CREDIT AGREEMENT dated as of December 19, 2011 between THERMO NO. 1 BE-01, LLC, and ORMAT NEVADA INC.,

Exhibit 10.25.1

 

 

 

CREDIT AGREEMENT

dated as of

December 19, 2011

between

THERMO NO. 1 BE-01, LLC,

and

ORMAT NEVADA INC.,

 

 

 

 

 

THERMO 1 CREDIT AGREEMENT

---

TABLE OF CONTENTS

 

				Page
ARTICLE I DEFINITIONS					1
Section 1.01		Certain Defined Terms			1
Section 1.02		Terms Generally			19
Section 1.03		Accounting Terms			20
ARTICLE II THE ADVANCE AMOUNT					21
Section 2.01		Advance Amount			21
Section 2.02		Evidence of Indebtedness			21
Section 2.03		Repayment of the Advance Amount			21
Section 2.04		Prepayment of the Advance Amount			21
Section 2.05		Interest			24
Section 2.06		Taxes			24
Section 2.07		Payments by the Company			26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY					26
Section 3.01		Due Organization, Power, Etc.			26
Section 3.02		Due Authorization, Etc.			27
Section 3.03		No Conflict			27
Section 3.04		Approvals, Etc.			27
Section 3.05		Financial Statements; No Material Adverse Effect			28
Section 3.06		Litigation, Etc.			29
Section 3.07		Compliance with Laws and Obligations			29
Section 3.08		Environmental Laws			29
Section 3.09		Material Project Documents			30
Section 3.10		Properties			30
Section 3.11		Taxes			30
Section 3.12		Full Disclosure			31
Section 3.13		Solvency and Bankruptcy			31
Section 3.14		Regulatory Restrictions on Borrowing			31
Section 3.15		Security Documents			32
Section 3.16		ERISA			32
Section 3.17		Insurance			32
Section 3.18		Conduct of Business			32
Section 3.19		Margin Stock			32
Section 3.20		Members; Membership Interests and Related Matters			33
Section 3.21		No Ownership by Disqualified Persons			33
Section 3.22		Sufficiency of Material Project Documents			33
Section 3.23		No Force Majeure Event			33
Section 3.24		No Employees			33
Section 3.25		No Lienable Work			33
ARTICLE IV CONDITIONS					34

 

THERMO 1 CREDIT AGREEMENT		-i-

---

Section 4.01		Conditions Precedent to Effectiveness			34
Section 4.02		Conditions Precedent to Phase Two Date			37
Section 4.03		Conditions Precedent to Phase Three Date			39
ARTICLE V AFFIRMATIVE COVENANTS					40
Section 5.01		Limited Liability Company Existence; Etc.			40
Section 5.02		Conduct of Business			40
Section 5.03		Compliance with Laws and Obligations			40
Section 5.04		Governmental Authorizations			40
Section 5.05		Maintenance of Title			40
Section 5.06		Maintenance of Property; Insurance			41
Section 5.07		Keeping of Books			42
Section 5.08		Access to Records			42
Section 5.09		Payment of Utilities, Taxes, Etc.			42
Section 5.10		Reporting Requirements			43
Section 5.11		Notices			44
Section 5.12		Cash Grant			45
Section 5.13		Further Assurances			46
Section 5.14		Maintenance of Regulatory Status			46
Section 5.15		Accounts			46
Section 5.16		Budgets			46
Section 5.17		Operating Statements and Reports			47
Section 5.18		Material Project Documents			48
Section 5.19		Maintenance of Corporate Separateness			48
Section 5.20		Environmental Laws			48
Section 5.21		Maintenance of Site			49
Section 5.22		Lien Waivers			49
ARTICLE VI NEGATIVE COVENANTS					49
Section 6.01		Organizational Documents			49
Section 6.02		Subsidiaries; Equity Issuances			50
Section 6.03		Indebtedness			50
Section 6.04		Liens, Etc.			50
Section 6.05		Investments, Advances, Loan			50
Section 6.06		Business Activities; Employees			51
Section 6.07		Restricted Payments			51
Section 6.08		Fundamental Changes; Asset Dispositions and Acquisitions			51
Section 6.09		Accounting Changes			52
Section 6.10		Amendment or Termination of Project Documents			52
Section 6.11		Transactions with Affiliates			53
Section 6.12		Accounts			53
Section 6.13		Derivative Transactions			53
Section 6.14		Cash Grant			53
Section 6.15		Substantial Consummation			53
ARTICLE VII EVENTS OF DEFAULT					54
Section 7.01		Events of Default			54

 

