ORMAT TECHNOLOGIES, INC. (Form: 10-Q, Received: 06/19/2018 17:36:59)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

Form 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 4

	For the quarterly period ended March 31, 2018

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission file number: 001-32347

ORMAT TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	88-0326081
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

6225 Neil Road, Reno, Nevada	89511-1136
(Address of principal executive offices)	(Zip Code)

(775) 356-9029

( Registrant’s telephone number, including area code )

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☑

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of June 17, 2018, the number of outstanding shares of common stock, par value $0.001 per share, was 50,617,209.

Table of Contents

ORMAT TECHNOLOGIES, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2018

PART I — FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	5

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	30

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	60

ITEM 4.	CONTROLS AND PROCEDURES	60

PART II — OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	62

ITEM 1A.	RISK FACTORS	63

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	63

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	63

ITEM 4.	MINE SAFETY DISCLOSURES	63

ITEM 5.	OTHER INFORMATION	63

ITEM 6.	EXHIBITS	64

SIGNATURES		65

iii

Table of Contents

Certain Definitions

Unless the context otherwise requires, all references in this quarterly report to “Ormat”, “the Company”, “we”, “us”, “our company”, “Ormat Technologies” or “our” refer to Ormat Technologies, Inc. and its consolidated subsidiaries.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			December 31,
	2018			2017
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	54,723		$	47,818
Restricted cash and cash equivalents (primarily related to VIEs)		50,332			48,825
Receivables:
Trade		103,580			110,410
Other		10,018			13,828
Inventories		20,069			19,551
Costs and estimated earnings in excess of billings on uncompleted contracts		41,134			40,945
Prepaid expenses and other		42,274			40,269
Total current assets		322,130			321,646
Investment in an unconsolidated company		63,109			34,084
Deposits and other		21,205			21,599
Deferred income taxes		124,304			57,337
Deferred charges		—			49,834
Property, plant and equipment, net ($1,655,365 and $1,631,900 related to VIEs, respectively)		1,723,560			1,734,691
Construction-in-process ($149,872 and $142,717 related to VIEs, respectively)		345,563			293,542
Deferred financing and lease costs, net		4,922			4,674
Intangible assets, net		84,771			85,420
Goodwill		21,253			21,037
Total assets	$	2,710,817		$	2,623,864
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	103,551		$	153,796
Short term revolving credit lines with banks (full recourse)		38,500			51,500
Billings in excess of costs and estimated earnings on uncompleted contracts		10,458			20,241
Current portion of long-term debt:
Limited and non-recourse (primarily related to VIEs):
Senior secured notes		28,398			33,226
Other loans		21,495			21,495
Full recourse		2,809			3,087
Total current liabilities		205,211			283,345
Long-term debt, net of current portion:
Limited and non-recourse (primarily related to VIEs):
Senior secured notes (less deferred financing costs of $7,693 and $8,113, respectively)		305,905			311,668
Other loans (less deferred financing costs of $5,231 and $5,258, respectively)		237,245			242,385
Full recourse:
Senior unsecured bonds (less deferred financing costs of $863 and $580, respectively)		303,469			203,752
Other loans (less deferred financing costs of $994 and $1,011, respectively)		46,506			46,489
Liability associated with sale of tax benefits		42,622			44,634
Deferred lease income		50,745			51,520
Deferred income taxes		48,074			61,961
Liability for unrecognized tax benefits		9,074			8,890
Liabilities for severance pay		20,874			21,141
Asset retirement obligation		27,639			27,110
Other long-term liabilities		21,625			18,853
Total liabilities		1,318,989			1,321,748
Commitments and contingencies (Note 10)

Redeemable noncontrolling interest		6,943			6,416

Equity:
The Company's stockholders' equity:
Common stock, par value $0.001 per share; 200,000,000 shares authorized; 50,617,209 and 50,609,051 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively		51			51
Additional paid-in capital		890,485			888,778
Retained earnings		410,758			327,255
Accumulated other comprehensive loss		(909	)		(4,706	)
Total equity attributable to the Company's stockholders		1,300,385			1,211,378
Noncontrolling interest		84,500			84,322
Total equity		1,384,885			1,295,700
Total liabilities, redeemable noncontrolling interest and equity	$	2,710,817		$	2,623,864

The accompanying notes are an integral part of the consolidated financial statements.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended March 31,
	2018			2017
	(Dollars in thousands, except per share data)
Revenues:
Electricity	$	132,489		$	115,776
Product		48,672			74,122
Other		2,862			—
Total revenues		184,023			189,898
Cost of revenues:
Electricity		73,482			66,036
Product		33,726			49,452
Other		3,443			—
Total cost of revenues		110,651			115,488
Gross profit		73,372			74,410
Operating expenses:
Research and development expenses		1,108			602
Selling and marketing expenses		3,699			4,363
General and administrative expenses		13,849			9,949
Write-off of unsuccessful exploration activities		123			—
Operating income		54,593			59,496
Other income (expense):
Interest income		113			244
Interest expense, net		(14,344	)		(14,923	)
Derivatives and foreign currency transaction gains (losses)		(1,599	)		1,338
Income attributable to sale of tax benefits		7,361			6,157
Other non-operating expense, net		(20	)		(92	)
Income from continuing operations before income taxes and equity in earnings (losses) of investees		46,104			52,220
Income tax (provision) benefit		26,942			(11,004	)
Equity in earnings (losses) of investees, net		1,210			(1,599	)
Income from continuing operations		74,256			39,617
Net income attributable to noncontrolling interest		(4,748	)		(4,423	)
Net income attributable to the Company's stockholders	$	69,508		$	35,194
Comprehensive income:
Net income		74,256			39,617
Other comprehensive income (loss), net of related taxes:
Change in foreign currency translation adjustments		1,528			—
Change in unrealized gains or losses in respect of the Company's share in derivatives instruments of unconsolidated investment		2,634			569
Loss in respect of derivative instruments designated for cash flow hedge		20			48
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge		(15	)		(24	)
Comprehensive income		78,423			40,210
Comprehensive income attributable to noncontrolling interest		(5,118	)		(4,412	)
Comprehensive income attributable to the Company's stockholders	$	73,305		$	35,798
Earnings per share attributable to the Company's stockholders:
Basic:
Net income	$	1.37		$	0.71
Diluted:
Net income	$	1.36		$	0.70
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:
Basic		50,614			49,680
Diluted		51,051			50,491
Dividend per share declared	$	0.23		$	0.17

The accompanying notes are an integral part of the consolidated financial statements.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

	The Company's Stockholders' Equity
							Retained			Accumulated
					Additional		Earnings			Other
	Common Stock				Paid-in					Income						Noncontrolling			Total
	Shares		Amount		Capital					(Loss)			Total			Interest			Equity

	(Dollars in thousands, except per share data)

Balance at December 31, 2016		49,667	$	50	$	869,463	$	215,352		$	(8,175	)	$	1,076,690		$	91,582		$	1,168,272

Stock-based compensation		—		—		1,713		—			—			1,713			—			1,713
Exercise of options by employees and directors		39		—		—		—			—			—			—			—
Cash paid to noncontrolling interest		—		—		—		—			—			—			(6,807	)		(6,807	)
Cash dividend declared, $0.17 per share		—		—		—		(8,448	)		—			(8,448	)		—			(8,448	)
Net income		—		—		—		35,194			—			35,194			4,079			39,273
Other comprehensive income (loss), net of related taxes:
Currency translation adjustment		—		—		—		—			89			89			(11	)		78
Loss in respect of derivative instruments designated for cash flow hedge		—		—		—		—			48			48			—			48
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment		—		—		—		—			569			569			—			569
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $14)		—		—		—		—			(24	)		(24	)		—			(24	)

Balance at March 31, 2017		49,706	$	50	$	871,176	$	242,098		$	(7,493	)	$	1,105,831		$	88,843		$	1,194,674

Balance at December 31, 2017		50,609	$	51	$	888,778	$	327,255		$	(4,706	)	$	1,211,378		$	84,322		$	1,295,700

Stock-based compensation		—		—		1,707		—			—			1,707			—			1,707
Exercise of options by employees and directors		8		—		—		—			—			—			—			—
Cumulative effect of changes in accounting principles		—		—		—		25,635			—			25,635			—			25,635
Cash paid to noncontrolling interest		—		—		—		—			—			—			(4,674	)		(4,674	)
Cash dividend declared, $0.23 per share		—		—		—		(11,640	)		—			(11,640	)		—			(11,640	)
Net income		—		—		—		69,508			—			69,508			4,482			73,990
Other comprehensive income (loss), net of related taxes:
Currency translation adjustment		—		—		—		—			1,158			1,158			370			1,528
Loss in respect of derivative instruments designated for cash flow hedge (net of related tax of $13)		—		—		—		—			20			20			—			20
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment		—		—		—		—			2,634			2,634			—			2,634
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $9)		—		—		—		—			(15	)		(15	)		—			(15	)

Balance at March 31, 2018		50,617	$	51	$	890,485	$	410,758		$	(909	)	$	1,300,385		$	84,500		$	1,384,885

The accompanying notes are an integral part of the consolidated financial statements.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2018			2017

	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	74,256		$	39,617
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,553			27,059
Accretion of asset retirement obligation		529			455
Stock-based compensation		1,707			1,713
Amortization of deferred lease income		(671	)		(671	)
Income attributable to sale of tax benefits, net of interest expense		(6,295	)		(4,335	)
Equity in losses (earnings) of investees		(1,210	)		1,600
Mark-to-market of derivative instruments		962			(1,519	)
Write-off of unsuccessful exploration activities		123			—
Gain on severance pay fund asset		129			(947	)
Deferred income tax provision and deferred charges		(29,467	)		6,612
Liability for unrecognized tax benefits		184			692
Deferred lease revenues		(104	)		(92	)
Changes in operating assets and liabilities, net of amounts acquired:
Receivables		9,777			19,092
Costs and estimated earnings in excess of billings on uncompleted contracts		(189	)		(4,352	)
Inventories		(503	)		(5,800	)
Prepaid expenses and other		(2,005	)		6,873
Deposits and other		62			(557	)
Accounts payable and accrued expenses		(49,027	)		681
Billings in excess of costs and estimated earnings on uncompleted contracts		(9,783	)		(14,035	)
Liabilities for severance pay		(267	)		930
Other long-term liabilities		1,008			(1,553	)
Net cash provided by operating activities		19,769			71,463
Cash flows from investing activities:
Capital expenditures		(66,962	)		(52,885	)
Investment in unconsolidated companies		(1,275	)		(14,918	)
Cash paid for acquisition of controlling interest in a subsidiary, net of cash acquired		—			(35,300	)
Decrease (increase) in severance pay fund asset, net of payments made to retired employees		203			(18	)
Net cash used in investing activities		(68,034	)		(103,121	)
Cash flows from financing activities:
Proceeds from long-term loans, net of transaction costs		100,000			—
Proceeds from revolving credit lines with banks		860,800			50,000
Repayment of revolving credit lines with banks		(873,800	)		(20,000	)
Cash received from noncontrolling interest		4,134			1,411
Repayments of long-term debt		(16,687	)		(13,405	)
Cash paid to noncontrolling interest		(4,674	)		(6,807	)
Payments of capital leases		(436	)		(408	)
Deferred debt issuance costs		(1,020	)		(1,144	)
Cash dividends paid		(11,640	)		(8,448	)
Net cash provided by financing activities		56,677			1,199
Net change in cash and cash equivalents and restricted cash and cash equivalents		8,412			(30,459	)
Cash and cash equivalents and restricted cash and cash equivalentsat beginning of period		96,643			264,476
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	105,055		$	234,017
Supplemental non-cash investing and financing activities:
Increase (decrease) in accounts payable related to purchases of property, plant and equipment	$	(1,673	)	$	1,801

The accompanying notes are an integral part of the consolidated financial statements.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — GENERAL AND BASIS OF PRESENTATION

These unaudited condensed consolidated interim financial statements of Ormat Technologies, Inc. and its subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not contain all information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of March 31, 2018, the consolidated results of operations and comprehensive income (loss) for the three -month periods ended March 31, 2018 and 2017 and the consolidated cash flows for the three -month periods ended March 31, 2018 and 2017.

The financial data and other information disclosed in the notes to the condensed consolidated financial statements related to these periods are unaudited. The results for the three -month period ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018.

These condensed unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10 -K/A for the year ended December 31, 2017. The condensed consolidated balance sheet data as of December 31, 2017 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2017, but does not include all disclosures required by U.S. GAAP.

Dollar amounts, except per share data, in the notes to these financial statements are rounded to the closest $1,000.

Revision of previously issued condensed consolidated financial statements

As previously disclosed in the Company’s Form 10-K/A as of and for the year ended December 31 2017, filed on June 19, 2018, the Company restated its previously issued 2017 financial statements due to the subsequent identification of material tax errors.

The Company also identified other tax errors in the previously issued unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2017, including a prior period tax error for an unrecognized tax benefit related to intercompany interest. The Company assessed the materiality of these errors in accordance with the SECs Staff Accounting Bulletin (“SAB”) Topic 1.Materiality, codified in ASC Topic 250, Presentation of Financial Statements (“ASC 250”), and concluded that such previously issued financial statements were not materially misstated. However, in connection with the fiscal 2017 restatement, the Company determined that it would revise such previously issued financial statements to correct for these errors. As a result, the revised financial statements for the three months ended March 31, 2017 reflect a $0.1 million increase in the income tax provision, with a corresponding decrease in net income and comprehensive income, and a $1.7 million decrease to total equity as of January 1, 2017 to correct for immaterial tax errors originating prior to 2017.

