable in connection with any Guarantee, except for (i) endorsements
and similar obligations in the ordinary course of business and (ii) Guarantees
of the Senior Secured Notes.

                  Section 4.21 Prohibitions on Other Obligations or Assignments.
The Issuer shall not, and shall not permit any of its Subsidiaries to, assign
any of its or its Subsidiaries' respective rights or obligations under any
Financing Document.

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                  Section 4.22 Books and Records, Inspection. The Issuer shall,
and shall cause each of its Subsidiaries to, maintain books and records in
accordance with GAAP and provide the Trustee, the Collateral Agent and the
Independent Engineer with reasonable inspection rights with respect to the
Projects and such books and records.

                  Section 4.23 Maintenance of Existence. The Issuer shall, and
shall cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve and keep in full force and effect its and their (i)
existence and good standing under the laws of their respective states of
organization, in accordance with their organizational documents (as the same may
be amended from time to time), (ii) qualification to do business in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business as conducted or proposed to be
conducted makes such qualification necessary and (iii) powers, rights (charter
and statutory), privileges, licenses and franchises with respect to the Projects
except where the failure to maintain any of the foregoing in clause (iii) could
not reasonably be expected to have a Material Adverse Effect.

                  Section 4.24 Additional Documents; Filings and Recordings. The
Issuer shall, and shall cause each of its Subsidiaries to, execute and deliver,
as requested by the Trustee or the Collateral Agent, such other documents as
shall reasonably be necessary or advisable in order to effect or protect the
rights and remedies of the Trustee or the Collateral Agent, as the case may be,
granted or provided for by the Security Documents to which the Issuer is a party
and to consummate the transactions contemplated therein. The Issuer shall, at
its own expense, take all reasonable actions (a) that are requested by the
Trustee or the Collateral Agent, or (b) that an Authorized Officer of the Issuer
has actual knowledge are necessary as a legal matter, to establish, maintain and
perfect the first priority security interests of Trustee and the Collateral
Agent in the Collateral, subject to Permitted Liens. Without limiting the
generality of the foregoing, the Issuer shall execute or cause to be executed
and shall file or cause to be filed such financing statements, continuation
statements, and fixture filings and such mortgages, or deeds of trust in all
places necessary or advisable to establish, maintain and perfect the Liens
purported to be provided for in the Security Documents, subject to Permitted
Liens.

                  Section 4.25 Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Issuer shall not, nor shall it permit any of its Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any of its Subsidiaries
to:

                  (a) pay dividends or make any other distributions on its
         Capital Stock to the Issuer or any of its Subsidiaries, or with respect
         to any other interest or participation in, or measured by, its profits,
         or pay any Indebtedness owed to the Issuer or any of its Subsidiaries;

                  (b) make loans or advances to the Issuer or any of its
         Subsidiaries; or

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                  (c) transfer any of its properties or assets to the Issuer or
         any of its Subsidiaries.

                  However, the preceding restrictions shall not apply to
encumbrances or restrictions existing under or by reason of:

                  (a) any of the Financing Documents;

                  (b) Applicable Law;

                  (c) customary non-assignment provisions in contracts,
         agreements, leases, permits or licenses entered into or issued in the
         ordinary course of business and consistent with past practices;

                  (d) purchase money obligations for property acquired in the
         ordinary course of business and Capital Lease Obligations that impose
         restrictions on the property purchased or leased of the nature
         described in clauses (a) and (c) of the preceding paragraph;

                  (e) Indebtedness incurred pursuant to clause (f) of the
         definition of Permitted Indebtedness; provided that the restrictions
         contained in the agreements governing such Indebtedness are not
         materially more restrictive, taken as a whole, than those contained in
         the agreements governing the Indebtedness being refinanced;

                  (f) Liens securing Indebtedness otherwise permitted to be
         incurred under Section 4.27 that limit the right of the debtor to
         dispose of the assets subject to such Liens or to use the proceeds of
         any such disposition; and

                  (g) restrictions on cash or other deposits or net worth
         imposed by customers under contracts entered into in the ordinary
         course of business.

                  Section 4.26 Budget And Expenditures. The Issuer shall, and
shall cause each of its Subsidiaries to, deliver, at its own expense, an annual
Operating Budget to the Trustee, the Collateral Agent and the Independent
Engineer at least 30 days prior to the beginning of each fiscal year of the
Issuer.

                  Section 4.27 Limitation on Liens. The Issuer shall not, and
shall not permit any of its Subsidiaries to, grant, create, incur or suffer to
exist any Liens upon any of its or their assets, except for the Permitted Liens.

                  Section 4.28 Compliance With Laws. The Issuer shall, and shall
cause each of its Subsidiaries to, comply with all applicable laws and
Governmental Approvals, except where non-compliance could not reasonably be
expected to have a Material Adverse Effect.

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                  Section 4.29 Operation and Maintenance. The Issuer shall, and
shall cause each of its Subsidiaries to, at all times maintain and operate each
Project in compliance with Prudent Industry Practices.

                  Section 4.30 Additional Subsidiaries; Bank Accounts. The
Issuer shall own at all times, directly or indirectly, 100% of the issued and
outstanding Capital Stock of each of its Subsidiaries. The Issuer shall own at
all times directly or indirectly, not less than 50% of the issued and
outstanding Capital Stock of Mammoth-Pacific. The Issuer shall not, and shall
not permit any of its Subsidiaries to, acquire or create any additional
Subsidiaries; provided, however, this shall not limit the Issuer's ability or
the ability of any Guarantor to create a Wholly-Owned Subsidiary that becomes a
Guarantor in accordance with Article IX of the Indenture by execution of a
Supplemental Indenture in the form of Exhibit G hereto on or prior to the date
of acquisition, to (i) acquire the Capital Stock of Mammoth-Pacific that the
Issuer does not own as of the Closing Date or (ii) acquire a Qualified Project
in accordance with the terms of this Indenture. The Issuer shall not, and shall
not permit any of its Subsidiaries to, establish any bank account other than the
Accounts and not more than two checking accounts (each, a "Checking Account"),
provided that the Secured Parties shall have a perfected security interest in
such Checking Accounts pursuant to an agreement which is reasonably satisfactory
to the Collateral Agent.

                  Section 4.31 Maintenance of Water Supply; Access Rights. The
Issuer shall, and shall cause its Subsidiaries to, at all times maintain in full
force and effect the agreements and other arrangements to ensure that (i) the
Projects have a constant and continuous supply of water to the extent necessary
to permit the operation of the Projects at levels contemplated in the
Projections and (ii) the Projects have such real estate rights as may be
necessary to ensure the ingress to and egress from each of the Projects.

                  Section 4.32 No Abandonment. The Issuer shall, and shall cause
its Subsidiaries not to permit the occurrence of any Event of Abandonment.

                  Section 4.33 Consents to Assignment of Unassigned Leases
Additional Project Documents. The Issuer shall, and shall cause its Subsidiaries
to, use its commercially reasonable efforts to obtain executed consents to the
assignment of each Unassigned Lease and each Additional Project Document.

                  Section 4.34 Loans. The Issuer shall not, and shall not permit
its Subsidiaries to, make any loan or advance other than in the ordinary course
of business (other than a loan or advance to a Guarantor that constitutes
Indebtedness owed to the Issuer and that is represented by an intercompany
note); provided, however, the Issuer may direct the investment of funds on
deposit in the accounts in Permitted Investments in accordance with the terms of
the Financing Documents.

                  Section 4.35 Amendments to Organizational Documents. The
Issuer shall not, and shall cause its Subsidiaries not to, amend, modify or
supplement its or their Organizational

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Documents except such amendments as (i) could not reasonably be expected to
result in a Material Adverse Effect and (ii) could not reasonably be expected to
adversely affect any provisions of such organizational documents that relate to
the bankruptcy remoteness of the Issuer.

                  Section 4.36 Removal of Independent Consultant. The Issuer
shall not remove or otherwise replace any of the Independent Consultants;
provided that any Independent Consultant may be replaced or removed by the
Issuer at any time (i) in the event that any such Independent Consultant shall
have become incapable of acting or performing its services, or otherwise fails
to perform its function as the Independent Consultant in the manner contemplated
by this Indenture and the other Financing Documents, or shall have been adjudged
bankrupt or insolvent, or a receiver of such Independent Consultant or of its
property shall have been appointed, or any public office shall have taken
control or charge of such Independent Consultant or its property or affairs for
the purpose of rehabilitation, conservation or liquidation at any time or (ii)
so long as the Issuer shall have certified to the Trustee (which certification
shall have been delivered by an Authorized Representative of the Issuer) that
the replacement Independent Consultant being retained to perform the services of
the removed or replaced Independent Consultant is properly qualified to perform
such services at least to the same degree, extent and quality as the replaced or
removed Independent Consultant and the same could not reasonably be expected to
materially adversely affect the rights of the Holders.

                  Section 4.37 Payments for Consent. The Issuer shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, pay or
cause to be paid any consideration to or for the benefit of any holder of Senior
Secured Obligations for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of any Financing Document unless such
consideration is offered to be paid and is paid to all Holders of Senior Secured
Notes that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

                  Section 4.38 Limitations on Ormesa. On the Ormesa Support
Date, the Issuer shall cause Ormesa to provide a Lien on substantially all of
its property in favor of the Collateral Agent (including, without limitation,
the consent of Southern California Edison) pursuant to the terms of the Security
Agreement and to execute a Guarantee in accordance with Article IX of this
Indenture by execution of a Supplemental Indenture in the form of Exhibit G
hereto. The Issuer shall not grant any Liens on the Capital Stock it holds of
Ormesa except to the Collateral Agent and shall not permit Ormesa to incur any
Indebtedness or become subject to any Lien other than the Liens contemplated in
this Section 4.38 and Liens under the Ormesa Credit Agreement.

                  Section 4.39 Limitation on Issuance and Sale of Capital Stock
of Subsidiaries. The Issuer shall not permit any of its Subsidiaries to
transfer, convey, sell or otherwise dispose of Capital Stock in any of its
Subsidiaries to any Person, other than the Issuer or one of the Guarantors.

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                  Section 4.40 Maintenance of Qualifying Facility Status. The
Issuer shall, and shall cause each of its Operating Subsidiaries to, operate and
maintain each Plant as a Qualifying Facility.

                  Section 4.41 Payment of taxes and claims. The Issuer shall and
shall cause each of its Subsidiaries to pay and discharge (a) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties before they shall become
delinquent, (b) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, could reasonably be expected to give rise to a Lien
upon any of its properties; and (c) except as prohibited under the Financing
Documents, all of its other Indebtedness as it shall become due; provided,
however, neither the Issuer nor its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy, claim or Indebtedness which is being
contested in good faith by appropriate proceedings, as to which adequate
reserves have been established in accordance with GAAP, unless the failure to
make such payment (i) could reasonably be expected to give rise to an immediate
right to foreclose on a Lien securing such amounts or (ii) could reasonably be
expected to have a Material Adverse Effect.

                  Section 4.42 Repayment of Ormesa Credit Agreement. As
consideration for the Lien and Guarantees to be provided by Ormesa pursuant to
Section 4.38 hereof, a portion of the proceeds of the Initial Notes shall be
deposited in the Ormesa Repayment Account and the Issuer shall use its
commercially reasonable efforts to cause the Ormesa Credit Agreement to be
repaid in full with proceeds from the Ormesa Repayment Account or otherwise in
accordance with the Depositary Agreement and cause all liabilities of Ormesa
under the Ormesa Credit Agreement to be discharged on or prior to January 31,
2005.

                  Section 4.43 Provision of Additional Liens. The Issuer shall
cause Liens to be provided in favor of the Collateral Agent and the relevant
Guarantor shall become party to the Security Documents with respect to (i) the
Mammoth Plant if, at any time, the Issuer or one of the Guarantors acquires that
portion of the Capital Stock of Mammoth-Pacific that the Issuer or the
Guarantors do not own as of the Closing Date, or the Issuer or one of the
Guarantors otherwise acquires control of 100% of the interests in the Mammoth
Plant and (ii) a Qualified Project upon an acquisition of a Qualified Project.

                  Section 4.44 Galena Re-powering. The Issuer shall, and shall
cause its Subsidiaries to, use their commercially reasonable efforts to effect
the Galena Re-Powering.

                  Section 4.45 Title Policies. The Issuer shall use its
commercially reasonable efforts to remove any survey exceptions with respect to
Title Policies.

                  Section 4.46 Preservation of Liens. The Issuer shall take all
actions and shall cause it Subsidiaries to take all actions necessary to
preserve the validity, perfection and priority of the Liens and security
interests in the Collateral created pursuant to the Security Documents.

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                  Section 4.47 Title Reports. In connection with all real estate
over which the Collateral Agent holds a Deed of Trust, the Issuer shall provide
to the Collateral Agent a title report and title policy, including endorsements,
or title opinion in form and substance satisfactory to the Collateral Agent, and
evidence that the Deed of Trust has been filed for recording; provided, that,
subject to Section 4.45 hereof, such title policies may contain a survey
exception.

                                   ARTICLE V

                              DEFAULTS AND REMEDIES

                  Section 5.01 Events of Default. The following events
constitute an "Event of Default" under this Indenture:

                  (a) the failure to pay or cause to be paid any principal of,
interest, premium, Liquidated Damages, if any, fees or any other obligations on
the Senior Secured Notes for five or more days after the same becomes due and
payable, whether by scheduled maturity or required prepayment or by acceleration
or otherwise;

                  (b) any representation or warranty made by the Issuer, any
Subsidiary or Ormat Nevada under any Financing Document shall prove to have been
untrue or misleading as of the time made, confirmed or furnished and the fact,
event or circumstance that gave rise to such inaccuracy has had or could
reasonably be expected to result in a Material Adverse Effect and such fact,
event or circumstance shall continue to be uncured for 30 or more days from the
date a Responsible Officer of the Issuer, such Subsidiary or Ormat Nevada, as
the case may be, obtains knowledge thereof; provided, that if the Issuer, such
Subsidiary or Ormat Nevada, as the case may be, commences efforts to cure such
fact, event or circumstance within such 30-day period, the Issuer, such
Subsidiary or Ormat Nevada, as the case may be, may continue to effect such cure
and such misrepresentation will not be deemed an Event of Default for an
additional 90 days so long as the Issuer, such Subsidiary or Ormat Nevada, as
the case may be, is diligently pursuing such cure;

                  (c) the failure by the Issuer or any Subsidiary to perform or
observe any covenant contained in Sections 4.06, 4.07, 4.09, 4.10, 4.11, 4.15,
4.16, 4.18, 4.19, 4.20, 4.23, 4.27 and 4.46 and such failure shall continue
uncured for 30 or more days after a Responsible Officer of the Issuer obtains
knowledge thereof;

                  (d) the failure by the Issuer, any Subsidiary or Ormat Nevada
to perform or observe any of the other covenants in the Financing Documents that
the Issuer, such Subsidiary or Ormat Nevada is a party to (other than such
failures described in clause (a) or (c) above) and such failure shall continue
uncured for 30 or more days after a Responsible Officer of the Issuer, any
Subsidiary or Ormat Nevada, as the case may be, obtains knowledge thereof;
provided that if the Issuer, any Subsidiary or Ormat Nevada, as the case may be,
commence efforts to cure such default within such 30-day period, the Issuer, any
Subsidiary or Ormat Nevada, as the case may

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                                                                         Page 73

be, may continue to effect such cure of the default and such default will not be
deemed an Event of Default for an additional 90 days so long as the Issuer, any
Subsidiary or Ormat Nevada, as the case may be, is diligently pursuing such
cure;

                  (e) the Issuer or any Subsidiary of the Issuer:

                     (i)   admits in writing its inability, or is generally
                           unable, to pay its debts as the debts become due
                           or makes a general assignment for the benefit of
                           creditors; or

                     (ii)  commences any case, proceeding or other action
                           seeking reorganization, arrangement, adjustment,
                           liquidation, dissolution or composition of it or its
                           debts under any applicable liquidation,
                           conservatorship, bankruptcy, moratorium, arrangement,
                           adjustment, insolvency, reorganization or similar
                           laws affecting the rights or remedies of creditors
                           generally, as in effect from time to time
                           (collectively, "Debtor Relief Law"); or

                     (iii) in any involuntary case, proceeding or other action
                           commenced against it which seeks to have an order for
                           relief (injunctive or otherwise) entered against it,
                           as debtor, or seeks reorganization, arrangement,
                           adjustment, liquidation, dissolution or composition
                           of it or its debts under any Debtor Relief Law, (A)
                           fails to obtain a dismissal of such case, proceeding
                           or other action within ninety (90) days of its
                           commencement, or (B) converts the case from one
                           chapter of the Bankruptcy Reform Act of 1978, as
                           amended, to another chapter, or (C) is the subject of
                           an order for relief that remains unstayed and in
                           effect for a period of ninety (90) days; or

                     (iv)  has a trustee, receiver, custodian or other official
                           appointed for or to take possession of all or any
                           part of its property or has any court take
                           jurisdiction of any of its property, which action
                           remains undismissed for a period of ninety (90) days;

                  (f) the entry of one or more final and non-appealable judgment
or judgments for the payment of money in excess of $10.0 million (exclusive of
judgment amounts covered by insurance) against the Issuer or any Subsidiary,
which remain unpaid or unstayed for a period of 60 or more consecutive days;

                  (g) an event of default under any Permitted Indebtedness
(other than Indebtedness referred to in clause (a) above) that results in
Indebtedness in excess of $10.0 million becoming due and payable prior to its
stated maturity;

                  (h) any Governmental Approval required for the operation of
any Project or any material portion thereof owned by the Issuer or any
Subsidiary is revoked, terminated,

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withdrawn or ceases to be in full force and effect if such revocation,
termination, withdrawal or cessation has had or could reasonably be expected to
have a Material Adverse Effect and such revocation, termination, withdrawal or
cessation is not cured within 60 days following the occurrence thereof;

                  (i) any Material Project Document or Third Party Consent or
any material provision thereof (i) ceases to be valid and binding and in full
force and effect prior to its stated maturity date other than as a result of an
amendment or termination permitted under this Indenture or (ii) a party thereto
fails to perform or observe any of its covenants or obligations thereunder or
makes any material misrepresentation thereunder and such event has had or could
reasonably be expected to have a Material Adverse Effect; provided that, in any
such event no such event shall be an Event of Default if within 180 days from
the occurrence of any such event, (a) such Material Project Document or Third
Party Consent or material provision thereof is reinstated as a valid and binding
agreement among the parties thereto, (b) any breaching party resumes performance
and otherwise cures such misrepresentation or failure to perform or observe its
covenants or obligations under the Material Project Documents or Third Party
Consents or (c) in the case of Material Project Documents, the Issuer enters
into an Additional Project Document in replacement thereof, as permitted under
this Indenture;

                  (j) any of the Security Documents or any other Financing
Document ceases to be in full force and effect or any Lien granted therein
ceases to be a valid and perfected Lien in favor of the Secured Parties on the
Collateral described therein with the priority purported to be created thereby;
provided, however, that the Issuer shall have 10 days after any of the Issuer or
its Subsidiaries' Responsible Officers obtains knowledge thereof to cure any
such cessation or to furnish to the Trustee, the Collateral Agent or the
Depositary all documents or instruments required to cure any such cessation;

                  (k) the occurrence of a Change of Control; or

                  (l) the failure of Ormesa to prepay all of the amounts
outstanding under the Ormesa Credit Agreement on or prior to January 31, 2005 or
the failure of the Issuer to cause Ormesa to comply with its obligations under
Sections 4.20 and 4.38 of this Indenture.

                  Section 5.02 Enforcement of Remedies

                  (a) If one or more Events of Default have occurred and are
continuing, then:

                  (i) in the case of an Event of Default described in clause (e)
         above with respect to the Issuer, the entire outstanding principal
         amount of the Senior Secured Notes, all interest and Liquidated
         Damages, if any, accrued and unpaid thereon, and all premium, if any,
         and other amounts payable under this Indenture, if any, shall
         automatically become due and payable without presentment, demand,
         protest or notice of any kind; or

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                  (ii) in the case of an Event of Default described in:

                           (A)      clause (a) above, upon the written direction
                                    of the Holders of no less than 25% in
                                    aggregate principal amount of the
                                    Outstanding Senior Secured Notes, the
                                    Trustee shall declare the outstanding
                                    principal amount of the Senior Secured Notes
                                    to be accelerated and due and payable and
                                    all interest and Liquidated Damages, if any,
                                    accrued and unpaid thereon, and all premium,
                                    if any, and other amounts payable under this
                                    Indenture, if any, to be due and payable; or

                           (B)      clause (b), (c), (d), (e) (with respect to
                                    our Subsidiaries), (f), (g), (h), (i), (j),
                                    (k) or (l) above, upon the written direction
                                    of the Required Holders, the Trustee shall
                                    declare the outstanding principal amount of
                                    the Senior Secured Notes to be accelerated
                                    and due and payable and all interest and
                                    Liquidated Damages, if any, accrued and
                                    unpaid thereon, and all premium, if any, and
                                    other amounts payable under this Indenture,
                                    if any, to be due and payable.

                  (b) At any time after the principal of the Senior Secured
Notes has become due and payable upon a declared acceleration, and before any
judgment or decree for the payment of the money so due, or any portion thereof,
has been entered, the Required Holders, by written notice to the Issuer and the
Trustee, shall rescind and annul such declaration and its consequences if:

                  (i) there has been paid to or deposited with the Trustee a sum
         sufficient to pay

                           (A)      all overdue interest and Liquidated Damages,
                                    if any, on the Senior Secured Notes,

                           (B)      the principal of and premium, if any, on any
                                    Senior Secured Notes that have become due
                                    (including overdue principal) other than by
                                    such declaration of acceleration and
                                    interest thereon at the respective rates
                                    provided in the Senior Secured Notes for
                                    overdue principal;

                           (C)      to the extent that payment of such interest
                                    is lawful, interest upon overdue interest
                                    and Liquidated Damages, if any, at the
                                    respective rates provided in the Senior
                                    Secured Notes for overdue interest; and

                           (D)      all sums paid or advanced by the Trustee and
                                    the Collateral Agent and the reasonable
                                    compensation, expenses, disbursements, and

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                                                                         Page 76

                                    advances of the Trustee, the Depositary, the
                                    Collateral Agent and their respective agents
                                    and counsel; and

                  (ii) all Events of Default, other than the nonpayment of the
         principal of the Senior Secured Notes that has become due solely by
         such acceleration, have been cured or waived in accordance with this
         Indenture.

                  (c) If an Event of Default has occurred and is continuing and
an acceleration has occurred, the Trustee may (as the Required Holders request)
direct the Collateral Agent to take possession of any or all of the Collateral
or to exercise any or all other rights of the Secured Parties under the Security
Documents.

                  If an Event of Default occurs and is continuing and is
actually known to a Responsible Officer of the Trustee, the Trustee will mail to
each Holder notice of the Event of Default within 30 days after the occurrence
thereof. Except in the case of an Event of Default in payment of principal of,
interest, premium or Liquidated Damages, if any, on any Senior Secured Note, the
Trustee may withhold the notice to the Holders if the Trustee in good faith
determines that withholding the notice is in the interest of the Holders.

                  If an Event of Default relating to failure to pay amounts owed
on the Senior Secured Notes has occurred and is continuing, the Trustee may
declare the principal amount of the Outstanding Senior Secured Notes, all
interest accrued and unpaid thereon, and all premium and Liquidated Damages, if
any, and other amounts payable under the Senior Secured Notes and this
Indenture, if any, to be due and payable notwithstanding the absence of written
direction from Holders of at least 25% in aggregate principal amount of the
Outstanding Senior Secured Notes directing the Trustee in writing to accelerate
the principal maturity of the Senior Secured Notes, unless the Required Holders
direct the Trustee not to accelerate the maturity of such Senior Secured Notes,
if in the good faith exercise of its discretion the Trustee determines that such
action is necessary to protect the interests of the Holders.

                  In addition, if one or more of the Events of Default referred
to in clause (a)(ii)(B) of this Section 5.02 has occurred and is continuing, the
Trustee may declare the entire principal amount of the Outstanding Senior
Secured Notes, all interest accrued and unpaid thereon, and all premium and
Liquidated Damages, if any, and other amounts payable under the Senior Secured
Notes and this Indenture, if any, to be due and payable notwithstanding the
absence of written direction from the Required Holders directing the Trustee to
accelerate the maturity of the Senior Secured Notes, unless the Required Holders
direct the Trustee not to accelerate the maturity of the Senior Secured Notes,
if in the good faith exercise of its discretion the Trustee determines that such
action is necessary to protect the interests of the Holders.

                  Section 5.03 Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal, interest, premium, and Liquidated Damages, if any, on the
Senior Secured Notes or to enforce the performance of any provision of the
Senior Secured Notes or this Indenture.

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                                                                         Page 77

                  The Trustee may maintain a proceeding even if it does not
possess any of the Senior Secured Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Senior Secured
Note in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.

                  Section 5.04 Waiver of Past Defaults. Required Holders by
notice to the Trustee may on behalf of the Holders of all of the Senior Secured
Notes waive an existing Default or Event of Default and its consequences
hereunder, except a continuing Default or Event of Default in the payment of the
principal of, premium, Liquidated Damages if any, or interest on, the Senior
Secured Notes; provided, however, that the Required Holders may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.

                  Section 5.05 Control by Majority. The Required Holders have
the right to direct the time, place and method of conducting any proceeding for
any right or remedy available to the Trustee or exercising any trust or power
conferred on the Trustee in this Indenture.

                  Section 5.06 Limitation on Suits. A Holder of a Senior Secured
Note may pursue a remedy with respect to this Indenture or the Senior Secured
Notes only if:

                  (a) the Holder of a Senior Secured Note gives to the Trustee
written notice of a continuing Event of Default;

                  (b) the Holders of at least 25% in aggregate principal amount
of the then outstanding Senior Secured Notes make a written request to the
Trustee to pursue the remedy;

                  (c) such Holder of a Senior Secured Note or Holders of Senior
Secured Notes offer and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;

                  (d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and

                  (e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Senior Secured Notes do not give the
Trustee a direction inconsistent with the request.

                  A Holder of a Senior Secured Note may not use this Indenture
to prejudice the rights of another Holder of a Senior Secured Note or to obtain
a preference or priority over another Holder of a Senior Secured Note.

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                                                                         Page 78

                  Section 5.07 Rights of Holders of Senior Secured Notes to
Receive Payment. Notwithstanding any other provision of this Indenture, the
right of any Holder of a Senior Secured Note to receive payment of principal,
premium, Liquidated Damages if any, and interest on the Senior Secured Notes, on
or after the respective due dates expressed in the Senior Secured Notes
(including in connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.