THERMO 1 CREDIT AGREEMENT		-ii-

---

Section 7.02		Limitation on Exercise of Remedies			57
Section 7.03		Certain Step In Rights			57
ARTICLE VIII MISCELLANEOUS					58
Section 8.01		Notices			58
Section 8.02		Waivers; Amendments			58
Section 8.03		Expenses; Indemnity; Etc.			59
Section 8.04		Successors and Assigns			60
Section 8.05		Survival			61
Section 8.06		Counterparts; Integration; Effectiveness			61
Section 8.07		Severability			61
Section 8.08		Right of Setoff			61
Section 8.09		Governing Law; Jurisdiction; Etc.			62
Section 8.10		Headings			63
Section 8.11		Confidentiality			63
Section 8.12		Third Party Beneficiaries			64
Section 8.13		Usury			64
Section 8.14		Reinstatement			65
Section 8.15		Limited Recourse			65
Section 8.16		Reasonable Cooperation of Ormat; Following Payment of Advance Amount			66
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF ORMAT					66
Section 9.01		Due Organization, Power, Etc.			66
Section 9.02		Due Authorization, Etc.			66
Section 9.03		No Conflict			67

 

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

 

SCHEDULE 3.04		-		Authorizations

 

THERMO 1 CREDIT AGREEMENT		-iii-

---

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

 

THERMO 1 CREDIT AGREEMENT		-iv-

---

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

RECITALS

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

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

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

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

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

ARTICLE I

DEFINITIONS

Section 1.01 Certain Defined Terms

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-1-

---

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-2-

---

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

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

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-3-

---

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

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-4-

---

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

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-5-

---

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-6-

---

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-7-

---

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-8-

---

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

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

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

“Indemnified Taxes” means Taxes other than Excluded Taxes.

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-9-

---

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

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-10-

---

“Net Available Amount” means:

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

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

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

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

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

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

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

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

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

“Operator” means ▇▇▇▇▇ Technologies Operating Company, Inc.

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

 

THERMO 1 CREDIT AGREEMENT		-11-

---

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

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

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

“Permitted Lien” means any of the following:

(a) Liens arising by reason of:

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

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

 

THERMO 1 CREDIT AGREEMENT		-12-

---

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

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

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

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

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

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

(g) Liens created under the Security Documents; or

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-13-

---

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

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

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

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

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-14-

---

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-15-

---

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-16-

---

“Restricted Payment” means:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-17-

---

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-18-

---

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

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

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

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

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

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

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

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

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

Section 1.02 Terms Generally

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

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

 

THERMO 1 CREDIT AGREEMENT		-19-

---

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

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

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

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

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

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

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

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

Section 1.03 Accounting Terms

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

 

THERMO 1 CREDIT AGREEMENT		-20-

---

ARTICLE II

THE ADVANCE AMOUNT

Section 2.01 Advance Amount

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

Section 2.02 Evidence of Indebtedness

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

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

Section 2.03 Repayment of the Advance Amount

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

Section 2.04 Prepayment of the Advance Amount

(a) Optional Prepayments.

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

 

THERMO 1 CREDIT AGREEMENT		-21-

---

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-22-

---

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-23-

---

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

Section 2.05 Interest

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

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

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

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

Section 2.06 Taxes

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

 

THERMO 1 CREDIT AGREEMENT		-24-

---

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-25-

---

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

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

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

Section 2.07 Payments by the Company

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Ormat that:

Section 3.01 Due Organization, Power, Etc.

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

 

THERMO 1 CREDIT AGREEMENT		-26-

---

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

Section 3.02 Due Authorization, Etc.

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

Section 3.03 No Conflict

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

Section 3.04 Approvals, Etc.

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

 

THERMO 1 CREDIT AGREEMENT		-27-

---

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

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

Section 3.05 Financial Statements; No Material Adverse Effect

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-28-

---

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

Section 3.06 Litigation, Etc.

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

Section 3.07 Compliance with Laws and Obligations

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

Section 3.08 Environmental Laws

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

 

THERMO 1 CREDIT AGREEMENT		-29-

---

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

Section 3.09 Material Project Documents

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

Section 3.10 Properties

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

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

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

Section 3.11 Taxes

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

 

THERMO 1 CREDIT AGREEMENT		-30-

---

Section 3.12 Full Disclosure

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

Section 3.13 Solvency and Bankruptcy

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

Section 3.14 Regulatory Restrictions on Borrowing

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-31-

---

Section 3.15 Security Documents

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

Section 3.16 ERISA

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

Section 3.17 Insurance

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

Section 3.18 Conduct of Business

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

Section 3.19 Margin Stock

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

 

THERMO 1 CREDIT AGREEMENT		-32-

---

Section 3.20 Members; Membership Interests and Related Matters

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

(b) The Company has no Subsidiaries.