The effects of the revision on the line items within the Company's condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2017 are as follows:


	Three months ended March 31, 2017
	As originally reported			Adjustments			As revised
	(Dollars in thousands)
Income tax provision	$	(10,886	)	$	(118	)	$	(11,004	)
Income from continuing operations		39,735			(118	)		39,617
Net income attributable to the Company’s Stockholders		35,312			(118	)		35,194
Loss in respect of derivative instruments designated for cash flow hedge		22			26			48
Comprehensive income		40,302			(92	)		40,210
Comprehensive income attributable to the Company’s stockholders		35,890			(92	)		35,798
Earnings per share
Basic:	$	0.71		$	-		$	0.71
Diluted:	$	0.70		$	-		$	0.70

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The effects of the revision on the line items within the Company’s condensed consolidated statements of equity for the three months ended March 31, 2017 are as follows:


	Three months ended March 31, 2017
	As originally reported			Adjustments			As revised
	(Dollars in thousands)
Balances as of December 31, 2016:
Retained earnings	$	216,644		$	(1,292	)	$	215,352
Accumulated other comprehensive loss		(7,732	)		(443	)		(8,175	)
Total stockholders’ equity attributable to the Company’s stockholders		1,078,425			(1,735	)		1,076,690
Total equity		1,170,007			(1,735	)		1,168,272
Net income for the three months ended March 31, 2017		39,391			(118	)		39,273
Net income attributable to the Company’s stockholders for the three months ended March 31, 2017		35,312			(118	)		35,194
Loss in respect of derivative instruments designated for cash flow hedge for the three months ended March 31, 2017		22			26			48
Balances as of March 31, 2017:
Retained earnings		243,508			(1,410	)		242,098
Accumulated other comprehensive loss		(7,076	)		(417	)		(7,493	)
Total stockholders’ equity attributable to the Company’s stockholders		1,107,658			(1,827	)		1,105,831
Total equity		1,196,501			(1,827	)		1,194,674

Although there was no impact to net cash provided by operating activities, net cash used in investing activities or net cash used in financing activities, the effects of the revision on the line items within the condensed consolidated statements of cash flows for the three months ended March 31, 2017 are as follows:

	Three months ended March 31, 2017

	As originally reported		Adjustments			As revised
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	39,735	$	(118	)	$	39,617
Liability for unrecognized tax benefits		574		118			692
Net cash provided by operating activities		71,463		-			71,463

Migdal Senior Unsecured Loan

On March 22, 2018 the Company entered into a definitive loan agreement (the "Migdal Loan Agreement") with Migdal Insurance Company Ltd., Migdal Makefet Pension and Provident Funds Ltd. and Yozma Pension Fund of Self Employed Ltd., all entities within the Migdal Group, a leading insurance company and institutional investor in Israel. The Migdal Loan Agreement provides for a loan by the lenders to the Company in an aggregate principal amount of $100 million (the “Migdal Loan”). The Migdal Loan will be repaid in 15 semi-annual payments of $4.2 million each, commencing on September 15, 2021, with a final payment of $37 million on March 15, 2029. The Migdal Loan bears interest at a fixed rate of 4.8% per annum, payable semi-annually, subject to adjustment in certain circumstances as described below.

The Migdal Loan is subject to early redemption by the Company prior to maturity from time to time (but not more frequently than once per quarter) and at any time in whole or in part, at a redemption price set forth in the Migdal Loan Agreement. If the rating of the Company is downgraded to "ilA-", by Standard and Poor’s Global Ratings Maalot Ltd. (“Maalot”), the interest rate applicable to the Migdal Loan will be increased by 0.50%. If the rating of the Company is further downgraded to a lower level, the interest rate applicable to the Migdal Loan will be increased by 0.25% for each additional downgrade. In no event will the cumulative increase in the interest rate applicable to the Migdal Loan exceed 1% regardless of the cumulative rating downgrade. A subsequent upgrade or reinstatement of a rating by Maalot will reduce the interest rate applicable to the Migdal Loan by 0.25% for each upgrade (but in no event will the interest rate applicable the Migdal Loan fall below the base interest rate of 4.8% ). Additionally, if the ratio between short-term and long-term debt to financial institutions and bondholders, deducting cash and cash equivalents to EBITDA is equal to or higher than 4.5, the interest rate on all amounts then outstanding under the Migdal Loan shall be increased by 0.5% per annum over the interest rate then-applicable to the Migdal Loan.

The Migdal Loan constitutes senior unsecured indebtedness of the Company and will rank equally in right of payment with any existing and future senior unsecured indebtedness of the Company, and effectively junior to any existing and future secured indebtedness, to the extent of the security therefore.

The Migdal Loan Agreement includes various affirmative and negative covenants, including a covenant that the Company maintain (i) a debt to adjusted EBITDA ratio below 6, (ii) a minimum equity amount (as shown on its consolidated financial statements, excluding noncontrolling interests) of not less than $650 million, and (iii) an equity attributable to Company's stockholders to total assets ratio of not less than 25%. In addition, the Migdal Loan Agreement restricts the Company from making dividend payments if its equity falls below $800 million and otherwise restricts dividend payments in any one year to not more than 50% of the net income of the Company of such year as shown on the Company’s consolidated annual financial statements as long as any of the Company's bonds issued in Israel prior to March 27, 2018 remain outstanding. The Migdal Loan Agreement includes other customary affirmative and negative covenants and events of default.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Other comprehensive income

For the three months ended March 31, 2018 and 2017, the Company classified $5,000 and $2,000, respectively, related to derivative instruments designated as cash flow hedges, from accumulated other comprehensive income, of which $9,000 and $3,000, respectively, were recorded to reduce interest expense and $4,000 and $1,000, respectively, were recorded against the income tax provision, in the condensed consolidated statements of operations and comprehensive income. The accumulated net loss included in Other comprehensive income as of March 31, 2018, is $0.6 million.

Write-offs of unsuccessful exploration activities

Write-offs of unsuccessful exploration activities for the three months ended March 31, 2018 were $0.1 million. There were no write-offs of unsuccessful exploration activities for the three months ended March 31, 2017.

Reconciliation of Cash and cash equivalents and Restricted cash and cash equivalents

The following table provides a reconciliation of Cash and cash equivalents and Restricted cash and cash equivalents reported on the balance sheet that sum to the total of the same amounts shown on the statement of cash flows:

	March 31,		December 31,
	2018		2017
Cash and cash equivalents	$	54,723	$	47,818
Restricted cash and cash equivalents		50,332		48,825
Total Cash and cash equivalents and Restricted cash and cash equivalents	$	105,055	$	96,643

Concentration of credit risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.

The Company places its temporary cash investments with high credit quality financial institutions located in the United States and in foreign countries. At March 31, 2018 and December 31, 2017, the Company had deposits totaling $20.3 million and $21.2 million, respectively, in eight U.S. financial institutions that were federally insured up to $250,000 per account. At March 31, 2018 and December 31, 2017, the Company’s deposits in foreign countries amounted to approximately $47.3 million and $32.8 million, respectively.

At March 31, 2018 and December 31, 2017, accounts receivable related to operations in foreign countries amounted to approximately $73.3 million and $78.1 million, respectively. At March 31, 2018 and December 31, 2017, accounts receivable from the Company’s primary customers amounted to approximately 59% and 57% of the Company’s accounts receivable, respectively.

Sierra Pacific Power Company and Nevada Power Company (subsidiaries of NV Energy, Inc.) accounted for 17.4% and 18.8% of the Company’s total revenues for the three months ended March 31, 2018 and 2017, respectively.

Southern California Public Power Authority (“SCPPA”) accounted for 16.3% and 9.0% of the Company’s total revenues for the three months ended March 31, 2018 and 2017, respectively.

Kenya Power and Lighting Co. Ltd. accounted for 15.1% and 14.3% of the Company’s total revenues for the three months ended March 31, 2018 and 2017, respectively.

The Company has historically been able to collect on substantially all of its receivable balances, and believes it will continue to be able to collect all amounts due. Accordingly, no provision for doubtful accounts has been made.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 2 — NEW ACCOUNTING PRONOUNCEMENTS

New accounting pronouncements effective in the three -month period ended March 31, 2018

Income Taxes

In March 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018 - 05, Income Taxes (Topic 740 ). The amendments in this update add several SEC paragraphs pursuant to the issuance of the SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118” ) in December 2017. The amendments in this update are effective immediately. For additional information, see Note 11 to the consolidated financial statements.

Revenues from Contracts with Customers

In May 2014, the FASB issued ASU 2014 - 09, Revenues from Contracts with Customers, Topic 606, which was a joint project of the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The update provides that an entity should recognize revenue in connection with the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, an entity is required to apply each of the following steps: ( 1 ) identify the contract(s) with the customer; ( 2 ) identify the performance obligations in the contracts; ( 3 ) determine the transaction price; ( 4 ) allocate the transaction price to the performance obligation in the contract; and ( 5 ) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014 - 09 also prescribes additional financial presentations and disclosures. In March 2016, the FASB issued ASU 2016 - 08, Principal versus Agent Considerations. This update did not change the core principles of the guidance and was intended to clarify the implementation guidance on principal versus agent considerations. When another entity is involved in providing goods or services to a customer, an entity is required to determine if the nature of its promise is to provide the specific good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). The guidance included indicators to assist an entity in determining whether it acts as a principal or agent in a specified transaction.

The Company adopted this update effectively as of January 1, 2018 using the modified retrospective approach with one -time cumulative adjustment to the opening balance of retained earnings as further described below and applied the five -step model described above on identified outstanding contracts at the date of adoption, under which revenues are generated. Under ASC 606, an entity must identify the performance obligations in a contract, determine the transaction price and allocate the price to specific performance obligations recognize the revenue when the obligation is completed. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The standard also requires disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flow arising from contracts.

The adoption of ASC 606, Revenues from Contracts with Customers, as described above, did not have an impact on our Electricity, Product and Other revenues in 2018, however, the adoption did have an impact on our accounting for investment in an unconsolidated company as further described in the following table and in the disclosure under the heading "Investment in an unconsolidated company" within this note below. Additionally, the following table below summarizes the impact of the adoption of ASC 606 on the Company’s consolidated financial statements as of January 1, 2018, followed by further information for each of the line items in the table:

	(Dollars in millions)
Electricity segment revenues	$	–
Product segment revenues		–
Other segment revenues		–
Investment in an unconsolidated company		24.0

Electricity segment revenues : Electricity revenues are primarily related to sale of electricity from geothermal and recovered energy-based power plants owned and operated by the Company. Revenues related to the sale of electricity from geothermal and recovered energy-based power plants and capacity payments are recorded based upon output delivered and capacity provided at rates specified under relevant contract terms. For power purchase agreements (“PPAs”) agreed to, modified, or acquired in business combinations on or after July 1, 2003, the Company determines whether such PPAs contain a lease element requiring lease accounting. Revenue from such PPAs are accounted for in electricity revenues. The lease element of the PPAs is also assessed in accordance with the revenue arrangements with multiple deliverables guidance, which requires that revenues be allocated to the separate earnings processes based on their relative fair value. PPAs with minimum lease rentals which vary over time are generally recognized on the straight-line basis over the term of the PPAs. PPAs with contingent rentals are recognized when earned. In the Electricity segment, revenues for all but three power plants are accounted for under ASC 840 (Leases) as operating leases, and therefore equipment related to geothermal and recovered energy generation power plants is considered held for leasing. For power plants in the scope of ASC 606, the Company identified electricity as a separate performance obligation. Performance obligations identified were evaluated and determined to be satisfied over time and qualified for the invoicing practical expedient since the invoiced amounts reasonably represented the value to customers of performance obligations fulfilled to date. The transaction price is determined based on the price per actual mega-watt output or available capacity as agreed to in the respective PPA. Customers are generally billed on a monthly basis and payment is typically due within 30 to 60 days after the issuance of the invoice.

Product segment revenues : Product segment revenues are primarily related to sale of geothermal and recovered energy-based power plants, including equipment, engineering, construction and installation and operating services. Revenues from the supply and/or construction of geothermal and recovered energy-based power plant equipment and other equipment to third parties are recognized over time since control is transferred continuously to our customers. The majority of our contracts include a single performance obligation which is essentially the promise to transfer the individual goods or services that is not separately identifiable from other promises in the contracts and therefore deemed as not distinct. Performance obligations are satisfied over-time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being constructed, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. In our Product segment, revenues spread over a period of one to two years and recognized over time based on cost incurred to date in ratio to total estimated costs which represents input method that best depicts the transfer of control over the performance obligation to the customer. Costs include direct material, labor, and indirect costs. Selling, marketing, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

In contracts for which we determine that control is not transferred continuously to the customer, we recognized revenues at point in time, when the customer obtain control of the asset. This generally is the case for sale of spare parts, generators or similar other products. Revenues for such contracts are recorded upon delivery and acceptance by the customer.

Accounting for product contracts that are satisfied over time includes use of several estimates such as variable consideration related to bonuses and penalties and total estimated cost for completing the contract. The estimated amount of variable consideration will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are based on historical experience, anticipated performance and our best judgment at the time.

The nature of our product contracts give rise to several modifications or change requests by our customer. Substantially all of the modifications are treated as cumulative catch-ups to revenues since the additional goods are not distinct from those already provided. We include the additional revenues related to the modifications in our transaction price when both parties to the contract approved the modification. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in Product revenues on contracts under the cumulative catch-up method. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified.

The Company generally provides a one -year warranty against defects in workmanship and materials related to the sale of products for electricity generation. The Company considered the warranty as an assurance type warranty since the warranty provides the customer the assurance that the product complies with agreed-upon specifications. Estimated future warranty obligations are included in operating expenses in the period in which the related revenue is recognized. Such charges are immaterial for the years ended December 31, 2017, 2016, and 2015.

Contract Assets and Liabilities related to our Product segment : Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of March 31, 2018 and December 31, 2017 are as follows:

	March 31, 2018			December 31, 2017
	(Dollars in thousands)

Contract assets (*)	$	41,134		$	40,945
Contract liabilities (*)		(10,458	)		(20,241	)
Contract assets, net	$	30,676		$	20,704

(*) Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheet.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The following table presents the significant changes in the contract assets and contract liabilities for the three months ended March 31, 2018:

	Contract assets			Contract liabilities
	(Dollars in thousands)
Recognition of contract liabilities as revenue as a result of performance obligations satisfied	$	–		$	8,353
Cash received in advance for which revenues have not yet recognized		–			(4,451	)
Reduction of contract assets as a result of rights to consideration becoming unconditional		(22,144	)		–
Contract assets recognized, net of recognized receivables		28,214			–
Net change in contract assets and contract liabilities	$	6,070		$	3,902

The timing of revenue recognition, billings and cash collections results in accounts receivable, contract assets and contract liabilities on the consolidated balance sheet. In our Products segment, amounts are billed as work progresses in accordance with agreed-upon contractual terms, or upon achievement of contractual milestones. Generally, billing occurs subsequent to the recognition of revenue, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue can be recognized, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. The timing of billing our customers and receiving advance payments vary from contract to contract. We typically receive a down payment of between 10% and 20% of total contract consideration upon signing, followed by additional milestone payments for which timing varies from contract to contract. The majority of payments are received no later than the completion of the project and satisfaction of our performance obligation.

On March 31, 2018, we had approximately $211.0 million of remaining performance obligations not yet satisfied or partly satisfied related to our Product segment. We expect to recognize approximately 91% of this amount as Product revenues during the next 24 months and the rest thereafter.

The following schedule reconciles revenues accounted under ASC 840, Leases, and ASC 606, Revenues from Contracts with Customers, to total consolidated revenues for the three months ended March 31, 2018:

	Three Months Ended March 31, 2018
	(Dollars in thousands)
Electricity Revenues accounted under ASC 840, Leases	$	125,832
Electricity and Product revenues accounted under ASC 606		58,191
Total consolidated revenues	$	184,023

Disaggregated revenues from contracts with customers for the three months ended March 31, 2018 are shown under Note 9 – Business Segments, to the consolidated financial statements.