                  Section 5.08 Collection Suit by Trustee. If an Event of
Default specified in Section 5.01(a) occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Issuer for the whole amount of principal of, premium,
Liquidated Damages if any, and interest remaining unpaid on the Senior Secured
Notes and interest on overdue principal and, to the extent lawful, interest,
Liquidated Damages and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

                  Section 5.09 Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders of the Senior Secured Notes
allowed in any judicial proceedings relative to the Issuer (or any other obligor
upon the Senior Secured Notes), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 6.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Senior Secured Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

                  Section 5.10 Priorities. If the Trustee collects any money
pursuant to this Article, it shall be applied to amounts owed with respect to
all Senior Secured Notes and will be applied ratably to the Holders of Senior
Secured Notes in the following order from time to time (to the extent such order
does not conflict with Section 5 of the Collateral Agency Agreement),

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                                                                         Page 79

on the date or dates fixed by the Trustee: (i) first, to the payment of all
amounts due to the Trustee or any predecessor Trustee under this Indenture; (ii)
second; (A) in case the unpaid principal amount of the Outstanding Senior
Secured Notes has not become due, to the payment of any overdue interest, (B) in
case the unpaid principal amount of a portion of the Outstanding Senior Secured
Notes has become due, first to the payment of accrued interest and Liquidated
Damages, if any, on all Outstanding Senior Secured Notes for overdue principal,
premium, Liquidated Damages if any, and overdue interest, and next to the
payment of the overdue principal on all Senior Secured Notes or (C) in case the
unpaid principal amount of all the Outstanding Senior Secured Notes has become
due, first to the payment of the whole amount then due and unpaid upon the
Outstanding Senior Secured Notes for principal, premium, Liquidated Damages if
any, and interest, together with interest for overdue principal, premium,
Liquidated Damages if any, and overdue interest; and (iii) third, in case the
unpaid principal amount of all the Outstanding Senior Secured Notes has become
due, and all of the outstanding principal, premium, Liquidated Damages if any,
interest and other amounts owed in connection with the Senior Secured Notes have
been fully paid, any surplus then remaining will be paid to the Issuer, or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.

                  The Trustee may fix a record date and payment date for any
payment to Holders of Senior Secured Notes pursuant to this Section 5.10.

                  Section 5.11 Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder of a Senior Secured Note pursuant to
Section 5.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Senior Secured Notes.

                                   ARTICLE VI

                                     TRUSTEE

                  Section 6.01 Duties of Trustee.

                  (a) If an Event of Default actually known to a Responsible
Trust Officer has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.

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                                                                         Page 80

                  (b) Except during the continuance of an Event of Default:

                  (i) the duties of the Trustee shall be determined solely by
         the express provisions of this Indenture and the Trustee need perform
         only those duties that are specifically set forth in this Indenture and
         no others, and no implied covenants or obligations shall be read into
         this Indenture against the Trustee; and

                  (ii) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. However, the Trustee shall examine the certificates and
         opinions to determine whether or not they conform to the requirements
         of this Indenture.

                  (c) The Trustee may not be relieved from liabilities for its
own grossly negligent action, its own negligent failure to act, or its own
willful misconduct, except that:

                  (i) this paragraph does not limit the effect of paragraph (b)
         of this Section;

                  (ii) the Trustee shall not be liable for any error of judgment
         made in good faith by a Responsible Trust Officer, unless it is proved
         that the Trustee was grossly negligent in ascertaining the pertinent
         facts; and

                  (iii) the Trustee shall not be liable with respect to any
         action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 6.05 hereof.

                  (d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.

                  (e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.

                  (f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer. Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.

                  Section 6.02 Rights of Trustee.

                  (a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.

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                                                                         Page 81

                  (b) Before the Trustee acts or refrains from acting, it may
require and shall be entitled to an Officer's Certificate or an Opinion of
Counsel or both. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers' Certificate or Opinion
of Counsel. The Trustee may consult with counsel and the advice, promptly
confirmed in writing thereafter, of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

                  (c) The Trustee may act through its attorneys, custodians,
nominees and agents and shall not be responsible for the misconduct or
negligence of any agent, attorney, custodian or nominee appointed with due care.

                  (d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.

                  (e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Issuer shall be sufficient if
signed by an Officer of the Issuer.

                  (f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.

                  (g) In no event shall the Trustee be required to take notice
of any default or breach hereof or any Event of Default hereunder, except for
Events of Default specified in Section 5.01(a) hereof, unless and until the
Trustee shall have received from a Holder or from the Issuer express written
notice of the circumstances constituting the breach, default or Event of Default
and stating that said circumstances constitute an Event of Default hereunder.

                  (h) If the Trustee is acting as Paying Agent, Registrar,
Collateral Agent, Depositary Agent or Securities Intermediary hereunder, the
rights and protections afforded to the Trustee pursuant to this Article VI
(other than the Trustee's right to require, and entitlement to, an Opinion of
Counsel pursuant to Section 6.02(b) hereof) will also be afforded to such Paying
Agent, Registrar, Collateral Agent, Depositary Agent and Securities
Intermediary.

                  Section 6.03 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Senior
Secured Notes and may otherwise deal with the Issuer or any Affiliate of the
Issuer with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 6.10 and 6.11 hereof.

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                                                                         Page 82

                  Section 6.04 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Senior Secured Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Senior Secured Notes or any money paid to
the Issuer or upon the Issuer's direction under any provision of this Indenture,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Security Documents, the
Senior Secured Notes or any other document in connection with the sale of the
Senior Secured Notes or pursuant to this Indenture other than its certificate of
authentication.

                  The Trustee makes no representations as to and shall not be
responsible for the existence, genuineness, value, sufficiency or condition of
any of the Collateral or as to the security afforded or intended to be afforded
thereby, hereby or by any Security Document, or for the validity, perfection,
priority or enforceability of the Liens or security interests in any of the
Collateral created or intended to be created by any of the Security Documents,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder, except to the extent such action or omission
constitutes gross negligence or willful misconduct on the part of the Trustee,
for the validity of the title of the Issuer to the Collateral, for insuring the
Collateral or for the payment of taxes, charges, assessments or Liens upon the
Collateral or otherwise as to the maintenance of the Collateral.

                  References to the Trustee in this Section 6.04 shall include
the Trustee in its role as a Collateral Agent.

                  Section 6.05 Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if it is actually known to a Responsible
Trust Officer, or if appropriate notice is provided in writing in accordance
with Section 6.02(g), as applicable, the Trustee shall mail to Holders of Senior
Secured Notes a notice of the Default or Event of Default within 30 days after
it occurs. Except in the case of a Default or Event of Default in payment of
principal of, premium, Liquidated Damages, if any, or interest on any Senior
Secured Note, the Trustee may withhold the notice if and so long as a committee
of its Responsible Trust Officers in good faith determines that withholding the
notice is in the interests of the Holders of the Senior Secured Notes.

                  Section 6.06 Reports by Trustee to Holders of the Senior
Secured Notes.

                  (a) Within 60 days after each May 15 beginning with the May 15
following the date hereof, and for so long as any Senior Secured Notes remain
outstanding, the Trustee shall mail to the Holders of the Senior Secured Notes a
brief report dated as of such reporting date that complies with TIA (section)
313(a) (but if no event described in TIA (section) 313(a) has occurred within
the twelve months preceding the reporting date, no report need be transmitted).
The Trustee also shall comply with TIA (section) 313(b)(2). The Trustee shall
also transmit by mail all reports as required by TIA (section) 313(c).

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                                                                         Page 83

                  (b) A copy of each report at the time of its mailing to the
Holders of Senior Secured Notes shall be mailed to the Issuer and filed with the
SEC and each stock exchange on which the Senior Secured Notes are listed in
accordance with TIA (section) 313(d). The Issuer shall promptly notify the
Trustee in writing when the Senior Secured Notes are listed on any stock
exchange.

                  Section 6.07 Compensation and Indemnity.

                  (a) The Issuer shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder as is now or hereafter agreed to in writing by the Issuer and the
Trustee. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuer shall reimburse the
Trustee promptly upon request for all reasonable and properly documented
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable and
properly documented fees, disbursements and expenses of the Trustee's agents and
counsel.

                  (b) The Issuer shall indemnify the Trustee against any and all
losses, liabilities, damages or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture and the other Financing Documents, including the costs and expenses of
enforcing this Indenture against the Issuer (including this Section 6.07) and
defending itself against any claim (whether asserted by the Issuer or any Holder
or any other person) or liability in connection with the exercise or performance
of any of its powers or duties hereunder or in connection with the storage, use,
presence, disposal or release of any Hazardous Substance on, under or about any
properties encumbered by the Deeds of Trust, except to the extent any such loss,
liability or expense may be attributable to its gross negligence or bad faith.
The Trustee shall notify the Issuer promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuer shall not relieve the
Issuer of its obligations hereunder. The Issuer shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
(reasonably acceptable to the Issuer) and the Issuer shall pay the reasonable
fees and expenses of such counsel. The Issuer need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.

                  (c) The obligations of the Issuer under this Section 6.07
shall survive the satisfaction and discharge of this Indenture.

                  (d) To secure the Issuer's payment obligations in this
Section, the Trustee shall have a Lien prior to the Senior Secured Notes on all
money or property held or collected by the Trustee, except that held in trust to
pay principal, interest, premium and Liquidated Damages, if any, on particular
Senior Secured Notes.

                  (e) When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 5.01(e) hereof occurs, the expenses and
the compensation for the

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                                                                         Page 84

services (including the fees and expenses of its agents and counsel) are
intended to constitute expenses of administration under any Bankruptcy Law.

                  (f) The Trustee shall comply with the provisions of TIA
(section) 313(b)(2) to the extent applicable.

                  (g) The provisions of this Section 6.07 shall extend to the
Trustee acting in the capacities of Paying Agent and Registrar, Collateral
Agent, Depositary Agent and Securities Intermediary under this Indenture and the
other Financing Documents.

                  Section 6.08 Replacement of Trustee.

                  (a) A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.

                  (b) The Trustee may resign in writing at any time and be
discharged from the trust hereby created by giving thirty (30) days written
notice to the Issuer. The Required Holders may remove the Trustee by so
notifying the Trustee and the Issuer in writing. The Issuer may remove the
Trustee if:

                  (i) the Trustee fails to meet the eligibility criteria set
         forth in this Indenture;

                  (ii) the Trustee is adjudged a bankrupt or an insolvent or an
         order for relief is entered with respect to the Trustee under any
         bankruptcy law;

                  (iii) no Default or Event of Default on our part has occurred
         and is continuing and the Trustee has failed to observe or perform any
         of its material obligations under the Financing Documents;

                  (iv) a custodian or public officer takes charge of the Trustee
         or its property; or

                  (v) the Trustee becomes incapable of acting.

                  (c) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Issuer shall promptly
appoint a successor Trustee. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the then outstanding
Senior Secured Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Issuer.

                  (d) The Issuer shall give notice of each resignation and
removal of the Trustee and each appointment of a successor to all Holders.

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                  (e) If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuer, or the Holders of Senior Secured Notes of at least 10% in principal
amount of the then outstanding Senior Secured Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

                  (f) If the Trustee, after written request by any Holder of a
Senior Secured Note who has been a Holder of a Senior Secured Note for at least
six months, fails to comply with Section 6.10, such Holder of a Senior Secured
Note may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

                  (g) A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Senior Secured Notes. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
provided all sums owing to the Trustee hereunder have been paid and subject to
the Lien provided for in Section 6.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 6.08, the Issuer's obligations under Section
6.07 hereof shall continue for the benefit of the retiring Trustee.

                  (h) If a Trustee is removed with or without cause, all fees
and expenses (including the reasonable fees and expenses of counsel) of the
Trustee incurred in the administration of the trust or in performing of the
duties hereunder shall be paid to the Trustee.

                  Section 6.09 Successor Trustee by Merger, etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.

                  Section 6.10 Eligibility; Disqualification. There will at all
times be a Trustee under this Indenture, which shall be a corporation having
either (a) a combined capital and surplus of at least $50.0 million, or (b) a
combined capital and surplus of at least $10.0 million and being a Wholly-Owned
Subsidiary of a corporation having a combined capital and surplus of at least
$50.0 million, in each case subject to supervision or examination by a federal
or state or District of Columbia authority and having a corporate trust office
in New York, New York, to the extent there is such an institution eligible and
willing to serve.

                  This Indenture shall always have a Trustee who satisfies the
requirements of TIA (section) 310(a)(1), (2) and (5). The Trustee is subject to
TIA (section) 310(b).

                  Section 6.11 Preferential Collection of Claims Against the
Issuer. The Trustee is subject to TIA (section) 311(a), excluding any creditor
relationship listed in TIA (section) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (section) 311(a) to the extent indicated
therein.

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                  Section 6.12 Receipt of Documents. In no event shall receipt
by the Trustee of financial and other reports from the Issuer as provided in
this Indenture, review of which could lead to the conclusion that an Event of
Default exists hereunder, result, without further action, in the occurrence of
an Event of Default, or impose upon the Trustee the obligation to review and
examine the same, it being understood that all such information shall be
received by the Trustee as repository for said information and documents with no
obligation on the part of the Trustee to review the same.

                                  ARTICLE VII

                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

                  Section 7.01 Option to Effect Legal Defeasance or Covenant
Defeasance. The Issuer may, at its option evidenced by a resolution set forth in
an Officers' Certificate, at any time, elect to have either Section 7.02 or 7.03
hereof be applied to all outstanding Senior Secured Notes and all obligations of
the Guarantors with respect to their Guarantees upon compliance with the
conditions set forth below in this Article VII.

                  Section 7.02 Legal Defeasance and Discharge. Upon the Issuer's
exercise under Section 7.01 hereof of the option applicable to this Section
7.02, the Issuer shall, subject to the satisfaction of the conditions set forth
in Section 7.04 hereof, be deemed to have been discharged from its obligations
with respect to all outstanding Senior Secured Notes and the Guarantors shall be
deemed to be discharged from all of their obligations with respect to their
Guarantees and the Collateral Agent shall release all of its liens on the
Collateral other than pursuant to Section 7.04(a) hereof, on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, Legal Defeasance means that the Issuer shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Senior Secured Notes and the Guarantees, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 7.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Senior Secured Notes, the
Guarantees and this Indenture (and the Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments acknowledging the same), except
for the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Senior Secured
Notes to receive payments in respect of the principal of, or interest or premium
and Liquidated Damages, if any, on such Senior Secured Notes when such payments
are due from the trust referred to below, (b) the Issuer's obligations with
respect to the Senior Secured Notes concerning issuing temporary Senior Secured
Notes, registration of Senior Secured Notes, replacing mutilated, destroyed,
lost or stolen Senior Secured Notes and the maintenance of an office or agency
for payment and money for security payments held in trust, (c) the rights,
powers, trusts, duties and immunities of the trustee, and our and the
Guarantors' obligations in connection therewith, and (d) this Article VII.
Subject to compliance with this Article VII, the Issuer may exercise its option
under this Section 7.02 notwithstanding the prior exercise of its option under
Section 7.03 hereof.

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                  Section 7.03 Covenant Defeasance. Upon the Issuer's exercise
under Section 7.01 hereof of the option applicable to this Section 7.03, the
Issuer shall and the Guarantors shall, subject to the satisfaction of the
conditions set forth in Section 7.04 hereof, be released from their obligations
under any of the covenants contained in this Indenture other than under Sections
4.01, 4.02, 4.03, 4.05 and clauses (i) and (ii) of Section 4.23 hereof with
respect to the outstanding Senior Secured Notes and may terminate the Liens of
the Security Documents on the Collateral to the extent that such Liens run to
the benefit of the Trustee, the Holders or other agents under any of the
Security Documents on and after the date the conditions set forth in Section
7.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Senior Secured
Notes and all obligations of the Guarantors with respect to the Guarantees shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Senior Secured Notes and all obligations of the Guarantors with respect to the
Guarantees shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Senior
Secured Notes, the Issuer and the Guarantors may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 5.01 hereof, but, except as specified above, the remainder of this
Indenture and such Senior Secured Notes shall be unaffected thereby. In
addition, upon the Issuer's exercise under Section 7.01 hereof of the option
applicable to this Section 7.03 hereof, subject to the satisfaction of the
conditions set forth in Section 7.04 hereof, Sections 5.01(b) through 5.01(d)
and Sections 5.01(g) through 5.01(l) hereof shall not constitute Events of
Default.

                  Section 7.04 Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 7.02 or
7.03 hereof to the outstanding Senior Secured Notes:

                  In order to exercise either Legal Defeasance or Covenant
Defeasance:

                  (a) the Issuer must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
shall be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium and Liquidated
Damages, if any, and interest on the outstanding Senior Secured Notes on the
stated date for payment thereof or on the applicable Redemption Date, as the
case may be, and the Issuer must specify whether the Senior Secured Notes are
being defeased to maturity or to a particular redemption date;

                  (b) in the case of an election under Section 7.02 hereof, the
Issuer shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Issuer has
received from, or there has been published by, the

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Internal Revenue Service a ruling or (B) since the date hereof, there has been a
change in the applicable federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that, the Holders
of the outstanding Senior Secured Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;

                  (c) in the case of an election under Section 7.03 hereof, the
Issuer shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Senior Secured Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred;

                  (d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Senior Secured Notes pursuant to this
Article 7 concurrently with such incurrence);

                  (e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Issuer is a
party or by which the Issuer is bound;

                  (f) the Issuer shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Issuer with
the intent of preferring the Holders over any other creditors of the Issuer or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Issuer; and

                  (g) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.

                  Section 7.05 Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions. Subject to Section 7.06 hereof,
all money and non-callable Government Securities (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 7.05, the "Trustee") pursuant to Section 7.04
hereof in respect of the outstanding Senior Secured Notes shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Senior
Secured Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may
determine, to the Holders of such Senior Secured Notes of all sums due and to
become due thereon in respect of principal, premium, Liquidated Damages, if any,
and interest, but such money need not be segregated from other funds except to
the extent required by law.

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                  The Issuer shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 7.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Senior
Secured Notes.

                  Anything in this Article VII to the contrary notwithstanding,
the Trustee shall deliver or pay to the Issuer from time to time upon the
request of the Issuer any money or non-callable Government Securities held by it
as provided in Section 7.04 hereof which, in the opinion of a nationally
recognized investment bank or firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 7.04(a) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.

                  Section 7.06 Repayment to Issuer. Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium, Liquidated Damages, if any, or interest on
any Senior Secured Note and remaining unclaimed for two years after such
principal, and premium, Liquidated Damages, if any, or interest has become due
and payable shall be paid to the Issuer on its request or (if then held by the
Issuer) shall be discharged from such trust; and the Holder of such Senior
Secured Note shall thereafter, as a secured creditor, look only to the Issuer
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Issuer as trustee thereof,
shall thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Issuer cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining shall be repaid to the Issuer.

                  Section 7.07 Reinstatement. If the Trustee or Paying Agent is
unable to apply any United States dollars or non-callable Government Securities
in accordance with Section 7.02 or 7.03 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuer's
obligations under this Indenture and the Senior Secured Notes shall be revived
and reinstated as though no deposit had occurred pursuant to Section 7.02 or
7.03 hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 7.02 or 7.03 hereof, as the case may
be; provided, however, that, if the Issuer makes any payment of principal of,
premium, Liquidated Damages, if any, or interest on any Senior Secured Note
following the reinstatement of its obligations, the Issuer shall be subrogated
to the rights of the Holders of such Senior Secured Notes to receive such
payment from the money held by the Trustee or Paying Agent.

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                                  ARTICLE VIII

                        AMENDMENT, SUPPLEMENT AND WAIVER

                  Section 8.01 Without Consent of Holders of Senior Secured
Notes. Notwithstanding Section 8.02 of this Indenture, the Issuer and the
Trustee may amend or supplement this Indenture and any of the other Financing
Documents without the consent of any Holder of a Senior Secured Note:

                  (a) to cure any ambiguity, defect or inconsistency;

                  (b) to add additional covenants of the Issuer or its
Subsidiaries, to surrender rights conferred upon the Issuer or its Subsidiaries,
or to confer additional benefits upon the Holders;

                  (c) to increase the assets securing the Issuer's obligations
under this Indenture;

                  (d) to allow any Subsidiary to execute a Supplemental
Indenture and/or Guarantee with respect to the Senior Secured Notes;

                  (e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the Trust Indenture Act;

                  (f) to make any change not inconsistent with the terms of this
Indenture that does not adversely affect the legal rights thereunder of any
Holder of the Senior Secured Notes; or

                  (g) to establish the form and terms of Senior Secured Notes of
any series permitted by Sections 2.01 and 2.03.

                  Upon the request of the Issuer accompanied by a resolution of
the Issuer's Board of Directors authorizing the execution of any such amended or
supplemental Indenture or amendments to the other Financing Documents, and upon
receipt by the Trustee of the documents described in Section 6.02 hereof, the
Trustee and the Collateral Agent shall join with the Issuer in the execution of
any amended or supplemental Indenture and any amendment to any of the other
Financing Documents authorized or permitted by the terms of this Indenture and
to make any further appropriate agreements and stipulations that may be therein
contained, but the Trustee and the Collateral Agent shall not be obligated to
enter into such amended or supplemental Indenture or amendments to the Financing
Documents that affects its own rights, duties, immunities, or indemnities under
this Indenture or otherwise.

                  Section 8.02 With Consent of Holders of Senior Secured Notes.
Except as provided below in this Section 8.02, the Issuer and the Trustee may
amend or supplement this Indenture (including Section 4.23 hereof) and the other
Financing Documents with the consent of the Required Holders voting as a single
class (including consents obtained in connection with a

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tender offer or exchange offer for, or purchase of, the Senior Secured Notes),
and, subject to Sections 5.04 and 5.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, Liquidated Damages, if any, or interest on the Senior
Secured Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture or the other
Financing Documents may be waived with the consent of the Required Holders
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Senior Secured Notes);
provided, however, that if there shall be Senior Secured Notes of more than one
series Outstanding hereunder and if a proposed supplemental indenture shall
directly affect the rights of the Holders of one or more, but less than all, of
such series, then the consent only of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Senior Secured Notes of all series
so directly affected, considered as one class, shall be required. Section 2.08
hereof shall determine which Senior Secured Notes are considered to be
"outstanding" for purposes of this Section 8.02.

                  Upon the request of the Issuer accompanied by a resolution of
the Issuer's Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Senior Secured
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 6.02 hereof, the Trustee shall join with the Issuer in the execution
of such amended or supplemental Indenture and amendments to the other Financing
Documents unless such amended or supplemental Indenture or amendments to the
Financing Documents directly affects the Trustee's own rights, duties,
immunities or indemnities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture or such amendments.

                  It shall not be necessary for the consent of the Holders of
Senior Secured Notes under this Section 8.02 to approve the particular form of
any proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.

                  After an amendment, supplement or waiver under this Section
becomes effective, the Issuer shall mail to the Holders of Senior Secured Notes
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Issuer to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such amended
or supplemental Indenture or waiver or amendments to the Financing Documents.
Subject to Sections 5.04 and 5.07 hereof, the Required Holders may waive
compliance in a particular instance by the Issuer with any provision of this
Indenture or the Senior Secured Notes. However, without the consent of all
Holders of Outstanding Senior Secured Notes directly affected thereby, an
amendment or waiver under this Section 8.02 may not (with respect to any such
Senior Secured Notes held by a non-consenting Holder):

                  (a) modify the principal, interest, premium or Liquidated
Damages, if any, payable upon the Senior Secured Notes;

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                  (b) modify the dates on which principal, interest, premium and
Liquidated Damages, if any, on any Senior Secured Notes are paid;

                  (c) release any Guarantor from its obligations under a
Guarantee;

                  (d) modify the dates of maturity of any Senior Secured Notes;
and

                  (e) make any change in the preceding procedures for amendment,
supplement or waiver.

                  This Indenture and the other Security Documents may be amended
or supplemented to provide for the release of Collateral, by the Issuer and the
Trustee, with the consent of Holders of not less than 66% of the Outstanding
Senior Secured Notes.

                  A supplemental indenture that changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Senior Secured Notes,
or which modifies the rights of the Holders of Senior Secured Notes of such
series with respect to such covenant or other provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Senior Secured Notes of
any other series.

                  Upon the request of the Issuer accompanied by a resolution of
the issuer's Board of Directors authorizing the execution of any such amended or
supplemental Indenture or amendments to the other Financing Documents, and upon
receipt by the Trustee of the documents described in Section 6.02 hereof, the
Trustee and the Collateral Agent shall join with the Issuer in the execution of
any amended or supplemental Indenture and any amendment to any of the other
Financing Documents authorized or permitted by the terms of this Indenture and
to make any further appropriate agreements and stipulations that may be therein
contained, but the Trustee and the Collateral Agent shall not be obligated to
enter into such amended or supplemental Indenture or amendments to the Financing
Documents that affects its own rights, duties, immunities, or indemnities under
this Indenture or otherwise.

                  It shall not be necessary for any act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such act shall approve the substance thereof.

                  Section 8.03 Revocation and Effect of Consents. Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Senior Secured Note is a continuing consent by the Holder of a Senior
Secured Note and every subsequent Holder of a Senior Secured Note or portion of
a Senior Secured Note that evidences the same debt as the consenting Holder's
Senior Secured Note, even if notation of the consent is not made on any Senior
Secured Note. However, any such Holder of a Senior Secured Note or subsequent
Holder of a Senior Secured Note may revoke the consent as to its Senior Secured
Note if the Trustee receives written notice of revocation before the date the
waiver, supplement or amendment

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becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.

                  Section 8.04 Notation on or Exchange of Senior Secured Notes.
The Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Senior Secured Note thereafter authenticated. The Issuer in
exchange for all Senior Secured Notes may issue and the Trustee shall, upon
receipt of an Authentication Order, authenticate new Senior Secured Notes that
reflect the amendment, supplement or waiver.

                  Failure to make the appropriate notation or issue a new Senior
Secured Note shall not affect the validity and effect of such amendment,
supplement or waiver.

                  Section 8.05 Trustee to Sign Amendments, etc. The Trustee and
the Collateral Agent shall sign any amended or Supplemental Indenture and
amendments to the other Financing Documents authorized pursuant to this Article
VIII if the amendment or supplement does not adversely affect the rights,
duties, liabilities, immunities or indemnities of the Trustee or the Collateral
Agent. The Issuer may not sign an amendment or Supplemental Indenture until its
shareholders approve it. In executing any amended or Supplemental Indenture or
amendments to the other Financing Documents, the Trustee and the Collateral
Agent shall be entitled to receive and (subject to Section 6.01 hereof) shall be
fully protected in relying upon, in addition to the documents required by
Section 10.04 hereof, an Officer's Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture or amendment to the
other Financing Documents is authorized or permitted by this Indenture.

                  Section 8.06 Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by any Series Supplemental
Indenture or other supplemental indenture permitted by this Article VIII or the
modifications thereby of the trusts created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Sections 6.01 and 6.02) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture.

                  Section 8.07 Effect of Supplemental Indentures. Upon the
execution of any Supplemental Indenture under this Article VIII, this Indenture
shall be modified in accordance therewith, and such Supplemental Indenture shall
form a part of this Indenture for all purposes; and every Holder of Senior
Secured Notes theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

                  Section 8.08 Conformity with Trust Indenture Act. Every
Supplemental Indenture executed pursuant to this Article VIII shall conform to
the requirements of the Trust Indenture Act as then in effect.