Section 3.21 No Ownership by Disqualified Persons

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

Section 3.22 Sufficiency of Material Project Documents

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

Section 3.23 No Force Majeure Event

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

Section 3.24 No Employees

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

Section 3.25 No Lienable Work

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

 

THERMO 1 CREDIT AGREEMENT		-33-

---

ARTICLE IV

CONDITIONS

Section 4.01 Conditions Precedent to Effectiveness.

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-34-

---

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

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-35-

---

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

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

(i) Project Documents.

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

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

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

(k) Authorizations.

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

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

 

THERMO 1 CREDIT AGREEMENT		-36-

---

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

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

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

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

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

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

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

Section 4.02 Conditions Precedent to Phase Two Date.

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-37-

---

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

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

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

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-38-

---

Section 4.03 Conditions Precedent to Phase Three Date.

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

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-39-

---

ARTICLE V

AFFIRMATIVE COVENANTS

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

Section 5.01 Limited Liability Company Existence; Etc.

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

Section 5.02 Conduct of Business

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

Section 5.03 Compliance with Laws and Obligations

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

Section 5.04 Governmental Authorizations

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

Section 5.05 Maintenance of Title

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

 

THERMO 1 CREDIT AGREEMENT		-40-

---

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

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

Section 5.06 Maintenance of Property; Insurance

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

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

 

THERMO 1 CREDIT AGREEMENT		-41-

---

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

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

Section 5.07 Keeping of Books

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

Section 5.08 Access to Records

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

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

Section 5.09 Payment of Utilities, Taxes, Etc.

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

 

THERMO 1 CREDIT AGREEMENT		-42-

---

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

Section 5.10 Reporting Requirements

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-43-

---

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

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

Section 5.11 Notices

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-44-

---

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

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

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

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

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

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

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

Section 5.12 Cash Grant

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

 

THERMO 1 CREDIT AGREEMENT		-45-

---

Section 5.13 Further Assurances

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

Section 5.14 Maintenance of Regulatory Status

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

Section 5.15 Accounts

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

Section 5.16 Budgets

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

 

THERMO 1 CREDIT AGREEMENT		-46-

---

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

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

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

Section 5.17 Operating Statements and Reports

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

 

THERMO 1 CREDIT AGREEMENT		-47-

---

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

Section 5.18 Material Project Documents

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

Section 5.19 Maintenance of Corporate Separateness

The Company shall:

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

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

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

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

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

Section 5.20 Environmental Laws

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

 

THERMO 1 CREDIT AGREEMENT		-48-

---

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

Section 5.21 Maintenance of Site

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

Section 5.22 Lien Waivers

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

ARTICLE VI

NEGATIVE COVENANTS

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

Section 6.01 Organizational Documents

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

 

THERMO 1 CREDIT AGREEMENT		-49-

---

Section 6.02 Subsidiaries; Equity Issuances

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

Section 6.03 Indebtedness

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

(a) Indebtedness incurred under the Financing Documents;

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

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

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

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

Section 6.04 Liens, Etc.

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

Section 6.05 Investments, Advances, Loan

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

 

THERMO 1 CREDIT AGREEMENT		-50-

---

Section 6.06 Business Activities; Employees

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

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

Section 6.07 Restricted Payments

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

Section 6.08 Fundamental Changes; Asset Dispositions and Acquisitions

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-51-

---

Section 6.09 Accounting Changes

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

Section 6.10 Amendment or Termination of Project Documents

The Company shall not:

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-52-

---

Section 6.11 Transactions with Affiliates

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

Section 6.12 Accounts

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

Section 6.13 Derivative Transactions

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

Section 6.14 Cash Grant

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

Section 6.15 Substantial Consummation

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

 

THERMO 1 CREDIT AGREEMENT		-53-

---

ARTICLE VII

EVENTS OF DEFAULT

Section 7.01 Events of Default.

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

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-54-

---

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-55-

---

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-56-

---

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

Section 7.02 Limitation on Exercise of Remedies

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

Section 7.03 Certain Step In Rights

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

During the Step In Period:

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

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-57-

---

ARTICLE VIII

MISCELLANEOUS

Section 8.01 Notices

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

 

If to the Company:
		Thermo No. 1 BE-01, LLC ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Ormat:
		Ormat Nevada Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attn: President Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇

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

Section 8.02 Waivers; Amendments

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

 

THERMO 1 CREDIT AGREEMENT		-58-

---

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

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

Section 8.03 Expenses; Indemnity; Etc.

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

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

 

THERMO 1 CREDIT AGREEMENT		-59-

---

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

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

Section 8.04 Successors and Assigns

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

 

THERMO 1 CREDIT AGREEMENT		-60-

---

Section 8.05 Survival

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

Section 8.06 Counterparts; Integration; Effectiveness

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

Section 8.07 Severability

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

Section 8.08 Right of Setoff

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

 

THERMO 1 CREDIT AGREEMENT		-61-

---

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

Section 8.09 Governing Law; Jurisdiction; Etc.