Investment in an unconsolidated company : The Company also reviewed the impact of the adoption of ASC 606 on its investment in an unconsolidated company. As a result of the adoption, the Company recorded one -time cumulative credit adjustment to the opening balance of retained earnings of approximately $24.0 million as of January 1, 2018. This impact is a result of the unconsolidated company’s variable consideration related to the construction of its power plant for which, under the new guidance, is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty resolved. As such, the comparative information will not be restated and shall continue to be reported under the accounting standards in effect for those periods.

The following schedule quantifies the impact of adopting ASC 606 on the statement of operations for the three months ended March 31, 2018:

2018, under

previous

standard

Effect of the New

Revenue

Standard

2018, as

reported

(Dollars in thousands)

Equity in earnings of investees, net

1,944

(734

)

1,210

Income from continuing operations

74,990

(734

)

74,256

Net income attributable to the Company’s stockholders

70,242

(734

)

69,508

Retained earnings

411,492

(734

)

410,758

Other segment revenues : Other segment revenues are primarily related to energy storage, demand-response and energy management related services. Revenues are recorded based on energy management of load curtailment capacity delivered or service provided at rates specified under the relevant contract terms. The Company determined that the Other segment revenues are in the scope of ASC 606 and identified energy management as a separate performance obligation. Performance obligations are satisfied once the Company provides a verification to the electric power grid operator or utility of its ability to meet the committed capacity or power curtailment requirements and thus entitled to cash proceeds. Such verification may be provided by the Company bi-weekly, monthly or under any other frequency as set by the related program and are typically followed by a payment shortly after. Performance obligations identified were evaluated and determined to be satisfied over time and qualified for the invoicing practical expedient since the amounts included in the verification document reasonably represent the value of performance obligations fulfilled to date. The transaction price is determined based on mechanisms specified in the contract with the customer.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Compensation - Stock Compensation

In May 2017, the FASB issued ASU 2017 - 09, Compensation—Stock Compensation (Topic 718 ). The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this update require that an entity should account for the effects of a modification unless all of the following are met: ( 1 ) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; ( 2 ) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; ( 3 ) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this update. The amendments in this update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Business Combinations

In January 2017, the FASB issued ASU 2017 - 01, Business Combinations (Topic 805 ). The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update primarily provide a screen to determine when a set of assets and activities is not a business and by that reduces the number of transactions that need to be further evaluated. The amendments in this update should be applied prospectively and are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

Statement of Cash Flow

In November 2016, the FASB issued ASU 2016 - 18, Statement of Cash Flows (Topic 230 ) – Restricted Cash. The amendments in this update require that a statement of cash flows explain the changes during the period in total cash, cash equivalents, and the amounts generally described as restricted cash or cash equivalents. Therefore, amounts of restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update should be applied retrospectively for each period presented and are effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company adopted this guidance retrospectively in its consolidated financial statements for the three month period ending March 31, 2018 and adjusted its disclosure accordingly.

Intra-Entity Transfers of Assets Other than Inventory

In October 2016, the FASB issued ASU 2016 - 16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The amendments in this update require that the entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new guidance does not apply to intra-entity transfers on inventory. The amendments in this update should be applied for each period presented and are effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The modified retrospective approach is required for transition to the new guidance, with cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. The Company adopted this guidance retrospectively in its consolidated financial statements for the three months ending March 31, 2018 and recorded a net cumulative-effect adjustment to retained earnings of approximately $1.8 million with a corresponding adjustment to deferred charges and deferred income taxes on the consolidated balance sheet of approximately $49.8 million and $51.6 million, respectively.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230)

In August 2016, the FASB issued ASU 2016 - 15, Statement of Cash-Flows (Topic 230 ). This update addresses eight specific cash flow classification issues with the objective of reducing diversity in practice. One of the issues addressed in this update is debt prepayment or debt extinguishment costs which under the new guidance should be classified as cash outflows for financing activities. Additionally, the update addressed contingent consideration payments made after a business combination. Such cash payments made soon after the acquisition date to settle a contingent consideration liability should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities. The amendments in this update are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company adopted this guidance and expects that the impact from the adoption of the update will result in a reclassification of approximately $8.0 million of cash paid for achievement of production threshold in Guadeloupe during the fourth quarter of 2017 from cash outflows from investing activities to cash outflows from financing activities as required by this update.

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued ASU 2016 - 01, Recognition and Measurement of Financial Assets and Financial Liabilities. The update primarily requires that an entity present separately, in other comprehensive income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk if the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The application of this update should be by means of cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of this update did not have a material impact on the Company’s consolidated financial statements.

New accounting pronouncements effective in future periods

Derivatives and Hedging

In August 2017, the FASB issued ASU 2017 - 12, Targeted Improvements to Accounting for Hedging Activities. The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the update. The Company is currently evaluating the potential impact, if any, of the adoption of these amendments on its consolidated financial statements.

Intangibles –Goodwill and Other

In January 2017, the FASB issued ASU 2017 - 04, Intangibles – Goodwill and Other (Topic 350 ). The amendments in this update require the entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This update, eliminated Step 2 from the goodwill impairment test under the current guidance. Step 2 measures a goodwill impairment loss by comparing the implied fair value of reporting unit’s goodwill with the carrying amount of that goodwill. The amendments in this update should be applied on a prospective basis. An entity is also required to disclose the nature of and the reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and the interim period within the first annual period when the entity initially adopts the amendments in this update. The amendments in this update are effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the potential impact, if any, of the adoption of these amendments on its consolidated financial statements.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Leases

In February 2016, the FASB issued ASU 2016 - 02, Leases (Topic 842). This update introduces a number of changes and simplifies previous guidance, primarily the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The update retains the distinction between finance leases and operating leases and the classification criteria between the two types remains substantially similar. Also, lessor accounting remains largely unchanged from previous guidance. However, key aspects of the update were aligned with the revenue recognition guidance in Topic 606. Additionally, the update defines a lease as a contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of the identified asset means that the customer has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. This update requires the modified retrospective transition approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. The modified retrospective approach includes a number of optional practical expedients related to identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commenced before the effective date in accordance with the previous generally accepted accounting principles in the United States unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous generally accepted accounting principles in the United States. The amendments in this update are effective for annual reporting periods beginning after December 15, 2018, including interim periods within those reporting periods. Early adoption is permitted. The Company is currently evaluating the potential impact, if any, of the adoption of these amendments on its consolidated financial statements.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive income

In February 2018, the FASB issued ASU 2018 - 02, Income Statement – Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting for the Tax Cuts and Jobs Act of 2017. The guidance is effective for the fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements, however, such impact, if any, is not expected to be material.

NOTE 3 — INVENTORIES

Inventories consist of the following:

	March 31,		December 31,
	2018		2017
	(Dollars in thousands)
Raw materials and purchased parts for assembly	$	12,019	$	12,007
Self-manufactured assembly parts and finished products		8,050		7,544
Total	$	20,069	$	19,551

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 4 — INVESTMENT IN AN UNCONSOLIDATED COMPANY

Unconsolidated investments consist of the following:

	March 31,		December 31,
	2018		2017
	(Dollars in thousands)
Sarulla	$	63,109	$	34,084

The Sarulla Project

The Company holds a 12.75% equity interest in a consortium which developed the 330 MW Sarulla geothermal power plant project in Tapanuli Utara, North Sumatra, Indonesia. The Sarulla project is comprised of three separately constructed 110 MW units, the most recent of which, NIL 2, was completed in April 2018. The Sarulla project is owned and operated by the consortium members under the framework of a joint operating contract and energy sales contract that were both signed on April 4, 2013. Under the joint operating contract, PT Pertamina Geothermal Energy, the concession holder for the project, has provided the consortium with the right to use the geothermal field, and under the energy sales contract, PT PLN, the state electric utility, is the off-taker at Sarulla for a period of 30 years.

On May 16, 2014, the consortium closed $1.17 billion in financing for the development of the Sarulla project with a consortium of lenders comprised of Japan Bank for International Cooperation (“JBIC”), the Asian Development Bank and six commercial banks and obtained construction and term loans on a limited recourse basis backed by a political risk guarantee from JBIC. Of the $1.17 billion, $0.1 billion bears interest at a fixed rate and $1.07 billion bears interest at a rate linked to LIBOR. The total interest expenses, net incurred by the consortium for the three months ended March 31, 2018, totaled approximately $16.9 million.

The Sarulla consortium entered into interest rate swap agreements with various international banks, effective as of June 4, 2014, in order to fix the interest rate linked to LIBOR on up to $0.96 billion of the $1.07 billion portion of the financing arrangement subject to such interest rate at 3.4565%. The Sarulla project company accounted for the interest rate swap as a cash flow hedge upon which changes in the fair value of the hedging instrument, relative to the effective portion, are recorded in other comprehensive income. During the three months ended March 31, 2018 and 2017, the Sarulla project company recorded a gain of $20.7 million and $4.5 million, respectively, net of deferred tax, of which the Company’s share was $2.6 million and $0.6 million, respectively. The Company’s share of such gains were recorded in other comprehensive income. The related accumulated loss recorded by the Company in other comprehensive income (loss) as of March 31, 2018 is $2.5 million.

During the three months ended March 31, 2018, the Company made additional cash equity investments in the Sarulla project of approximately $1.3 million, for a total of $59.5 million since inception.

As further described above under the heading “New accounting pronouncement effective in the three -month period ended March 31, 2018” in Note 2 to the consolidated financial statements, the Company adopted ASC 606, Revenue from Contracts with Customers, on January 1, 2018. The impact of the adoption of this standard on its investment in an unconsolidated company amounted to $24.0 million at January 1, 2018. This impact was a result of the unconsolidated company’s variable consideration related to the construction of its power plant for which, under the new guidance, is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. The Company adopted the new standard using the modified retrospective approach with a one -time cumulative adjustment to the opening balance of retained earnings of approximately $24.0 million at January 1, 2018, the date of initial application.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 5— FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received upon selling an asset or paid upon transferring a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 — Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth certain fair value information at March 31, 2018 and December 31, 2017 for financial assets and liabilities measured at fair value by level within the fair value hierarchy, as well as cost or amortized cost. As required by the fair value measurement guidance, assets and liabilities are classified in their entirety based on the lowest level of inputs that is significant to the fair value measurement.

				March 31, 2018
				Fair Value
	Carrying Value at March 31, 2018			Total			Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Current assets:
Cash equivalents (including restricted cash accounts)	$	20,658		$	20,658		$	20,658	$	—	$	—
Derivatives:
Contingent receivable ⁽¹⁾		111			111			—		—		111
Currency forward contracts ⁽²⁾		30			30			—		30		—
Liabilities:
Current liabilities:
Derivatives:
Contingent payables ⁽¹⁾		(14,006	)		(14,006	)		—		—		(14,006	)
Warrants ⁽¹⁾		(4,080	)		(4,080	)		—		—		(4,080	)
	$	2,713		$	2,713		$	20,658	$	30	$	(17,975	)

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

December 31, 2017

Fair Value

Carrying

Value at

December

31, 2017

Total

Level 1

Level 2

Level 3

(Dollars in thousands)

Assets

Current assets:

Cash equivalents (including restricted cash accounts)

18,359

—

Derivatives:

Contingent receivable ⁽¹⁾

108

—

108

Currency forward contracts ⁽²⁾

992

—

992

—

Liabilities:

Current liabilities:

Derivatives:

Contingent payables ⁽¹⁾

(13,904

)

(13,904

)

—

(13,904

)

Warrants ⁽¹⁾

(3,967

)

(3,967

)

—

(3,967

)

1,588

18,359

992

(17,763

)

^( 1 )	These amounts relate to contingent receivables and payables and warrants relating to acquisition of substantially all of the assets of Viridity Energy, Inc. and the Guadeloupe power plant purchase transaction, valued primarily based on unobservable inputs and are included within “Prepaid expenses and other”, “Accounts payable and accrued expenses” and “Other long-term liabilities” on March 31, 2018 and within “Prepaid expenses and other” and “Other long-term liabilities” on December 31, 2017 in the consolidated balance sheets with the corresponding gain or loss being recognized within “Derivatives and foreign currency transaction gains (losses)” in the consolidated statement of operations and comprehensive income.

^( 2 )	These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within “Prepaid expenses and other” and “Accounts payable and accrued expenses”, as applicable, on March 31, 2018 and December 31, 2017, in the consolidated balance sheet with the corresponding gain or loss being recognized within “Derivatives and foreign currency transaction gains (losses)” in the consolidated statement of operations and comprehensive income.

The amounts set forth in the tables above include investments in debt instruments and money market funds (which are included in cash equivalents). Those securities and deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in an active market.

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The following table presents the amounts of gain (loss) recognized in the consolidated statements of operations and comprehensive income on derivative instruments not designated as hedges:

		Amount of recognized gain (loss)
Derivatives not designated	Location of recognized	Three Months Ended March 31,
as hedging instruments	gain (loss)	2018			2017

Put options on natural gas price	Derivatives and foreign currency transaction gains (losses)	$	—		$	(193	)
Contingent considerations	Derivative and foreign currency transaction gains (losses)		—			(50	)
Currency forward contracts	Derivative and foreign currency and transaction gains (losses)		(546	)		2,262
		$	(546	)	$	2,019

In January 2017, the Company entered into Henry Hub Natural Gas Future contracts under which it bought a number of put options covering a notional quantity of approximately 4.1 million British Thermal Units (“MMBtu”) with exercise prices of $3 and expiration dates ranging from January 26, 2017 until November 27, 2017 in order to reduce its exposure to fluctuations in natural gas prices under its PPAs with Southern California Edison. The Company paid an aggregate amount of approximately $0.7 million for these put options.

The foregoing future and forward transactions were not designated as hedge transactions and are marked to market with the corresponding gains or losses recognized within “Derivatives and foreign currency transaction gains (losses)”.

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 during the three months ended March 31, 2018.

The fair value of the Company’s long-term debt approximates its carrying amount, except for the following:

Fair Value

Carrying Amount

March 31,

2018

December 31,

2017

March 31,

2018

December 31,

2017

(Dollars in millions)

Olkaria III Loan - OPIC

225.2

234.6

224.1

228.6

Olkaria IV Loan - DEG 2

50.6

50.7

50.0

Amatitlan Loan

31.2

32.8

32.4

33.3

Senior Secured Notes:

OrCal Geothermal Inc. ("OrCal")

28.5

34.2

27.3

32.1

OFC 2 LLC ("OFC 2")

223.9

234.6

228.0

232.5

Don A. Campbell 1 ("DAC 1")

81.6

85.5

86.7

88.3

Senior Unsecured Bonds

196.5

200.3

204.3

Senior Unsecured Loan

100.7

—

100.0

—

Other long-term debt

6.6

7.0

7.8

7.9

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The fair value of the long-term debt is determined by a valuation model, which is based on a conventional discounted cash flow methodology and utilizes assumptions of current borrowing rates. The fair value of revolving lines of credit is determined using a comparison of market-based price sources that are reflective of similar credit ratings to those of the Company.