                  Section 8.09 Reference in Senior Secured Notes to Supplemental
Indentures. Senior Secured Notes authenticated and delivered after the execution
of any Supplemental Indenture pursuant to this Article VIII may, and shall if
required by the Issuer, bear a notation in

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                                                                         Page 94

form approved by the Issuer as to any matter provided for in such Supplemental
Indenture; and, in such case, suitable notation may be made upon Outstanding
Senior Secured Notes after proper presentation and demand. If the Issuer shall
so determine, new Senior Secured Notes so modified as to conform, in the opinion
of the Issuer and the Trustee, to any such Supplemental Indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Trustee in exchange for Outstanding Senior Secured Notes.

                                   ARTICLE IX

                                    GUARANTEE

                  Section 9.01 Agreement to Guarantee.

                  (a) Each of the Guarantors, hereby jointly and severally with
all other Guarantors, unconditionally guarantees to each Holder of a Senior
Secured Note authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, regardless of the validity and enforceability of
this Indenture, the Senior Secured Notes or the other Senior Secured Obligations
of the Issuer under this Indenture or the Senior Secured Notes, that:

                  (i) the principal of, premium, interest and Liquidated
         Damages, if any, on the Senior Secured Notes will be promptly paid in
         full when due, whether at maturity, by acceleration, redemption or
         otherwise, and interest on the overdue principal of, premium and
         Liquidated Damages, if any, and interest on the Senior Secured Notes,
         to the extent lawful, and all other Senior Secured Obligations of the
         Issuer to the Holders or the Trustee under this Indenture or the Senior
         Secured Notes will be promptly paid in full, all in accordance with the
         terms hereof or thereof; and

                  (ii) in case of any extension of time for payment or renewal
         of any Senior Secured Note or any of such other Senior Secured
         Obligations, that the same will be promptly paid in full when due in
         accordance with the terms of the extension or renewal, whether at
         stated maturity, by acceleration or otherwise.

                  (b) Notwithstanding the foregoing, in the event that this
Guarantee would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of the
Guarantors under this Indenture will be reduced to the maximum amount
permissible under such fraudulent conveyance or similar law.

                  (c) Failing payment when due of any amount so guaranteed or
any performance so guaranteed for whatever reason, the Guarantors will be
jointly and severally obligated to pay, perform or cause the performance of the
same immediately. Each Guarantor agrees that this is a guarantee of payment and
not a guarantee of collection.

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                                                                         Page 95

                  Section 9.02 Execution and Delivery of Guarantee.

                  (a) To evidence its Guarantee set forth in this Indenture,
each Guarantor hereby agrees that a notation of such Guarantee substantially in
the form attached as Exhibit F to this Indenture will be endorsed by an
Authorized Officer of such Guarantor on each Senior Secured Note authenticated
and delivered by the Trustee on or after the date hereof.

                  (b) Notwithstanding the foregoing, each Guarantor hereby
agrees that its Guarantee set forth herein will remain in full force and effect
notwithstanding any failure to endorse on each Senior Secured Note a notation of
such Guarantee.

                  (c) If an Authorized Officer whose signature is on this
Indenture or on a Guarantee no longer holds that office at the time the Trustee
authenticates the Senior Secured Note on which a Guarantee is endorsed, the
Guarantee will be valid nevertheless.

                  (d) The delivery of any Senior Secured Note by the Trustee,
after the authentication thereof under this Indenture, will constitute due
delivery of the Guarantee set forth in this Indenture on behalf of each
Guarantor.

                  (e) Each Guarantor hereby agrees that its Senior Secured
Obligations hereunder will be unconditional, regardless of the validity,
regularity or enforceability of the Senior Secured Note or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Senior Secured Notes with respect to any provisions hereof or thereof,
the recovery of any judgment against the Issuer, any action to enforce the same
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor.

                  (f) Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Issuer, any right to require a proceeding first against the
Issuer, protest, notice and all demands whatsoever and covenants that its
Guarantee made pursuant to this Indenture will not be discharged except by
complete performance of the Senior Secured Obligations contained in the Senior
Secured Notes and this Indenture.

                  (g) If any Holder or the Trustee is required by any court or
otherwise to return to the Issuer or any Guarantor, or any custodian, Trustee,
liquidator or other similar official acting in relation to either the Issuer or
such Guarantor, any amount paid by either to the Trustee or such Holder, the
Guarantee made pursuant to this Indenture, to the extent theretofore discharged,
will be reinstated in full force and effect.

                  (h) Each Guarantor agrees that it will not be entitled to any
right of subrogation in relation to the Holders in respect of any Senior Secured
Notes guaranteed hereby until payment in full of all Senior Secured Notes
guaranteed hereby. Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand:

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                                                                         Page 96

                  (i) the maturity of the Senior Secured Notes guaranteed hereby
         may be accelerated as provided in Article V hereof for the purposes of
         the Guarantee made pursuant to this Indenture, notwithstanding any
         stay, injunction or other prohibition preventing such acceleration in
         respect of the Senior Secured Notes guaranteed hereby; and

                  (ii) in the event of any declaration of acceleration of such
         Senior Secured Notes as provided in Article V hereof, such Senior
         Secured Notes (whether or not due and payable) will forthwith become
         due and payable by such Guarantor for the purpose of the Guarantee made
         pursuant to this Indenture.

                  (i) Each Guarantor will have the right to seek contribution
from any other non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders or the Trustee under the Guarantee made
pursuant to this Indenture.

                  Section 9.03 Guarantors May Consolidate, etc. on Certain
Terms.

                  (a) Except as set forth in Article IV, and notwithstanding
Section 9.03(b) hereof, nothing contained in this Indenture or in the Senior
Secured Notes will prevent any consolidation or merger of any Guarantor with or
into the Issuer or any other Guarantor or will prevent any transfer, sale or
conveyance of the property of any Guarantor as an entirety or substantially as
an entirety to the Issuer or any other Guarantor.

                  (b) No Guarantor may sell or otherwise dispose of all or
substantially all of its assets to, or consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person), another Person, other
than the Issuer or another Guarantor.

                  Section 9.04 Covenants of the Guarantors and Ormesa. Each
Guarantor and Ormesa (to the extent compliance therewith would not violate the
Ormesa Credit Agreement) agrees that to the extent the Issuer has agreed to
cause a Subsidiary to take certain actions, or to prohibit, prevent, or
otherwise limit the ability of a Subsidiary to take certain actions, that such
agreement shall constitute a direct obligation of each Guarantor and Ormesa (to
the extent compliance therewith would not violate the Ormesa Credit Agreement).
Nothing in this Section 9.04 shall be construed to permit any Guarantor to incur
Indebtedness permitted to be incurred by the Issuer pursuant to Section 4.18
hereof.

                                   ARTICLE X

                                  MISCELLANEOUS

                  Section 10.01 Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with the duties imposed by TIA
(section) 318(c), the imposed duties shall control.

                                      -96-

                                                                         Page 97

                  Section 10.02 Notices. Any notice or communication by the
Issuer or the Trustee to the others is duly given if in writing and delivered in
Person or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address:

                  If to the Issuer or the Guarantors:

                  Ormat Funding Corp.
                  980 Greg Street
                  Sparks, Nevada  89431
                  Tel.: (775) 356-9029
                  Fax:  (775) 356-9039
                  Attention:  President

                  with a copy to:

                  Latham & Watkins LLP
                  701 "B" Street
                  Suite 2100
                  San Diego, CA  92101
                  Tel.:  (619) 238-2869
                  Fax:  (619) 696-7419
                  Attention:  Andrew Singer, Esq.

                  If to the Trustee:

                  Union Bank of California, N.A.
                  475 Sansome Street, 12th Floor
                  San Francisco, CA 94111
                  Tel.:  (415) 296-6754
                  Fax:  (415) 296-6757
                  Attention:  Corporate Trust Department

                  The Issuer or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.

                  All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.

                                      -97-

                                                                         Page 98

                  Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA (section) 313(c), to the extent required
by the TIA. Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders.

                  If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.

                  If the Issuer mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.

                  Section 10.03 Communication by Holders of Senior Secured Notes
with Other Holders of Senior Secured Notes. Holders may communicate pursuant to
TIA (section) 312(b) with other Holders with respect to their rights under this
Indenture or the Senior Secured Notes. The Issuer, the Trustee, the Registrar
and anyone else shall have the protection of TIA (section) 312(c).

                  Section 10.04 Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Issuer to the Trustee to take
any action under this Indenture, the Issuer shall furnish to the Trustee:

                  (a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and

                  (b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.

                  Section 10.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (section) 314(a)(4)) shall comply with the provisions of TIA
(section) 314(e) and shall include:

                  (a) a statement that the Person making such certificate or
opinion has read such covenant or condition;

                  (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;

                  (c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and

                                      -98-

                                                                         Page 99

                  (d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.

                  Section 10.06 Rules by Trustee and Agents. The Trustee may
make reasonable rules for action by or at a meeting of Holders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.

                  Section 10.07 No Personal Liability of Directors, Officers,
Employees and Stockholders. No past, present or future director, officer,
employee, organizer, manager or agent of the Issuer or any Affiliate of any such
party (other than the Issuer), as such, shall have any liability for any
obligations of the Issuer under the Senior Secured Notes, this Indenture, any
Financing Document or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder by accepting a Senior Secured
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Senior Secured Notes.

                  Section 10.08 Governing Law. THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE SENIOR SECURED
NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

                  Section 10.09 Submission to Jurisdiction. The Issuer and the
Guarantors hereby submit to the nonexclusive jurisdiction of the New York State
Courts and the federal courts sitting in the State of New York for the purposes
of all legal proceedings arising out of or relating to this Indenture or the
transactions contemplated hereby. The Issuer and Guarantors hereby irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
court has been brought in an inconvenient forum.

                  Section 10.10 Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS INDENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER THIS INDENTURE BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

                                      -99-

                                                                        Page 100

                  Section 10.11 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
Indebtedness agreement of the Issuer or its Subsidiaries or of any other Person.
Any such indenture, loan or Indebtedness agreement may not be used to interpret
this Indenture.

                  Section 10.12 Successors. All agreements of the Issuer in this
Indenture and the Senior Secured Notes shall bind its successors. All agreements
of the Trustee in this Indenture shall bind its successors.

                  Section 10.13 Severability. In case any provision in this
Indenture or in the Senior Secured Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

                  Section 10.14 Counterpart Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.

                  Section 10.15 Table of Contents, Headings, etc. The Table of
Contents, and headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part of
this Indenture and shall in no way modify or restrict any of the terms or
provisions hereof.

                         [Signatures on following page]

                                     -100-

                                                                        Page 101

                                   SIGNATURES:

                                        ORMAT FUNDING CORP.

                                        By: /s/ Connie Stechman
                                           ---------------------------------
                                        Name: Connie Stechman
                                        Title: Assistant Secretary

                                     -101-

                                                                        Page 102

                                        UNION BANK OF CALIFORNIA, N.A.
                                        as Trustee

                                        By: /s/ Sonia N. Flores
                                           ---------------------------------
                                           Name:  Sonia N. Flores
                                           Title: Vice President

                                     -102-

                                                                        Page 103

ORMESA LLC,

By: ORMAT FUNDING CORP.,
      a Delaware corporation
      Its: Sole Member and Manager

By:   /s/ Connie Stechman
    ----------------------------
Name:  Connie Stechman
Title: Assistant Secretary

GUARANTORS:

BRADY POWER PARTNERS
as a Guarantor

By: ORNI 1 LLC,
      a Delaware limited liability company
      Its: General Partner

      By: ORMAT FUNDING CORP.,
          a Delaware corporation
          Its:  Sole Member and Manager

By:   /s/ Connie Stechman
    ----------------------------
Name:   Connie Stechman
Title:  Assistant Secretary

STEAMBOAT GEOTHERMAL LLC,
as a Guarantor

By: ORNI 7 LLC,
      a Delaware limited liability company
      Its: General Partner

     By: ORMAT FUNDING CORP.,
         a Delaware corporation
         Its: Sole Member and Manager

                                     -103-

                                                                        Page 104

By:   /s/ Connie Stechman
    ----------------------------
Name:  Connie Stechman
Title: Assistant Secretary

STEAMBOAT DEVELOPMENT CORPORATION
as a Guarantor

By:   /s/ Connie Stechman
    ----------------------------
Name:  Connie Stechman
Title: Assistant Secretary

ORMAMMOTH INC.
as a Guarantor

By:  /s/ Connie Stechman
    ----------------------------
Name:  Connie Stechman
Title: Assistant Secretary

ORNI 1 LLC
as a Guarantor

By: ORMAT FUNDING CORP.,
      a Delaware corporation
      Its: Sole Member and Manager

By:   /s/ Connie Stechman
    ----------------------------
Name:  Connie Stechman
Title: Assistant Secretary

ORNI 2 LLC
as a Guarantor

By: ORMAT FUNDING CORP.,
      a Delaware corporation

                                     -104-

                                                                        Page 105

      Its: Sole Member and Manager

By:   /s/ Connie Stechman
    ----------------------------
Name:  Connie Stechman
Title: Assistant Secretary

ORNI 7 LLC
as a Guarantor

By: ORMAT FUNDING CORP.,
      a Delaware corporation
      Its: Sole Member and Manager

By:   /s/ Connie Stechman
    ----------------------------
Name:  Connie Stechman
Title: Assistant Secretary

                                     -105-

                                   EXHIBIT A-l

                         (Face of Senior Secured Note)

                              [GLOBAL NOTE LEGEND)

          [INCLUDE IF SENIOR SECURED NOTE IS A GLOBAL NOTE - UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO ORMAT FUNDING CORP. (THE "ISSUER")
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

          THIS SENIOR SECURED NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO. THIS GLOBAL NOTE MAY NOT BE EXCHANGED, IN
WHOLE OR IN PART, FOR A SENIOR SECURED NOTE REGISTERED IN THE NAME OF ANY PERSON
OTHER THAN THE DEPOSITORY TRUST COMPANY OR A NOMINEE THEREOF EXCEPT IN THE
CIRCUMSTANCES SET FORTH IN SECTION 2.07 OF THE INDENTURE, AND MAY NOT BE
TRANSFERRED, IN WHOLE OR IN PART, EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.07 OF THE INDENTURE. BENEFICIAL INTERESTS IN THIS GLOBAL NOTE
MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH SECTION 2.07 OF THE INDENTURE.]

                            [RESTRICTED NOTES LEGEND]

          [INCLUDE IF NOTE IS A RESTRICTED NOTE OR A TEMPORARY REGULATION S
GLOBAL NOTE (UNLESS, PURSUANT TO SECTION 2.07, THE ISSUER DETERMINES THAT THE
LEGEND MAY BE REMOVED) - THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(l), (2),
(3) OR (7) UNDER THE

                                                                     Exhibit A-l
                                                                          Page 2

SECURITIES ACT, IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, (5) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF
COUNSEL IF ORMAT FUNDING CORP. SO REQUESTS) OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL
APPLICABLE BLUE SKY LAWS OF THE STATES OF THE UNITES STATES.

     IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRUSTEE
SUCH CERTIFICATES AND OTHER INFORMATION AS THE ISSUER MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.]

                                                                     Exhibit A-l
                                                                          Page 3

================================================================================

               CUSIP/CINS: 686685 AA 6

                    8 1/4% Senior Secured Notes due 2020

No.                                                                   $
   --                                                                  ---------

                               ORMAT FUNDING CORP.

promises to pay to Cede & Co., or registered assigns, the principal sum
of______________ Dollars in installments on the dates and in the amounts as set
forth in Schedule I attached hereto and made part hereof.

Interest Payment Dates: June 30 and December 30

Record Dates: June 15 and December 15

                                        DATED:

                                        ORMAT FUNDING CORP.

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

This is one of the [Global Notes] [Certificated Notes] referred to in the
within-mentioned Indenture:

Union Bank of California, N.A.,
 as Trustee

By:
   ---------------------------------
   Name:

================================================================================

                                                                     Exhibit A-l
                                                                          Page 4

                                 (Back of Note)

                      8 1/4% Senior Secured Notes due 2020

          Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

          1. Interest. Ormat Funding Corp., a Delaware corporation (the
"Issuer"), promises to pay interest on the outstanding principal amount of this
Senior Secured Note at 8 1/4% per annum from the date of issuance until the
Final Maturity Date and will pay the Liquidated Damages payable pursuant to
Section 5 of the Registration Rights Agreement referred to below. The Issuer
shall pay interest and Liquidated Damages, if any, pro rata semi-annually in
arrears on June 30 and December 30 of each year (the "Interest Payment Date"),
or if any such day is not a Business Day, on the next succeeding Business Day.
Interest on the Senior Secured Notes will accrue from the most recent Interest
Payment Date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Senior Secured Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be June 30,
2004. The Issuer shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.

          2. Method of Payment. The Issuer will pay interest and payments of
principal in accordance with Schedule I attached hereto on the Senior Secured
Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons
who are registered Holders of Senior Secured Notes at the close of business on
the June 15 or December 15 next preceding the Interest Payment Date, even if
such Senior Secured Notes are cancelled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. The Senior Secured Notes will be payable as
to principal, premium and Liquidated Damages, if any, and interest at the office
or agency of the Issuer maintained for such purpose within or without the City
and State of New York, or, at the option of the Issuer, payment of interest may
be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds will be required with respect to principal of, interest, premium
and Liquidated Damages on all Global Notes and all other Senior Secured Notes
the Holders of which shall have provided wire transfer instructions to the
Issuer or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

                                                                     Exhibit A-l
                                                                          Page 5

          3. Paying Agent and Registrar. Initially, Union Bank of California,
N.A., the Trustee under the Indenture, will act as Paying Agent and Registrar.
The Issuer may change any Paying Agent or Registrar without notice to any
Holder. The Issuer or any of its Subsidiaries may act in any such capacity.

          4. Indenture. The Issuer issued the Senior Secured Notes under an
Indenture dated as of February 13, 2004 among the Issuer, Brady Power Partners,
Steamboat Development Corp., Steamboat Geothermal LLC, OrMammoth Inc., ORNI 1
LLC, ORNI 2 LLC, ORNI 7 LLC, Ormesa LLC and Union Bank of California, N.A., as
Trustee. The terms of the Senior Secured Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Senior Secured Notes are subject to all such terms, and Holders are referred to
the Indenture and such Act for a statement of such terms. To the extent any
provision of this Senior Secured Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.

          5. Optional Redemption. (a) The Senior Secured Notes shall be
redeemable at the option of the Issuer at any time and from time to time, in
whole or in part, upon not less than 30 nor more than 60 days' notice to the
Trustee and each Holder of Senior Secured Notes, at a redemption price equal to
the outstanding principal amount thereof plus accrued interest and Liquidated
Damages, if any, plus the Make-Whole Premium, such redemption price to be set
forth in the notice to the Trustee. In no event shall the sum of the redemption
price plus the Make-Whole Premium ever be less than 100% of the Senior Secured
Notes being redeemed plus accrued and unpaid interest thereon to the Redemption
Date. Unless the Issuer defaults in payment of the redemption price, on and
after the Redemption Date interest and Liquidated Damages, if any, shall cease
to accrue on the Senior Secured Notes or portions thereof called for redemption.

          (b) Any redemption pursuant to this subparagraph 5 shall be made
pursuant to the provisions of Section 3.01 through 3.06 of the Indenture.

          6. Mandatory Redemption. (a) The Senior Secured Notes shall be subject
to mandatory redemption, in whole or in part, at a redemption price equal to the
principal amount of the Senior Secured Notes being redeemed plus accrued and
unpaid interest and Liquidated Damages, if any, to the Redemption Date, if the
Issuer or any Subsidiary receives more than $5.0 million of Loss Proceeds or
Eminent Domain Proceeds because of an Event of Loss or an Event of Eminent
Domain and:

          (i)  the Issuer determines that all or such portion of the applicable
               Plant cannot be rebuilt, repaired or restored to permit
               operations on a commercially reasonable basis, or the Issuer
               determines not to rebuild, repair or restore the applicable Plant
               or such portion, in which case the Issuer shall have to use the
               Net Available Amount of such proceeds for such redemption; or

                                                                     Exhibit A-1
                                                                          Page 6

          (ii) only a portion of the applicable Plant is capable of being
               rebuilt, repaired or restored on a commercially reasonable basis
               and the Issuer determines to so rebuild, repair or restore, in
               which case the Issuer will have to use only the amount of such
               Loss Proceeds or Eminent Domain Proceeds not used to rebuild,
               repair or restore such Plant for such redemption, except as set
               forth in the immediately following paragraph.

          If the Issuer or any Subsidiary receives less than $5 million of Loss
Proceeds or Eminent Domain Proceeds or has less than $5 million remaining after
rebuilding, repairing or restoring a portion of the applicable Plant because of
an Event of Loss or Event of Eminent Domain the Issuer will cause such amounts
to be deposited into the Revenue Account.

          (b) If the Issuer or any Subsidiary (a) receives more than $5.0
million of Title Event Proceeds in connection with a Title Event and is unable
to remedy the Title Event, or (b) has more than $5.0 million of Title Event
Proceeds remaining after remedying the Title Event, the Issuer will have to use
the Net Available Amount of such proceeds, to the extent not used to cure the
Title Event, on a pro rata basis to redeem the Senior Secured Notes at a
redemption price equal to the principal amount of the Senior Secured Notes being
redeemed plus accrued and unpaid interest and Liquidated Damages, if any, to the
Redemption Date. If the Issuer or any Subsidiary receives less than $5 million
of Title Event Proceeds in connection with a Title Event or has less than $5
million remaining after remedying a Title Event the Issuer will cause such
amounts to be deposited into the Revenue Account.

          (c) If on or prior to September 30, 2005, the Issuer has not satisfied
the Initial Galena Re-powering Account Withdrawal Conditions, then the Issuer
will have to use the proceeds of the Galena Re-powering Account to redeem Senior
Secured Notes at a price equal to 101% of the principal amount of Senior Secured
Notes being redeemed plus accrued and unpaid interest and Liquidated Damages, if
any, to the Redemption Date.

          (d) If Final Completion is not achieved by March 31, 2006 or the
Galena Re-powering does not result in a minimum net electrical output of 18 MW
as determined in accordance with performance tests conducted pursuant to the
Galena Re-powering Contract (as certified by the Independent Engineer), then
from and after March 31, 2006, the Issuer will not be able to make any
Restricted Payments until the Issuer has used any amounts the Issuer receives as
Performance Liquidated Damages and amounts in the Distribution Suspense Account
to redeem or has otherwise redeemed (a "Galena Re-powering Performance
Redemption") Senior Secured Notes in an amount equal to the product of (x)
$1,100,000 times (y) the difference between (i) 18 MW minus (ii) the actual
number of Megawatts of the Galena Re-powering as demonstrated by the Performance
Guarantee Tests and certified by the Independent Engineer. The Issuer will
redeem the Senior Secured Notes in connection with a Galena Re-powering
Performance Redemption at a price equal to 101% of the principal amount of the
Senior Secured Notes required to be redeemed plus accrued and unpaid interest
and Liquidated Damages, if any, to the Redemption Date.

                                                                     Exhibit A-1
                                                                          Page 7

          (e) If, as of January 1, 2006, the Mammoth Enhancement has not
improved the net electrical output of the Mammoth Plant by at least 3.6 MW (as
certified by the Independent Engineer), then from and after January 1, 2006, the
Issuer will not be able to make any Restricted Payments until the Issuer has
used amounts in the Distribution Suspense Account to redeem or has otherwise
redeemed (a "Mammoth Enhancement Redemption") Senior Secured Notes in an amount
equal to the product of (x) $1,100,000 times (y) the difference between (i) 3.6
MW minus (ii) the actual number of Megawatts that the Mammoth Enhancement
increases the net electrical output of the Mammoth Plant. The Issuer shall
redeem the Senior Secured Notes in connection with a Mammoth Enhancement
Redemption at a price equal to 101% of the principal amount of the Senior
Secured Notes required to be redeemed plus accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date.

          In the event that any Senior Secured Obligations (other than the
Senior Secured Notes) are required to be redeemed before their scheduled
maturity pursuant to documents governing such Senior Secured Obligations for any
reason not otherwise giving rise to a redemption of the Senior Secured Notes,
the Issuer shall offer to repurchase the Senior Secured Notes on a pro rata
basis with the other Senior Secured Obligations as are required to be redeemed
at a redemption price equal to the principal amount of the Senior Secured Notes
the Issuer offers to repurchase plus accrued and unpaid interest and Liquidated
Damages, if any, to the Redemption Date, but without any premium.

          Other than as specifically provided in this subparagraph 6, any
purchase or redemption pursuant to this subparagraph 6 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.

          7. Notice of Redemption. At least 30 days but not more than 60 days
before a Redemption Date, the Issuer shall mail or cause to be mailed, by first
class mail, a notice of redemption to each Holder whose Senior Secured Notes are
to be redeemed at its registered address.

          The notice shall identify the Senior Secured Notes to be redeemed and
shall state:

          (a) the Redemption Date;

          (b) the redemption price;

          (c) if any Senior Secured Note is being redeemed in part, the portion
     of the principal amount of such Senior Secured Note to be redeemed and
     that, after the redemption date upon surrender of such Senior Secured Note,
     a new Senior Secured Note or Senior Secured Notes in principal amount equal
     to the unredeemed portion shall be issued upon cancellation of the original
     Senior Secured Note;

          (d) the name, address and telephone number of the Paying Agent;

                                                                     Exhibit A-l
                                                                          Page 8

          (e) that Senior Secured Notes called for redemption must be
     surrendered to the Paying Agent to collect the redemption price;

          (f) that, unless the Issuer defaults in making such redemption
     payment, interest and Liquidated Damages, if any, on Senior Secured Notes
     called for redemption ceases to accrue on and after the Redemption Date;

          (g) the paragraph of the Senior Secured Notes and/or Section of the
     Indenture pursuant to which the Senior Secured Notes called for redemption
     are being redeemed; and

          (h) the CUSIP number (provided that the Issuer may state that no
     representation is made as to the correctness or accuracy of the CUSIP
     number, if any, listed in such notice or printed on the Senior Secured
     Notes).

          At the Issuer's request, the Trustee or the Paying Agent shall give
the notice of redemption in the Issuer's name and at its expense; provided,
however, that the Issuer shall have delivered to the Trustee, at least 45 days
prior to the redemption date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.

          8. Denominations, Transfer, Exchange. The Senior Secured Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The transfer of Senior Secured Notes may
be registered and Senior Secured Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuer may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuer need not exchange or register the
transfer of any Senior Secured Note or portion of a Senior Secured Note selected
for redemption, except for the unredeemed portion of any Senior Secured Note
being redeemed in part. Also, the Issuer need not exchange or register the
transfer of any Senior Secured Notes for a period of 15 days before a selection
of Senior Secured Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.