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

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-62-

---

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

(e) Service of Process. The Company irrevocably appoints CT Corporation System (the “Company Process Agent”), with an office on the date hereof at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇ and at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ and Ormat irrevocably appoints HIQ Corporate Services, Inc. (the “Ormat Process Agent”), with an office on the date hereof at One Commerce Plaza, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ and at ▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as its agent and true and lawful attorney-in-fact in its name, place and stead to accept on behalf of such party and its property and revenues service of copies of the summons and complaint and any other process which may be served in any suit, action or proceeding brought in the State of New York or the State of Utah, respectively, in connection with this Agreement, and each party agrees that the failure of the Company Process Agent or Ormat Process Agent, as applicable, to give any notice of any such service of process to a party shall not impair or affect the validity of such service or, to the extent permitted by applicable law, the enforcement of any judgment based thereon. Each party hereto irrevocably consents to the service of process in the manner provided for notices in Section 8.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

Section 8.10 Headings

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

Section 8.11 Confidentiality

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

 

THERMO 1 CREDIT AGREEMENT		-63-

---

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

Section 8.12 Third Party Beneficiaries

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

Section 8.13 Usury

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

 

THERMO 1 CREDIT AGREEMENT		-64-

---

Section 8.14 Reinstatement

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

Section 8.15 Limited Recourse

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

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

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

 

THERMO 1 CREDIT AGREEMENT		-65-

---

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

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

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

ARTICLE IX

REPRESENTATIONS AND WARRANTIES OF ORMAT

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

Section 9.01 Due Organization, Power, Etc.

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

Section 9.02 Due Authorization, Etc.

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

 

THERMO 1 CREDIT AGREEMENT		-66-

---

Section 9.03 No Conflict

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

THERMO 1 CREDIT AGREEMENT		-67-

---

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

 

 

THERMO 1 CREDIT AGREEMENT		-68-

---

 

THERMO 1 CREDIT AGREEMENT		-69-

---

APPENDIX A – Insurance

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

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

(c) Company’s Insurance Requirements

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

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

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

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

 

		Appendix A		Page 1

---

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

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

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

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

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

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

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

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

 

		Appendix A		Page 2

---

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

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

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

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

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

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

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

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

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

 

		Appendix A		Page 3

---

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

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

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

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

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

 

		Appendix A		Page 4

---

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

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

 

		Appendix A		Page 5

---

APPENDIX B – Real Estate Documents

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

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

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

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

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

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

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

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

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

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

 

		Appendix B		Page 1

---

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

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

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

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

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

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

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

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

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

 

*	Specified Collateral

 

		Appendix B		Page 2

---

EXHIBIT A – Form of Financial Statement Certificate

[Date]

Ormat Nevada Inc.

under the Agreement

referred to below

▇▇▇▇ ▇▇▇▇ ▇▇▇▇

▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Attn: President

Telephone: (▇▇▇) ▇▇▇-▇▇▇▇

Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇

 

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

Ladies and Gentlemen:

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

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

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

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

 

		Exhibit A		Page 1

---

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

 

 

		Exhibit A		Page 2

---

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

CONSENT AND AGREEMENT

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

RECITALS

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

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

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

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

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

 

		Exhibit B-1		Page 1

---

AGREEMENT

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

 

1.	ASSIGNMENT AND AGREEMENT

 

1.1

Consent to Assignment

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

 

1.2

Subsequent Owner

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

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

 

1.3

Right to Cure

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

 

CONSENT AND AGREEMENT		-2-

---

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

 

1.4

No Amendments

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

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

 

1.5

Replacement Agreements

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

 

CONSENT AND AGREEMENT		-3-

---

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

 

1.6

Limitations on Liability

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

 

1.7

Delivery of Notices

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

 

1.8

Transfer

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

 

CONSENT AND AGREEMENT		-4-

---

2.	PAYMENTS UNDER THE ASSIGNED AGREEMENT

 

2.1

Payments

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

 

2.2

No Offset, Etc.

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

 

3.	REPRESENTATIONS AND WARRANTIES OF CONTRACTING PARTY

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

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

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

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

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

 

CONSENT AND AGREEMENT		-5-

---

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

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

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

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

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

 

4.	ADDITIONAL PROVISIONS

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

 

5.	MISCELLANEOUS

 

5.1

Addresses

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

 

CONSENT AND AGREEMENT		-6-

---

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

 

If to Company:		Thermo No. 1 BE-01, LLC ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
		Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Contracting Party:		[                                         ]
		[                                 ]
		[                                 ]
		Attn: [                            ]
		Telephone: [                                ]
		Facsimile: [                                ]
If to Ormat:		Ormat Nevada, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
		Attn: President
		Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
		Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇

 

5.2

Governing Law; Jurisdiction; Etc.

