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 PhilippinesExhibit 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
                                                                                                              ----

         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-

                                                                                                              Page
                                                                                                              ----

         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.

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                                                                         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

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                                                                         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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                                                                         Page 35

                 "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;

                                      -35-

                                                                         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

                                      -37-

                                                                         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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                  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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                  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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                                                                         Page 54

                  (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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                  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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                                                                         Page 59

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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                                                                         Page 60

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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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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                  (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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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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                                    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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                  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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                  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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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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                  (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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                  (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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                  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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                  (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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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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                                                                         Page 89

                  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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                                                                         Page 90

                                  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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                                                                         Page 93

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

                                      -93-

                                                                         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.

                                      -94-

                                                                         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:

                                      -95-

                                                                         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-

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