          9. Persons Deemed Owners. The registered Holder of a Senior Secured
Note may be treated as its owner for all purposes.

          10. Amendment, Supplement and Waiver. The Issuer and the Trustee may
amend or supplement the Indenture and any of the other Financing Documents
without the consent of the Holders:

               (a) to cure any ambiguity, defect or inconsistency;

                                                                     Exhibit A-1
                                                                          Page 9

               (b) to add additional covenants of the Issuer or its
          Subsidiaries, to surrender rights conferred upon the Issuer or its
          Subsidiaries, or to confer additional benefits upon the Holders;

               (c) to increase the assets securing the Issuer's obligations
          under the Indenture;

               (d) to allow any Subsidiary to execute a Supplemental Indenture
          and/or Guarantee with respect to the Senior Secured Notes;

               (e) to comply with requirements of the SEC in order to effect or
          maintain the qualification of the Indenture under the Trust Indenture
          Act;

               (f) to make any change not inconsistent with the terms of the
          Indenture that does not adversely affect the legal rights thereunder
          of any Holder of the Senior Secured Notes; or

               (g) to establish the form and terms of Senior Secured Notes of
          any series permitted by Sections 2.01 and 2.03 of the Indenture.

          The Indenture and the other Financing Documents may be otherwise
amended or supplemented by the Issuer and the Trustee, with the consent of the
Required Holders; provided that no such amendment or supplement may, without the
consent of all Holders of Outstanding Senior Secured Notes affected thereby:

               (a) modify the principal, interest and premium or Liquidated
          Damages, if any, payable upon the Senior Secured Notes;

               (b) modify the dates on which principal, interest, premium and
          Liquidated Damages, if any, on any Senior Secured Notes are paid;

               (c) release any Guarantor from its obligations under a Guarantee;

               (d) modify the dates of maturity of any Senior Secured Notes; and

               (e) make changes in the procedures for amendment, supplement or
          waiver.

          The Indenture and the other Security Documents may be amended or
supplemented to provide for the release of Collateral, by the Issuer and the
Trustee, with the consent of Holders of not less than 66% of the Outstanding
Senior Secured Notes.

          11. Defaults and Remedies. The following events constitute an Event of
Default under the Indenture:

                                                                     Exhibit A-1
                                                                         Page 10

          (a) the failure to pay or cause to be paid any principal of, interest,
     premium, Liquidated Damages, if any, fees or any other obligations on the
     Senior Secured Notes for five or more days after the same becomes due and
     payable, whether by scheduled maturity or required prepayment or by
     acceleration or otherwise;

          (b) any representation or warranty made by the Issuer, any Subsidiary
     or Ormat Nevada under any Financing Document shall prove to have been
     untrue or misleading as of the time made, confirmed or furnished and the
     fact, event or circumstance that gave rise to such inaccuracy has had or
     could reasonably be expected to result in a Material Adverse Effect and
     such fact, event or circumstance shall continue to be uncured for 30 or
     more days from the date a Responsible Officer of the Issuer, such
     Subsidiary or Ormat Nevada, as the case may be, obtains knowledge thereof;
     provided, that if the Issuer, such Subsidiary or Ormat Nevada, as the case
     may be, commences efforts to cure such fact, event or circumstance within
     such 30-day period, the Issuer, such Subsidiary or Ormat Nevada, as the
     case may be, may continue to effect such cure and such misrepresentation
     will not be deemed an Event of Default for an additional 90 days so long as
     the Issuer, such Subsidiary or Ormat Nevada, as the case may be, is
     diligently pursuing such cure;

          (c) the failure by the Issuer or any Subsidiary to perform or observe
     any covenant under Sections 4.06, 4.07, 4.09, 4.10, 4.11, 4.15, 4.16, 4.18,
     4.19, 4.20, 4.23, 4.27 and 4.46 of the Indenture and such failure shall
     continue uncured for 30 or more days after a Responsible Officer of the
     Issuer obtains knowledge thereof;

          (d) the failure by the Issuer, any Subsidiary or Ormat Nevada to
     perform or observe any of the other covenants in the Financing Documents
     that the Issuer, such Subsidiary or Ormat Nevada is a party to (other than
     such failures described in clause (a) or (c) above) and such failure shall
     continue uncured for 30 or more days after a Responsible Officer of the
     Issuer, any Subsidiary or Ormat Nevada, as the case may be, obtains
     knowledge thereof; provided that if the Issuer, any Subsidiary or Ormat
     Nevada, as the case may be, commences efforts to cure such default within
     such 30-day period, the Issuer, any Subsidiary or Ormat Nevada, as the case
     may be, may continue to effect such cure of the default and such default
     will not be deemed an Event of Default for an additional 90 days so long as
     the Issuer, any Subsidiary or Ormat Nevada, as the case may be, is
     diligently pursuing such cure;

          (e) the Issuer or any Subsidiary of the Issuer:

               (i) admits in writing its inability, or is generally unable, to
          pay its debts as the debts become due or makes a general assignment
          for the benefit of creditors; or

               (ii) commences any case, proceeding or other action seeking
          reorganization, arrangement, adjustment, liquidation, dissolution or
          composition of it or its debts under any applicable liquidation,
          conservatorship, bankruptcy,

                                                                     Exhibit A-1
                                                                         Page 11

          moratorium, arrangement, adjustment, insolvency, reorganization or
          similar laws affecting the rights or remedies of creditors generally,
          as in effect from time to time (collectively, "Debtor Relief Law"); or

               (iii) in any involuntary case, proceeding or other action
          commenced against it which seeks to have an order for relief
          (injunctive or otherwise) entered against it, as debtor, or seeks
          reorganization, arrangement, adjustment, liquidation, dissolution or
          composition of it or its debts under any Debtor Relief Law, (A) fails
          to obtain a dismissal of such case, proceeding or other action within
          ninety (90) days of its commencement, or (B) converts the case from
          one chapter of the Bankruptcy Reform Act of 1978, as amended, to
          another chapter, or (C) is the subject of an order for relief that
          remains unstayed and in effect for a period of ninety (90) days; or

               (iv) has a trustee, receiver, custodian or other official
          appointed for or to take possession of all or any part of its property
          or has any court take jurisdiction of any of its property, which
          action remains undismissed for a period of ninety (90) days;

          (f) the entry of one or more final and non-appealable judgment or
     judgments for the payment of money in excess of $10.0 million (exclusive of
     judgment amounts covered by insurance) against the Issuer or any
     Subsidiary, which remain unpaid or unstayed for a period of 60 or more
     consecutive days;

          (g) an event of default under any Permitted Indebtedness (other than
     Indebtedness referred to in clause (a) above) that results in Indebtedness
     in excess of $10.0 million becoming due and payable prior to its stated
     maturity;

          (h) any Governmental Approval required for the operation of any
     Project or any material portion thereof owned by the Issuer or any
     Subsidiary is revoked, terminated, withdrawn or ceases to be in full force
     and effect if such revocation, termination, withdrawal or cessation has had
     or could reasonably be expected to have a Material Adverse Effect and such
     revocation, termination, withdrawal or cessation is not cured within 60
     days following the occurrence thereof;

          (i) any Material Project Document or Third Party Consent or any
     material provision thereof (i) ceases to be valid and binding and in full
     force and effect prior to its stated maturity date other than as a result
     of an amendment or termination permitted under the Indenture or (ii) a
     party thereto fails to perform or observe any of its covenants or
     obligations thereunder or makes any material misrepresentation thereunder
     and such event has had or could reasonably be expected to have a Material
     Adverse Effect; provided that, in any such event no such event shall be an
     Event of Default if within 180 days from the occurrence of any such event,
     (a) such Material Project Document or Third Party Consent or material
     provision thereof is reinstated as a valid and binding agreement

                                                                     Exhibit A-1
                                                                         Page 12

     among the parties thereto, (b) any breaching party resumes performance and
     otherwise cures such misrepresentation or failure to perform or observe its
     covenants or obligations under the Material Project Documents or Third
     Party Consents or (c) in the case of Material Project Documents, the Issuer
     enters into an Additional Project Document in replacement thereof, as
     permitted under the Indenture;

          (j) any of the Security Documents or any other Financing Document
     ceases to be in full force and effect or any Lien granted therein ceases to
     be a valid and perfected Lien in favor of the Secured Parties on the
     Collateral described therein with the priority purported to be created
     thereby; provided, however that the Issuer shall have 10 days after any of
     the Issuer's or the Issuer's Subsidiaries' Responsible Officers obtains
     knowledge thereof to cure any such cessation or to furnish to the Trustee,
     the Collateral Agent or the Depositary all documents or instruments
     required to cure any such cessation;

          (k) the occurrence of a Change of Control; or

          (l) the failure of Ormesa to prepay all of the amounts outstanding
     under the Ormesa Credit Agreement on or prior to January 31, 2005 or the
     failure of the Issuer to cause Ormesa to comply with its obligations under
     Sections 4.20 and 4.38 of the Indenture.

          If an Event of Default relating to failure to pay amounts owed on the
     Senior Secured Notes has occurred and is continuing, the Trustee may
     declare the principal amount of the Outstanding Senior Secured Notes, all
     interest accrued and unpaid thereon, and all premium and Liquidated
     Damages, if any, and other amounts payable under the Senior Secured Notes
     and the Indenture, if any, to be due and payable notwithstanding the
     absence of written direction from Holders of at least 25% in aggregate
     principal amount of the Outstanding Senior Secured Notes directing the
     Trustee in writing to accelerate the principal maturity of the Senior
     Secured Notes, unless the Required Holders direct the Trustee not to
     accelerate the maturity of such Senior Secured Notes, if in the good faith
     exercise of its discretion the Trustee determines that such action is
     necessary to protect the interests of the Holders. Notwithstanding the
     foregoing, in the case of an Event of Default arising from certain events
     of bankruptcy or insolvency, all Outstanding Senior Secured Notes will
     become due and payable immediately.

          12. Trustee Dealings with Issuer. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuer or its Affiliates, and may otherwise deal with the
Issuer or its Affiliates, as if it were not the Trustee.

          13. No Recourse Against Others. No past, present or future director,
officer, employee, organizer, member, manager or agent of the Issuer or any
Affiliate of any such party (other than the Issuer), as such, shall have any
liability for any obligations of the Issuer under the Senior Secured Notes, the
Indenture, any Financing Document or for any claim based on, in

                                                                     Exhibit A-1
                                                                         Page 13

respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Senior Secured Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Senior
Secured Notes.

          14. Authentication. This Senior Secured Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

          15. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

          16. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Senior Secured Notes and the Trustee may use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Senior Secured Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.

          The Issuer will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

          Ormat Funding Corp.
          980 Greg Street
          Sparks, Nevada 89431
          Tel.: (775)356-9029
          Fax:(775)356-9039
          Attention: President

                                                                     Exhibit A-1
                                                                         Page 14

                                 Assignment Form

To assign this Senior Secured Note, fill in the form below: (I) or (we) assign
and transfer this Senior Secured Note to

(Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________
(Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________

to transfer this Senior Secured Note on the books of the Issuer. The agent may
substitute another to act for him.

Date:                                    Your Signature:
                                                         -----------------------
                                                         (Sign exactly as your
                                                         name appears on the
                                                         Senior Secured Note)

                                         Tax Identification No:
                                                                ----------------

Signature Guarantee.

Medallion No.:

Notice: Signature must be guaranteed by a member firm of the STAMP, SEMP or MSP
signature guaranty medallion program

                                                                     Exhibit A-l
                                                                         Page 15

              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

          The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Certificated Note, or exchanges of a part of
another Global Note or Certificated Note for an interest in this Global Note,
have been made:

               Amount of          Amount of      Principal Amount     Signature of
              decrease in        increase in      of this Global       authorized
           Principal Amount   Principal Amount    Note following       officer of
 Date of        of this            of this         such decrease    Trustee or Note
Exchange      Global Note        Global Note       (or increase)       Custodian
--------   ----------------   ----------------   ----------------   ---------------

                                                                     Exhibit A-1
                                                                         Page 16

                                                                      SCHEDULE I

                         SCHEDULE OF PRINCIPAL PAYMENTS

          The principal of the Senior Secured Notes will be payable in
semi-annual installments, commencing June 30, 2004, as follows:

SCHEDULED PAYMENT DATE                               PRINCIPAL AMOUNT PAYABLE(1)
----------------------                               ---------------------------
June 30, 2004 ....................................           $  215,305
December 30, 2004 ................................              296,077
June 30, 2005 ....................................            2,982,569
December 30, 2005 ................................            3,107,308
June 30, 2006 ....................................            4,707,100
December 30, 2006 ................................            4,903,964
June 30, 2007 ....................................            4,374,290
December 30, 2007 ................................            4,557,235
June 30, 2008 ....................................            3,837,232
December 30, 2008 ................................            3,997,716
June 30, 2009 ....................................            4,477,107
December 30, 2009 ................................            4,664,353
June 30, 2010 ....................................            4,955,198
December 30, 2010 ................................            5,162,439
June 30, 2011 ....................................            5,588,336
December 30, 2011 ................................            5,822,056
June 30, 2012 ....................................            5,388,039
December 30, 2012 ................................            5,613,382
June 30, 2013 ....................................            5,849,423
December 30, 2013 ................................            6,094,063
June 30, 2014 ....................................            6,796,100
December 30, 2014 ................................            7,052,203
June 30, 2015 ....................................            7,916,885
December 30, 2015 ................................            8,247,993
June 30, 2016 ....................................            8,458,680
December 30, 2016 ................................            8,812,447
June 30, 2017 ....................................            9,084,414
December 30, 2017 ................................            9,464,350
June 30, 2018 ....................................            6,481,436
December 30, 2018 ................................            6,752,509
June 30, 2019 ....................................            5,823,102
December 30, 2019 ................................            6,066,641
June 30, 2020 ....................................            6,111,116
December 30, 2020 ................................            6,365,934

----------
(1)  Represents the principal amount payable with respect to $190,000,000 of
     Senior Secured Notes through the Final Maturity Date. The Holder of this
     Senior Secured Note shall be entitled to a pro rata portion of the
     principal amount set forth in this schedule on each Scheduled Payment Date
     based on the principal sum set forth on the face of this Senior Secured
     Note as adjusted in the attached Schedule of Exchanges of Interests in the
     Global Note.

                                   EXHIBIT A-2

                  (Face of Regulation S Temporary Global Note)

"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."

"THE SENIOR SECURED NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT BY THE INITIAL
INVESTOR (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH CASE, IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES."

                                                                      ExhibitA-2
                                                                          Page 2

================================================================================

                             CUSIP/CINS: U68283 AA5

                      8 1/4% Senior Secured Notes due 2020

No.                                                                   $
    --                                                                  --------

                               ORMAT FUNDING CORP.

promises to pay to Cede & Co., or registered assigns, the principal sum of
___________ Dollars in installments on the dates and in the amounts as set forth
in Schedule I attached hereto and made part hereof.

Interest Payment Dates: June 30 and December 30

Record Dates: June 15 and December 15

                                    DATED:

                                    ORMAT FUNDING CORP.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

This is one of the Global Notes referred to
in the within-mentioned Indenture:
Union Bank of California, N.A.,
as Trustee

By:
    ----------------------------------
    Name:

                                                                     Exhibit A-2
                                                                          Page 3

                  (Back of Regulation S Temporary Global Note)

                8 1/4% Senior Secured Notes due December 30, 2020

          Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

          1. Interest. Ormat Funding Corp., a Delaware corporation (the
"Issuer"), promises to pay interest on the outstanding principal amount of this
Senior Secured Note at 8 1/4% per annum from the date of issuance until the
Final Maturity Date. The Issuer shall pay interest and Liquidated Damages, if
any, pro rata semi-annually in arrears on June 30 and December 30 of each year
(the "Interest Payment Date"), or if any such day is not a Business Day, on the
next succeeding Business Day. Interest on the Senior Secured Notes will accrue
from the most recent Interest Payment Date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there
is no existing Default in the payment of interest, and if this Senior Secured
Note is authenticated between a record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be June 30, 2004. The Issuer shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.

          2. Method of Payment. The Issuer will pay interest and payments of
principal in accordance with Schedule I attached hereto on the Senior Secured
Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons
who are registered Holders of Senior Secured Notes at the close of business on
the June 15 or December 15 next preceding the Interest Payment Date, even if
such Senior Secured Notes are cancelled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. The Senior Secured Notes will be payable as
to principal, premium and Liquidated Damages, if any, and interest at the office
or agency of the Issuer maintained for such purpose within or without the City
and State of New York, or, at the option of the Issuer, payment of interest may
be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds will be required with respect to principal of, interest, premium
and Liquidated Damages on all Global Notes and all other Senior Secured Notes
the Holders of which shall have provided wire transfer instructions to the
Issuer or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

                                                                     Exhibit A-2
                                                                          Page 4

          3. Paying Agent and Registrar. Initially, Union Bank of California, N.
A., the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Issuer may change any Paying Agent or Registrar without notice to any Holder.
The Issuer or any of its Subsidiaries may act in any such capacity.

          4. Indenture. The Issuer issued the Senior Secured Notes under an
Indenture dated as of February 13, 2004 among the Issuer, Brady Power Partners,
Steamboat Development Corp., Steamboat Geothermal LLC, OrMammoth Inc., ORNI 1
LLC, ORNI 2 LLC, ORNI 7 LLC, Ormesa LLC and Union Bank of California, N.A., as
Trustee. The terms of the Senior Secured Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Senior Secured Notes are subject to all such terms, and Holders are referred to
the Indenture and such Act for a statement of such terms. To the extent any
provision of this Senior Secured Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.

          5. Optional Redemption. (a) The Senior Secured Notes shall be
redeemable at the option of the Issuer at any time and from time to time, in
whole or in part, upon not less than 30 nor more than 60 days' notice to the
Trustee and each Holder of Senior Secured Notes, at a redemption price equal to
the outstanding principal amount thereof plus accrued interest and Liquidated
Damages, if any, plus the Make-Whole Premium, such redemption price to be set
forth in the notice to the Trustee. In no event shall the sum of the redemption
price plus the Make-Whole Premium ever be less than 100% of the Senior Secured
Notes being redeemed plus accrued and unpaid interest thereon to the Redemption
Date. Unless the Issuer defaults in payment of the redemption price, on and
after the Redemption Date interest and Liquidated Damages, if any, shall cease
to accrue on the Senior Secured Notes or portions thereof called for redemption.

          (b) Any redemption pursuant to this subparagraph 5 shall be made
pursuant to the provisions of Section 3.01 through 3.06 of the Indenture.

          6. Mandatory Redemption. (a) The Senior Secured Notes shall be subject
to mandatory redemption, in whole or in part, at a redemption price equal to the
principal amount of the Senior Secured Notes being redeemed plus accrued and
unpaid interest and Liquidated Damages, if any, to the Redemption Date, if the
Issuer or any Subsidiary receives more than $5.0 million of Loss Proceeds or
Eminent Domain Proceeds because of an Event of Loss or an Event of Eminent
Domain and:

          (i)  the Issuer determines that all or such portion of the applicable
               Plant cannot be rebuilt, repaired or restored to permit
               operations on a commercially reasonable basis, or the Issuer
               determines not to rebuild, repair or restore the applicable Plant
               or such portion, in which case the Issuer shall have to use the
               Net Available Amount of such proceeds for such redemption; or

                                                                     Exhibit A-2
                                                                          Page 5

          (ii) only a portion of the applicable Plant is capable of being
               rebuilt, repaired or restored on a commercially reasonable basis
               and the Issuer determines to so rebuild, repair or restore, in
               which case the Issuer will have to use only the amount of such
               Loss Proceeds or Eminent Domain Proceeds not used to rebuild,
               repair or restore such Plant for such redemption, except as set
               forth in the immediately following paragraph.

          If the Issuer or any Subsidiary receives less than $5 million of Loss
Proceeds or Eminent Domain Proceeds or has less than $5 million remaining after
rebuilding, repairing or restoring a portion of the applicable Plant because of
an Event of Loss or Event of Eminent Domain the Issuer will cause such amounts
to be deposited into the Revenue Account.

          (b) If the Issuer or any Subsidiary (a) receives more than $5.0
million of Title Event Proceeds in connection with a Title Event and is unable
to remedy the Title Event, or (b) has more than $5.0 million of Title Event
Proceeds remaining after remedying the Title Event, the Issuer will have to use
the Net Available Amount of such proceeds, to the extent not used to cure the
Title Event, on a pro rata basis to redeem the Senior Secured Notes at a
redemption price equal to the principal amount of the Senior Secured Notes being
redeemed plus accrued and unpaid interest and Liquidated Damages, if any, to the
Redemption Date. If the Issuer or any Subsidiary receives less than $5 million
of Title Event Proceeds in connection with a Title Event or has less than $5
million remaining after remedying a Title Event the Issuer will cause such
amounts to be deposited into the Revenue Account.

          (c) If on or prior to September 30, 2005, the Issuer has not satisfied
the Initial Galena Re-powering Account Withdrawal Conditions, then the Issuer
will have to use the proceeds of the Galena Re-powering Account to redeem Senior
Secured Notes at a price equal to 101% of the principal amount of Senior Secured
Notes being redeemed plus accrued and unpaid interest and Liquidated Damages, if
any, to the Redemption Date.

          (d) If Final Completion is not achieved by March 31, 2006 or the
Galena Repowering does not result in a minimum net electrical output of 18 MW as
determined in accordance with performance tests conducted pursuant to the Galena
Repowering Contract (as certified by the Independent Engineer), then from and
after March 31, 2006, the Issuer will not be able to make any Restricted
Payments until the Issuer has used any amounts the Issuer receives as
Performance Liquidated Damages and amounts in the Distribution Suspense Account
to redeem or has otherwise redeemed (a "Galena Re-powering Performance
Redemption") Senior Secured Notes in an amount equal to the product of (x)
$1,100,000 times (y) the difference between (i) 18 MW minus (ii)the actual
number of Megawatts of the Galena Re-powering as demonstrated by the Performance
Guarantee Tests and certified by the Independent Engineer. The Issuer will
redeem the Senior Secured Notes in connection with a Galena Re- powering
Performance Redemption at a price equal to 101% of the principal amount of the
Senior Secured Notes required to be redeemed plus accrued and unpaid interest
and Liquidated Damages, if any, to the Redemption Date.

                                                                     Exhibit A-2
                                                                          Page 6

          (e) If, as of January 1, 2006, the Mammoth Enhancement has not
improved the net electrical output of the Mammoth Plant by at least 3.6 MW (as
certified by the Independent Engineer), then from and after January 1, 2006, the
Issuer will not be able to make any Restricted Payments until the Issuer has
used amounts in the Distribution Suspense Account to redeem or has otherwise
redeemed (a "Mammoth Enhancement Redemption") Senior Secured Notes in an amount
equal to the product of (x) $1,100,000 times (y) the difference between (i) 3.6
MW minus (ii) the actual number of Megawatts that the Mammoth Enhancement
increases the net electrical output of the Mammoth Plant. The Issuer shall
redeem the Senior Secured Notes in connection with a Mammoth Enhancement
Redemption at a price equal to 101% of the principal amount of the Senior
Secured Notes required to be redeemed plus accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date.

          In the event that any Senior Secured Obligations (other than the
Senior Secured Notes) are required to be redeemed before their scheduled
maturity pursuant to documents governing such Senior Secured Obligations for any
reason not otherwise giving rise to a redemption of the Senior Secured Notes,
the Issuer shall offer to repurchase the Senior Secured Notes on a pro rata
basis with the other Senior Secured Obligations as are required to be redeemed
at a redemption price equal to the principal amount of the Senior Secured Notes
the Issuer offers to repurchase plus accrued and unpaid interest and Liquidated
Damages, if any, to the Redemption Date, but without any premium.

          Other than as specifically provided in this subparagraph 6, any
purchase or redemption pursuant to this subparagraph 6 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.

          7. Notice of Redemption. At least 30 days but not more than 60 days
before a Redemption Date, the Issuer shall mail or cause to be mailed, by first
class mail, a notice of redemption to each Holder whose Senior Secured Notes are
to be redeemed at its registered address.

          The notice shall identify the Senior Secured Notes to be redeemed and
shall state:

          (a) the Redemption Date;

          (b) the redemption price;

          (c) if any Senior Secured Note is being redeemed in part, the portion
     of the principal amount of such Senior Secured Note to be redeemed and
     that, after the redemption date upon surrender of such Senior Secured Note,
     a new Senior Secured Note or Senior Secured Notes in principal amount equal
     to the unredeemed portion shall be issued upon cancellation of the original
     Senior Secured Note;

          (d) the name, address and telephone number of the Paying Agent;

                                                                     Exhibit A-2
                                                                          Page 7

          (e) that Senior Secured Notes called for redemption must be
     surrendered to the Paying Agent to collect the redemption price;

          (f) that, unless the Issuer defaults in making such redemption
     payment, interest and Liquidated Damages, if any, on Senior Secured Notes
     called for redemption ceases to accrue on and after the Redemption Date;

          (g) the paragraph of the Senior Secured Notes and/or Section of the
     Indenture pursuant to which the Senior Secured Notes called for redemption
     are being redeemed; and

          (h) the CUSIP number (provided that the Issuer may state that no
     representation is made as to the correctness or accuracy of the CUSIP
     number, if any, listed in such notice or printed on the Senior Secured
     Notes).

          At the Issuer's request, the Trustee or the Paying Agent shall give
the notice of redemption in the Issuer's name and at its expense; provided,
however, that the Issuer shall have delivered to the Trustee, at least 45 days
prior to the redemption date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.

          8. Denominations, Transfer, Exchange. The Senior Secured Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The transfer of Senior Secured Notes may
be registered and Senior Secured Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuer may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuer need not exchange or register the
transfer of any Senior Secured Note or portion of a Senior Secured Note selected
for redemption, except for the unredeemed portion of any Senior Secured Note
being redeemed in part. Also, the Issuer need not exchange or register the
transfer of any Senior Secured Notes for a period of 15 days before a selection
of Senior Secured Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.

          9. Persons Deemed Owners. The registered Holder of a Senior Secured
Note may be treated as its owner for all purposes.

          10. Amendment, Supplement and Waiver. The Issuer and the Trustee may
amend or supplement the Indenture and any of the other Financing Documents
without the consent of the Holders:

          (a) to cure any ambiguity, defect or inconsistency;

          (b) to add additional covenants of the Issuer or its Subsidiaries, to
surrender rights conferred upon the Issuer or its Subsidiaries, or to confer
additional benefits upon the Holders;

                                                                     Exhibit A-2
                                                                          Page 8

          (c) to increase the assets securing the Issuer's obligations under the
Indenture;

          (d) to allow any Subsidiary to execute a Supplemental Indenture and/or
Guarantee with respect to the Senior Secured Notes;

          (e) to comply with requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act;

          (f) to make any change not inconsistent with the terms of the
Indenture that does not adversely affect the legal rights thereunder of any
Holder of the Senior Secured Notes; or

          (g) to establish the form and terms of Senior Secured Notes of any
series permitted by Sections 2.01 and 2.03 of the Indenture.

          The Indenture and the other Financing Documents may be otherwise
amended or supplemented by the Issuer and the Trustee, with the consent of the
Required Holders; provided that no such amendment or supplement may, without the
consent of all Holders of Outstanding Senior Secured Notes affected thereby:

          (a) modify the principal, interest and premium or Liquidated Damages,
if any, payable upon the Senior Secured Notes;

          (b) modify the dates on which principal, interest, premium and
Liquidated Damages, if any, on any Senior Secured Notes are paid;

          (c) release any Guarantor from its obligations under a Guarantee;

          (d) modify the dates of maturity of any Senior Secured Notes; and

          (e) make changes in the procedures for amendment, supplement or
waiver.