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

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

 

CONSENT AND AGREEMENT		-7-

---

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

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

 

5.3

Counterparts

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

 

5.4

Headings Descriptive

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

 

5.5

Severability

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

 

5.6

Amendment, Waiver

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

 

CONSENT AND AGREEMENT		-8-

---

5.7

Successors and Assigns

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

 

5.8

Third Party Beneficiaries

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

 

5.9

Entire Agreement

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

 

5.10

Refinancing

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

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

 

CONSENT AND AGREEMENT		-9-

---

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

 

Accepted and Agreed to:

 

Ormat:
ORMAT NEVADA, INC.
By
		Name:
		Title:

 

CONSENT AND AGREEMENT		-10-

---

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

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

(1) corporate (or similar) existence

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

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

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

 

		Exhibit B-2		Page 1

---

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

[United States Department of the Interior

BLM Utah Cedar City Field Office Letterhead]

In Reply Refer To:

BLM Right-of-Way Grant, UTU-83018

VIA CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Thermo No. 1 BE-01, LLC

▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇

▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇

Attention:                     

Ormat Nevada Inc.

▇▇▇▇ ▇▇▇▇ ▇▇▇▇

▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇

Attention: President

 

RE:	Credit Agreement dated December     , 2011 between Thermo ▇▇.▇ ▇▇-▇▇, LLC (“Holder”) and Ormat Nevada Inc. (“Secured Party”) and secured by, among other things, a deed of trust and collateral assignment of Holder’s right, title and interest in and to the ROW (as defined below).

To Whom it May Concern:

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

 

•

▇▇▇▇▇-▇▇-▇▇▇ ▇▇▇▇▇, ▇▇▇-▇▇▇▇▇, dated effective as of June 5, 2008, granted to Intermountain Renewable Power, LLC (“Intermountain”) as assigned by Intermountain to Holder.

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

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

 

		Exhibit B-3		Page 1

---

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

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

Ormat Nevada Inc.

▇▇▇▇ ▇▇▇▇ ▇▇▇▇

▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇

Attention: President

Telephone: (▇▇▇) ▇▇▇-▇▇▇▇

Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇

Re: Thermo ▇▇.▇▇ ▇▇-▇▇, LLC

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

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

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

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

 

 

2

---

EXHIBIT B-4 – Collateral Assignment Agreement

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

Recitals

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

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

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

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

Agreement

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

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

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

 

1

---

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

4. Cure Rights.

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

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

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

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

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

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

 

2

---

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

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

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

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

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

 

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

 

3

---

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

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

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

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

 

a.

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

 

b.

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

 

c.

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

 

d.

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

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

 

4

---

11. Miscellaneous.

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

 

If to the Secured Party, addressed to:

 

Name:		Ormat Nevada Inc.
Address:		▇▇▇▇ ▇▇▇▇ ▇▇▇▇
		▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone		(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:		(▇▇▇) ▇▇▇-▇▇▇▇
Attention:		President
with copy to: ▇▇▇▇▇▇▇ Coie LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇.▇▇▇▇▇

 

If to Anaheim:
Name: City of Anaheim
Attention: City Clerk
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:		(▇▇▇)▇▇▇-▇▇▇▇
Facsimile:		(▇▇▇)▇▇▇-▇▇▇▇
With a Copy to:
City of Anaheim
Attention: Public Utilities General Manager
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:		(▇▇▇)▇▇▇-▇▇▇▇
Facsimile:		(▇▇▇) ▇▇▇-▇▇▇▇

 

5

---

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

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

 

d.

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

 

e.

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

 

f-

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

 

g.

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

 

h.

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

 

i.

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

 

6

---

j.

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

 

k.

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

 

J-

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

 

m.

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

[SIGNATURES ON FOLLOWING PAGE]

 

7

---

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

 

						CITY OF ANAHEIM a municipal corporation
						By:		▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
								Public Utilities General Manager
DATE OF EXECUTION:						ATTEST:
						By:		▇▇▇▇▇ ▇. ▇▇▇▇▇, City Clerk
Approved as to form: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CITY ATTORNEY
By:		▇▇▇▇▇▇ ▇. ▇▇▇▇
		Assistant City Attorney
						ORMAT NEVADA INC.
						By:
						Name:
						Title:
Approved as to form:
▇▇▇▇▇▇▇ Coie LLP
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇

 

8

---

ACKNOWLEDGEMENT

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

 

 

Approved as to form: Hunton & ▇▇▇▇▇▇▇▇, LLP
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.