The carrying value of financial instruments such as revolving lines of credit and deposits approximates fair value.

The following table presents the fair value of financial instruments as of March 31, 2018:

Level 1

Level 2

Level 3

Total

(Dollars in millions)

Olkaria III - OPIC

—

225.2

Olkaria IV - DEG 2

—

50.6

Amatitlan Loan

—

31.2

—

31.2

Senior Secured Notes:

OrCal Senior Secured Notes

—

28.5

OFC 2 Senior Secured Notes

—

223.9

DAC 1 Senior Secured Notes

—

81.6

Senior Unsecured Bonds

—

196.5

Senior Unsecured Loan

—

100.7

Other long-term debt

—

6.6

Revolving lines of credit

—

38.5

—

38.5

Deposits

15.2

—

15.2

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The following table presents the fair value of financial instruments as of December 31, 2017:

Level 1

Level 2

Level 3

Total

(Dollars in millions)

Olkaria III Loan - OPIC

—

234.6

Olkaria IV - DEG 2

50.7

Amatitlan Loan

—

32.8

—

32.8

Senior Secured Notes:

OrCal Senior Secured Notes

—

34.2

OFC 2 Senior Secured Notes

—

234.6

DAC 1 Senior Secured Notes

—

85.5

Senior Unsecured Bonds

—

200.3

Other long-term debt

—

7.0

Revolving lines of credit

—

51.5

—

51.5

Deposits

15.6

—

15.6

NOTE 6 — STOCK-BASED COMPENSATION

The 2004 Incentive Compensation Plan

In 2004, the Board of Directors of the Company (the “Board”) adopted the 2004 Incentive Compensation Plan ( “2004 Incentive Plan”), which provided for the grant of the following types of awards: incentive stock options, non-qualified stock options, restricted stock, stock appreciation rights (“SARs”), stock units, performance awards, phantom stock, incentive bonuses, and other possible related dividend equivalents to employees of the Company, directors and independent contractors. Under the 2004 Incentive Plan, a total of 3,750,000 shares of the Company’s common stock were reserved for issuance, all of which could be issued as options or as other forms of awards. Options and SARs granted to employees under the 2004 Incentive Plan cliff vest and are exercisable from the grant date as follows: 25% after 24 months, 25% after 36 months, and the remaining 50% after 48 months. Options granted to non-employee directors under the 2004 Incentive Plan cliff vest and are exercisable one year after the grant date. Vested stock-based awards may be exercised for up to ten years from the grant date. The shares of common stock issued in respect of awards under the 2004 Incentive Plan are issued from the Company’s authorized share capital upon exercise of options or SARs. The 2004 Incentive Plan expired in May 2012 upon adoption of the 2012 Incentive Compensation Plan ( “2012 Incentive Plan”), except as to stock-based awards outstanding under the 2004 Incentive Plan on that date.

The 2012 Incentive Compensation Plan

In May 2012, the Company’s shareholders adopted the 2012 Incentive Plan, which provides for the grant of the following types of awards: incentive stock options, non-qualified stock options, restricted stock, SARs, stock units, performance awards, phantom stock, incentive bonuses, and other possible related dividend equivalents to employees of the Company, directors and independent contractors. Under the 2012 Incentive Plan, a total of 4,000,000 shares of the Company’s common stock were reserved for issuance, all of which could be issued as options or as other forms of awards. Options and SARs granted to employees under the 2012 Incentive Plan typically vest and become exercisable as follows: 25% vest 24 months after the grant date, an additional 25% vest 36 months after the grant date, and the remaining 50% vest 48 months after the grant date. Options granted to non-employee directors under the 2012 Incentive Plan will vest and become exercisable one year after the grant date. Restricted stock units granted to directors and members of senior management vest according to a vesting schedule as follows: for the directors, 100% on the first anniversary of the grant date and for members of senior management, 25% on each of the first, second, third and fourth anniversaries of the grant date. The term of stock-based awards typically ranges from six to ten years from the grant date. The shares of common stock issued in respect of awards under the 2012 Incentive Plan are issued from the Company’s authorized share capital upon exercise of options or SARs. The 2012 Incentive Plan expired in May 2018 upon adoption of the 2018 Incentive Compensation Plan (“2018 Incentive Plan”), except as to stock-based awards outstanding under the 2012 Incentive Plan on that date.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The 2018 Incentive Compensation Plan

On May 7, 2018, the Company held its 2018 Annual Meeting of Stockholders at which the Company's stockholders approved the 2018 Incentive Plan. The 2018 incentive plan provides for the grant of the following types of awards: incentive stock options, restricted stock, SARs, stock units, performance awards, phantom stock, incentive bonuses and other possible related dividend equivalents to employees of the Company, directors and independent contractors. Under the 2018 Incentive Plan, a total of 5,000,000 shares of the Company’s common stock will be authorized for issuance, all of which could be issued as options or as other forms of awards.

NOTE 7 — INTEREST EXPENSE, NET

The components of interest expense are as follows:

	Three Months Ended March 31,
	2018			2017

Interest related to sale of tax benefits	$	1,409		$	2,012
Interest expense		13,306			14,175
Less — amount capitalized		(371	)		(1,264	)
	$	14,344		$	14,923

NOTE 8 — EARNINGS PER SHARE

Basic earnings per share attributable to the Company’s stockholders is computed by dividing net income or loss attributable to the Company’s stockholders by the weighted average number of shares of common stock outstanding for the period. The Company does not have any equity instruments that are dilutive, except for employee stock-based awards.

The table below shows the reconciliation of the number of shares used in the computation of basic and diluted earnings per share:

	Three Months Ended March 31,
	2018		2017

Weighted average number of shares used in computation of basic earnings per share		50,614		49,680
Add:
Additional shares from the assumed exercise of employee stock options		437		811

Weighted average number of shares used in computation of diluted earnings per share		51,051		50,491

The number of stock-based awards that could potentially dilute future earnings per share and that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive was 62,409 and 11,491 for the three months ended March 31, 2018 and 2017, respectively.

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 9 — BUSINESS SEGMENTS

In 2018, the Company started disclosing its energy storage and power load management business activity under the Other segment as such operations met the reportable segment criteria of ASC 280, Segment Reporting. As such, starting in 2018 the Company has three reporting segments: the Electricity segment, the Product segment and the Other segment. These segments are managed and reported separately as each offers different products and serves different markets. The Electricity segment is engaged in the sale of electricity from the Company’s power plants pursuant to PPAs. The Product segment is engaged in the manufacture, including design and development, of turbines and power units for the supply of electrical energy and in the associated construction of power plants utilizing the power units manufactured by the Company to supply energy from geothermal fields and other alternative energy sources. The Other segment is engaged in management of curtailable customer loads under contracts with U.S. retail energy providers and directly with large commercial and industrial customers as well as battery storage as a service. The summarized financial information below of the Other segment for the three months ending March 31, 2017 is immaterial.

Transfer prices between the operating segments are determined based on current market values or cost plus markup of the seller’s business segment.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables, including, as further described under Note 1 to the consolidated financial statements, the Company's disaggregated revenues from contracts with customers as required by ASC 606:

Electricity

Product

Other

Consolidated

(Dollars in thousands)

Three Months Ended March 31, 2018:

Revenues from external customers:

United States (1)

83,683

194

2,862

86,739

Foreign (2)

48,806

48,478

—

97,284

Total net revenues from external customers

132,489

48,672

2,862

184,023

Intersegment revenues

—

24,827

—

24,827

Operating income

46,412

9,553

(1,372

)

54,593

Segment assets at period end (3) (*)

2,542,154

114,815

53,848

2,710,817

(*) Including unconsolidated investments

63,109

—

63,109

Three Months Ended March 31, 2017:

Net revenues from external customers (4)

115,776

74,122

—

189,898

Intersegment revenues (4)

—

16,213

—

16,213

Operating income (4)

40,898

18,598

—

59,496

Segment assets at period end (3)

2,233,237

217,051

49,600

2,499,888

^(

1

)

Electricity revenues in the United States are all accounted under ASC 840, Leases, except for $6.7 million that are accounted under ASC 606 starting in 2018. Product and Other revenues in the United States are accounted under ASC 606, as further described under Note 2 to the consolidated financial statements.

^(

2

)

Electricity revenues in foreign countries are all accounted under ASC 840, Leases, and Product revenues in foreign countries are accounted under ASC 606 as further described under Note 2 to the consolidated financial statements.

^(

3

)

Electricity segment assets include goodwill in the amount of $7.8 million and $6.2 million as of March, 31, 2018 and 2017, respectively. Other segment assets include goodwill in the amount of $13.5 million as of March 31, 2018 and 2017.

^(

4

)

The amounts related to the Other segment are immaterial.

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Reconciling information between reportable segments and the Company’s consolidated totals is shown in the following table:

	Three Months Ended March 31,
	2018			2017

Revenue:
Total segment revenue	$	184,023		$	189,898
Intersegment revenue		24,827			16,213
Elimination of intersegment revenue		(24,827	)		(16,213	)

Total consolidated revenue	$	184,023		$	189,898

Operating income:
Operating income	$	54,593		$	59,496
Interest income		113			244
Interest expense, net		(14,344	)		(14,923	)
Derivatives and foreign currency transaction gains (losses)		(1,599	)		1,338
Income attributable to sale of tax benefits		7,361			6,157
Other non-operating income (expense), net		(20	)		(92	)
Total consolidated income before income taxes and equity in earnings of investees	$	46,104		$	52,220

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 10 — COMMITMENTS AND CONTINGENCIES

	●	Following the announcement of the Company’s acquisition of U.S. Geothermal Inc. (“USG”), a number of putative shareholder class action complaints were initially filed on behalf of USG shareholders between March 8, 2018 and March 30, 2018 against USG and the individual members of the USG board of directors. All of the class action suits filed in Federal Court in Idaho and Delaware have been voluntarily dismissed. The single remaining class action complaint is a purported class action filed in the Delaware Chancery Court, entitled Riche v. Pappas, et al., Case No. 2018-0177 (Del. Ch., Mar. 12, 2018). The Riche complaint alleges state law claims for breach of fiduciary duty against former USG directors, and seeks post-closing damages. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

	●	On February 18, 2018, Western Watersheds Project filed a notice of appeal and petition with the U.S. Department of the Interior Board of Land Appeals for standing with respect to the January 16, 2018 Bureau of Land Management (“BLM”) decision approving Addendum 2 to Operation Plan & Utilization Plan for the McGinness Hills Geothermal Project. The appeal alleges that the January 2018 BLM decision authorizing construction and operation of Phase 3 of McGinness Hills causes harm to WWP and its members by allowing degradation of the wildlife habitat of the Greater sage-grouse in that area. The Company has filed a motion to intervene as an interested party in support of the BLM. The litigation was resolved and the settlement was approved by the Interior Board of Land appeals. The settlement amount was immaterial to the Company’s consolidated financial statements.

●

On August 5, 2016, George Douvris, Stephanie Douvris, Michael Hale, Cheryl Cacocci, Hillary E. Wilt and Christina Bryan, acting for themselves and on behalf of all other similarly situated residents of the lower Puna District, filed a complaint in the Third Circuit Court for the State of Hawaii seeking certification of a class action for preliminary and permanent injunctive relief, consequential and punitive damages, attorney’s fees and statutory interest against PGV and other presently unknown defendants. On December 12, 2016, the federal district court granted plaintiffs’ motion for joinder of HELCO as a co-defendant, and the case, which had previously been removed to the U.S. District Court for the District of Hawaii, was remanded back to the Third Circuit Court. The amended complaint alleged that injuries and other damages in an undisclosed amount were caused to the plaintiffs as a result of an alleged toxic release by PGV in the wake of Hurricane Iselle in August 2014. On June 14, 2017, the Third Circuit Court denied HELCO’s motion to dismiss the complaint against HELCO. Discovery is underway. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

●

On March 29, 2016, a former local sales representative in Chile, Aquavant, S.A., filed a claim against Ormat’s subsidiaries in the 27th Civil Court of Santiago, Chile on the basis of unjust enrichment. The claim requests that the court order Ormat to pay Aquavant $4.8 million in connection with its activities in Chile, including the EPC contract for the Cerro Pabellon project and various geothermal concessions, plus 3.75% of Ormat geothermal products sales in Chile over the next 10 years. Pursuant to various motions submitted by the defendants and the plaintiffs to various courts, including the Court of Appeals, the case was removed from the original court and then refiled before the 11th Civil Court of Santiago. In February 2018 preliminary defenses, filed by the Company, were denied by the lower court and are pending on appeal. The Company’s answer to the complaint, plaintiff’s response and the Company’s rejoinder were duly filed. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

●

Jon Olson and Hilary Wilt, together with Puna Pono Alliance filed a complaint on February 17, 2015 in the Third Circuit Court for the State of Hawaii, requesting declaratory and injunctive relief requiring that Puna Geothermal Venture comply with an ordinance that the plaintiffs allege will prohibit PGV from engaging in night drilling operations at its KS- 16 well site. On May 17, 2015, the original complaint was amended to add the County of Hawaii and the State of Hawaii Department of Land and Natural Resources as defendants to the case. On October 10, 2016, the court issued its decision in response to each of the plaintiffs’ and defendants’ motions for summary judgment, denying plaintiffs’ motion and granting defendant PGV's and the County of Hawaii’s cross motions for summary judgment, effectively rendering the plaintiffs’ action moot. On January 23, 2017, the plaintiffs filed a motion requesting that the Intermediate Court of Appeals address appellate jurisdiction, which was denied by the court on April 20, 2017 as premature. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

●

On May 21, 2018, a motion to certify a class action was filed in the Tel Aviv District Court (Economic Division) entitled Heit vs Ormat Technologies, Inc. et al (C.A. 44366-05-18). The motion purports that the Company and eleven of its officers and directors misled investors by asserting in its financial statements that it maintains effective internal controls over its accounting policies and procedures, and demands payment of 93 million Shekels (approximately $26 million) to compensate persons who purchased Company shares between August 3, 2017 and May 13, 2018. The Company believes that it has valid defenses under law and intends to defend itself vigorously. Pending resolution of the putative class action filed in the United States and described below, the Company intends to seek a stay of the proceedings in relation to the claim filed in the Tel Aviv District Court.