          The Indenture and the other Security Documents may be amended or
supplemented to provide for the release of Collateral, by the Issuer and the
Trustee, with the consent of Holders of not less than 66% of the Outstanding
Senior Secured Notes.

          11. Defaults and Remedies. The following events constitute an Event of
Default under the Indenture:

          (a) the failure to pay or cause to be paid any principal of, interest,
     premium, Liquidated Damages, if any, fees or any other obligations on the
     Senior Secured Notes for five or more days after the same becomes due and
     payable, whether by scheduled maturity or required prepayment or by
     acceleration or otherwise;

                                                                     Exhibit A-2
                                                                          Page 9

          (b) any representation or warranty made by the Issuer, any Subsidiary
     or Ormat Nevada under any Financing Document shall prove to have been
     untrue or misleading as of the time made, confirmed or furnished and the
     fact, event or circumstance that gave rise to such inaccuracy has had or
     could reasonably be expected to result in a Material Adverse Effect and
     such fact, event or circumstance shall continue to be uncured for 30 or
     more days from the date a Responsible Officer of the Issuer, such
     Subsidiary or Ormat Nevada, as the case may be, obtains knowledge thereof;
     provided, that if the Issuer, such Subsidiary or Ormat Nevada, as the case
     may be, commences efforts to cure such fact, event or circumstance within
     such 30-day period, the Issuer, such Subsidiary or Ormat Nevada, as the
     case may be, may continue to effect such cure and such misrepresentation
     will not be deemed an Event of Default for an additional 90 days so long as
     the Issuer, such Subsidiary or Ormat Nevada, as the case may be, is
     diligently pursuing such cure;

          (c) the failure by the Issuer or any Subsidiary to perform or observe
     any covenant under Sections 4.06, 4.07, 4.09, 4.10, 4.11, 4.15, 4.16, 4.18,
     4.19, 4.20, 4.23, 4.27 and 4.46 of the Indenture and such failure shall
     continue uncured for 30 or more days after a Responsible Officer of the
     Issuer obtains knowledge thereof;

          (d) the failure by the Issuer, any Subsidiary or Ormat Nevada to
     perform or observe any of the other covenants in the Financing Documents
     that the Issuer, such Subsidiary or Ormat Nevada is a party to (other than
     such failures described in clause (a) or (c) above) and such failure shall
     continue uncured for 30 or more days after a Responsible Officer of the
     Issuer, any Subsidiary or Ormat Nevada, as the case may be, obtains
     knowledge thereof; provided that if the Issuer, any Subsidiary or Ormat
     Nevada, as the case may be, commences efforts to cure such default within
     such 30-day period, the Issuer, any Subsidiary or Ormat Nevada, as the case
     may be, may continue to effect such cure of the default and such default
     will not be deemed an Event of Default for an additional 90 days so long as
     the Issuer, any Subsidiary or Ormat Nevada, as the case may be, is
     diligently pursuing such cure;

          (e) the Issuer or any Subsidiary of the Issuer:

               (i) admits in writing its inability, or is generally unable, to
          pay its debts as the debts become due or makes a general assignment
          for the benefit of creditors; or

               (ii) commences any case, proceeding or other action seeking
          reorganization, arrangement, adjustment, liquidation, dissolution or
          composition of it or its debts under any applicable liquidation,
          conservatorship, bankruptcy, moratorium, arrangement, adjustment,
          insolvency, reorganization or similar laws affecting the rights or
          remedies of creditors generally, as in effect from time to time
          (collectively, "Debtor Relief Law"); or

                                                                     Exhibit A-2
                                                                         Page 10

               (iii) in any involuntary case, proceeding or other action
          commenced against it which seeks to have an order for relief
          (injunctive or otherwise) entered against it, as debtor, or seeks
          reorganization, arrangement, adjustment, liquidation, dissolution or
          composition of it or its debts under any Debtor Relief Law, (A) fails
          to obtain a dismissal of such case, proceeding or other action within
          ninety (90) days of its commencement, or (B) converts the case from
          one chapter of the Bankruptcy Reform Act of 1978, as amended, to
          another chapter, or (C) is the subject of an order for relief that
          remains unstayed and in effect for a period of ninety (90) days; or

               (iv) has a trustee, receiver, custodian or other official
          appointed for or to take possession of all or any part of its property
          or has any court take jurisdiction of any of its property, which
          action remains undismissed for a period of ninety (90) days;

          (f) the entry of one or more final and non-appealable judgment or
     judgments for the payment of money in excess of $10.0 million (exclusive of
     judgment amounts covered by insurance) against the Issuer or any
     Subsidiary, which remain unpaid or unstayed for a period of 60 or more
     consecutive days;

          (g) an event of default under any Permitted Indebtedness (other than
     Indebtedness referred to in clause (a) above) that results in Indebtedness
     in excess of $10.0 million becoming due and payable prior to its stated
     maturity;

          (h) any Governmental Approval required for the operation of any
     Project or any material portion thereof owned by the Issuer or any
     Subsidiary is revoked, terminated, withdrawn or ceases to be in full force
     and effect if such revocation, termination, withdrawal or cessation has had
     or could reasonably be expected to have a Material Adverse Effect and such
     revocation, termination, withdrawal or cessation is not cured within 60
     days following the occurrence thereof;

          (i) any Material Project Document or Third Party Consent or any
     material provision thereof (i) ceases to be valid and binding and in full
     force and effect prior to its stated maturity date other than as a result
     of an amendment or termination permitted under the Indenture or (ii) a
     party thereto fails to perform or observe any of its covenants or
     obligations thereunder or makes any material misrepresentation thereunder
     and such event has had or could reasonably be expected to have a Material
     Adverse Effect; provided that, in any such event no such event shall be an
     Event of Default if within 180 days from the occurrence of any such event,
     (a) such Material Project Document or Third Party Consent or material
     provision thereof is reinstated as a valid and binding agreement among the
     parties thereto, (b) any breaching party resumes performance and otherwise
     cures such misrepresentation or failure to perform or observe its covenants
     or obligations under the Material Project Documents or Third Party Consents
     or (c) in the case of

                                                                     Exhibit A-2
                                                                         Page 11

     Material Project Documents, the Issuer enters into an Additional Project
     Document in replacement thereof, as permitted under the Indenture;

          (j) any of the Security Documents or any other Financing Document
     ceases to be in full force and effect or any Lien granted therein ceases to
     be a valid and perfected Lien in favor of the Secured Parties on the
     Collateral described therein with the priority purported to be created
     thereby; provided, however, that the Issuer shall have 10 days after any of
     the Issuer's or the Issuer's Subsidiaries' Responsible Officers obtains
     knowledge thereof to cure any such cessation or to furnish to the Trustee,
     the Collateral Agent or the Depositary all documents or instruments
     required to cure any such cessation;

          (k) the occurrence of a Change of Control; or

          (l) the failure of Ormesa to prepay all of the amounts outstanding
     under the Ormesa Credit Agreement on or prior to January 31, 2005 or the
     failure of the Issuer to cause Ormesa to comply with its obligations under
     Sections 4.20 and 4.38 of the Indenture.

          If an Event of Default relating to failure to pay amounts owed on the
Senior Secured Notes has occurred and is continuing, the Trustee may declare the
principal amount of the Outstanding Senior Secured Notes, all interest accrued
and unpaid thereon, and all premium and Liquidated Damages, if any, and other
amounts payable under the Senior Secured Notes and the Indenture, if any, to be
due and payable notwithstanding the absence of written direction from Holders of
at least 25% in aggregate principal amount of the Outstanding Senior Secured
Notes directing the Trustee in writing to accelerate the principal maturity of
the Senior Secured Notes, unless the Required Holders direct the Trustee not to
accelerate the maturity of such Senior Secured Notes, if in the good faith
exercise of its discretion the Trustee determines that such action is necessary
to protect the interests of the Holders. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all Outstanding Senior Secured Notes will become due and payable
immediately.

          12. Trustee Dealings with Issuer. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuer or its Affiliates, and may otherwise deal with the
Issuer or its Affiliates, as if it were not the Trustee.

          13. No Recourse Against Others. No past, present or future director,
officer, employee, organizer, member, manager or agent of the Issuer or any
Affiliate of any such party (other than the Issuer), as such, shall have any
liability for any obligations of the Issuer under the Senior Secured Notes, the
Indenture, any Financing Document or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder by accepting a
Senior Secured Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Senior Secured Notes.

                                                                     Exhibit A-2
                                                                         Page 12

          14. Authentication. This Senior Secured Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

          15. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

          16. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Senior Secured Notes and the Trustee may use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Senior Secured Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.

          The Issuer will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

          Ormat Funding Corp.
          980 Greg Street
          Sparks, Nevada 89431
          Tel.: (775)356-9029
          Fax: (775)356-9039
          Attention: President

                                                                     Exhibit A-2
                                                                         Page 13

                                 Assignment Form

To assign this Senior Secured Note, fill in the form below: (I) or (we) assign
and transfer this Senior Secured Note to

(Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________
(Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________
to transfer this Senior Secured Note on the books of the Issuer. The agent may
substitute another to act for him.

Date:                  Your Signature:
                                       -----------------------------------------
                                       (Sign exactly as your name appears on the
                                           Senior Secured Note)

                       Tax Identification No:
                                              ----------------------------------

Signature Guarantee.

Medallion No.:

Notice: Signature must be guaranteed by a member firm of the STAMP, SEMP or MSP
signature guaranty medallion program.

                                                                     Exhibit A-2
                                                                         Page 14

           SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE

          The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:

               Amount of          Amount of      Principal Amount    Signature of
              decrease in        increase in      of this Global      authorized
           Principal Amount   Principal Amount    Note following      officer of
 Date of        of this            of this         such decrease      Trustee or
Exchange      Global Note        Global Note       (or increase)    Note Custodian
--------   ----------------   ----------------   ----------------   --------------

                                                                     Exhibit A-2
                                                                         Page 15

                                                                      SCHEDULE I

                         SCHEDULE OF PRINCIPAL PAYMENTS

          The principal of the Senior Secured Notes will be payable in
semi-annual installments, commencing June 30, 2004, as follows:

SCHEDULED PAYMENT DATE                     PRINCIPAL AMOUNT PAYABLE(2)
----------------------                     ---------------------------
June 30,2004 ...........................            $  215,305
December 30, 2004 ......................               296,077
June 30, 2005 ..........................             2,982,569
December 30, 2005 ......................             3,107,308
June 30, 2006 ..........................             4,707,100
December 30, 2006 ......................             4,903,964
June 30, 2007 ..........................             4,374,290
December 30, 2007 ......................             4,557,235
June 30, 2008 ..........................             3,837,232
December 30, 2008 ......................             3,997,716
June 30, 2009 ..........................             4,477,107
December 30, 2009 ......................             4,664,353
June 30, 2010 ..........................             4,955,198
December 30, 2010 ......................             5,162,439
June 30, 2011 ..........................             5,588,336
December 30, 2011 ......................             5,822,056
June 30, 2012 ..........................             5,388,039
December 30, 2012 ......................             5,613,382
June 30, 2013 ..........................             5,849,423
December 30, 2013 ......................             6,094,063
June 30, 2014 ..........................             6,796,100
December 30, 2014 ......................             7,052,203
June 30, 2015 ..........................             7,916,885
December 30, 2015 ......................             8,247,993
June 30, 2016 ..........................             8,458,680
December 30, 2016 ......................             8,812,447
June 30, 2017 ..........................             9,084,414
December 30, 2017 ......................             9,464,350
June 30, 2018 ..........................             6,481,436
December 30, 2018 ......................             6,752,509
June 30, 2019 ..........................             5,823,102
December 30, 2019 ......................             6,066,641
June 30, 2020 ..........................             6,111,116
December 30, 2020 ......................             6,365,934

----------
(2)  Represents the principal amount payable with respect to $190,000,000 of
     Senior Secured Notes through the Final Maturity Date. The Holder of this
     Senior Secured Note shall be entitled to a pro rata portion of the
     principal amount set forth in this schedule on each Scheduled Payment Date
     based on the principal sum set forth on the face of this Senior Secured
     Note as adjusted in the attached Schedule of Exchanges of Interests in the
     Global Note.

                                    EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Ormat Funding Corp.
980 Greg Street
Sparks, Nevada 89431
Tel.: (775) 356-9029
Fax: (775)356-9039
Attention: President

Union Bank of California, N.A.
475 Sansome Street, 12th Floor
San Francisco, CA 94111
Tel.: (415)296-6754
Fax:(415)296-6757
Attention: Corporate Trust Department

Re:  8 1/4% Senior Secured Notes Due December 30, 2020

          Reference is hereby made to this Indenture, dated as of February 13,
2004 (the "Indenture"), among Ormat Funding Corp., as issuer, Brady Power
Partners, Steamboat Development Corp., Steamboat Geothermal LLC, OrMammoth Inc.,
ORNI 1 LLC, ORNI 2 LLC, ORNI 7 LLC, as guarantors, Ormesa LLC and Union Bank of
California, N.A., as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in this Indenture.

          __________________, (the "Transferor") owns and proposes to transfer
the Senior Secured Note [s] or interest in such Senior Secured Note [s]
specified in Annex A hereto, in the principal amount of $_________________ in
such Senior Secured Note [s] or interests (the "Transfer"), to ______ (the
"Transferee"), as further specified in Annex A hereto. In connection with the
Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
GLOBAL NOTE OR A CERTIFICATED NOTE PURSUANT TO RULE 144A. The Transfer is being
effected pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Certificated
Note is being transferred to a Person that the Transferor reasonably believed
and believes is purchasing the beneficial interest or Certificated Note for its
own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of this
Indenture, the transferred beneficial interest or Certificated Note will be
subject to the

                                                                       Exhibit B
                                                                          Page 2

restrictions on transfer enumerated in the Private Placement Legend printed on
the Global Note and/or the Certificated Note and in this Indenture and the
Securities Act.

2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A
CERTIFICATED NOTE PURSUANT TO REGULATION S. The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the Transfer
is not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and (iii)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of this Indenture, the transferred beneficial interest or
Certificated Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Certificated Note and in this
Indenture and the Securities Act.

3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE CERTIFICATED NOTE OR A CERTIFICATED NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Certificated Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

          (a)  such Transfer is being effected pursuant to and in accordance
               with Rule 144 under the Securities Act;

                                       or

          (b)  such Transfer is being effected to the Issuer or a subsidiary
               thereof;

                                       or

          (c)  such Transfer is being effected pursuant to an effective
               registration statement under the Securities Act and in compliance
               with the prospectus delivery requirements of the Securities Act.

                                                                       Exhibit B
                                                                          Page 3

                                       or

          (d)  such Transfer is being effected to an Institutional Accredited
               Investor and pursuant to an exemption from the registration
               requirements of the Securities Act other than Rule 144A, Rule 144
               or Rule 904, and the Transferor hereby further certifies that it
               has not engaged in any general solicitation within the meaning of
               Regulation D under the Securities Act and the Transfer complies
               with the transfer restrictions applicable to beneficial interests
               in a Restricted Global Note or Restricted Definitive Notes and
               the requirements of the exemption claimed, which certification is
               supported by (1) a certificate executed by the Transferee
               certifying that such Transferee is an Institutional Accredited
               Investor and (2) if such Transfer is in respect of a principal
               amount of Senior Secured Notes at the time of transfer of less
               than $250,000, an Opinion of Counsel provided by the Transferor
               or the Transferee (a copy of which the Transferor has attached to
               this certification), to the effect that such Transfer is in
               compliance with the Securities Act. Upon consummation of the
               proposed transfer in accordance with the terms of this Indenture,
               the transferred beneficial interest or Definitive Note will be
               subject to the restrictions on transfer enumerated in the Private
               Placement Legend printed on the Definitive Note and/or the
               Definitive Notes and in this Indenture and the Securities Act.

4. [_] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Certificated Note.

     (a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in this Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in this Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of this Indenture, the transferred beneficial interest or
Certificated Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Certificated Notes and in this Indenture.

     (b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in
this Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in this Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of this Indenture, the transferred beneficial
interest or Certificated Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Certificated Notes and in this Indenture.

                                                                       Exhibit B
                                                                          Page 4

     (c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in this
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in this Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of this Indenture, the transferred beneficial interest or
Certificated Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Certificated Notes and in this Indenture.

          This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer.

                                        ----------------------------------------
                                               [Insert Name of Transferor]

                                        BY:
                                            ------------------------------------
                                            Name:
                                            Title:

Dated:            ,
       -----------  ----

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.   The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

     (a)  [_] a beneficial interest in the:

          (i)  [_] Global Note (CUSIP ____), or

          (ii) [_] Regulation S Global Note (CUSIP ____), or

          (iii) [_] Certificated Note (Number ____); or

     (b)  [_] a Restricted Certificated Note.

2.   After the Transfer the Transferee will hold:

                                   [CHECK ONE]

     (a)  [_] a beneficial interest in the:

          (i)  [_] Global Note (CUSIP ____), or

          (ii) [_] Regulation S Global Note (CUSIP ____), or

          (iii) [_] Certificated Note (CUSIP ____); or

          (iv) [_] Unrestricted Global Note (CUSIP ____); or

     (b)  [_] a Restricted Certificated Note; or

     (c)  [_] an Unrestricted Certificated Note, in accordance with the terms of
          this Indenture.

                                    EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Ormat Funding Corp.
980 Greg Street
Sparks, Nevada 89431
Tel.: (775) 356-9029
Fax: (775)356-9039
Attention: President

Union Bank of California, N.A.
475 Sansome Street, 12th Floor
San Francisco, CA 94111
Tel.: (415)296-6754
Fax: (415)296-6757
Attention: Corporate Trust Department

Re:  8 1/4% Senior Secured Notes Due December 30, 2020

                            (CUSIP ________________)

          Reference is hereby made to this Indenture, dated as of February 13,
2004 (the "Indenture"), among Ormat Funding Corp., as issuer, Brady Power
Partners, Steamboat Development Corp., Steamboat Geothermal LLC, OrMammoth Inc.,
ORNI 1 LLC, ORNI 2 LLC, ORNI 7 LLC, as guarantors, Ormesa LLC and Union Bank of
California, N.A., as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in this Indenture.

          ____________, (the "Owner") owns and proposes to exchange the Senior
Secured Note [s] or interest in such Senior Secured Note [s] specified herein,
in the principal amount of $________________ in such Senior Secured Note [s] or
interests (the "Exchange"). In connection with the Exchange, the Owner hereby
certifies that:

1. Exchange of Restricted Certificated Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Certificated Notes or Beneficial
Interests in an Unrestricted Global Note

     (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant

                                                                       Exhibit C
                                                                          Page 2

to and in accordance with the United States Securities Act of 1933, as amended
(the "Securities Act"), (iii) the restrictions on transfer contained in this
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

     (b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED CERTIFICATED NOTE. In connection with the Exchange
of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Certificated Note, the Owner hereby certifies (i) the Certificated
Note is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in this
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Certificated Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

     (c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Certificated Note for a beneficial interest in
an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Certificated Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in this
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

     (d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED NOTE TO
UNRESTRICTED CERTIFICATED NOTE. In connection with the Owner's Exchange of a
Restricted Certificated Note for an Unrestricted Certificated Note, the Owner
hereby certifies (i) the Unrestricted Certificated Note is being acquired for
the Owner's own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to Restricted
Certificated Notes and pursuant to and in accordance with the Securities Act,
(iii) the restrictions on transfer contained in this Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Certificated Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.

2. Exchange of Restricted Certificated Notes or Beneficial Interests in
Restricted Global Notes for Restricted Certificated Notes or Beneficial
Interests in Restricted Global Notes.

     (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED CERTIFICATED NOTE. In connection with the Exchange of
the Owner's beneficial

                                                                       Exhibit C
                                                                          Page 3

interest in a Restricted Global Note for a Restricted Certificated Note with an
equal principal amount, the Owner hereby certifies that the Restricted
Certificated Note is being acquired for the Owner's own account without
transfer. Upon consummation of the proposed Exchange in accordance with the
terms of this Indenture, the Restricted Certificated Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Certificated Note and in this
Indenture and the Securities Act.

     (b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE OR CERTIFICATED NOTE. In
connection with the Exchange of the Owner's Restricted Certificated Note for a
beneficial interest in the [CHECK ONE] [_] "Global Note", [_] "Regulation S
Global Note", [_] "Certificated Note" with an equal principal amount, the Owner
hereby certifies (i) the beneficial interest is being acquired for the Owner's
own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Exchange in accordance with the
terms of this Indenture, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the relevant Restricted Global Note and in this Indenture and the Securities Act

                                                                       Exhibit C
                                                                          Page 4

          This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer.

                                             -----------------------------------
                                                    [Insert Name of Owner]

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

Dated:           ,
       ----------  ----

                                    EXHIBIT D

                            SUBORDINATION PROVISIONS

          Section 1. Definitions and Rules of Interpretation. Except as
otherwise specified, capitalized terms used herein without definition shall have
the meanings assigned to such terms in the Indenture. In addition, the following
terms shall have the following meanings:

1.1  "Subordinated Debt" shall mean any Indebtedness of the Issuer permitted to
     be incurred pursuant to clause (vi) of the definition of Permitted
     Indebtedness under the Indenture.

1.2  "Subordinated Debt Pledge Agreement" means an agreement executed and
     delivered by the parties hereto substantially in the form of the Pledge
     Agreements with such changes thereto as may be necessary to ensure that a
     first priority Lien and security interest is created and maintained in
     favor of the Collateral Agent for the benefit of the Secured Parties.

1.3  "Subordinated Lenders" shall mean each and every lender to whom any of the
     Subordinated Debt is owed and any holder of any document evidencing such
     Subordinated Debt.

          Section 2. Ranking of Senior Secured Obligations

2.1  Until the final maturity date of the Senior Secured Obligations, (i) the
     Subordinated Lenders and the Issuer hereby agree that all Subordinated Debt
     is and shall be subordinated in right of payment and liquidation in
     relation to all Senior Secured Obligations to the extent and in the manner
     hereinafter set forth, (ii) except as provided in Section 2.2 hereof, no
     payments or other distributions whatsoever in respect of any part of the
     Subordinated Debt shall be made nor shall any property or assets of the
     Issuer be applied to the purchase or other acquisition or retirement of any
     part of the Subordinated Debt, and (iii) each of the Subordinated Lenders
     agrees that it will not ask, demand, sue for, take or receive from or for
     the account of the Issuer (whether directly or indirectly), by set-off or
     in any other manner, the Subordinated Debt, or any security therefor,
     except with the prior written consent of each of the Secured Parties.

2.2  Notwithstanding the restrictions set forth in Section 2.1 above, but
     without limitation to the rights of the Secured Parties under the terms of
     the Financing Documents, until the final maturity date of the Senior
     Secured Obligations, the Issuer may make repayments of principal of, other
     prepayments of principal of, and payments of interest on, and other amounts
     owing in respect of, the Subordinated Debt solely out of and to the extent
     of any funds permitted to be paid to the Issuer out of the Distribution
     Account in accordance with the provisions of the Depositary Agreement.

2.3  Payments of the Subordinated Debt not payable by reason of Section 2.2
     above shall be deferred until the date on which such payment may be made in
     accordance with the terms

                                                                       Exhibit D
                                                                          Page 2

     hereof; provided that, in the event that the payment of the Subordinated
     Debt is so deferred or the conditions to payment have not been satisfied in
     accordance with the terms hereof, such delay in payment shall not
     constitute a default in respect of the Subordinated Debt.

          Section 3. No Payment in Certain Circumstances. Until the final
maturity date of the Senior Secured Obligations, and without limitation to the
rights of the Secured Parties under the terms of the Financing Documents:

3.1  upon any distribution or application of the assets of the Issuer in
     connection with any liquidation, dissolution or other proceeding for the
     winding up of the Issuer (whether partial or complete) or any proceeding
     for insolvency or bankruptcy (whether voluntary or involuntary) or any
     receivership, reorganization or other similar case or proceeding in
     connection therewith, or any assignment for the benefit of creditors or
     arrangement with creditors, whether or not pursuant to the insolvency,
     bankruptcy or similar laws of any jurisdiction, or the sale of all or
     substantially all of the assets of the Issuer or any other marshalling of
     assets and liabilities of the Issuer:

     3.1.1 the Senior Secured Obligations shall first be irrevocably and
          indefeasibly paid in full to the Secured Parties before any of the
          Subordinated Lenders shall be entitled to receive any payment on
          account of the Subordinated Debt or any other interests in the Issuer
          arising from the Subordinated Debt whether in cash, securities or
          other assets; and

     3.1.2 any payment or distribution of assets of the Issuer of any kind or
          character in respect of the Subordinated Debt to which any of the
          Subordinated Lenders would be entitled if the Subordinated Debt were
          not subordinated pursuant to the terms hereof shall be made by the
          trustee, liquidator or agent or other Person making such payment or
          distribution, directly to the Secured Parties until the Senior Secured
          Obligations are irrevocably and indefeasibly paid in full and each of
          the Subordinated Lenders irrevocably authorizes and empowers the
          Collateral Agent, acting for and on behalf of the Secured Parties, to
          receive and collect on its behalf any and all such payments or
          distributions;

3.2  without limitation to the foregoing, in the event any of the Distribution
     Conditions (as defined in the Depositary Agreement) are not satisfied, then
     no payment of principal, interest or other amounts owing shall be made by
     the Issuer on or in respect of the Subordinated Debt, and each Subordinated
     Lender agrees that it will not ask, demand, sue for, take or receive from
     or for the account of the Issuer (whether directly or indirectly), by
     set-off or in any other manner, or retain payment (in whole or in part) of,
     the Subordinated Debt, or any security therefor, until payments are
     permitted to be made out of the Distribution Account in accordance with the
     provisions of the Depositary Agreement;

3.3  if, for any reason whatsoever and whether pursuant to a bankruptcy,
     liquidation or similar proceeding or otherwise, the Issuer shall make or
     any of the Subordinated Lenders shall receive any payment or distribution
     of any kind or character, whether in

                                                                       Exhibit D
                                                                          Page 3

     cash, securities or other property, on account or in respect of the
     Subordinated Debt in contravention of any of the terms set forth herein,
     such Subordinated Lender shall hold any such payment or distribution in
     trust for the benefit of the Secured Parties, promptly notify the
     Collateral Agent of the receipt of such payment or distribution and
     promptly pay over or deliver such distribution or payment to the Collateral
     Agent, or to any other Person nominated by the Collateral Agent, to hold
     for the account of the Secured Parties. In the event of failure of any
     Subordinated Lender to make any such endorsement or assignment, the
     Collateral Agent is irrevocably authorized by the Subordinated Lenders to
     make the same; provided, however, that nothing in this sentence shall be
     deemed to restrict any rights of the Secured Parties to enforce in any
     manner provided under applicable law the obligation of a Subordinated
     Lender to make any such endorsement or assignment; and

3.4  notwithstanding any provision to the contrary herein or in any other
     Financing Document, no payment or delivery shall be made to the
     Subordinated Lenders of securities or other Senior Secured Obligations
     which are issued upon any merger, consolidation, sale, lease, transfer or
     other disposal by any Person succeeding to the Issuer or acquiring the
     Issuer's property and assets, unless such securities or Senior Secured
     Obligations are pledged in favor of the Secured Parties and subordinate and
     junior at least to the extent provided herein to the irrevocable and
     indefeasible payment in full in cash of all Senior Secured Obligations and
     to the payment of any stock or Senior Secured Obligations which are issued
     in exchange or substitution for any such Senior Secured Obligations.