---

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

CERTIFICATE, CONSENT AND AGREEMENT

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

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

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

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

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

---

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

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

Ormat Nevada Inc.

▇▇▇▇ ▇▇▇▇ ▇▇▇▇

▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇

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

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

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

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

 

2

---

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

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

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

Executed on                     , 2012

 

 

3

---

Schedule 1 – Mineral Leases

 

4

---

EXHIBIT C – Operating Statements and Report Requirements

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

1. Technical performance of the Project, including production;

2. An accident incident report

3. Safety and environmental compliance status

4. Equipment operating status

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

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

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

 

		Exhibit C		Page 1

---

SCHEDULE 3.04 – Authorizations

Part 1

Owner Acquired Permits

 

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

Part II - Not Obtained

Owner Acquired Permits

 

Agency		Permit		Status
California Energy Commission
		Certified Renewable Energy Facility		Submitted, not obtained
Homeland Security
		If required

 

		Schedule 3.04		Page 1

---

SCHEDULE 3.05 – Financial Statements

Part I

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

Part II

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

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

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

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

 

		Schedule 3.05		Page 1

---

SCHEDULE 3.06 – Litigation

Part I – Litigation

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

Part II – Administrative Claims in Bankruptcy

 

Claim No.

Creditor Name

Amount of Claim

Debtor

Case No.

Disputed?

109 /123

City of Anaheim, Public Utilities Department

$

1,154,519

Estimated

Thermo No. 1 BE-01, LLC

11-11339

Yes

94

▇▇▇▇▇ & Whitney Power Systems, Inc.

$

314,741

Estimated through 8/31/2011

Thermo No. 1 BE-01, LLC

11-11339

Yes

Total:

$

1,469,260

 

		Schedule 3.06		Page 1

---

SCHEDULE 3.10 – Real Property

None.

 

		Schedule 3.10		Page 1

---

SCHEDULE 3.11 – Taxes

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

 

		Schedule 3.11		Page 1

---

SCHEDULE 4.01(f) – Form of Opinions

December 20, 2011

Ormat Nevada Inc.

▇▇▇▇ ▇▇▇▇ ▇▇▇▇

▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Re: Thermo No. 1 Repowering

Ladies and Gentlemen:

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

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

 

(i)

the Credit Agreement;

 

(ii)

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

 

(iii)

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

 

(iv)

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

 

(v)

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

 

		Schedule 4.01(f)		Page 1

---

 

(vi)

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

 

(vii)

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

 

(viii)

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

 

(ix)

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

 

(x)

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

 

(xi)

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

 

(xii)

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

 

(xiii)

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

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

 

2

---

 

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

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

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

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

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

 

3

---

 

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

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

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

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

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

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

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

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

 

4

---

 

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

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

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

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

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

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

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

 

5

---

 

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

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

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

 

6

---

 

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

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

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

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

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

 

7

---

 

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

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

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

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

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

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

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

 

8

---

 

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

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

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

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

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

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

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

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

 

9

---

 

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

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

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

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

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

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

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

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

 

10

---

 

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

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

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

 

Very truly yours,

07877/07960

 

11

---

 

 

A PROFESSIONAL CORPORATION				▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇		▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇   Of counsel: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
ATTORNEYS AT LAW
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (801) 532-2666 (▇▇▇) ▇▇▇-▇▇▇▇ DIRECT FAX ▇▇▇@▇▇▇▇▇▇.▇▇▇ DIRECT E-MAIL		Mailing ▇▇▇▇▇▇▇   ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

December 20, 2011

Ormat Nevada, Inc.

▇▇▇▇ ▇▇▇▇ ▇▇▇▇

▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

 

Re:

Thermo No. 1 BE-01, LLC Project Financing

Ladies and Gentlemen:

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

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

 

(i)

the Credit Agreement;

 

(ii)

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

 

(iii)

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

---

Ormat Nevada, Inc.

December 20, 2011

Page 2

 

 

 

(iv)

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

 

(v)

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

 

(vi)

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

 

(vii)

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

 

(viii)

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

 

(ix)

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

 

(x)

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

 

(xi)

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

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

---

Ormat Nevada, Inc.

December 20, 2011

Page 3

 

 

 

Assumptions

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

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

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

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

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

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

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

---

Ormat Nevada, Inc.

December 20, 2011

Page 4

 

 

 

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

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

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

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

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

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

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

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

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

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

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

---

Ormat Nevada, Inc.

December 20, 2011

Page 5

 

 

 

Opinion

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

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

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

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

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

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

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

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

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

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

---

Ormat Nevada, Inc.