●

On June 11, 2018, a putative class action on behalf of alleged shareholders that purchased or acquired the Company's ordinary shares between August 8, 2017 and May 15, 2018 was commenced in the United States District Court for the District of Nevada against the Company and its Chief Executive Officer and Chief Financial Officer. The complaint asserts claims against all defendants pursuant to Section 10(b) of the Exchange Act, as amended and Rule 10b-5 there under Section 20(a) of the Exchange Act, as amended. The complaint alleges that the Company's Form 10-K for the years ended December 31, 2016 and 2017, and Form 10-Qs for each of the quarters in the nine months ended September 30, 2017 contained material misstatements or omissions, among other things, with respect to the Company’s tax provisions and the effectiveness of its internal control over financial reporting, and that, as a result of such alleged misstatements and omissions, the plaintiffs suffered damages. The Company has not yet responded to the complaints. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

In addition, from time to time, the Company is named as a party to various other lawsuits, claims and other legal and regulatory proceedings that arise in the ordinary course of our business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to such lawsuits, claims and proceedings, the Company accrues reserves when a loss is probable and the amount of such loss can be reasonably estimated. It is the opinion of the Company’s management that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole.

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 11 — INCOME TAXES

The Company’s effective tax rate expense (benefit) for the three months ended March 31, 2018 and 2017 was (58.4)% and 21.1%, respectively. The effective rate differs from the US federal statutory rate of 21% for the three months ended March 31, 2018 due to: (i) the impact of the newly enacted global intangible low tax income (“GILTI”); (ii) forecasted generation of production tax credits; (iii) impact of U.S. permanent tax adjustments (iv) lower tax rate in Israel of 16% and (v) a tax credit and tax exemption related to the Company’s subsidiaries in Guatemala and Honduras.

The Tax Cuts and Jobs Act (the Tax Act) was enacted on December 22, 2017. The Tax Act (1) reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) required companies to include in taxable income an amount on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminated U.S. federal income taxes on dividends from foreign subsidiaries; (4) required a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminated the corporate alternative minimum tax (AMT) and changed how existing AMT credits can be realized; (6) created the base erosion anti-abuse tax (BEAT), a new minimum tax; (7) created a new limitation on deductible interest expense; and (8) changed rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Tax Act.

The Company is applying the guidance in SAB 118 when accounting for the enactment date effects of the Act. As of December 31, 2017, the Company made provisional estimates related to (1) deemed repatriation transition tax; (2) GILTI; (3) valuation allowance; and (4) uncertain tax positions As of March 31, 2018, the Company made updates to its provisional estimates related to GILTI and valuation allowance. The Company will continue to refine the estimates as it continues its analysis of the statutory provisions and related interpretations. Any changes to a provisional estimate of the tax effect of the Tax Act, that were recorded as of December 31, 2017, will be recorded as a discrete item in the interim period.

During the first quarter of 2018, based upon continued analysis of the specific provisions of the Act, including the newly created requirement that GILTI earned by controlled foreign corporations (CFCs) must be included currently in gross income of the CFC’s U.S. shareholder, the Company concluded it was more likely than not that certain income included in the GILTI calculation would be allocated in a way that would provide an additional source of realization for the Company’s foreign tax credits and production tax credits. Accordingly, and as allowed for under SAB 118, in the first quarter of 2018, the Company recorded a tax benefit of $44.4 million for the reduction of the valuation allowance related to foreign tax credits and production tax credits, which had a (96%) impact on the Company’s effective tax rate during the first quarter of 2018. In addition, due to the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Act and the application of ASC 740. We have included a provisional estimate of the 2018 current GILTI impact in our annual effective tax rate for 2018, and we have elected to treat GILTI as a period cost.

In May 2018 certain officials from the Treasury and the IRS made public comments about a plan to propose regulations related to GILTI that will confirm how to allocate certain income in the GILTI calculation. The method of allocation is different than our analysis of the law in Q1 and is expected to have a direct impact on our valuation allowance related to foreign tax credits and production tax credits. Therefore, we believe that this confirmation of the allocation method provides evidence on a more likely than not basis that the Company should reverse the $44.4 million tax benefit as recorded in the first quarter of 2018. The Company will record this adjustment in the second quarter results because ASC 740 requires changes in tax positions to be accounted for in the period in which the change in facts occurs. The range of the ultimate adjustment to our valuation allowance in the second quarter is dependent on multiple variables such as activities and events that occur during the three months ended June 30, 2018. The release of additional guidance in future periods may require changes to the Company’s provision estimates during the quarterly or annual periods of 2018.

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 12 — SUBSEQUENT EVENTS

Cash dividend

On May 7, 2018, the Board declared, approved and authorized payment of a quarterly dividend of $5.1 million ( $0.10 per share) to all holders of the Company’s issued and outstanding shares of common stock on May 21, 2018, payable on May 30, 2018.

Compliance with financial covenants

In relation to covenants in certain debt facilities, which require timely filing of quarterly financial statements, the Company received waivers from each of its and its subsidiaries’ lenders as follows:

●

The Company received waivers extending the period required to file the quarterly condensed consolidated financial statements for the three months ended March 31, 2018 for all debt facilities with a May 30, 2018 filing deadline. The Company subsequently filed such financial statements within the period provided by the waivers.

●

The deeds of trust governing the Company’s Series 2 Bonds and Series 3 Bonds contain a June 14, 2018 filing deadline for the quarterly condensed consolidated financial statements for the three months ended March 31, 2018. Nevertheless, the failure to file is not a default under the bonds unless a majority of bondholders votes to take action to accelerate the maturity date of the bonds, which did not occur prior to the late filing of the Form 10-Q for the quarter ended March 31, 2018. However, since the ability of the bondholders to accelerate may trigger a cross default under certain of the Company other debt facilities, the Company received waivers of any potential cross default under those facilities.

Tungsten Mountain partnership transaction

On May 17, 2018, one of the Company’s wholly-owned subsidiaries that indirectly owns the 26 MW Tungsten Mountain Geothermal power plant entered into a partnership agreement with a private investor. Under the transaction documents, the private investor acquired membership interests in the Tungsten Mountain Geothermal power plant project for an initial purchase price of approximately $33.4 million and for which it will pay additional installments that are expected to amount to approximately $13 million. The Company will continue to operate and maintain the power plant and will receive substantially all the distributable cash flow generated by the power plant.

Puna

On May 3, 2018, the Kilauea volcano located in close proximity to the Company’s 38 MW Puna geothermal power plant in the Puna district of Hawaii's Big Island erupted following a significant increase in seismic activity in the area. While the Company has taken steps to secure the Puna facilities, including, among others, taking electricity generation offline and placing physical barriers around, and protective coverings over, the geothermal wells, and has evacuated non-essential personnel at the power plant and removed all pentane from the site, it is still assessing the impact of the volcanic eruption and seismic activity on the Puna facilities. The approaching lava covered the wellheads of three geothermal wells and the substation of the Puna complex and an adjacent warehouse that stored a drilling rig were burned due to the approaching lava. The damages are expected to be covered by the Company’s insurance policies. The net book value of the Puna property, plant and equipment is approximately $109 million. The Company cannot currently estimate when the lava flow will stop nor when it will be able to assess all of the damages. Any significant physical damage to, or extended shut-down of, the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on the Company’s business and results of operations. The Company continues to monitor the condition of the Puna facilities, coordinate with HELCO and local authorities, and is taking steps to both further secure the power plant and restore its operations as soon as it is safe to do so. In addition, the Company will be assessing the accounting implications of this event on the assets and liabilities on its balance sheet and whether an impairment will be required.

Platanares loan

On April 30, 2018 the Company, through its wholly owned subsidiary, and the Overseas Private Investment Corporation (“OPIC”), an agency of the United States Government, signed a finance agreement for non-recourse project financing totaling up to $124.7 million for the 35 MW Platanares geothermal power plant in Honduras. The loan may be funded to Platanares in up to three total disbursements and will have a final maturity of approximately 14 years. Closing and disbursements of the loan are subject to customary conditions for funding, which the Company expects to satisfy by the end of the second quarter of 2018. Upon closing, the interest rate on the loan will be determined, and is expected to be between 6.75% and 7.25% based on the current estimates for U.S. Treasury and for the additional spread on OPIC certificates of participation.

U.S. Geothermal transaction

On April 24, 2018, the Company completed its previously announced acquisition of USG. The total cash consideration (exclusive of transaction expenses) was approximately $110 million, comprised of approximately $106 million funded from available cash of Ormat Nevada Inc. (to acquire the outstanding shares of common stock of USG) and approximately $4 million funded from available cash of USG (to cash-settle outstanding in-the-money options for common stock of USG). As a result of the acquisition, USG became an indirect wholly owned subsidiary of Ormat, and Ormat indirectly acquired, among other things, interests held by USG and its subsidiaries in:

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three operating power plants at Neal Hot Springs, Oregon, San Emidio, Nevada and Raft River, Idaho with a total net generating capacity of approximately 38 MW; and

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development assets which include a project at the Geysers, California; a second phase project at San Emidio, Nevada; a greenfield project in Crescent Valley, Nevada; and the El Ceibillo project located near Guatemala City, Guatemala.

The Company accounted for the transaction in accordance with ASC 805, Business Combinations and following the transaction, the Company consolidates USG in accordance with ASC 810, Consolidation. Accounting guidance provides that the allocation of the purchase price may be modified for up to one year from the date of the acquisition to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The Company expects that the adoption of ASU 2017 - 01, Business Combinations, as further described under Note 2 to the consolidated financial statements, would not have an effect on the U.S. Geothermal transaction

The Company deemed the transaction to not meet the significant subsidiary threshold and as a result did not provide additional pro-forma and other related information, that otherwise would have been required.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Revision of the condensed consolidated financial statements

As discussed in Note 1 to our unaudited condensed consolidated financial statements in Part I, Item 1, "Financial Statements", the condensed consolidated financial statements for the three months ended March 31, 2017 have been revised to reflect the correction of certain errors . Accordingly, the Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth below reflects the effects of the revision.

Cautionary Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this quarterly report that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections of annual revenues, expenses and debt service coverage with respect to our debt securities, future capital expenditures, business strategy, competitive strengths, goals, development or operation of generation assets, market and industry developments and the growth of our business and operations, are forward-looking statements. When used in this quarterly report on Form 10-Q, the words “may”, “will”, “could”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, or “contemplate” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. The forward-looking statements in this quarterly report are primarily located in the material set forth under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Risk Factors”, and “Notes to Condensed Consolidated Financial Statements”, but are found in other locations as well. These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management’s current estimates and projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. You should read this quarterly report on Form 10-Q completely and with the understanding that actual future results and developments may be materially different from what we expect attributable to a number of risks and uncertainties, many of which are beyond our control.

Specific factors that might cause actual results to differ from our expectations include, but are not limited to:

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significant considerations, risks and uncertainties discussed in this quarterly report;

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geothermal resource risk (such as the heat content, useful life and geological formation of the reservoir);

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operating risks, including equipment failures and the amounts and timing of revenues and expenses;

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financial market conditions and the results of financing efforts;

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weather and other natural phenomena including earthquakes, volcanic eruption, drought and other natural disasters;

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political, legal, regulatory, governmental, administrative and economic conditions and developments in the U.S., Turkey and other countries in which we operate and, in particular, possible import tariffs, the impact of recent and future federal, state and local regulatory proceedings and changes, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, public policies and government incentives that support renewable energy and enhance the economic feasibility of our projects at the federal and state level in the U.S., Turkey and elsewhere, and carbon-related legislation;

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risks and uncertainty with respect to our internal control over financial reporting, including the identification of a material weakness which, if not timely remediated, may adversely affect the accuracy and reliability of our financial statements;

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the impact of fluctuations in oil and natural gas prices and competition with other renewable sources on the energy price component under certain of our power purchase agreements (“PPAs”);

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risks and uncertainties with respect to our ability to implement strategic goals or initiatives in segments of the clean energy industry or new or additional geographic focus areas;

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risk and uncertainties associated with our future development of storage projects which may operate as "merchant" facilities without long-term sales agreements, including the variability of revenues and profitability of such projects;

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environmental constraints on operations and environmental liabilities arising out of past or present operations, including the risk that we may not have, and in the future may be unable to procure, any necessary permits or other environmental authorizations;

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construction or other project delays or cancellations;

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the enforceability of long-term PPAs for our power plants;

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contract counterparty risk;

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changes in environmental and other laws and regulations to which our company is subject, as well as changes in the application of existing laws and regulations;

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current and future litigation;

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our ability to successfully identify, integrate and complete acquisitions;

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our ability to access the public markets for debt or equity capital quickly;

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competition from other geothermal energy projects and new geothermal energy projects developed in the future, and from alternative electricity producing technologies;

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market or business conditions and fluctuations in demand for energy or capacity in the markets in which we operate;

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when, if and to what extent opportunities under our commercial cooperation agreement with ORIX Corporation may in fact materialize;

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the direct or indirect impact on our company’s business of various forms of hostilities including the threat or occurrence of war, terrorist incidents or cyber-attacks or responses to such threatened or actual incidents or attacks, including the effect on the availability of and premiums on insurance;

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our new strategic plan to expand our geographic markets, customer base and product and service offerings may not be implemented as currently planned or may not achieve our goals as and when implemented;

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development and construction of solar photovoltaic (“Solar PV”) and energy storage projects, if any, may not materialize as planned;

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the effect of and changes in current and future land use and zoning regulations, residential, commercial and industrial development and urbanization in the areas in which we operate;

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the risk factors set forth in our Annual Report on Form 10-K/A for the year ended December 31, 2017 and any update contained herein and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission (“SEC”); and

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other uncertainties which are difficult to predict or beyond our control and the risk that we may incorrectly analyze these risks and forces or that the strategies we develop to address them may be unsuccessful.

Investors are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. Other than as required by law, we undertake no obligation to update forward-looking statements even though our situation may change in the future. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report and the “Risk Factors” section of our Annual Report on Form 10-K/A for the year ended December 31, 2017 and any updates contained herein as well as those set forth in our reports and other filings made with the SEC.

General

Overview

We are a leading vertically integrated company that is currently primarily engaged in the geothermal and recovered energy power business. With the objective of becoming a leading global provider of renewable energy, we focus on several key initiatives under our strategic plan, as described below.

We design, develop, build, sell, own, and operate clean, environmentally friendly geothermal and recovered energy-based power plants, usually using equipment that we design and manufacture.

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Our geothermal power plants include both power plants that we have built and power plants that we have acquired, We have built all of our recovered energy-based plants. In 2017, we expanded our operations to include the provision of services in the energy storage, demand response and energy management markets. We currently conduct our business activities in three business segments:

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In the Electricity segment we develop, build, own and operate geothermal and recovered energy-based power plants in the U.S. and geothermal power plants in other countries around the world and sell the electricity they generate;

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In the Product segment we design, manufacture and sell equipment for geothermal and recovered energy-based electricity generation and remote power units and provide services relating to the engineering, procurement, construction, operation and maintenance of geothermal, Solar PV and recovered energy-based power plants; and

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In the Other segment, we provide energy storage, demand response and energy management related services as well as services relating to the engineering, procurement, construction, operation and maintenance of energy storage units through our subsidiary Viridity Energy Solutions Inc. ("Viridity") business.