          Section 4. Authorizations to Collateral Agent. Until the final
maturity date of the Senior Secured Obligations, and without limitation to the
rights of the Secured Parties under the terms of the Financing Documents, each
Subordinated Lender (i) irrevocably authorizes and empowers (without imposing
any obligation on) the Collateral Agent to claim, enforce, demand, sue for,
collect and receive all payments and distributions on or in respect of the
Subordinated Debt which are required to be paid or delivered to any Secured
Party, as provided herein, and to file and prove all claims therefor, give
receipts and take all such other action, in the name of such Subordinated Lender
or otherwise, necessary or appropriate for the enforcement of these
subordination provisions, (ii) irrevocably authorizes and empowers (without
imposing any obligation on) the Collateral Agent to vote the Subordinated Debt
in favor of or in opposition to any matter which may come before any meeting of
creditors of the Issuer generally or in connection with, or in anticipation of,
any insolvency or bankruptcy case or proceeding, or any proceeding under any
laws relating to the relief of debtors, readjustment of indebtedness,
arrangements, reorganizations, compositions or extensions relative to the
Issuer, and (iii) agrees to execute and deliver to the Collateral Agent all such
further instruments confirming the above authorization, and all such powers of
attorney, proofs of claim, assignments of claim and other instruments, and to
take all such other action, as may be necessary or as may be requested by any
Secured Party in order to enable the Collateral Agent to accomplish the
foregoing.

                                                                       Exhibit D
                                                                          Page 4

          Section 5. Non-Impairment. None of the Senior Secured Obligations of
the Issuer shall be impaired by the Secured Parties:

5.1  agreeing with the Issuer, any Subordinated Lender or any other Person as to
     any amendment, variation, assignment, novation, extension or departure
     (however substantial or material) of, to or from any Transaction Document
     (including changing the manner, place or terms of payment of or extending
     the time of payment of, or renewing or altering, the Senior Secured
     Obligations, or otherwise amending or supplementing in any manner the
     Senior Secured Obligations or any instrument evidencing the same or any
     agreement under which the Senior Secured Obligations are outstanding, or
     any Financing Document) so that any such amendment, variation, assignment,
     novation or departure shall, whatever its nature, be binding upon the
     Subordinated Lenders in all circumstances;

5.2  releasing, granting any time, any indulgence or any waiver of any kind to,
     or composition with, the Issuer, any Subordinated Lender or any other
     Person (including, without limitation, the waiver of any preconditions for
     drawing under, or of any breach of, the Financing Documents or the exercise
     or the failure to exercise any rights against the Issuer and any other
     Person), or entering into any transaction or arrangements whatsoever with
     or in relation to the Issuer, any Subordinated Lender and/or any other
     Person;

5.3  taking, accepting, varying, dealing with, exchanging, renewing, enforcing,
     failing to enforce, take up or perfect, abstaining from enforcing,
     surrendering or releasing any security, right of recourse, set-off or
     combination or other right, remedy or interest held by the Secured Parties
     in connection with the Senior Secured Obligations or any part thereof, or
     acting in relation to the Transaction Documents in such manner as it thinks
     fit;

5.4  failing to present or observe any formality or other requirement in respect
     of any instrument or any failure to realize the full value of any security;

5.5  claiming, proving for, accepting or transferring any payment in respect of
     the Senior Secured Obligations in any composition by, or winding up of, the
     Issuer, any Subordinated Lender and/or any other Person or abstaining from
     so claiming, proving for, accepting or transferring; or

5.6  actually or purportedly assigning all or any portion of the Senior Secured
     Obligations to any other Person.

To the fullest extent permitted by applicable law, no change of law or
circumstances shall release or diminish any of the Subordinated Lender's
liabilities, agreements or duties hereunder, affect the provisions set forth
herein in any way, or afford the Subordinated Lenders any recourse against any
of the Secured Parties.

                                                                       Exhibit D
                                                                          Page 5

          Section 6. Benefit of Subordination Provisions. These subordination
provisions are intended solely to define the relative rights of the Secured
Parties, the Subordinated Lenders, and their respective successors and permitted
assigns.

          Section 7. Subordination of Liens. Without limitation of any other
provisions of this Exhibit D, the Issuer shall not create or suffer to exist any
Lien on any of its Property benefiting the Subordinated Debt. If in
contravention of this Section 7, any such Liens shall now or hereafter secure or
benefit the Subordinated Debt, whether arising by statute, in law or equity or
by contract, then, without limiting any of the Secured Parties' rights in
respect of such breach, such Lien shall and is hereby expressly subordinated and
made secondary and inferior to the Liens now or hereafter securing or benefiting
the Senior Secured Obligations.

          Section 8. Reinstatement. If any payment to any of the Secured Parties
by the Issuer or any other Person in respect of any of the Senior Secured
Obligations is held to constitute a preference or a voidable transfer under
applicable law, or if for any other reason any Secured Party is required to
refund such payment to the Issuer or to such Person or to pay the amount thereof
to any other Person, such payment to such Secured Party shall not constitute a
release of any of the Subordinated Lenders from any of their liability
hereunder, and each Subordinated Lender agrees and acknowledges that the
provisions set forth herein shall continue to be effective or shall be
reinstated, as the case may be, to the extent of any such payment or payments.

          Section 9. Restrictions on Transfers. None of the Subordinated Lenders
may transfer (by sale, novation or otherwise) any of its rights or obligations
under the Subordinated Debt and under these subordination provisions unless (i)
such transfer is in connection with a transfer of all or a portion of its
respective interest in the Subordinated Debt as expressly permitted under the
Financing Documents and (ii) the transferee of such interest first agrees in
writing to be bound by the terms of this Exhibit D applicable to the transferor
of such interest and executes an instrument to that effect.

          Section 10. Affirmative Covenants of the Subordinated Lenders. Each of
the Subordinated Lenders shall:

10.1 until the Senior Secured Obligations have been paid in full, promptly
     deliver to the Collateral Agent copies of each amendment or modification to
     any agreement relating to the Subordinated Debt agreed to which such
     Subordinated Lender is a party;

10.2 until the Senior Secured Obligations have been paid in full, cause to be
     clearly inserted in any instrument which at any time evidences any part of
     the Subordinated Debt owing to such Subordinated Lender a statement to the
     effect that the payment thereof is subordinated in accordance with the
     terms of this Exhibit D; and

10.3 cause its right to receive any payment in respect of the Subordinated Debt
     to be (and, upon the creation of the Subordinated Obligation, the
     Subordinated Lender acknowledges and agrees that such Subordinated
     Obligation is and shall be) subject to the Liens created by the Security
     Documents and, if required by applicable law, cause any agreement or
     instrument evidencing such right to be registered or filed with the

                                                                       Exhibit D
                                                                          Page 6

     appropriate Governmental Authorities in order to perfect such Liens created
     by the Security Documents and cause any instrument which at any time
     evidences any part of the Subordinated Debt owing to such Subordinated
     Lender and any proceeds deriving therefrom to be pledged in favor of the
     Secured Parties and an original of such instrument shall be delivered to
     the order of the Collateral Agent with appropriate endorsements thereto
     executed in blank; and

10.4 at its own cost, file all documents or instruments necessary or advisable
     and do all things as any Secured Party may reasonably request in order to
     carry out more effectively the intent and purpose of these subordination
     provisions.

          Section 11. Negative Covenants of the Subordinated Lenders. Until the
Senior Secured Obligations have been paid in full, each of the Subordinated
Lenders shall not:

11.1 create, agree to create or permit to exist, any Lien (howsoever ranking in
     point of priority) of any nature whatsoever in, over or affecting the
     Subordinated Debt owing to such Subordinated Lender, other than pursuant to
     the Security Documents and those contemplated hereunder;

11.2 without the prior written consent of the each of the Secured Parties, sue
     for payment of, or accelerate the maturity of, or initiate any proceedings
     or take any other actions to enforce any of the Subordinated Debt owing to
     such Subordinated Lender;

11.3 whether by set-off, counter-claim or otherwise, reduce any amount owing by
     such Subordinated Lender to the Issuer by an amount payable by the Issuer
     or any Affiliate or other Person to such Subordinated Lender in respect of
     the Subordinated Debt;

11.4 initiate, support, permit or join any creditor in bringing any proceeding
     against the Issuer under any bankruptcy, insolvency, reorganization,
     receivership or similar law of any jurisdiction (to recover all or any part
     of the Subordinated Debt or any other liability owed to such Subordinated
     Lender), except at the written request of the Collateral Agent;

11.5 permit to subsist or receive any guarantee or other assurance against loss
     in respect of all or any part of the Subordinated Debt owing to such
     Subordinated Lender (other than those guarantees and/or assurances against
     loss that a Subordinated Lender would normally acquire in the ordinary
     course of business, based upon its exercise of prudent business judgment,
     including, but not limited to political risk insurance, currency and
     interest rate hedging agreements, and other similar instruments; provided
     that such guarantees and/or assurances do not give rise to any direct or
     indirect recourse against the Issuer by the providers of such guarantees
     and/or assurances) or accept, or otherwise take, any collateral security
     for such Subordinated Debt or commence enforcement proceedings with respect
     to, or against, any collateral security for such Subordinated Debt;

                                                                       Exhibit D
                                                                          Page 7

11.6 subordinate all or any part of the Subordinated Debt owing to such
     Subordinated Lender or the proceeds thereof to any sums owing by the Issuer
     to any Persons other than the Secured Parties; or

11.7 take or omit to take any action whereby the subordination hereunder of all
     or any part of the Subordinated Debt may be impaired.

          Section 12. Security Interest. (a) Each Subordinated Lender hereby
acknowledges and agrees that, as a condition to the incurrence of any
Subordinated Debt, such Subordinated Lender shall have delivered to the
Collateral Agent a Subordinated Debt Pledge Agreement in respect of such
Subordinated Debt, and each Subordinated Lender hereby acknowledges that it has
assigned and granted to the Collateral Agent, for the benefit of the Secured
Parties, a first priority Lien and security interest on such Subordinated Debt
and any subordinated note evidencing such Subordinated Debt as collateral
security for the payment and performance when due of the Senior Secured
Obligations.

(b) Each Subordinated Lender hereby acknowledges and agrees that upon the
conversion of any Subordinated Debt into equity pursuant to Section 13 below,
such Subordinated Lender will either (i) confirm in writing to the Collateral
Agent that such equity interests are subject to a first priority Lien on and
security interest in favor of the Collateral Agent, for the benefit of the
Secured Parties, pursuant to an existing Pledge Agreement previously executed by
such Subordinated Lender or (ii) provide to the Collateral Agent a pledge
agreement in substantially the same form as the Pledge Agreements pursuant to
which such Subordinated Lender will grant a first priority Lien on and security
interest in such equity interests in favor of the Collateral Agent, for the
benefit of the Secured Parties.

          Section 13. Conversion of Subordinated Debt. Upon the occurrence and
during the continuance of an Event of Default, each of the Subordinated Lenders
and the Issuer shall, at the request of the Collateral Agent, immediately cause
all Subordinated Debt then outstanding to be converted into equity of the
Issuer.

          Section 14. Waiver of Subrogation.

14.1 Notwithstanding anything to the contrary herein or in any other Financing
     Document, until the final maturity date of the Senior Secured Obligations
     each of the Subordinated Lenders irrevocably waives any claim or other
     rights which it may now have or hereafter acquire against the Issuer that
     arise from the existence or performance of its Senior Secured Obligations
     hereunder including any and all rights of subrogation, reimbursement,
     exoneration, contribution, indemnification, any right to participate in any
     claim or remedy of the Secured Parties against the Issuer, or any security
     which the Secured Parties may now have or hereafter acquire, by any payment
     made hereunder or otherwise, including the right to take or receive from
     the Issuer, directly or indirectly, in cash or other property or by set-off
     or in any other manner, payment or security on account of such claim or
     other rights.

14.2 For the purposes of such waiver of subrogation, any payments or
     distributions to the Secured Parties of any cash, property or securities to
     which the Subordinated Lenders

                                                                       Exhibit D
                                                                          Page 8

     would be entitled except for these provisions shall, as between the Issuer
     and the Subordinated Lenders and their respective other creditors, be
     deemed to be a payment by the Issuer to or on account of the Senior Secured
     Obligations.

          Section 15. Exercise of Powers.

15.1 The Secured Parties shall be entitled to exercise their rights and powers
     under these subordination provisions in such a manner and at such times as
     the Secured Parties in their absolute discretion may determine. None of the
     Secured Parties shall be liable for any losses arising in connection with
     the exercise of or failure to exercise any of its rights, powers and
     discretions hereunder.

15.2 The Subordinated Lenders alone shall be responsible for their contracts,
     engagements, acts, omissions, defaults and losses and for liabilities
     incurred by them.

                                    EXHIBIT E

                              FORM OF DEED OF TRUST

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

MILBANK, TWEED, HADLEY & McCLOY
601 South Figueroa Street
Thirtieth Floor
Los Angeles, California 90017
Attn: Matthew S. Meza, Esq.

                  DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY
                          AGREEMENT, AND FIXTURE FILING

     THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE
FILING (this "DEED OF TRUST") is made as of ___________________________, 200_,
made by _______________________, a _____________________("TRUSTOR"), whose
address is ____________________________, to __________________________ Title
Company, a _____________________ corporation ("TRUSTEE"), whose address is
____________________________________, for the benefit of _____________________,
a __________________________, whose address is _________________________, in its
capacity as __________________ [agent] under the ______________________ (as
defined herein), its successors and assigns (collectively, "BENEFICIARY").

                                   ARTICLE I.
                         GRANTS AND OBLIGATIONS SECURED

          A.   GRANT

          1.1. TRUSTOR HEREBY GRANTS, TRANSFERS, CONVEYS AND ASSIGNS TO TRUSTEE,
IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, under
and subject to the terms and conditions hereinafter set forth:

          (i) all right, title and interest of Trustor, now owned or hereafter
     acquired, in and to all of those buildings, structures, fixtures, machinery
     and other improvements constituting that certain geothermal electrical
     generating facility and steam gathering system (including, without
     limitation, foundations, turbine decks, sumps, trenches, paving, control
     building, structural steel framing, parking covers, HVAC, electrical,
     septic and plumbing installations, pipelines, cooling tower and turbine
     generators) located on that certain real property in the County of
     _________________________, State of California, all as more particularly
     described in Exhibit A attached hereto and by this reference incorporated
     herein (all such real property described in Exhibit A is collectively
     referred to herein as the "PROPERTY");

          (ii) TOGETHER WITH, all right, title and interest of Trustor, now
     owned or hereafter acquired, in and to those certain leasehold estates and
     leases described in Exhibit B attached hereto and by this reference
     incorporated herein (each lease described therein a "LEASE," and
     collectively the "LEASES"), covering that certain real property located in
     the County of ____________________, State of California and more
     particularly described in Exhibit B attached hereto and by this reference
     incorporated herein (all such real property described in Exhibit B is
     collectively referred to herein as the "LEASED LAND," and with the Property
     is collectively referred to herein as the "PREMISES");

          (iii) TOGETHER WITH, to the extent not comprising a part of the
     Property described above, all of Trustor's right, title and interest in any
     and all buildings and improvements now or hereafter erected on the Premises
     or on the easements described in subparagraph (vi) of this granting clause,
     including but not limited to an __________ (___) megawatt geothermal
     electric power plant facility comprised of _____________ (___)
     [_____________] turbines (each rated at _____ megawatt) and ____________
     (___) [spare rotor and diaphragm], and all appurtenant structures and
     equipment, including the related steamfield development improvements and
     equipment comprised of drill pads, roads, geothermal resource gathering and
     disposal systems, interconnection equipment, all surface steam gathering
     systems, brine disposal systems, power transmission facilities and lines,
     substations, interconnection facilities and other facilities and equipment
     used to generate, sell and deliver power and all other machinery and
     equipment and other articles attached to said facilities and improvements
     (the "IMPROVEMENTS");

          (iv) TOGETHER WITH all rents, earnings issues, profits, royalties,
     income, accounts receivable, revenues, deposits, security deposits,
     receipts and other benefits (collectively, the "RENTS") derived or
     generated from the use and operation of the Premises, Improvements and the
     Collateral (as defined herein), including any of the Leases, or to which
     Trustor may be entitled, whether now due, past due or to become due or from
     any lease, sublease, license, franchise or concession or other agreement
     now or hereafter affecting all or any portion of the Premises or the
     Improvements or the use, operation or occupancy thereof, subject to the
     terms and provisions of Article III hereof;

          (v) TOGETHER WITH all interests, estates or other claims, both in law
     and in equity, which Trustor now has or may hereafter acquire in the
     Premises or the Improvements;

          (vi) TOGETHER WITH all right, title and interest now or hereafter
     appertaining, belonging to or acquired by Trustor in and to any easements,
     rights-of-way, rights, licenses, profits, and privileges used in connection
     therewith or as a means of access thereto, including without limitation
     those easements covering that certain real property located in the County
     of __________________________, State of California, which easements and
     real property are more particularly described in Exhibit C attached hereto
     and by this reference incorporated herein, and including, without limiting
     the generality of the foregoing, all rights pursuant to any trackage
     agreement and all rights to the nonexclusive use of common drive entries,
     any after acquired title and reversion in or to

                                       -2-

     each and every part of all streets, roads, highways and alleys adjacent to
     and adjoining the same; and all tenements, hereditaments and appurtenances
     thereof and thereto, and all water and water rights (whether riparian,
     appropriative or otherwise, and whether or not appurtenant), and shares of
     stock evidencing the same;

          (vii) TOGETHER WITH all leasehold estates, rights, titles and
     interests of Trustor in, to and under all leases, subleases, licenses,
     franchises and other agreements covering the Premises, the Improvements or
     any portion thereof now or hereafter existing or entered into, and all
     rights, titles and interests of Trustor thereunder, including, without
     limitation, all cash or security deposits, advance rentals, and deposits or
     payments of similar nature;

          (viii) TOGETHER WITH all right, title and interest now owned or
     hereafter acquired by Trustor in and to any greater estate in the Premises
     or the Improvements;

          (ix) TOGETHER WITH all the estate, interest, right, title, other claim
     or demand, both in law and in equity, including claims or demands with
     respect to the proceeds of insurance in effect with respect thereto, which
     Trustor now has or may hereafter acquire in the Premises or the
     Improvements, and any and all awards made for the taking by eminent domain,
     or by any proceeding of purchase in lieu thereof, of any other component of
     the whole or any part of the Trust Estate (as hereinafter defined),
     including, without limitation, any awards resulting from a change of grade
     of streets and awards for severance damages;

          (x) TOGETHER WITH all right, title and interest now owned or hereafter
     acquired by Trustor in and to all articles of personal property and any
     additions to, substitutions for, changes in or replacements of the whole or
     any part thereof, including, without limitation, pipes, furnaces, boilers,
     generators, conveyors, drums, fire sprinklers and alarm systems, and air
     conditioning, heating, refrigerating, electronic monitoring, trash and
     garbage removal and maintenance equipment, office equipment, appliances,
     and all other and additional personal property which may now or hereafter
     be used or obtained in connection with the Premises or the Improvements,
     the specific enumerations herein not excluding the general, now or at any
     time hereafter affixed to, attached to, placed upon, used or useful in any
     way in connection with the use, enjoyment, occupancy or operation of the
     Premises or the Improvements or any portion thereof and owned by Trustor or
     in which Trustor now has or hereafter acquires an interest, and all
     building materials, supplies, tools and equipment now or hereafter
     delivered to the Premises and intended to be installed or placed in or
     about the Improvements;

          (xi) TOGETHER WITH all general intangibles relating to design,
     development, operation, management and use of the Premises and construction
     of the Improvements, including, but not limited to, (a) all permits,
     licenses, authorizations, variances, land use entitlements, approvals and
     consents issued or obtained in connection with the construction of the
     Improvements, (b) all permits, licenses, approvals, consents,
     authorizations, franchises and agreements issued or obtained in connection
     with the use,

                                       -3-

     occupancy or operation of the Premises or the Improvements, (c) all rights
     as a declarant (or its equivalent) under any covenants, conditions and
     restrictions or other matters of record affecting the Premises or the
     Improvements, (d) all materials prepared for filing or filed with any
     governmental agency, (e) all rights under any contract in connection with
     the development, design, use, operation, management and construction of the
     Premises or the Improvements and (f) all books and records prepared and
     kept in connection with the acquisition, construction, operation and
     occupancy of the Premises, the Improvements and any other component of the
     Trust Estate;

          (XII) TOGETHER WITH all construction, service, engineering,
     consulting, leasing, architectural and other similar contracts of any
     nature (including, without limitation, those of any general contractors,
     subcontractors and materialmen), as such may be modified, amended or
     supplemented from time to time, concerning the design, construction,
     management, operation, occupancy, use, and/or disposition of any other
     component of any portion of or all of the Trust Estate;

          (XIII) TOGETHER WITH all architectural drawings, plans,
     specifications, soil tests and reports, feasibility studies, appraisals,
     engineering reports and similar materials relating to any portion or all of
     the Premises and the Improvements;

          (XIV) TOGETHER WITH all payment and performance bonds or guarantees
     and any and all modifications and extensions thereof relating to the
     Premises and the Improvements;

          (XV) TOGETHER WITH all reserves, deferred payments, deposits, refunds,
     cost savings, letters of credit and payments of any kind relating to the
     construction, design, development, operation, occupancy, use and
     disposition of any other component of all or any portion of the Trust
     Estate, including, without limitation, any property tax rebates now owing
     or hereafter payable to Trustor;

          (XVI) TOGETHER WITH any commitment by any lender to extend permanent
     or additional construction financing to Trustor relating to any other
     component of the Trust Estate;

          (XVII) TOGETHER WITH all proceeds and claims arising on account of any
     damage to or taking of any other component of the Trust Estate or any part
     thereof, and all causes of action and recoveries for any loss or diminution
     in the value of any other component of the Trust Estate;

          (XVIII) TOGETHER WITH all policies of, and proceeds resulting from,
     insurance relating to any other component of the Trust Estate or any of the
     above collateral, and any and all riders, amendments, renewals, supplements
     or extensions thereof, and all proceeds thereof;

                                       -4-

          (XIX) TOGETHER WITH all deposits made with or other security given to
     utility companies by Trustor with respect to the Premises and/or the
     Improvements, and all advance payments of insurance premiums made by
     Trustor with respect thereto and claims or demands relating to insurance
     and all deposit accounts wherever located;

          (XX) TOGETHER WITH all shares of stock or other evidence of ownership
     of any other component of any part of the Trust Estate that is owned by
     Trustor in common with others, including all water stock relating to the
     Premises or the Improvements, if any, and all documents or rights of
     membership in any owners' or members' association or similar group having
     responsibility for managing or operating any part of the Premises or the
     Improvements;

          (XXI) TOGETHER WITH all proceeds, whether cash, promissory notes,
     contract rights or otherwise, of the sale or other disposition of all or
     any part of the estate of Trustor upon the Premises or the Improvements now
     or hereafter existing thereon;

          (XXII) TOGETHER WITH all sales contracts, escrow agreements and
     broker's agreements concerning the sale of any other component of any or
     all of the Trust Estate;

          (XXIII) TOGETHER WITH any and all monies and other property, real or
     personal, which may from time to time be subjected to the lien hereof by
     Trustor or by anyone on its behalf or with its consent, or which may come
     into the possession or be subject to the control of Trustee or Beneficiary
     pursuant to this Deed of Trust or any Project Document (as defined in the
     Indenture), including, without limitation, any protective advances under
     this Deed of Trust;

          (XXIV) TOGETHER WITH all Goods, Accounts, Documents, Instruments,
     Money, Chattel Paper and General Intangibles, as those terms are defined in
     the Commercial Code from time to time in effect in the State of California
     ("COMMERCIAL CODE") (collectively with the property described in
     subsections (x) through (xxiii), the "COLLATERAL").

          The security interest granted by Section 1.1 with respect to the
property described in subsection (iv) above is intended by Trustor to be
subordinate to the provisions of Article III hereof and shall not take priority
unless and until the absolute assignment granted to Beneficiary by Trustor in
Article III is for any reason deemed to be ineffective.

          1.2. MINERAL RIGHTS. Trustor hereby assigns and transfers to
Beneficiary all damages, royalties and revenue of every kind, nature and
description whatsoever that Trustor may be entitled to receive from any person
or entity owning or having or hereafter acquiring a right to the oil, gas or
mineral rights and reservations of the Premises, with the right in Beneficiary
to receive and receipt therefor, and apply the same to the indebtedness secured
hereby either before or after any default hereunder, and Beneficiary may demand,
sue for and recover any such payments but shall not be required to do so.

                                       -5-

          The entire estate, property and interest hereby conveyed to Trustee in
Sections 1.1 and 1.2 of this Article I(A) may hereafter be collective referred
to as the "TRUST ESTATE".

          1.3. FIXTURE FILING. The personal property in which beneficiary has a
security interest includes goods which are or shall become fixtures on the
Premises. This Deed of Trust is intended to serve as a fixture filing pursuant
to the terms of Sections 9334, 9502 and 9604 of the California Commercial Code
__________________ Commercial Code. This filing is to be recorded in the real
estate records of the county in which the Premises is located. This filing
remains in effect as a fixture filing until this Deed of Trust is released or
satisfied of record or its effectiveness otherwise terminates as to the Trust
Estate. In that regard, the following information is provided:

          Name of Debtor:
                          --------------------------

          Address of Debtor: See Section 5.7 hereof.

          Name of Secured Party:
                                 ------------------------

          Address of Secured Party: See Section 5.7 hereof.

          Trustor is the owner of a record interest in the real estate
concerned. Trustor warrants and agrees that there is no financing statement
covering the foregoing Collateral, the Premises, the Improvements, the Trust
Estate, or any part thereof, on file in any public office, except as disclosed
by Trustor to Beneficiary or as filed in connection with the transactions
contemplated by the Indenture.

          B. OBLIGATIONS SECURED

          1.4. FOR THE PURPOSE OF SECURING, IN SUCH ORDER OF PRIORITY AS
BENEFICIARY MAY DETERMINE (COLLECTIVELY, THE "OBLIGATIONS"):

          (i) payment of the aggregate outstanding principal amount of the Loans
     (as defined in the Indenture) plus accrued interest thereon, created by
     that certain Indenture dated as of even date herewith between
     Trustor, [_________________] as indenture trustee,
     [____________] party(ies) thereto and Beneficiary (the "INDENTURE")
     and evidenced by that certain Promissory Note (the "NOTE") of even date
     herewith executed by Trustor;

          (ii) payment of all other amounts from time to time payable under the
     Basic Documents (as defined in the Indenture) plus accrued interest
     thereon;

          (iii) payment of all other amounts from time to time payable by
     Trustor, to any Lender in connection with the Interest Rate Protection
     Agreements contemplated by Section 8.15 of the Indenture and entered into
     with parties that are Lenders (or affiliates of Lenders);

                                       -6-

          (iv) performance of every obligation, covenant or agreement of Trustor
     contained herein and all supplements, amendments and modifications thereto
     and all extensions and renewals thereof; and

          (v) performance of every obligation, covenant and agreement of Trustor
     contained in any Loan Document or any agreement now or hereafter executed
     by Trustor which recites that the obligations thereunder are secured by
     this Deed of Trust.

          TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR HEREBY
COVENANTS AND AGREES AS FOLLOWS:

                                   ARTICLE II.
                       COVENANTS AND AGREEMENTS OF TRUSTOR

          2.1. ASSIGNMENT OF POLICIES UPON FORECLOSURE. In any event of
foreclosure of this Deed of Trust or other transfer of title or assignment of
the Trust Estate in extinguishment, in whole or in part, of the debt secured
hereby, all right, title and interest of Trustor in and to all policies of
insurance required by the Indenture shall inure to the benefit of and pass to
the successor in interest to Trustor or the purchaser or grantee of the Trust
Estate.

          2.2. WAIVER OF OFFSET. All sums payable by Trustor pursuant to this
Deed of Trust shall be paid without notice, demand, counterclaim, setoff,
deduction or defense and without abatement, suspension, deferment, diminution or
reduction, and the obligations and liabilities of Trustor hereunder shall in no
way be released, discharged or otherwise affected (except as expressly provided
herein) by reason of: (a) any damage to or destruction of or any condemnation or
similar taking of the Trust Estate or any part thereof; (b) any restriction or
prevention of or interference by any third party with any use of the Trust
Estate or any part thereof; (c) any title defect or encumbrance or any eviction
from the Premises or the Improvements or any part thereof by title paramount or
otherwise; (d) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
Beneficiary or any guarantor of any Obligations, or any action taken with
respect to this Deed of Trust by any trustee or receiver of Beneficiary, or by
any court, in any such proceeding; (e) any claim which Trustor has or might have
against Beneficiary; (f) any default or failure on the part of Beneficiary to
perform or comply with any of the terms hereof or of any other agreement with
Trustor; or (g) any other occurrence whatsoever, whether similar or dissimilar
to the foregoing; whether or not Trustor shall have notice or knowledge of any
of the foregoing. Except as expressly provided herein, Trustor waives all rights
now or hereafter conferred by statute or otherwise to any abatement, suspension,
deferment, diminution or reduction of any sum secured hereby and payable by
Trustor.

          2.3. ACTIONS BY TRUSTEE OR BENEFICIARY TO PRESERVE TRUST ESTATE. If
Trustor fails to make any payment or to do any act as and in the manner provided
in any of the Project Documents, Beneficiary and/or Trustee, each in its own
discretion, without obligation so to do, without releasing Trustor from any
obligation, and without notice to or demand upon Trustor,

                                       -7-

may make or do the same in such manner and to such extent as either may deem
necessary to protect the security hereof. In connection therewith (without
limiting their general powers, whether conferred herein, in another Project
Document or by law), Beneficiary and Trustee shall have and are hereby given the
right, but not the obligation, (a) to enter upon and take possession of the
Trust Estate; (b) to make additions, alterations, repairs and improvements to
the Trust Estate which they or either of them may consider necessary or proper
to keep the Trust Estate in good condition and repair; (c) to appear and
participate in any action or proceeding affecting or which may affect the
security hereof or the rights or powers of Beneficiary or Trustee; (d) to pay,
purchase, contest or compromise any encumbrance, claim, charge, lien or debt
which in the judgment of either may affect or appears to affect the security of
this Deed of Trust or be prior or superior hereto; and (e) in exercising such
powers, to pay necessary expenses, including attorneys' fees and costs or other
necessary or desirable consultants. Trustor shall, immediately upon demand
therefor by Beneficiary and Trustee or either of them, pay to Beneficiary and
Trustee an amount equal to all respective costs and expenses incurred by such
party in connection with the exercise of the foregoing rights, including,
without limitation, costs of evidence of title, court costs, appraisals, surveys
and receiver's, trustee's and attorneys' fees, together with interest thereon
from the date of such expenditures at the Post-Default Rate.

          2.4. FURTHER ASSURANCES. Trustor agrees to execute such documents and
take such action as Beneficiary shall determine to be necessary or desirable to
further evidence, perfect or continue the perfection and/or the priority of the
lien and security interest granted by Trustor herein.

          2.5. EMINENT DOMAIN. In the event that any proceeding or action be
commenced for the taking of the Trust Estate, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain,
condemnation or otherwise, or if the same be taken or damaged by reason of any
public improvement or condemnation proceeding, or in any other manner
(collectively, a "CONDEMNATION"), or should Trustor receive any notice or other
information regarding such proceeding, action, taking or damage, Trustor shall
give prompt written notice thereof to Beneficiary. Beneficiary shall be entitled
to consent to any compromise or settlement in connection with such taking or
damage. All compensation, awards, damages, rights of action and proceeds awarded
to Trustor by reason of any such taking or damage (the "Condemnation Proceeds")
are hereby absolutely and unconditionally assigned to Beneficiary and Trustor
agrees to execute such further assignments of the CONDEMNATION PROCEEDS as
Beneficiary or Trustee may require. All such Condemnation Proceeds shall be
applied as provided for in the Indenture [CONFIRM THAT INDENTURE WILL GOVERN
CONDEMNATION].

          2.6. ADDITIONAL SECURITY. No other security now existing, or hereafter
taken, to secure the Obligations shall be impaired or affected by the execution
of this Deed of Trust; and all additional security shall be taken, considered
and held as cumulative. The taking of additional security, execution of partial
releases of the security, or any extension of the time of payment of the
indebtedness shall not diminish the force, effect or lien of this Deed of Trust
and shall not affect or impair the liability of any maker, surety or endorser
for the payment of said indebtedness. In the event Beneficiary at any time holds
additional security for any of the

                                       -8-

Obligations, it may enforce the sale thereof or otherwise realize upon the same,
at its option, either before, concurrently, or after a sale is made hereunder.

          2.7. ASSIGNMENT OF CONTRACTS. In addition to any other grant, transfer
or assignment effectuated hereby, without in any manner limiting the generality
of the grants given above, Trustor shall assign to Beneficiary, as security for
the indebtedness secured hereby, Trustor's interest in all agreements,
contracts, leases, licenses and permits affecting the Premises and Improvements
in any manner whatsoever, such assignments to be made, if so requested by
Beneficiary, by instruments in form satisfactory to Beneficiary; but no such
assignment shall be construed as a consent by Beneficiary to any agreement,
contract, license or permit so assigned, or to impose upon Beneficiary any
obligations with respect thereto.

          2.8. APPOINTMENT OF SUCCESSOR TRUSTEE. Beneficiary may, from time to
time, by a written instrument executed and acknowledged by Beneficiary, mailed
to Trustor and recorded in the County in which the Trust Estate is located and
by otherwise complying with the provisions of applicable law, substitute a
successor or successors to any Trustee named herein or acting hereunder; and
said successor shall, without conveyance from the Trustee predecessor, succeed
to all title, estate, rights, powers and duties of said predecessor.

          2.9. TRUSTEE'S POWERS. At any time, or from time to time, without
liability therefor and without notice, upon written request of Beneficiary and
presentation of this Deed of Trust and the Note secured hereby for endorsement,
Trustee may (i) reconvey any part of said Trust Estate, (ii) consent in writing
to the making of any map or plat thereof, (iii) join in granting any easement
thereon, or (iv) join in any extension agreement or any agreement subordinating
the lien or charge hereof.

          2.10. BENEFICIARY'S POWERS. Without affecting the liability of any
other person liable for the payment of any obligation herein mentioned, and
without affecting the lien or charge of this Deed of Trust upon any portion of
the Premises not then or theretofore released as security for the full amount of
all unpaid obligations, Beneficiary may, from time to time and without notice
(i) release any person so liable, (ii) extend the maturity or alter any of the
terms of any such obligation, (iii) grant other indulgences, (iv) release or
reconvey, or cause to be released or reconveyed at any time at Beneficiary's
option any parcel, portion or all of the Trust Estate, (v) take or release any
other or additional security for any obligation herein mentioned, or (vi) make
compositions or other arrangements with debtors in relation thereto.

          2.11. TRADE NAMES. At the written request of Beneficiary, Trustor
shall execute a certificate in form satisfactory to Beneficiary listing the
trade-names or fictitious business names under which Trustor intends to operate
the Trust Estate or any business located thereon and representing and warranting
that Trustor does business under no other trade names or fictitious business
names. Trustor shall promptly notify Beneficiary in writing of any change in
said trade names or fictitious business names, and will, upon written request of
Beneficiary, execute any additional financing statements and other certificates
necessary to reflect the change in trade names or fictitious business names.

                                       -9-

          2.12. EASEMENT AND OTHER AGREEMENTS. Trustor shall faithfully perform
each and every obligation assumed under any reciprocal agreement, easement
agreement, operating agreement, parking agreement and/or other agreement
affecting the Premises or the Improvements or any portion thereof. All such
other agreements shall be satisfactory in form and substance to Beneficiary and,
if Beneficiary so requests, Trustor's rights and interests under any such other
agreement shall be assigned to Beneficiary. Failure by Trustor to perform any
obligation under any such agreement shall constitute a default hereunder if not
cured as and when provided.

          2.13. LEASES. With respect to the Leases, Trustor hereby acknowledges
and agrees:

          (a) That so long as this Deed of Trust is in effect, there shall be no
     merger of any of the Leases (as used in this subsection (a), "LEASES" shall
     refer to the Leases described on Exhibit B and any future leases entered
     into by Trustor covering any of the Trust Estate) or any interest therein
     nor of the estates created thereby with the fee estate in the Premises or
     the Improvements or any portion thereof by reason of the fact that any of
     the Leases or such interest therein or such estates may be held directly or
     indirectly by or for the account of any person who shall hold the leasehold
     or fee estate in the Premises or the Improvements or any portion thereof or
     any interest of the lessor under any of the Leases. In case Trustor
     acquires the fee title or any other estate, title or interest in the
     Premises or the Improvements covered by any of the Leases, this Deed of
     Trust shall attach to and cover and be a lien upon the fee title or such
     other estate so acquired, and such fee title or other estate shall, without
     further assignment, mortgage or conveyance, become and be subject to the
     lien of and any such acquisition by Trustor and, on written request by
     Beneficiary, Trustor shall cause to be executed and recorded all such other
     and further assurances or other instruments in writing as may in the
     reasonable opinion of Beneficiary be required to carry out the intent and
     meaning hereof.

          (b) That no surrender by Trustor, as lessee under any of the Leases,
     to the lessor under any of the Leases, or any portion thereof or of any
     interest therein, and no termination of any of the Leases by Trustor as
     lessee thereunder, shall be valid or effective, and the Leases and the
     terms of any assignment to Trustor as assignee thereunder may not be
     amended, modified, changed, surrendered or cancelled, or subordinated to
     any fee mortgage, to any lease, or to any other interest, either orally or
     in writing without the prior written consent of Beneficiary so long as this
     Deed of Trust is in effect.

          (c) That if any of the Leases is terminated, in whole or in part, by
     reason of default of Trustor thereunder, or by reason of the failure to
     satisfy conditions thereunder, the satisfaction of which would have
     resulted, either directly or indirectly, in the extension of the term of
     such Lease, and if, pursuant to any provision of any of the Leases, or
     otherwise, Beneficiary or its assignee shall acquire from the lessor
     thereunder a new lease of the Premises of the Improvements, or of any part
     of the Premises or the Improvements, Trustor shall have no right, title or
     interest in or to such new lease or the leasehold estate

                                      -10-

     created thereby unless and until Trustor cures all defaults hereunder and
     under the Project Documents during the cure periods set forth herein or
     therein or as allowed by California law applicable to foreclosures of real
     property.

          (d) Trustor acknowledges that, pursuant to Section 365 of the
     Bankruptcy Reform Act of 1978 (hereinafter, as the same may be amended or
     recodified from time to time, the "BANKRUPTCY ACT"), it is possible that a
     trustee in bankruptcy of any lessor of the Leases (for the purposes of this
     Section 2.13, a "LESSOR") or any Lessor as a debtor-in-possession could
     reject the Leases, in which case Trustor, as lessee, would have the
     election described in Section 365(h) of the Bankruptcy Act (which election,
     as the same may be amended, revised or recodified from time to time, and
     together with any comparable right under any other state or federal law
     relating to bankruptcy, reorganization or other relief for debtors, whether
     now or hereafter in effect, is in this Deed of Trust called the "ELECTION")
     to treat the Leases as terminated by such rejection, or in the alternative,
     to remain in possession for the balance of the term of the Leases, and any
     renewal or extension thereof that is enforceable by Trustor as the lessee
     under applicable non-bankruptcy law.

          (e) Trustor covenants that it will not consent to or permit the
     termination of the Leases by exercise of the Election or otherwise without
     the prior written consent of Beneficiary, Trustor acknowledges that,
     because the Leases are a primary part of Beneficiary's security for the
     Obligations, Beneficiary does not anticipate that it would consent to the
     termination of the Leases and shall not under any circumstances be obliged
     to give such consent.

          (f) To secure the covenant made in subsection (e) and as security for
     the other Obligations, Trustor assigns the Election to Beneficiary. Trustor
     acknowledges and agrees that the foregoing assignment of the Election is
     one of the rights that Beneficiary may use at any time to protect and
     preserve the other rights and interests of Beneficiary under this Deed of
     Trust, because exercise of the Election in favor of terminating the Leases
     would constitute waste hereunder.

          (g) Trustor acknowledges and agrees that the Election is in the nature
     of a remedy and is not a property interest that Trustor can separate from
     the Leases. Therefore, Trustor agrees that exercise of the Election in
     favor of preserving the right to possession under the Leases shall not be
     deemed to constitute a taking or sale of the Collateral by the Beneficiary
     and shall not entitle Trustor to any credit against the Obligations.

          (h) Trustor acknowledges and agrees that, in the event the Election is
     exercised by Beneficiary in favor of Trustor remaining in possession,
     Trustor's resulting right to possession and use of (and Rents and profits
     from) property under the Leases, as adjusted by the effect of Section 365
     of the Bankruptcy Act, shall then be part of the Collateral and shall be
     subject to the liens created by this Deed of Trust.

                                      -11-

                                  ARTICLE III.
                     ASSIGNMENT OF RENTS, ISSUES AND PROFITS

          3.1. ASSIGNMENT TO BENEFICIARY; LICENSE. Trustor hereby absolutely and
irrevocably grants, sells, assigns, transfers and sets over to Beneficiary all
of the Rents derived from any lease, now existing or hereafter created and
affecting all or any portion of the Trust Estate or the use or occupancy
thereof; together with all of Trustor's rights, titles and interests in any
leases, including the Leases, including all modifications, amendments,
extensions and renewals of any leases (whether heretofore or hereafter entered
into) and all rights and privileges incident thereto; together with all security
deposits, guaranties and other security now or hereafter held by Trustor as
security for the performance of the obligations of the tenants thereunder. This
assignment of rents is intended by Trustor and Beneficiary to create and shall
be construed to create an absolute assignment to Beneficiary of all of Trustor's
rights, titles and interests in the Rents and in any leases and shall not be
deemed to create a security interest therein for the payment of any indebtedness
or the performance of any obligations of Trustor under the Indenture. Trustor
irrevocably appoints Beneficiary its true and lawful attorney, at the option of
Beneficiary at any time, to demand, receive and enforce payment, to give
receipts, releases and satisfactions, and to sue, either in the name of Trustor
or in the name of Beneficiary, for all such income, rents, issues, deposits,
profits and proceeds and apply the same to the indebtedness secured hereby.
Trustor and Beneficiary further agree that, during the term of this assignment,
the Rents shall not constitute property of Trustor (or of any estate of Trustor)
within the meaning of 11 U.S.C. Section 541, as amended from time to time. By
its acceptance of this assignment and so long as an Event of Default shall not
have occurred and be continuing under the Project Documents, Beneficiary hereby
grants to Trustor a revocable license to enforce the leases, to collect the
Rents, to apply the Rents to the payment of the costs and expenses incurred in
connection with the development, construction, operation, maintenance, repair
and restoration of the Trust Estate and to any indebtedness secured thereby and
to distribute the balance, if any, to Trustor as may be permitted by the terms
of the Project Documents.

          3.2. REVOCATION OF LICENSE. Upon the occurrence of an Event of Default
and at any time thereafter during the continuance thereof, Beneficiary shall
have the right to revoke the license granted to Trustor hereby by giving written
notice of such revocation to Trustor. Upon such revocation, Trustor shall
promptly deliver to Beneficiary the original copies of all leases and all Rents
then held by Trustor and Beneficiary shall thereafter be entitled to enforce any
leases, to collect and receive, without deduction or offset, all Rents payable
thereunder, including but not limited to, all Rents which were accrued and
unpaid as of the date of such revocation and to apply such rents as provided in
the Project Documents. Trustor hereby irrevocably constitutes and appoints
Beneficiary its true and lawful attorney-in-fact to enforce, in Trustor's name
or in Beneficiary's name or otherwise, all rights of Trustor in the instruments,
including without limitation checks and money orders, tendered as payments of
rents and to do any and all things necessary and proper to carry out the
purposes hereof.

          3.3. ELECTION OF REMEDIES. Upon the occurrence of an Event of Default
hereunder Beneficiary may, at its option, exercise (or cause the Trustee to
exercise) its rights hereunder. If Beneficiary elects to exercise its rights
hereunder, Beneficiary or Trustee may, at

                                      -12-

any time without notice, either in person, by agent or by a receiver appointed
by a court, enter upon and take possession of all or any portion of the Trust
Estate, enforce all leases, collect all Rents, including those past due and
unpaid, and apply the same to the costs and expenses of operation and
collection, including, without limitation, attorneys' fees, and to any
indebtedness then secured hereby, in such order as Beneficiary may determine. In
connection with the exercise by Beneficiary of its rights hereunder, Trustor
agrees that Beneficiary shall have the right to specifically enforce such rights
and to obtain the appointment of a receiver in accordance with the provisions of
Section 4.2 hereof without regard to the value of the Trust Estate or the
adequacy of any security for the obligations then secured hereby. The collection
of such Rents, or the entering upon and taking possession of the Trust Estate,
or the application thereof as aforesaid, shall not cure or waive any default or
notice of default hereunder or invalidate any act done in response to such
default or pursuant to such notice of default.

                                   ARTICLE IV.
                         EVENTS OF DEFAULT AND REMEDIES

          4.1. EVENTS OF DEFAULT. The occurrence of an Event of Default under
the Indenture shall constitute an "Event of Default" hereunder.

          4.2. REMEDIES. Upon the occurrence of any Event of Default, Trustee
and Beneficiary shall have the following rights and remedies, in addition to
those specified in the Indenture and the Company Security Agreement (as defined
in the Indenture):

          (I) Beneficiary in person or by agent may, without any obligation so
     to do and without notice or demand upon Trustor and without releasing
     Trustor from any obligation hereunder: (a) make any payment or do any act
     which Trustor has failed to make or do; (b) enter upon, take possession of,
     manage and operate the Trust Estate or any part thereof; (c) make or
     enforce, or, if the same be subject to modification or cancellation, modify
     or cancel any leases of the Trust Estate or any part thereof upon such
     terms or conditions as Beneficiary deems proper; (d) obtain and evict
     tenants, and fix or modify rents, make repairs and alterations and do any
     acts which Beneficiary deems proper to protect the security hereof; and (e)
     with or without taking possession, in its own name or in the name of
     Trustor, sue for or otherwise collect and receive rents, royalties, issues,
     profits, revenue, income and other benefits, including those past due and
     unpaid, and apply the same less costs and expenses of operation and
     collection, including reasonable attorneys' fees, upon any indebtedness
     secured hereby, and in such order as Beneficiary may determine. Upon
     request of Beneficiary, Trustor shall assemble and make available to
     Beneficiary at the Premises any of the non-fixed assets comprising the
     Trust Estate which have been removed therefrom. The entering upon and
     taking possession of the Trust Estate, the collection of any rents,
     royalties, issues, profits, revenue, income or other benefits and the
     application thereof as aforesaid shall not cure or waive any default
     theretofore or thereafter occurring or affect any notice of default
     hereunder or invalidate any act done pursuant to any such notice; and,
     notwithstanding continuance in possession of the Trust Estate, or any part
     thereof, by Beneficiary, Trustee or a receiver, and the

                                      -13-

     collection, receipt and application of rents, royalties, issues, profits,
     revenue, income or other benefits, Beneficiary shall be entitled to
     exercise every right provided for in this Deed of Trust or by law upon or
     after the occurrence of an Event of Default, including the right to
     exercise the power of sale. Any of the actions referred to in this Section
     4.2(i) may be taken by Beneficiary, either in person or by agent, with or
     without bringing any action or proceeding, or by a receiver appointed by a
     court, and any such action may also be taken irrespective of whether any
     notice of default or election to sell has been given hereunder and without
     regard to the adequacy of the security for the indebtedness hereby secured.
     Further, Beneficiary, at the expense of Trustor, either by purchase, repair
     or construction, may from time to time maintain and restore the Trust
     Estate or any part thereof and complete construction of the Improvements
     uncompleted as of the date thereof and in the course of such completion may
     make such changes in the contemplated Improvements as Beneficiary may deem
     desirable and may insure the same.

          (II) Beneficiary shall be entitled, without notice and to the full
     extent provided by law, to the appointment by a court having jurisdiction
     of a receiver to take possession of and protect the Trust Estate or any
     part thereof, and operate the same and collect the Rents and profits.

          (III) Beneficiary may bring an action in any court of competent
     jurisdiction to foreclose this Deed of Trust or enforce any of the terms,
     covenants and conditions hereof.

          (IV) Beneficiary may elect to cause the Trust Estate or any part or
     parts thereof to be sold as follows:

               (A) Beneficiary may proceed as if all of the Trust Estate were
     real property in accordance with subparagraph (d) below, or Beneficiary may
     elect to treat any of the Trust Estate which consists of a right in action
     or which is property that can be severed from the Premises or the
     Improvements without causing structural damage thereto as if the same were
     personal property, and dispose of the same in accordance with subparagraph
     (c) below, separate and apart from the sale of real property, the remainder
     of the Trust Estate being treated as real property.

               (B) Beneficiary may cause any such sale or other disposition to
     be conducted immediately following the expiration of any grace period
     herein or in the Indenture or the Company Security Agreement provided (or
     immediately upon the expiration of any redemption or reinstatement period
     required by law) or Beneficiary may delay any such sale or other
     disposition for such period of time as Beneficiary deems to be in its best
     interest. Should Beneficiary desire that more than one (1) such sale or
     other disposition be conducted, Beneficiary may, at its option, cause the
     same to be conducted simultaneously, or successively, on the same day, or
     at such different days or times and in such order as Beneficiary may deem
     to be in its best interest.

               (C) Should Beneficiary elect to cause any of the Trust Estate to
     be disposed of as personal property as permitted by subparagraph (a) above,
     it may dispose of any part

                                      -14-

     thereof in any manner now or hereafter permitted by the California
     Commercial Code or in accordance with any other remedy provided by law. Any
     such disposition may be conducted by an employee or agent of Beneficiary or
     Trustee. Both Trustor and Beneficiary shall be eligible to purchase any
     part or all of such property at any such disposition. Any such disposition
     may be either public or private as Beneficiary may elect, subject to the
     provisions of the California Commercial Code. Beneficiary shall have all of
     the rights and remedies of a Secured Party under the California Commercial
     Code. Expenses of retaking, holding, preparing for sale, selling or the
     like shall include Beneficiary's reasonable attorneys' fees and legal
     expenses, and upon such default, Trustor, upon demand of Beneficiary, shall
     assemble such personal property and make it available to Beneficiary at the
     Premises, a place which is hereby deemed reasonably convenient to
     Beneficiary and Trustor. Beneficiary shall give Trustor at least five (5)
     days prior written notice of the time and place of any public sale or other
     disposition of such property or of the time at or after which any private
     sale or any other intended disposition is to be made, and if such notice is
     sent to Trustor, in the manner provided for the mailing of notices herein,
     it shall constitute reasonable notice to Trustor.

               (D) Should Beneficiary elect to sell the Trust Estate or any part
     thereof which is real property or which Beneficiary has elected to treat as
     real property, upon such election, Beneficiary or Trustee shall give such
     notice of default and election to sell as may then be required by law.
     Thereafter, upon the expiration of such time and the giving of such notice
     of sale as may then be required by law, and without the necessity of any
     demand on Trustor, Trustee, at the time and place specified in the notice
     of sale, shall sell the Trust Estate, or any portion thereof specified by
     Beneficiary, at public auction to the highest bidder for cash in lawful
     money of the United States, subject, however, to the provisions of Section
     4.2(vi). Trustee may, and upon request of Beneficiary shall, from time to
     time postpone the sale of all or any portion of the Trust Estate by public
     announcement at the time and place of such sale, and from time to time
     thereafter may postpone such sale by public announcement at the time fixed
     by the preceding postponement or subsequently noticed sale, and without
     further notice make such sale at the time fixed by the last postponement,
     or may, in its discretion, give a new notice of sale. If the Trust Estate
     consists of several lots or parcels, Beneficiary may direct that the same
     be sold as a unit or be sold separately and, if to be sold separately,
     Beneficiary may designate the order in which such lots or parcels shall be
     offered for sale or sold. Any person, including Trustor, Trustee or
     Beneficiary, may purchase at the sale. Upon any sale, Trustee shall execute
     and deliver to the purchaser or purchasers a deed or deeds conveying the
     property so sold, but without any covenant or warranty whatsoever, express
     or implied, whereupon such purchaser or purchasers shall be let into
     immediate possession.

               (E) Beneficiary, from time to time before any Trustee's sale as
     provided herein, may rescind any notice of default and election to sell or
     notice of sale by executing and delivering to Trustee a written notice of
     such rescission, which such notice, when recorded, shall constitute a
     cancellation of any prior declaration of default and demand for sale. The
     exercise by Beneficiary of such right of rescission shall not

                                      -15-

          constitute a waiver of any breach or default then existing or
          subsequently occurring, or impair the right of Beneficiary to execute
          and deliver to Trustee, as above provided, other declarations or
          notices of default and demand for sale of the Trust Estate to satisfy
          the obligations hereof, nor otherwise affect any provision, covenant
          or condition of any Project Document.

                    (f) In the event of a sale or other disposition of the Trust
          Estate, or any part thereof, and the execution of a deed or other
          conveyance pursuant thereto, the recitals therein of facts, such as
          default, the giving of notice of default and notice of sale, demand
          that such sale should be made, postponement of sale, terms of sale,
          sale, purchase, payment of purchase money and other facts affecting
          the regularity or validity of such sale or disposition, shall be
          conclusive proof of the truth of such facts and any such deed or
          conveyance shall be conclusive against all persons as to such facts
          recited therein.