December 20, 2011

Page 6

 

 

 

Limitations and Qualifications.

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

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

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

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

D. We express no opinion with respect to:

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

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

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

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

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

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

---

Ormat Nevada, Inc.

December 20, 2011

Page 7

 

 

 

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

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

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

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

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

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

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

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

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

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

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

---

Ormat Nevada, Inc.

December 20, 2011

Page 8

 

 

 

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

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

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

F. We express no opinion as to the effect of any prohibitions against assignment that may be contained in any lease agreement (including leases of real property, real property interests, and leases of person property).

G. We express no opinion with respect to all (i) municipal, political subdivision (whether created or enabled through legislative action at the federal, state, regional or local level), local and county ordinances, statutes, administrative decisions, laws, rules and regulations, and (ii) statutes, laws, rules and regulations relating to (a) pollution or protection of the environment, (b) zoning, land use, building or construction, (c) operation of any asset or property, (d) labor, employment, employee rights and benefits, or occupational safety and health, (e) utility regulation or regulation of matters pertaining to the acquisition, transportation, transmission, storage or use of energy sources used in connection therewith or generated thereby, (f) antitrust, (g) taxation and (h) securities laws, in each case with respect to each of the foregoing, (x) as interpreted, construed or enforced pursuant to any judicial, arbitral or other decision or pronouncement, (y) as enacted, promulgated or issued by, or otherwise existing in effect in, any jurisdiction, including, without limitation, any state of the United States of America and the United States of America, and (z) including, without limitation, any and all authorizations, permits, consents, applications, licenses, approvals, filings, registrations, publications, exemptions and the like required by any of them.

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

I. We express no opinion with respect to (i) the right, title or interest of the Borrower, Pledgor or any other Person in or to any property, tangible or intangible, (ii) except as expressly provided in opinion paragraph 3 above, the creation, attachment, enforceability or perfection of any security interest in any property, or (iii) the priority of any security interest.

J. To the extent that the Lien of the Trust Deed is intended to extend to after-acquired real properties or water rights, additional filings may be required to perfect a security interest therein.

---

Ormat Nevada, Inc.

December 20, 2011

Page 9

 

 

 

K. Section 16-10a-1501 UCA requires a foreign corporation transacting business in the State of Utah to file an application for authority to transact business in Utah with the Utah Division of Corporations. We express no opinion as to any consequences that may arise from your failing to file such a statement.

L. Any purported waiver by a Borrower in the Opinion Documents, prior to default, of a right to redeem any of the collateral that is subject to the terms of Article 9 of the Uniform Commercial Code is not effective. Section 70A-9a-624 (3) UCA.

M. Under Utah law, § 78B-6-509 UCA, the court shall have the power to (a) hear and determine all adverse or conflicting claims to the property sought to be condemned, and the damages; and (b) determine the respective rights of different parties seeking condemnation of the same property.

N. A Utah court may modify or limit contractual awards of attorneys’ fees.

O. A Utah court may decline to enforce Choice of Law Provisions to the extent that the application of New York law offends the public policy of Utah which has a materially greater interest than the State of New York in the determination of the issue(s) that are subject of such action or proceeding and whose law would apply in the absence of such choice of law.

P. In making the opinion we also have assumed that the Opinion Documents accurately reflect the complete understanding of the parties with respect to the transactions contemplated thereby and the rights and the obligations of the parties thereunder.

Q. We make no opinion as to any document that is referenced in or attached to the Opinion Documents other than the Opinion Documents themselves.

R. Our opinions relating to perfection of the security interests are subject to federal bankruptcy law and federal and state insolvency, reorganization, avoidable transfers, moratorium and other laws affecting the validity or enforcement of creditors’ rights generally.

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

The opinions set forth in this letter are limited to the internal laws of the State of Utah. We express no opinion in this letter to the laws of any other jurisdiction.

---

Ormat Nevada, Inc.

December 20, 2011

Page 10

 

 

 

This opinion is addressed to you and is solely for your benefit and only in connection with the above matter. This opinion may not be relied upon by any Person for any other purpose or furnished to, circulated, quoted or relied upon by any other Person for any purpose without our prior written consent (which may be given or withheld in our sole discretion).

 

---

				HUNTON & ▇▇▇▇▇▇▇▇ LLP
				▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
				TEL     212 - 309 - 1000 FAX    212 - 309 - 1100

December 20, 2011

Ormat Nevada Inc.