In March 2017, we expanded our operations by entering the energy storage, demand response and energy management markets following the acquisition of substantially all of the business and assets of Viridity Energy, Inc., a Philadelphia-based company, by our wholly owned subsidiary Viridity. The acquired business and assets comprise our Other segment. We intend to use our Viridity business to accelerate long-term growth, expand our market presence in a growing market, and further develop our energy storage, demand response and energy management services, including the VPower™ software platform. We plan to continue providing services and products to existing Viridity customers, while expanding our service offerings to include development and engineering procurement and construction ("EPC") into new regions and targeting a broader potential customer base.

Our operations are conducted in the U.S. and the rest of the world. Our current generating portfolio includes geothermal power plants in the U.S., Guatemala, Kenya, Honduras, Guadeloupe and Indonesia, as well as recovered energy generation power plants and storage activity in the U.S.

For the three months ended March 31, 2018, our total revenues decreased by 3.1% (from $189.9 million to $184.0 million) compared to the corresponding period in 2017.

For the three months ended March 31, 2018, Electricity segment revenues were $132.5 million, compared to $115.8 million for the three months ended March 31, 2017, an increase of 14.4% from the prior year period. Product segment revenues for the three months ended March 31, 2018 were $48.7 million, compared to $74.1 million during the three months ended March 31, 2017, a decrease of 34.3% from the prior year period. Our Other segment revenues were $2.9 million for the three months ended March 31, 2018.

During the three months ended March 31, 2018 and 2017, our consolidated power plants generated 1,522,965 megawatt hours (“MWh”) and 1,427,704 MWh, respectively, an increase of 6.7%.

For the three months ended March 31, 2018, our Electricity segment generated approximately 72.0% of our total revenues, our Product segment generated approximately 26.4% of our total revenues, and our Other segment generated approximately 1.6% of our total revenues. For the three months ended March 31, 2017, our Electricity segment generated approximately 61.0% of our total revenues, while our Product segment generated approximately 39.0% of our total revenues .

For the three months ended March 31, 2018, approximately 89.9% of our Electricity segment revenues were from PPAs with fixed energy rates which are not affected by fluctuations in energy commodity prices. We have variable price PPAs in California and Hawaii, which provide for payments based on the local utilities’ avoided cost, which is the incremental cost that the power purchaser avoids by not having to generate such electrical energy itself or purchase it from others, as follows:

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the energy rates under the PPAs in California for each of the Heber 2 power plant in the Heber complex and the G2 power plant in the Mammoth complex, a total of between 30 megawatts (“MW”) and 40 MW, change primarily based on fluctuations in natural gas prices; and

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the prices paid for electricity pursuant to the 25 MW PPA for the Puna complex in Hawaii change primarily as a result of variations in the price of oil as well as other commodities.

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To comply with obligations under their respective PPAs, certain of our project subsidiaries are structured as special purpose, bankruptcy remote entities and their assets and liabilities are ring-fenced. Such assets are not generally available to pay our debt, other than debt at the respective project subsidiary level. However, these project subsidiaries are allowed to pay dividends and make distributions of cash flows generated by their assets to us, subject in some cases to restrictions in debt instruments, as described below.

Electricity segment revenues are also subject to seasonal variations and can be affected by higher-than-average ambient temperatures, as described below under “Seasonality”.

Revenues attributable to our Product segment are based on the sale of equipment, engineering, procurement and construction (“EPC”) contracts and the provision of various services to our customers. Product segment revenues may vary from period to period because of the timing of our receipt of purchase orders and the progress of our equipment manufacturing and execution of the relevant project.

Revenues attributable to our Other segment are partly derived from the sale of ancillary services in the open electricity markets or through programs initiated by different energy providers. Pricing of such services and products are dependent on market supply and demand trends, market volatility, the need and price for ancillary services and other factors that may change over time.

Recent Developments

The most significant developments in our company and business since January 1, 2018 are described below.

	●	On May 8, 2018, we announced that NIL 2, the third unit of the Sarulla geothermal power plant, commenced commercial operation on May 4, 2018, and the power plant reached its full capacity of 330 MW. SIL, the first unit of the power plant commenced commercial operation in March 2017 and NIL 1, the second unit, commenced commercial operation in October 2017. Located in North Sumatra, Indonesia, the 330 MW Sarulla power plant is one of the world's largest geothermal power plants and it includes three units of approximately 110 MW each, utilizing both steam and brine extracted from the geothermal field to increase the power plant’s efficiency. In addition of being one of the sponsors, Ormat also provided the initial conceptual design of the Geothermal Combined Cycle Unit power plant and supplied its Ormat Energy Converter (“OEC”). The OECs are producing over 40% of the total power by utilizing low pressure steam and the separated brine, and as such maximizing resource exploitation for maximum power output.

	●	On May 3, 2018, the Kilauea volcano located in close proximity to our Puna 38 MW geothermal power plant in the Puna district of Hawaii's Big Island erupted following a significant increase in seismic activity in the area in recent weeks. While we have taken steps to secure the Puna facilities, including, among others, taking electricity generation offline and placing physical barriers around, and protective coverings over, the geothermal wells, and have evacuated non-essential personnel at the power plant and removed all pentene from the site, we are still assessing the impact of the volcanic eruption and seismic activity on the Puna facilities. The approaching lava covered the wellheads of three geothermal wells and the substation of the Puna complex and an adjacent warehouse that stored a drilling rig were burned due to the approaching lava. The damages are expected to be covered by the Company’s insurance policies. The net book value of the Puna property, plant and equipment is approximately $109 million. We cannot currently estimate when the lava flow will stop nor when we will be able to assess all of the damages. Any significant physical damage to, or extended shut-down of, the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on our business and results of operations. The Company continues to monitor the condition of the Puna facilities, coordinate with HELCO and local authorities, and is taking steps to both further secure the power plant and restore its operations as soon as it is safe to do so. In addition, The Company will be assessing the accounting implications of this event on the assets and liabilities on its balance sheet and whether an impairment will be required.

	●	On May 3, 2018 we announced that our wholly owned subsidiary, and the Overseas Private Investment Corporation (“OPIC”), an agency of the United States Government, signed a Finance Agreement for Non-recourse project financing totaling up to $124.7 million for the 35 MW Platanares geothermal power plant in Honduras.

		The OPIC loan may be funded to Platanares in up to three total disbursements and will have a final maturity of approximately 14 years. We expect to withdraw two tranches- first tranche of $114.7 million concurrently with closing, and a second tranche of $10 million within two quarters from closing. Closing and disbursements of the OPIC loan are subject to customary conditions for funding, which Ormat expects to satisfy by the end of the second quarter of 2018. Upon closing, the interest rate on the loan will be determined, and is expected to be between 6.75% and 7.25% based on the current estimates for U.S. Treasury and for the additional spread on OPIC certificates of participation.

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On April 24, 2018, we completed our previously announced acquisition of U.S. Geothermal Inc. ("USG"). The total cash consideration (exclusive of transaction expenses) was approximately $110 million, comprised of approximately $106 million funded from available cash of Ormat Nevada Inc. (Ormat Nevada) (to acquire the outstanding shares of common stock of USG) and approximately $4 million funded from available cash of USG (to cash-settle outstanding in-the-money options for common stock of USG). As a result of the acquisition, USG became an indirect wholly owned subsidiary of Ormat, and Ormat indirectly acquired, among other things, interests held by USG and its subsidiaries in:

three operating power plants at Neal Hot Springs, Oregon, San Emidio, Nevada and Raft River, Idaho with a total net generating capacity of approximately 38 MW (the USG Operating Projects); and

development assets which include a Project at the Geysers, California; a second phase project at San Emidio, Nevada; a greenfield project in Crescent Valley, Nevada; and the El Ceibillo project located near Guatemala City, Guatemala (the USG Development Projects)

USG Operating Projects . USG subsidiaries hold equity interests representing approximately 60% of the outstanding equity interests in a joint venture that owns the Neal Hot Springs generation facility; Enbridge Inc. owns the balance of those equity interests. Otherwise, USG subsidiaries own 100% of the outstanding equity interests in the USG Operating Projects. We currently plan to continue operating all of the USG Operating Projects. We plan to make some investments and technological and operational changes in some of those projects, which are expected to improve the overall financial performance of those assets. One of the operational changes currently being implemented is closing the USG Boise, Idaho “headquarters” and terminating employment of personnel and leases for office space and equipment there. The headquarters staff functions will be performed by current Ormat employees in the region.

USG Development Projects . We are currently evaluating each of the USG Development Projects, on a case-by-case basis, to determine whether and how best to proceed with each one. This includes, among other things, current and projected market conditions in the electricity markets the USG Development Projects would serve, our current and projected cost of capital, other alternative uses of resources available to us and the size and type of generation facility the geothermal resources associated with the USG Development Projects could be expected to support.

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We acquired USG subject to all of its existing (actual or contingent) liabilities. This includes, among other liabilities, litigation claims challenging various aspects of the acquisition, as described under the heading “Commitments and Contingencies” in the footnotes to our financial statements. These claims are subject to insurance obtained by USG, subject to retention, maximum coverage and other terms of those policies, as well as various legal defenses.

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On April 16, 2018, we announced that our Viridity subsidiary expects to start construction of two 20MW/20MWh utility scale, in-front-of-the-meter battery energy storage systems ("BESS") located in Plumsted Township and Alpha, New Jersey. The projects are expected to be operational in the fourth quarter of 2018 and will finance, construct, own and operate the projects through Viridity. The BESS will be utilized to provide ancillary services to assist PJM Interconnection, a regional transmission organization ("RTO"), in balancing the electric grid, and will also be available as a capacity asset. The projects are expected to generate, in 2019, average revenues of between $7 million and $8 million, mainly from ancillary services. The projects’ revenues are based on spot prices and may vary from period to period.

These projects are added to a new behind-the-meter 1 MWh project which will serve Atlantic County Utility Authority’s unique ecological green facility using a battery storage as a service (BSAAS) model, optimizing the facility economics as well as providing PJM Interconnection with grid ancillary services.

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On March 22, 2018, we entered into a loan agreement with affiliates of the Migdal Group, one of Israel's leading insurance companies and institutional investors, to provide us with a $100.0 million senior unsecured loan. The loan will be repaid in 15 semi-annual payments of $4.2 million each, commencing on September 15, 2021, with a final payment of $37 million on March 15, 2029. The average duration of the loan is 7 years. The loan bears interest at a fixed rate of 4.8% per annum, payable semi-annually, subject to adjustments in certain cases. We intend to use the proceeds of the loan to fund our capital needs to support our growth plans.

Trends and Uncertainties

Different trends, factors and uncertainties may impact our operations and financial condition, including many that we do not or cannot foresee. However, we believe that our results of operations and financial condition for the foreseeable future will be primarily affected by the following trends, factors and uncertainties that are from time to time also subject to market cycles:

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There has been increased demand for energy generated from geothermal and other renewable resources in the U.S. as costs for electricity generated from renewable resources have become more competitive. Much of this is attributable to legislative and regulatory requirements and incentives, such as state renewable portfolio standards (“RPS”) and federal tax credits such as production tax credits (“PTCs”) or investment tax credits (“ITCs”) (which are discussed in more detail in the section entitled “Government Grants and Tax Benefits” below). We believe that future demand for energy generated from geothermal and other renewable resources in the U.S. will be driven primarily by further commitment to and implementation of state RPS and greenhouse gas initiatives.

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We accelerated our efforts to expand business development activities in developing countries where geothermal is considered a local resource that can provide a stable and cost effective solution to increase access to power. We expect that a variety of local governmental initiatives will create new opportunities for the development of new projects with the potential to realize higher returns on our equity as well as create additional markets for our products. These initiatives include the award of long-term contracts to independent power generators, the creation of competitive wholesale markets for selling and trading energy, capacity and related energy products and the adoption of programs designed to encourage “clean” renewable and sustainable energy sources.

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We expect to continue to generate the majority of our revenues from our Electricity segment through the sale of electricity from our power plants. All of our current revenues from the sale of electricity are derived from payments under long-term PPAs related to fully-contracted power plants. As a result of the operational improvements and technological advancements that were implemented and that we plan to continue to implement in our operating portfolio including capacity additions, geographical expansion and re-contracting of existing power plants, we expect that the Electricity segment contribution to our operating income will increase further in the future. The increased contribution of the Electricity segment will increase our profitability and its stability. We also intend to continue to pursue opportunities as they arise in our recovered energy business, in the Solar PV sector, in the energy storage market and in other forms of clean energy. In addition, pursuant to our strategic plan, we acquired our Viridity business which operates in the energy storage, demand response and energy management markets and generates revenues derived primarily from software license fees and the provision of services. We are also pursuing PPAs with enterprises that will increase our potential customer base.

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We have adopted a strategic plan for the growth of our company, in terms of geographic scope, customer base, and technology platforms covered by our product and service offerings, with a focus on increasing net income from operations. Under this plan, we will continue to focus on organic growth and increasing operational efficiency of our existing business lines. In addition, we are actively pursuing domestic and international acquisition opportunities, both within our existing business lines and the solar power generation and energy storage businesses, all of which are targeted as part of the plan. For example, we acquired our interest in the Bouillante geothermal power plant in Guadeloupe and, as noted above, recently acquired U.S.G, a renewable energy company focused on the development, production and sale of electricity from geothermal energy. We also completed the acquisition of our Viridity business during fiscal year 2017. As part of our services offering expansion through our Viridity business, we have developed our BSAAS strategy to provide comprehensive holistic solutions for energy storage, demand response and energy management through nimble and flexible business models, technology and product solutions. We plan to develop, build, own and operate energy storage facilities and provide related services in diversified markets. We will face a number of challenges and uncertainties in implementing this plan, including integration of recently acquired assets as well as potential new acquisitions, and we may revise elements of the plan in response to market conditions or other factors as we move forward with the plan.

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In the Electricity segment, we expect intense domestic competition from the solar and wind power generation industries to continue and increase. While we believe the expected demand for renewable energy will be large enough to accommodate increased competition, any such increase in competition, including increasing amounts of renewable energy under contract as well as any further decline in natural gas prices attributable to increased production may contribute to a reduction in electricity prices. However, despite increased competition from the solar and wind power generation industries, we believe that firm and flexible, base-load electricity, such as geothermal-based energy, will continue to be an important source of renewable energy in areas with commercially viable geothermal resources. In the geothermal industry, we have experienced a decrease in the upfront fee required to secure geothermal leases largely as a result of reduced competition for such leases.

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In the Product segment, we have experienced increased competition from binary power plant equipment suppliers including the major steam turbine manufacturers. While we believe that we have a distinct competitive advantage based on our accumulated experience and current worldwide share of installed binary generation capacity, an increase in competition may impact our ability to secure new purchase orders from potential customers. The increased competition may also lead to further reductions in the prices that we are able to charge for our binary equipment, which in turn may reduce our profitability.