                    (g) The acknowledgment of the receipt of the purchase money,
          contained in any deed or conveyance executed as aforesaid, shall be
          sufficient discharge to the grantee of all obligations to see to the
          proper application of the consideration therefor as hereinafter
          provided. The purchaser at any trustee's or foreclosure sale hereunder
          may disaffirm any easement granted or rental or lease contract made in
          violation of any provision of this Trust Estate and may take immediate
          possession of the Trust Estate free from, and despite the terms of,
          such grant of easement and rental or lease contract.

                    (h) Upon the completion of any sale or sales made by Trustee
          or Beneficiary, as the case may be, under or by virtue of this Article
          IV, Trustee or any officer of any court empowered to do so, shall
          execute and deliver to the accepted purchaser or purchasers a good and
          sufficient instrument, or good and sufficient instruments, conveying,
          assigning and transferring all estate, right, title and interest in
          and to the property and rights sold. Trustee is hereby irrevocably
          appointed the true and lawful attorney-in-fact of Trustor in its name
          and stead to make all necessary conveyances, assignments, transfers
          and deliveries of the Trust Estate or any part thereof and the rights
          so sold and for that purpose Trustee may execute all necessary
          instruments of conveyance, assignment and transfer, and may substitute
          one or more persons with like power, Trustor hereby ratifying and
          confirming all that its said attorney or any substitute or substitutes
          shall lawfully do by virtue hereof. Nevertheless, Trustor, if so
          requested by Trustee or Beneficiary, shall ratify and confirm any such
          sale or sales by executing and delivering to Trustee or to such
          purchaser or purchasers all such instruments as may be advisable in
          the judgment of Trustee or Beneficiary, for the purpose as may be
          designated in such request. The foregoing power of attorney is coupled
          with an interest and cannot be revoked. Any such sale or sales made
          under or by virtue of this Article IV, whether made under the power of
          sale herein granted or under or by virtue of judicial proceedings or
          of a judgment or decree of foreclosure and sale, shall operate to
          divest all of the estate, right, title, interest, claim and demand
          whatsoever, whether at law or in equity, of Trustor in and to the
          properties and rights so sold, and shall be a perpetual bar, both at
          law and in equity, against Trustor and any and all persons claiming or
          who may claim the same, or any part thereof, from, through or under
          Trustor.

                                      -16-

                    (i) Trustor hereby expressly waives any right which it may
          have to direct the order in which any of the Trust Estate shall be
          sold in the event of any sale or sales pursuant hereto.

               (v) The purchase money, proceeds or avails of any sale made under
          or by virtue of this Article IV, together with all other sums which
          may then be held by Trustee or Beneficiary under this Trust Estate,
          whether under the provisions of this Article IV, or otherwise, shall
          be applied as follows:

                    FIRST: To the payment of the costs and expenses of the sale,
               including reasonable compensation to Trustee and Beneficiary,
               their agents and counsel, and of any judicial proceedings wherein
               the same may be made and to the payment of all expenses,
               liabilities and advances made or incurred by Trustee under this
               Deed of Trust, together with interest at the Post-Default Rate on
               all advances made by Trustee and all taxes or assessments, except
               for any taxes, assessments or other charges subject to which the
               Trust Estate shall have been sold, and further including all
               costs of publishing, recording, mailing and posting notice, the
               cost of any search and/or other evidence of title procured in
               connection therewith and the cost of any documentary transfer tax
               on any deed of conveyance.

                    SECOND: To the payment of any and all sums expended under
               the terms hereof, not then repaid, with accrued interest at the
               Post-Default Rate and all other sums required to be paid by
               Trustor pursuant to any provisions of this Deed of Trust or of
               the Note (other than principal and interest as specified in
               clause THIRD below) or of any other Loan Document, including all
               expenses, liabilities and advances made or incurred by
               Beneficiary under this Deed of Trust or in connection with the
               enforcement hereof, together with interest at the Post-Default
               Rate on all advances.

                    THIRD: To the payment of the principal and interest then
               due, owing and unpaid upon the Note, with interest on the unpaid
               principal at the Post-Default Rate from the due date of any such
               payment of principal until the same is paid.

                    FOURTH: The remainder, if any, to the person or persons
               legally entitled thereto.

               (vi) Upon any sale or sales made under or by virtue of this
          Article IV, whether made under the power of sale herein granted or
          under or by virtue of judicial proceedings or of a judgment or decree
          of foreclosure and sale, Beneficiary may bid for and acquire the Trust
          Estate or any part thereof and, in lieu of paying cash therefor, may
          make settlement for the purchase price by crediting upon the
          indebtedness or other sums secured by this Deed of Trust the net sales
          price after deducting therefrom the expenses of sale and the costs of
          the judicial proceedings, if any, and any other sums which Trustee

                                      -17-

          or Beneficiary is authorized to deduct under the Deed of Trust, and,
          in such event, this Deed of Trust, the Note and documents evidencing
          expenditures secured hereby shall be presented to the person or
          persons conducting the sale in order that the amount so used or
          applied may be credited upon said indebtedness as having been paid.

               (vii) Upon the commencement of any action, suit or other legal
          proceedings by Beneficiary to obtain judgment for the principal of, or
          interest on, the Note and other sums required to be paid by Trustor
          pursuant to any provision of this Deed of Trust, or of any other
          nature in aid of the enforcement of the Note or of this Deed of Trust,
          Trustor, to the fullest extent permitted by law, will and does hereby
          (a) waive the issuance and service of process and enter its voluntary
          appearance in such action, suit or proceedings, and (b) if required by
          Beneficiary, consent to the appointment of a receiver or receivers of
          the Trust Estate and of all the Rents and profits. After the happening
          of any Event of Default, or upon the commencement of any proceedings
          to foreclose this Deed of Trust or to enforce the specific performance
          hereof or in aid thereof or upon the commencement of any other
          judicial proceedings to enforce any right of Trustee or Beneficiary,
          Trustee or Beneficiary shall be entitled forthwith, as a matter of
          right, if either shall so elect, without the giving of notice to any
          other party and without regard to the adequacy of the security of the
          Trust Estate, either before or after declaring the unpaid principal of
          the Note to be due and payable, to the appointment of such a receiver
          or receivers.

               (viii) Notwithstanding the appointment of any receiver,
          liquidator or trustee of Trustor, or of any of its property, or of the
          Trust Estate or any part thereof, Trustee and Beneficiary shall be
          entitled to retain possession and control of all property now or
          hereafter held under this Trust Estate, including, but not limited to,
          the Rents and profits.

               (ix) No remedy herein conferred upon or reserved to Trustee or
          Beneficiary is intended to be exclusive of any other remedy herein or
          by law provided, but each shall be cumulative and shall be in addition
          to every other remedy given hereunder or now or hereafter existing at
          law or in equity or by statute. No delay or omission of Trustee or
          Beneficiary in exercising any right or power accruing upon any Event
          of Default shall impair any right or power or shall be construed to be
          a waiver of any Event of Default or any acquiescence therein; and
          every power and remedy given by this Deed of Trust to Trustee or
          Beneficiary may be exercised from time to time as often as may be
          deemed expedient by Trustee or Beneficiary. If there exists additional
          security for the performance of the obligations secured hereby, the
          holder of the Note, at its sole option, and without limiting or
          affecting any of the rights or remedies hereunder, may exercise any of
          the rights and remedies to which it may be entitled hereunder either
          concurrently with whatever rights it may have in connection with such
          other security or in such order as it may determine. Nothing in this
          Deed of Trust, the Note or any other Project Documents shall affect
          the obligation of Trustor to pay the principal of, and interest on,
          the Note in the manner and at the time and place therein respectively
          expressed.

                                      -18-

               (X) To the fullest extent permitted by applicable law, Trustor
          will not at any time insist upon, or plead, or in any manner whatever
          claim or take any benefit or advantage of any stay or extension or
          moratorium law or law pertaining to the marshalling of assets, the
          administration of estates of decedents, any exemption from execution
          or sale of the Trust Estate or any part thereof, including exemption
          of homestead, wherever enacted, now or at any time hereafter in force,
          which may affect the covenants and terms of performance of this Deed
          of Trust, nor claim, take or insist upon any benefit or advantage of
          any law now or hereafter in force providing for the valuation or
          appraisal of the Trust Estate, or any part thereof, prior to any sale
          or sales thereof which may be made pursuant to any provision herein,
          or pursuant to the decree, judgment or order of any court of competent
          jurisdiction; nor after any such sale or sales, claim or exercise any
          right under any statute heretofore or hereafter enacted to redeem the
          property so sold or any part thereof, and Trustor hereby expressly
          waives all benefit or advantage of any such law or laws, and covenants
          not to hinder, delay or impede the execution of any power herein
          granted or delegated to Trustee or Beneficiary, but to suffer and
          permit the execution of every power as though no such law or laws had
          been made or enacted. Trustor, for itself and all who claim under it,
          hereby waives, to the extent that it lawfully may, all right to have
          the Trust Estate marshalled upon any sale or foreclosure hereunder.

               (XI)Upon the occurrence of any Event of Default and pending the
          exercise by Trustee or Beneficiary or their agents or attorneys of
          their right to exclude Trustor from all or any part of the Trust
          Estate, Trustor agrees to vacate and surrender possession of the Trust
          Estate to Trustee or Beneficiary, as the case may be, or to a
          receiver, if any, and in default thereof may be evicted by any summary
          action or proceeding for the recovery of possession of leased premises
          for non-payment of rent, however designated.

               (XII) In the event ownership of the Trust Estate or any portion
          thereof becomes vested in a person other than the Trustor herein
          named, Beneficiary may, without notice to the Trustor herein named,
          whether or not Beneficiary has given written consent to such change in
          ownership, deal with such successor or successors in interest with
          reference to this Trust Estate and the indebtedness secured hereby,
          and in the same manner as with the Trustor herein named, without in
          any way vitiating or discharging Trustor's liability hereunder or for
          the indebtedness or obligations hereby secured.

               (XIII) In the event that there be a Trustee's sale hereunder and
          if at the time of such sale Trustor, or its heir, executor,
          administrator or assign, be occupying the Premises and Improvements or
          any part thereof so sold, each and all shall immediately become the
          tenant of the purchaser at such sale, which tenancy shall be a tenancy
          from day to day, terminable at the will of either tenant or landlord,
          at a reasonable rental per day based upon the value of the Premises
          and Improvements, such rental to be due daily to the purchaser. An
          action of unlawful detainer shall lie if the tenant holds over after a
          demand in writing for possession of said Premises and Improvements;
          and this agreement and the Trustee's deed shall constitute a lease and
          agreement under which any such tenant's possession arose and
          continued.

                                      -19-

               (XIV) Trustor shall pay immediately, without notice or demand,
          all costs and expenses in connection with the enforcement of
          Beneficiary's rights hereunder, including without limitation
          reasonable attorneys' fees, whether or not any suit is filed in
          connection with such enforcement; such costs and expenses shall
          include without limitation all costs, attorneys' fees and expenses
          incurred by the holder of the Note in connection with any insolvency,
          bankruptcy, reorganization, arrangement or other similar proceedings
          involving Trustor, any endorser or guarantor of the Note or Trustor's
          obligations under any Project Document, which in any way affects the
          exercise by Beneficiary of its rights and remedies under the Note,
          this Deed of Trust or any other Project Document.

                                   ARTICLE V.
                                  MISCELLANEOUS

                    5.1. AMENDMENTS. This instrument cannot be waived, changed,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of any waiver, change, discharge or
termination is sought.

                    5.2. NO WAIVER. By accepting payment of any sum secured
hereby after its due date or in an amount less than the sum due, Beneficiary
does not waive its rights either to require prompt payment when due of all other
sums so secured.

                    5.3. LIMITATION OF LIABILITY. The sole recourse of
Beneficiary hereunder shall be to the Trust Estate and nothing contained herein
shall create any obligation of, or right to seek payment from, Trustor, its
Affiliates, officers, directors, equity holders, employees, agents or any other
Person or their respective Properties individually for the satisfaction of the
Obligations.

                    5.4. TRUSTEE'S POWERS. At any time, or from time to time,
without liability therefor and without notice, upon written request of
Beneficiary and presentation of this Deed of Trust and the Note for endorsement,
and without affecting the personal liability of any person for payment of all or
any portion of the indebtedness secured hereby or the effect of this Deed of
Trust upon the remainder of the Premises, Trustee may: reconvey any part of the
Premises; consent in writing to the making of any map or plat thereof; join in
granting any easement thereon; or join in any extension agreement or any
agreement subordinating the lien or charge hereof.

                    5.5. TRUSTOR WAIVER OF RIGHTS. Trustor waives to the extent
permitted by law, (i) the benefit of all laws now existing or that may hereafter
be enacted providing for any appraisement before sale of any portion of the
Trust Estate and (ii) all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the secured
indebtedness and marshalling in the event of foreclosure of the liens hereby
created; provided, however, nothing contained herein shall be deemed to be a
waiver of Trustor's rights under Section 2924c of the California Civil Code.

                                      -20-

                    5.6. STATEMENTS OF TRUSTOR. Trustor shall, within ten (10)
days after written notice thereof from Beneficiary, deliver to Beneficiary a
written statement stating the unpaid principal of and interest on the Note and
any other amounts secured by this Deed of Trust and stating whether any offset
or defense exists against such principal and interest.

                    5.7. NOTICES. All notices, requests and other communications
provided for herein shall be given or made in writing (including, without
limitation, by telex or telecopy) delivered to the intended recipient at the
address set forth below or at such other address as shall be designated by such
party in a notice to each other party. Except as otherwise provided in this Deed
of Trust, all such communications shall be deemed to have been duly given when
transmitted by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.

To Beneficiary:
                    ----------------------------------------

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

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

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

                    Attention:
                               -----------------------------

                    Fax No.:
                               -----------------------------

With a copy to:     Milbank, Tweed, Hadley & McCloy
                    601 South Figueroa Street, 30th Floor
                    Los Angeles, California 90017
                    Attention: Matthew S. Meza, Esq.
                    Fax No.: (213) 629-5063

To Trustor:
                    ----------------------------------------

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

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

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

                    Attention:
                               -----------------------------

                    Fax No.:
                             -------------------------------

To Trustee:
                    ----------------------------------------

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

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

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

                    Attention:
                               -----------------------------

                    Fax No.:
                             -------------------------------

                    5.8. ACCEPTANCE BY TRUSTEE. Trustee accepts this Trust when
this Deed of Trust, duly executed and acknowledged, is made a public record as
provided by law.

                    5.9. CAPTIONS. The captions or headings at the beginning of
each Section hereof are for the convenience of the parties and are not a part of
this Deed of Trust.

                                      -21-

          5.10. AFFIDAVIT TO TRUSTEE. Trustee, upon presentation to it of an
affidavit signed by or on behalf of Beneficiary, certifying the existence of an
Event of Default by Trustor under this Deed of Trust, is authorized to accept as
true and conclusive all facts and statements in such affidavit and to act
hereunder in complete reliance thereon.

          5.11. INVALIDITY OF CERTAIN PROVISIONS. Every provision of this Deed
of Trust is intended to be severable. In the event any term or provision hereof
is declared to be illegal or invalid for any reason whatsoever by a court of
competent jurisdiction, such illegality or invalidity shall not affect the
balance of the terms and provisions hereof, which terms and provisions shall
remain binding and enforceable. If the lien of this Deed of Trust is invalid or
unenforceable as to any part of the debt, or if the lien is invalid or
unenforceable as to any part of the Trust Estate, the unsecured or partially
unsecured portion of the debt shall be completely paid prior to the payment of
the remaining and secured or partially secured portion of the debt, and all
payments made on the debt, whether voluntary or under foreclosure or other
enforcement action or procedure, shall be considered to have been first paid on
and applied to the full payment of that portion of the debt which is not secured
or fully secured by the lien of this Deed of Trust.

          5.12. WAIVER OF STATUTE OF LIMITATIONS. The right to plead any and all
statutes of limitation as a defense to any demand secured by this Deed of Trust
is hereby waived to the full extent permitted by law.

          5.13. GOVERNING LAW. This Deed of Trust and the indebtedness and
obligations secured hereby shall be governed by and construed in accordance with
the laws of the State of California, without reference to conflicts of laws
principles.

          5.14. INTERPRETATION AND SUCCESSORS IN INTEREST. Subject to the
provisions of the Indenture prohibiting the disposition of any assets of
Trustor, this Deed of Trust applies to, inures to the benefit of, and binds all
parties hereto, their heirs, legatees, devisees, administrators, executors,
successors and assigns. In this Deed of Trust the singular shall include the
plural and the masculine shall include the feminine and neuter and vice versa,
if the context so requires. The word "person" shall include corporation,
partnership or other form of association. Any reference in this Deed of Trust to
any document, instrument or agreement creating or evidencing an obligation
secured hereby shall include such document, instrument or agreement both as
originally executed and as it may from time to time be modified.

          5.15. RECONVEYANCE BY TRUSTEE. Upon written request of Beneficiary
stating that all sums secured hereby have been paid, and upon surrender of this
Deed of Trust and the Note to Trustee for cancellation and retention and upon
payment by Trustor of Trustee's fees, Trustee shall reconvey to Trustor, or to
the person or persons legally entitled thereto, without warranty, any portion of
the Trust Estate then held hereunder. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The
grantee in any reconveyance may be described as "the person or persons legally
entitled thereto."

                                      -22-

          5.16. COUNTERPARTS; RECORDING REFERENCES. This Deed of Trust may be
executed in several original counterparts. To facilitate filing and recording,
there may be omitted from certain counterparts the parts of Exhibit A, B or C,
hereto containing specific descriptions of certain collateral constituting the
Trust Estate which relate to land under the jurisdiction of offices or located
in cities or counties other than the office or city or county in which the
particular counterpart is to be filed or recorded. A complete copy of this Deed
of Trust is being filed for record in the Offices of the County Recorders
of __________________ and _______________ Counties, California. Each counterpart
shall be deemed to be an original for all purposes, and all counterparts shall
together constitute a single document; provided, however, Beneficiary and
Trustee shall also have the option to exercise all rights and remedies available
to Beneficiary and Trustee hereunder and under applicable law as though each
counterpart hereof were a separate deed of trust, or other security instrument
covering only the portions of the collateral constituting the Trust Estate
located in the city or county wherein such counterpart is recorded. Unless
otherwise specified in Exhibit A, B or C hereto, all recording references in
Exhibits A, B and C are to the official real property records of the city or
county as appropriate, in which the affected land is located. The references in
Exhibit A, B or C to liens, encumbrances and other burdens, if any, shall not be
deemed to recognize or create any rights in third parties.

          5.17. NONFOREIGN ENTITY. Section 1445 of the Internal Revenue Code of
1986, as amended (the "INTERNAL REVENUE CODE") provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Beneficiary that the withholding of tax will not be required
in the event of the disposition of the Premises or Improvements pursuant to the
terms of this Deed of Trust, Trustor hereby certifies, under penalty of perjury,
that:

          (I) Trustor is not a foreign corporation, foreign partnership, foreign
     trust or foreign estate, as those terms are defined in the Internal Revenue
     Code and the regulations promulgated thereunder; and

          (II) Trustor's U.S. employer identification number is _______________;
     and

          (III) Trustor's principal place of business is _________________.

It is understood that Beneficiary may disclose the contents of this
certification to the Internal Revenue Service and that any false statement
contained herein could be punished by fine, imprisonment or both. Trustor
covenants and agrees to execute such further certificates, which shall be signed
under penalty or perjury, as Beneficiary shall reasonably require. The covenant
set forth herein shall survive the foreclosure of the lien of this Deed of Trust
or acceptance of a deed in lieu thereof.

                                      -23-

          IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the
day and year first above written.

                                        --------------------------,
                                        a
                                          ------------------------

                                        By:
                                            ------------------------------------
                                            Name:
                                                  ------------------------------
                                            Its:
                                                 -------------------------------

                                      -24-

                                [ACKNOWLEDGEMENT]

                                      -25-

                                    EXHIBIT A

                                    Property

                                       A-1

                                    EXHIBIT B

                                     Leases

                                       B-1

                                    EXHIBIT C

                                    Easements

                                    EXHIBIT F

                                FORM OF GUARANTEE

     For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of February 13, 2004 (the "Indenture")
among Ormat Funding Corp., the Guarantors listed on the signature page thereto,
Ormesa LLC and Union Bank of California, N.A., as trustee (the "Trustee"), (a)
the due and punctual payment of the principal of, premium, Liquidated Damages,
if any, and interest on the Senior Secured Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal, premium, Liquidated Damages,
and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Issuer to the Holders or the Trustee
all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Senior Secured Notes or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. The obligations of the Guarantors
to the Holders of Senior Secured Notes and to the Trustee pursuant to the
Guarantee and the Indenture are expressly set forth in Article IX of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Guarantee. Each Holder of a Senior Secured Note, by accepting the same, (a)
agrees to and shall be bound by such provisions and (b) appoints the Trustee
attorney-in-fact of such Holder for such purpose.

                                                          [NAME OF GUARANTOR(S)]

                                                          By:
                                                              ------------------
                                                          Name:
                                                          Title:

                                    EXHIBIT G

                         [FORM OF SUPPLEMENTAL INDENTURE
                   TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

     SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
____________________, among ____________________ (the "Guarantor"), a subsidiary
of ____________________ (or its permitted successor), a ____________________
corporation (the "Issuer"), the Issuer, the other Guarantors (as defined in the
Indenture referred to herein) and ____________________, as trustee under the
Indenture referred to below (the "Trustee").

                                   WITNESSETH

     WHEREAS, the Issuer and the Guarantors have heretofore executed and
delivered to the Trustee an indenture (the "Indenture"), dated as of February
13, 2004 providing for the issuance of 8 1/4% Senior Secured Notes due 2020 (the
"Senior Secured Notes");

     WHEREAS, the Indenture provides that under certain circumstances the
Guarantor shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guarantor shall unconditionally guarantee all of the
Issuer's Obligations under the Senior Secured Notes and the Indenture on the
terms and conditions set forth herein (the "Guarantee"); and

     WHEREAS, pursuant to Article VIII of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.

     NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Senior Secured Notes as follows:

     1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meaning assigned to them in the Indenture.

     2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows:

          (a) Along with all Guarantors named in the Indenture, to jointly and
     severally, unconditionally Guarantee to each Holder of a Senior Secured
     Note authenticated and delivered by the Trustee and to the Trustee and its
     successors and assigns, the Senior Secured Notes or the obligations of the
     Issuer hereunder or thereunder, that:

               (i) the principal of, premium, Liquidated Damages, if any, and
          interest on the Senior Secured Notes will be promptly paid in full
          when due, whether at maturity, by acceleration, redemption or
          otherwise, and interest on the overdue principal of, premium,
          Liquidated Damages, and, to the extent permitted by law,

                                                                       Exhibit G
                                                                          Page 2

          interest, and all other obligations of the Issuer to the Holders or
          the Trustee hereunder or thereunder will be promptly paid in full or
          performed, all in accordance with the terms hereof and thereof; and

               (ii) in case of any extension of time of payment or renewal of
          any Senior Secured Notes or any of such other obligations, that same
          will be promptly paid in full when due or performed in accordance with
          the terms of the extension or renewal, whether at stated maturity, by
          acceleration or otherwise.

          (b) The obligations hereunder shall be unconditional, irrespective of
     the validity, regularity or enforceability of the Senior Secured Notes or
     the Indenture, the absence of any action to enforce the same, any waiver or
     consent by any Holder of the Senior Secured Notes with respect to any
     provisions hereof or thereof, the recovery of any judgment against the
     Issuer, any action to enforce the same or any other circumstance which
     might otherwise constitute a legal or equitable discharge or defense of a
     Guarantor.

          (c) The following is hereby waived: diligence, presentment, demand of
     payment, filing of claims with a court in the event of insolvency or
     bankruptcy of the Issuer, any right to require a proceeding first against
     the Issuer, protest, notice and all demands whatsoever.

          (d) This Guarantee shall not be discharged except by complete
     performance of the obligations contained in the Senior Secured Notes and
     the Indenture, and the Guarantor accepts all obligations of a Guarantor
     under the Indenture.

          (e) If any Holder or the Trustee is required by any court or otherwise
     to return to the Issuer, the Guarantors, or any Custodian, Trustee,
     liquidator or other similar official acting in relation to either the
     Issuer or the Guarantors, any amount paid by either to the Trustee or such
     Holder, this Guarantee, to the extent theretofore discharged, shall be
     reinstated in full force and effect.

          (f) The Guarantor shall not be entitled to any right of subrogation in
     relation to the Holders in respect of any obligations guaranteed hereby
     until payment in full of all obligations guaranteed hereby.

          (g) As between the Guarantors, on the one hand, and the Holders and
     the Trustee, on the other hand, (x) the maturity of the obligations
     guaranteed hereby may be accelerated as provided in Article V of the
     Indenture for the purposes of this Guarantee, notwithstanding any stay,
     injunction or other prohibition preventing such acceleration in respect of
     the obligations guaranteed hereby, and (y) in the event of any declaration
     of acceleration of such obligations as provided in Article V of the
     Indenture, such obligations (whether or not due and payable) shall
     forthwith become due and payable by the Guarantors for the purpose of this
     Guarantee.

                                                                       Exhibit G
                                                                          Page 3

          (h) The Guarantors shall have the right to seek contribution from any
     non-paying Guarantor so long as the exercise of such right does not impair
     the rights of the Holders under the Guarantee.

          (i) After giving effect to any maximum amount and any other contingent
     and fixed liabilities that are relevant under any applicable Bankruptcy or
     fraudulent conveyance laws, and after giving effect to any collections
     from, rights to receive contribution from or payments made by or on behalf
     of any other Guarantor in respect of the obligations of such other
     Guarantor under Article IX of the Indenture, this new Guarantee shall be
     limited to the maximum amount permissible such that the obligations of such
     Guarantor under this Guarantee will not constitute a fraudulent transfer or
     conveyance.

     3. EXECUTION AND DELIVERY. Each Guarantor agrees that the Guarantees shall
remain in full force and effect notwithstanding any failure to endorse on each
Senior Secured Note a notation of such Guarantee.

     4. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Issuer or any Guarantor,
as such, shall have any liability for any obligations of the Company or such
Subsidiary Guarantor under the Senior Secured Notes, the Guarantees, this
Indenture or the Collateral Documents or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder by accepting a
Senior Secured Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Senior Secured Notes.

     5. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     6. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.

     7. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.

     8. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guarantor and the Issuer.

                                                                       Exhibit G
                                                                          Page 4

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.

     Dated:
            -----------------------

                                             [GUARANTOR]

                                             By:
                                                 -------------------------------
                                                 Name:
                                                 Title:

                                             ORMAT FUNDING CORP.

                                             By:
                                                 -------------------------------
                                                 Name:
                                                 Title:

                                             UNION BANK OF CALIFORNIA, N.A.

                                             By:
                                                 -------------------------------
                                                 Authorized Signatory

                                                                       Exhibit G
                                                                          Page 5

                                   SCHEDULE I

                             SCHEDULE OF GUARANTORS

          The following schedule lists each Guarantor under the Indenture as of
the Closing Date:

          Brady Power Partners

          Steamboat Development Corp.

          Steamboat Geothermal LLC

          OrMammoth Inc.

          ORNI 1 LLC

          ORNI 2 LLC

          ORNI 7 LLC

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