▇▇▇▇ ▇▇▇▇ ▇▇▇▇

▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

 

Re: Thermo No. 1 Repowering

Ladies and Gentlemen:

We have acted as special Federal bankruptcy counsel to Thermo No. 1, BE-01, LLC, a Delaware limited liability company (the “Borrower”) in connection with the Credit Agreement, dated as of December 19, 2011 (the “Credit Agreement”), between the Borrower and Ormat Nevada Inc., a Delaware corporation (“Ormat”). We also acted as Federal bankruptcy counsel to the debtors in the ▇▇▇▇▇ Technologies, Inc. jointly administered Chapter 11 bankruptcy cases in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). Case No. 11-11315 (KJC) (the “Bankruptcy Cases”). At the request of the Borrower, this opinion is provided in accordance with Section 4.01(f)(iii) of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

I. FACTUAL BACKGROUND

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

 

(i)

the Credit Agreement;

 

(ii)

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

 

(iii)

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

ATLANTA     AUSTIN     BANGKOK     BEIJING     BRUSSELS     CHARLOTTE     DALLAS     HOUSTON     LONDON     LOS ANGELES

▇▇▇▇▇▇     MIAMI     NEW YORK     NORFOLK     RALEIGH     RICHMOND     SAN FRANCISCO     TOKYO     WASHINGTON

▇▇▇.▇▇▇▇▇▇.▇▇▇

---

Ormat Nevada Inc.

December 20, 2011

Page 2

 

(iv)

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

 

(v)

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

 

(vi)

the documents filed on the docket in the Bankruptcy Cases as of the date hereof.

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

II. ASSUMPTIONS

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

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

---

Ormat Nevada Inc.

December 20, 2011

Page 3

 

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

We express no opinion in this letter regarding the laws of any jurisdiction other than the Federal bankruptcy laws of the United States of America (Title 11 of the United States Code) as in effect on the date hereof (the “Federal Bankruptcy Laws”). We have made no investigation and we express no opinion herein concerning any other laws of any jurisdiction, including, without limitation, of any state, city, county, municipal or other local laws within any state or the effect thereof.

III. OPINIONS

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

1. Borrower and Pledgor each was a debtor in the Bankruptcy Cases.

2. On August 30, 2011, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Third Amended Plan of Reorganization of ▇▇▇▇▇ Technologies, Inc. and its Affiliated Debtors (the “Plan”).

3. The Confirmation Order is final and non-appealable.

4. The Plan became effective on September 9, 2011 (the “Effective Date”).

5. Pursuant to the Plan and the Confirmation Order, as of the Effective Date, all Assets (as defined in the Plan) of the Borrower and the Pledgor were vested in the Borrower and the Pledgor, respectively, in each case free and clear of all Liens.

---

Ormat Nevada Inc.

December 20, 2011

Page 4

 

6. The execution, delivery and performance by each Opinion Party of the Opinion Documents to which it is a party do not require any prior approval by the Bankruptcy Court.

7. The execution and delivery by each of the Opinion Parties of the Opinion Documents to which it is a party do not violate the Confirmation Order or any other order of the Bankruptcy Court entered in the Bankruptcy Cases and known to us.

8. Part II of Schedule 3.06 of the Credit Agreement accurately identifies the disputed unpaid Administrative Claims asserted against the Borrower in the Bankruptcy Cases.

9. Section 6.5 of the Plan and Paragraph 46 of the Confirmation Order provide that on the Effective Date all of the Debtors’ right, title and interests in the PWPS Claims (as defined in the Plan) were transferred to, and vested in, the Litigation LLC (as defined in the Plan).

IV. QUALIFICATIONS

We do not purport to express any opinion herein other than the opinions expressly set forth in Section III above, nor do we purport to express an opinion herein on any laws other than the Federal Bankruptcy Laws. We express no opinion herein with respect to the right, title or interest of the Borrower, Pledgor or any other Person in or to any property, tangible or intangible.

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

---

Ormat Nevada Inc.

December 20, 2011

Page 5

 

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

 

Very truly yours,

07908/09010

---

SCHEDULE 4.02(d) – Project Documents Requiring Consent to

Assignments from the Applicable Counterparty on the Phase Two Date

To be obtained per Section 4.02(d):

 

1.

Power Purchase Agreement

 

2.

▇▇▇▇▇ Lease (See Exhibit B-5)

 

3.

Minersville Lease

 

4.

O&M Agreement

The Company shall use commercially reasonable efforts to obtain fully executed Consents to Assignment with respect to:

 

1.

Interconnection Agreement

 

2.

MES Agreement

 

3.

Exxon Mobil Lease

 

		Schedule 4.02(d)		Page 1

---

SCHEDULE 4.03(e) – Project Documents Requiring Consent to

Assignments from the Applicable Counterparty on the Phase Three Date

 

1.

BLM ROW

 

		Schedule 4.03(e)		Page 1

---

SCHEDULE 5.05(b) – Specified Collateral

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

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

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

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

 

		Schedule 5.05(b)		Page 1