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The 38 MW Puna complex has three PPAs, one of which (a 25 MW PPA) has a monthly variable energy rate based on the local utility’s avoided costs. A decrease in the price of oil as well as in other commodities will result in a decrease in the incremental cost that the power purchaser avoids by not generating its electrical energy needs from oil, which will result in a reduction of the energy rate that we may charge under this PPA. In order to reduce our exposure to oil we signed fixed rate PPAs for the remaining 13 MW. The Puna power plant was shut-down recently due to the volcano eruption in the Big Island, Hawaii.

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The pricing under our PPAs for the G2 power plant in the Mammoth complex and Heber 2 power plant in the Heber complex for a total of between 30 MW and 40 MW are variable rates based on short run avoided cost (“SRAC”) pricing that is impacted by natural gas prices. In 2016, we signed a fixed rate PPA that reduced our exposure to fluctuations in natural gas prices at the Ormesa complex starting in November 2017.

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The amounts that we are paid under our PPAs for electricity, capacity and other energy attributes vary for a number of reasons, including:

market conditions when the PPA is signed;

the competitive environment in the power market where the power plant is located and the power and other energy attributes are sold; and

in the case of contracts described in the prior bullets with variable pricing components, current oil and natural gas prices.

This means, among other things, that the average price per MWh, which is one of the metrics some investors may use to evaluate power plant revenues, can fluctuate from period to period. Based on total Electricity segment revenues, we earned, on average, $87.0 and $81.1 per MWh in the three months ended March 31, 2018 and 2017, respectively. Oil and natural gas prices, together with other factors that affect our Electricity segment revenues, could cause changes in our average price per MWh in the future.

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The viability of a geothermal resource depends on various factors such as the resource temperature, the permeability of the resource (i.e., the ability to get geothermal fluids to the surface) and operational factors relating to the extraction and injection of the geothermal fluids. Such factors, together with the possibility that we may fail to find commercially viable geothermal resources in the future, represent significant uncertainties that we face in connection with our growth expectations.

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As our power plants (including their respective well fields) age, they may require increased maintenance with a resulting decrease in their availability, potentially leading to the imposition of penalties if we are not able to meet the requirements under our PPAs as a result of any decrease in availability.

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Our foreign operations are subject to significant political, economic and financial risks which vary by country as well as hostilities that may arise in the countries we operate. As of the date of this report, those risks include security conditions in Israel, the partial privatization of the electricity sector in Guatemala and the political uncertainty currently prevailing in some of the countries in which we operate as further described in the “Risk Factors” section of our Annual Report on Form 10-K/A for the year ended December 31, 2017. Although we maintain, among other things, political risk insurance for most of our investments in foreign power plants to mitigate these risks, insurance does not provide complete coverage with respect to all such risks.

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Turkey’s geothermal market is one of the fastest growing markets in the geothermal industry worldwide, mainly due to governmental and regulatory support. Turkey is ranked seventh globally with an installed geothermal capacity of approximately 1,000 MW. Since 2006, we have supplied our state of the art binary equipment to over 25 projects in Turkey, which account for over 41% of the total installed geothermal capacity in Turkey as of March 2018. As a major equipment supplier in the Turkish geothermal market we are involved in a number of projects that are currently under construction and plan to continue our marketing efforts to secure new contracts. Our revenue exposure to the Turkish market is increasing and we expect higher exposure in 2018, as we signed a number of new contracts in Turkey. The continued deterioration in the Turkish economy, devaluation in the Turkish Lira and increase in local interest rates or a decline in government support for the development of geothermal power in the country could affect local demand for the geothermal equipment and services we provide or the prices we may charge for such equipment and services. We are monitoring any change in the political and business environments that may affect our future business and operations in the country.

●

We established a facility in Turkey in order to locally produce several power plant components that entitle our customers to increased incentives under the renewable energy laws. The use of local equipment in renewable energy based generating facilities in Turkey entitles such facilities to significant benefits under Turkish law, provided such facilities have obtained a renewable energy resource ("RER") certificate from the Energy Market Regulatory Authority, which requires the issuance of a local certificate. If we do not obtain the local certificate, then some of our customers under the relevant supply agreements in Turkey may not be issued a RER Certificate based on the equipment we supply to them, and we will be required to make a payment to such customers equal to the amount of the expected lost benefit.

●

The Federal Energy Regulatory Commission ("FERC") is allowed under the Public Utility Regulatory Policies Act, as amended to terminate, upon the request of a utility, the obligation of the utility to purchase the output of a Qualifying Facility if FERC finds that there is an accessible competitive market for energy and capacity from the Qualifying Facility. FERC has granted the California investor owned utilities a waiver of the mandatory purchase obligations from Qualifying Facilities above 20 MW. If the utilities in the regions in which our domestic power plants operate were to be relieved of the mandatory purchase obligation, they would not be required to purchase energy from us upon termination of the existing PPA, which could have an adverse effect on our revenues.

●

The Trump Administration has expressed skepticism regarding climate change. The final outcome of this Administration’s policies and efforts regarding climate change and resulting effects to the geothermal industry remain uncertain.

●

While the recently enacted U.S. federal tax legislation (referred to herein as the "Tax Act") reduces the corporate tax rate, it also is expected to increase the cost of capital for renewable energy projects. Such projects often rely on "tax equity" as a core financing tool. Tax equity is a form of financing that is repaid partly in tax benefits and partly in cash. There are two types of federal income tax benefits on renewable energy projects: a tax credit and depreciation, or the ability to deduct the cost of the project. The reduction in the corporate tax rate from 35 percent to 21 percent reduces the value of the depreciation. Therefore, less tax equity can be raised on projects. The gap in the capital structure must be filled with more expensive debt or sponsor equity. The Tax Act allowed the full cost of equipment acquired after September 27, 2017 to be deducted immediately. However, the tax equity market is not expected to be interested in this tax benefit and, in fact, because of the way tax equity works, the Company has had in some tax equity deals to take depreciation on a straight-line basis over 12 years rather than on a front-loaded basis over five years, which leads to some further erosion in the present value of the depreciation. Other effects of the Tax Act were discussed earlier under Note 11 – Income Taxes.

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Revenues

We generate our revenues from the sale of electricity from our geothermal and recovered energy-based power plants; the design, manufacture and sale of equipment for electricity generation and the construction, installation and engineering of power plant equipment.

Revenues attributable to our Electricity segment are derived from the sale of electricity from our power plants pursuant to long-term PPAs. While approximately 89.9% of our Electricity revenues for the three months ended March 31, 2018 were derived from PPAs with fixed price components, we have variable price PPAs in California and Hawaii. Our Standard Offer #4 type of PPAs totaling between 30 MW and 40 MW in California are subject to the impact of fluctuations in natural gas prices while the prices paid for electricity pursuant to the 25 MW PPA for the Puna complex in Hawaii is impacted by the price of oil as well as other commodities. Accordingly, our revenues from those power plants may fluctuate.

Our Electricity segment revenues are also subject to seasonal variations, as more fully described in “Seasonality” below.

Our PPAs generally provide for energy payments alone, or energy and capacity payments. Generally, capacity payments are payments calculated based on the amount of time that our power plants are available to generate electricity. Some of our PPAs provide for bonus payments in the event that we are able to exceed certain target capacity levels and the potential forfeiture of payments if we fail to meet certain minimum target capacity levels. Energy payments, on the other hand, are payments calculated based on the amount of electrical energy delivered to the relevant power purchaser at a designated delivery point. The rates applicable to such payments are either fixed (subject, in certain cases, to certain adjustments) or are based on the relevant power purchaser’s avoided costs. Our more recent PPAs generally provide for energy payments alone with an obligation to compensate the off-taker for its incremental costs as a result of shortfalls in our supply .

Revenues attributable to our Product segment fluctuate between periods, primarily based on our ability to receive customer orders, the status and timing of such orders, delivery of raw materials and the completion of manufacturing. Larger customer orders for our products are typically the result of our sales efforts, our participation in and winning tenders or requests for proposals issued by potential customers in connection with projects they are developing and orders by returning customers. Such projects often take a significant amount of time to design and develop and are subject to various contingencies, such as the customer’s ability to raise the necessary financing for a project. Consequently, we are generally unable to predict the timing of such orders for our products and may not be able to replace existing orders that we have completed with new ones. As a result, revenues from our Product segment fluctuate (sometimes, extensively) from period to period.

Revenues attributable to our Others segment are mainly derived from BSAAS systems, demand response and energy management services.

Revenues attributable to our demand response and energy management services are derived by two methods. The first method is a fixed monthly or annual recurring fee for managing the customer’s energy assets and monetizing them in either the energy markets or through reducing the customer’s charges from their utility. The second method is through sharing the revenues or savings generated from monetizing their flexible electricity in the energy markets (revenue) or through reducing the customer’s bill from the utility (savings). The second method is subject to energy price fluctuations and the available flexible electricity.

Revenues attributable to our Software as a Services ("SAAS") are based on a fixed monthly or annual fee for energy management information and analytical services. Contract periods are typically 12 months or above. To date, we have experienced minimal customer churn.

BSAAS are battery storage deals that are financed, owned and operated by the Company. BSAAS revenues are a combination of sales of the electricity back to the utilities and energy markets based on the prevailing market price for the electricity or for the energy or ancillary services. The energy and ancillary services revenue includes frequency regulation, standby capacity, synchronized reserve, reactive power and other related services. Additionally, when providing a “behind the customer meter solution” we also generate revenue from sharing saving generated from reducing the customer’s utility bill. We also act as a general contractor on turnkey BESS for customers. BESS systems are owned by the customer and we provide the EPC for the project, delivering to the customer a fully operational system. Along with the BESS we also provide the management and operation of the battery for the customer for the life of the system which is typically 10 to 20 years. The EPC portion of the turnkey BESS revenue is a one-time charge and usually will be based on mile-stones or upon delivery.

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The following table sets forth a breakdown of our revenues for the periods indicated:

	Revenue (dollars in thousands)				% of Revenue for Period Indicated
	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2018			2017
Revenues:
Electricity	$	132,489	$	115,776		72.0	%		61.0	%
Product		48,672		74,122		26.4			39.0
Other		2,862		—		1.6			0.0
Total	$	184,023	$	189,898		100	%		100	%

The following table sets forth the geographic breakdown of the revenues attributable to our Electricity, Product and Other segments for the periods indicated;

	Revenue (dollars in thousands)				% of Revenue for Period Indicated
	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2018			2017
Electricity Segment:
United States	$	83,683	$	75,895		63.2	%		65.6	%
Foreign		48,806		39,880		36.8			34.4
Total	$	132,489	$	115,775		100	%		100	%

Product Segment:
United States	$	194	$	675		0.4	%		0.9	%
Foreign		48,478		73,447		99.6			99.1
Total	$	48,672	$	74,122		100	%		100	%

Other Segment:
United States	$	2,862	$	—		100.0	%		0.0	%
Foreign		—		—		0.0			0.0
Total	$	2,862	$	—		100	%		-	%

The contribution of our domestic and foreign operations within our Electricity segment and Product segment to combined pre-tax income differ in a number of ways.

Electricity Segment. Our Electricity segment domestic revenues were approximately 71% and 90% higher than our Electricity segment foreign revenues for the three months ended March 31, 2018 and 2017, respectively. However, domestic operations in our Electricity segment have higher costs of revenues and expenses than the foreign operations in our Electricity segment. Our foreign power plants are located in lower-cost regions, like Kenya, Guatemala, Honduras and Guadeloupe, which favorably impact payroll and maintenance expenses among other items. They are also newer than most of our domestic power plants and therefore tend to have lower maintenance costs and higher availability factors than our domestic power plants.

Product Segment . Our Product segment foreign revenues were approximately 99% of our total Product segment revenues for the three months ended March 31, 2018 and 2017. Our Product segment foreign activity also benefits from lower costs of revenues and expenses than Product segment domestic activity such as labor and transportation costs. Accordingly, our Product segment foreign activity contributes more than our Product segment domestic activity to our pre-tax income from operations.

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Relative Contributions. While our combined (domestic and foreign) Electricity segment revenues exceeded our combined Product segment revenues by approximately $84 million and $42 million, respectively, for the three months ended March 31, 2018 and 2017, Product segment revenues resulted in higher pre-tax income (primarily from foreign operations) for both of those periods. In the Other segment, all revenues and related pre-tax income are from domestic operations.

Seasonality

Electricity generation from some of our geothermal power plants is subject to seasonal variations; in the winter, our geothermal power plants produce more energy primarily attributable to the lower ambient temperature, which has a favorable impact on the energy component of our Electricity segment revenues. The prices (primarily for capacity) paid for electricity under the PPAs with Southern California Edison and Pacific Gas and Electricity (“PG&E”) in California for the Heber 2 power plant in the Heber complex, the Mammoth complex and the North Brawley power plant are higher in the months of June through September. The higher payments payable by Southern California Edison and PG&E in the summer months offset the negative impact on our revenues from lower generation in the summer attributable to the higher ambient temperature. As a result, we receive, and expect to continue to receive in the future, higher revenues from these power plants and complexes during such months.

Breakdown of Cost of Revenues

Electricity Segment

The principal cost of revenues attributable to our operating power plants includes operation and maintenance expenses comprised of salaries and related employee benefits, equipment expenses, costs of parts and chemicals, costs related to third-party services, lease expenses, royalties, startup and auxiliary electricity purchases, property taxes, insurance and, for some of our projects, purchases of make-up water for use in our cooling towers and also depreciation and amortization. In our California power plants, our principal cost of revenues also includes transmission charges and scheduling charges. In some of our Nevada power plants, we also incur transmission and wheeling charges. Some of these expenses, such as parts, third-party services and major maintenance, are not incurred on a regular basis. This results in fluctuations in our expenses and our results of operations for individual power plants from quarter to quarter. Payments made to government agencies and private entities on account of site leases where power plants are located are included in cost of revenues. Royalty payments, included in cost of revenues, are made as compensation for the right to use certain geothermal resources and are paid as a percentage of the revenues derived from the associated geothermal rights. Royalties constituted approximately 4.3% and 3.9% of Electricity segment revenues for the three months ended March 31, 2018 and March 31, 2017, respectively.

Product Segment

The principal cost of revenues attributable to our Product segment includes materials, salaries and related employee benefits, expenses related to subcontracting activities, and transportation expenses. Sales commissions to sales representatives are included in selling and marketing expenses. Some of the principal expenses attributable to our Product segment, such as a portion of the costs related to labor, utilities and other support services are fixed, while others, such as materials, construction, transportation and sales commissions, are variable and may fluctuate significantly depending on market conditions. As a result, the cost of revenues attributable to our Product segment, expressed as a percentage of total revenues, fluctuates. Another reason for such fluctuation is that in responding to bids for our products, we price our products and services in relation to existing competition and other prevailing market conditions, which may vary substantially from order to order.

Other Segment

The principal cost of revenues attributable to our Other segment includes direct costs attributable to providing services and equipment to our Viridity’s customers, direct costs associated with software development and the direct cost of operating batteries that are owned by our Viridity. Direct costs include labor costs of our network operations center, the labor costs for engineering and implementation of services to customers, consulting services provided to customers and developing software and the labor associated with operations and maintenance for customer and our Viridity owned energy assets. Cost of revenues attributable to our Other segment also include cost of equipment sold to customers in delivering our automated demand response and software services at a customer’s location, the cost of batteries or other associated equipment that is sold to customers and for any third party related costs such as local construction, local engineering or other similar costs incurred in implementing and managing the customers’ energy assets.

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Our cash and cash equivalents and restricted cash and cash equivalents increased to $105.1 million as of March 31, 2018 from $96.6 million as of December 31, 2017. This increase was primarily attributable to: (i) $19.8 million derived from operating activities during the three months ended March 31, 2018; and (ii) $100.0 million of proceeds from a senior unsecured loan. This increase was partially offset by: (i) our use of $67.0 million to fund capital expenditures; (ii) repayment of $16.7 million of long-term debt; (iii) net repayment of $13.0 million from our revolving credit lines with commercial banks; (iv) a $11.6 million dividend paid; (v) $4.7 million paid to noncontrolling interest; and (vi) an investment in an unconsolidated company of $1.3 million. Our corporate borrowing capacity under committed lines of credit with different commercial banks as of March 31, 2018 was $468.0 million, as described below under “Liquidity and Capital Resources”. As of March 31, 2018, we have utilized $273.2 million of our corporate borrowing capacity.

Critical Accounting Estimates and Assumptions

A comprehensive discussion of our critical accounting estimates and assumptions is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our Annual Report on Form 10-K/A for the year ended December 31, 2017.

New Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements set forth in Item 1 of this quarterly report for information regarding new accounting pronouncements.

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Results of Operations

The following table sets forth our historical operating results for the periods ended and at the dates indicated. We have derived the financial data for the three months ended March 31, 2018 and 2017 from our unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this quarterly report. Such unaudited condensed consolidated financial data for the three months ended March 31, 2017 reflects the correction of certain prior period errors related to income taxes, as more fully described in Note 1 to our unaudited condensed consolidated financial statements, which resulted in the revision of our financial statements as described therein.

Our historical operating results in dollars and as a percentage of total revenues are presented below. Starting 2018, we disclose our energy storage, demand reponse and energy management services under the Other segment and as such, the two tables below show our revenues, cost of revenues and gross profit for our three reportable segment: Electricty, Product and Other. A comparison of the different periods described below may be of limited utility primarily as a result of (i) our recent construction or disposition of new power plants and enhancement of acquired power plants; and (ii) fluctuation in revenues from our Product segment.

	Three Months Ended March 31,
	2018			2017
	(Dollars in thousands, except per share data)
Statements of Operations Historical Data:
Revenues:
Electricity	$	132,489		$	115,776
Product		48,672			74,122
Other		2,862			—
		184,023			189,898
Cost of revenues:
Electricity		73,482			66,036
Product		33,726			49,452
Other		3,443			—
		110,651			115,488
Gross profit
Electricity		59,007			49,740
Product		14,946			24,670
Other		(581	)		—
		73,372			74,410
Operating expenses:
Research and development expenses		1,108			602
Selling and marketing expenses		3,699			4,363
General and administrative expenses		13,849			9,949
Write-off of unsuccessful exploration activities		123			—
Operating income		54,593			59,496
Other income (expense):
Interest income		113			244
Interest expense, net		(14,344	)		(14,923	)
Derivatives and foreign currency transaction gains (losses)		(1,599	)		1,338
Income attributable to sale of tax benefits		7,361			6,157
Other non-operating expense, net		(20	)		(92	)
Income from continuing operations before income taxes and equity in earnings (losses) of investees, net		46,104			52,220
Income tax (provision) benefit		26,942			(11,004	)
Equity in earnings (losses) of investees, net		1,210			(1,599	)
Net income		74,256			39,617
Net income attributable to noncontrolling interest		(4,748	)		(4,423	)
Net income attributable to the Company's stockholders	$	69,508		$	35,194
Earnings per share attributable to the Company's stockholders:
Basic:
Net income	$	1.37		$	0.71
Diluted:
Net income	$	1.36		$	0.70
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:
Basic		50,614			49,680
Diluted		51,051			50,491

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	Three Months Ended March 31,
	2018			2017
Statements of Operations Data:
Revenues:
Electricity		72.0	%		61.0	%
Product		26.4			39.0
Other		1.6			0.0
		100.0			100.0
Cost of revenues:
Electricity		55.5			57.0
Product		69.3			66.7
Other		120.3			0.0
		60.1			60.8
Gross profit
Electricity		44.5			43.0
Product		30.7			33.3
Other		(20.3	)		0.0
		39.9			39.2
Operating expenses:
Research and development expenses		0.6			0.3
Selling and marketing expenses		2.0			2.3
General and administrative expenses		7.5			5.2
Write-off of unsuccessful exploration activities		0.1			0.0
Operating income		29.7			31.3
Other income (expense):
Interest income		0.1			0.1
Interest expense, net		(7.8	)		(7.9	)
Derivatives and foreign currency transaction gains (losses)		(0.9	)		0.7
Income attributable to sale of tax benefits		4.0			3.2
Other non-operating expense, net		(0.0	)		(0.0	)
Income from continuing operations before income taxes and equity in earnings (losses) of investees, net		25.1			27.5
Income tax (provision) benefit		14.6			(5.8	)
Equity in earnings (losses) of investees, net		0.7			(0.8	)
Net income		40.4			20.9
Net income attributable to noncontrolling interest		(2.6	)		(2.3	)
Net income attributable to the Company's stockholders		37.8	%		18.6	%

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Comparison of the Three Months Ended March 31, 2018 and the Three Months Ended March 31, 2017

Total Revenues

Total revenues for the three months ended March 31, 2018 were $184.0 million, compared to $189.9 million for the three months ended March 31, 2017, which represented a 3.1% decrease from the prior year period. This decrease was attributable to our Product segment, in which revenues decreased by 34.3% compared to the corresponding period in 2017. This decrease was partially offset by a 14.4% increase in our Electricity segment revenues compared to the corresponding period in 2017 and $2.9 million revenues from our Other segment generated by our Viridity business from the provision of energy storage, demand response and energy management services, all as discussed below.

Electricity Segment

Revenues attributable to our Electricity segment for the three months ended March 31, 2018 were $132.5 million, compared to $115.8 million for the three months ended March 31, 2017, representing a 14.4% increase from the prior year period. This increase was primarily attributable to: (i) the commencement of commercial operation of our Platanares power plant in Honduras, effective September 2017, with revenues of $8.4 million for the three months ended March 31, 2018 and the commencement of commercial operation of our Tungsten Mountain power plant in Nevada, effective December 2017, with revenues of $4.8 million for the three months ended March 31, 2018; (ii) higher energy rates under the new Ormesa 1 PPA commencing in December 2017; and (iii) an increase in generation at our Puna power plant attributable to successful improvement of resource performance. The increase was partially offset by a decrease in generation at some of our power plants that were taken offline to address maintenance issues and enhancements.

Power generation in our power plants increased by 6.7% from 1,427,704 MWh in the three months ended March 31, 2017 to 1,522,965 MWh in the three months ended March 31, 2018 primarily because of an increase in generation at our Puna power plant, and the commencement of commercial operation of our Platanares power plant in Honduras, and Tungsten Mountain power plant in Nevada, partially offset by a decrease in generation at some of our power plants mainly due to scheduled outages.

Product Segment

Revenues attributable to our Product segment for the three months ended March 31, 2018 were $48.7 million, compared to $74.1 million for the three months ended March 31, 2017, which represented a 34.3% decrease. The decrease in our Product segment revenues was attributable to the timing of revenue recognition. We recognized approximately $14.2 million and $21.5 million in revenues, from the New Zealand and China projects, respectively, in the three months ended March 31, 2017, compared to $4.3 million and $0.3 million in the three months ended March 31, 2018. The total contract price for the New Zealand project scheduled to be completed in the second quarter of 2018 is $37.7 million, and the total contract price for the China project to be completed in 2018 is $23.8 million. The decrease in our Product segment revenues was also attributable to other projects in Turkey, which were completed in 2017, and by a decrease in revenues as a result of completion or near-completion of our contracts for geothermal projects in Chile and Indonesia (the Sarulla Project), partially offset by the start of approximately $31.5 million in revenue recognition from our new projects in Turkey.

Other Segment

Revenues attributable to our Other segment for the three months ended March 31, 2018 were $2.9 million. In 2018, the Company started disclosing its energy storage and power load management business activity under the Other segment. The Other segment includes revenues from the provision of energy storage demand response and energy management services by our Viridity business following the acquisition of substantially all of the business and assets of Viridity Energy, Inc. on March 15, 2017.

Total Cost of Revenues

Total cost of revenues for the three months ended March 31, 2018 was $110.7 million, compared to $115.5 million for the three months ended March 31, 2017, which represented a 4.2% decrease. This decrease was attributable to a decrease in cost of revenues from our Product segment. This decrease was partially offset by a 11.3% increase in our Electricity segment cost of revenues compared to the corresponding period in 2017, and $3.5 million cost of revenues from our Other segment generated by our Viridity business, all as discussed below. As a percentage of total revenues, our total cost of revenues for the three months ended March 31, 2018 decreased to 60.1% from 60.8% for the three months ended March 31, 2018. This decrease was mainly attributable to a decrease in cost of revenues as a percentage of total revenues in our Electricity segment.

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Electricity Segment

Total cost of revenues attributable to our Electricity segment for the three months ended March 31, 2018 was $73.5 million, compared to $66.0 million for the three months ended March 31, 2017. This increase was primarily attributable to additional cost of revenues from the commencement of commercial operation of our Platanares power plant in Honduras, effective September 2017, and of our Tungsten Mountain power plant in Nevada, effective December 2017. As a percentage of total Electricity revenues, our total cost of revenues attributable to our Electricity segment for the three months ended March 31, 2018 was 55.5%, compared to 57.0% for the three months ended March 31, 2017. This decrease was primarily attributable to higher efficiency in some of our operating power plants as well as lower costs of operating the two new power plants and higher energy rates under the new Ormesa PPA commencing in December 2017, as discussed above.

Product Segment

Total cost of revenues attributable to our Product segment for the three months ended March 31, 2018 was $33.7 million, compared to $49.5 million for the three months ended March 31, 2017, which represented a 31.8% decrease. This decrease was primarily attributable to the decrease in Product segment revenues, as discussed above. As a percentage of total Product segment revenues, our total cost of revenues attributable to our Product segment for the three months ended March 31, 2018 was 69.3%, compared to 66.7% for the three months ended March 31, 2017. This increase was primarily attributable to a different product mix and different margins in the various sales contracts we entered into for the Product segment during these periods.

Other Segment

Cost of revenues attributable to our Other segment for the three months ended March 31, 2018 were $3.5 million. In 2018, the Company started disclosing its energy storage and power load management business activity under the Other segment. The Other segment includes cost of revenues related to the provision of energy storage, demand response and energy management services by our Viridity business.

Research and Development Expenses, Net

Research and development expenses for the three months ended March 31, 2018 were $1.1 million, compared to $0.6 million for the three months ended March 31, 2017.

Selling and Marketing Expenses

Selling and marketing expenses for the three months ended March 31, 2018 were $3.7 million compared to $4.4 million for the three months ended March 31, 2017. This decrease was primarily due to lower sales commissions related to our Product segment because of lower revenues and a different commission mix. Selling and marketing expenses for the three months ended March 31, 2018 constituted 2.0% of total revenues for such period, compared to 2.3% for the three months ended March 31, 2017.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2018 were $13.8 million compared to $9.9 million for the three months ended March 31, 2017. The increase was primarily attributable to general and administrative expenses from our Viridity business which we acquired on March 15, 2017 and an increase of approximately $2.0 million in costs associated with our identification of a material weakness related to taxes in the fourth quarter of 2017 and the additional work and controls to compensate for such material weakness. General and administrative expenses for the three months ended March 31, 2018 constituted 7.5% of total revenues for such period, compared to 5.2% for the three months ended March 31, 2017.

Operating Income

Operating income for the three months ended March 31, 2018 was $54.6 million, compared to $59.5 million for the three months ended March 31, 2017, which represented an 8.2% decrease. The decrease in operating income was primarily attributable to the decrease in our Product segment revenue as well as in our gross margin in our Product segment, and the increase in general and administrative expenses, as discussed above. The decrease was partially offset by an increase in our Electricity segment revenues as well as an increase in our gross margin in our Electricity segment, also discussed above. Operating income attributable to our Electricity segment for the three months ended March 31, 2018 was $46.4 million, compared to $40.9 million for the three months ended March 31, 2017. Operating income attributable to our Product segment for the three months ended March 31, 2018 was $9.6 million, compared to $18.6 million for the three months ended March 31, 2017. Operating loss attributable to our Other segment for the three months ended March 31, 2018 was $1.4 million.

Interest Expense, Net

Interest expense, net for the three months ended March 31, 2018 was $14.3 million, compared to $14.9 million for the three months ended March 31, 2017. This decrease was primarily attributable to $0.6 million decrease in interest related to the sale of tax benefits and lower interest expense as a result of principal payments of long term debt, partially offset by an increase in interest expenses as a result of an increase in revolving credit lines with banks and a $0.9 million related to a decrease in interest capitalized to projects.

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D erivatives and foreign Currency Transaction Gains (losses)

Derivatives and foreign currency transaction losses for the three months ended March 31, 2018 were $1.6 million, compared to gains of $1.3 million for the three months ended March 31, 2017. Derivatives and foreign currency transaction losses for the three months ended March 31, 2018 were primarily attributable to losses from foreign currency forward contracts which were not accounted for as hedge transactions. Derivatives and foreign currency transaction gains for the three months ended March 31, 2017 were primarily attributable to gains from foreign currency forward contracts which were not accounted for as hedge transactions.

Income Attributable to Sale of Tax Benefits

Tax equity is a form of financing used for renewable energy projects. In some such financings, the Company may realize income when the financing is put in place or over time as a consequence of how the financing is structured. Income attributable to such financings (as described below under “Opal Transaction”) for the three months ended March 31, 2018 was $7.4 million, compared to $6.2 million for the three months ended March 31, 2017. This income primarily represents the value of PTCs and taxable income or loss generated by Opal Geo LLC ("Opal Geo") and allocated to the investor in the three months ended March 31, 2018 compared to the value of PTCs and taxable income or loss generated by Opal Geo and ORTP, LLC (ORTP) and allocated to the investors in the three months ended March 31, 2017.

Income Taxes

Income tax benefit for the three months ended March 31, 2018 was $26.9 million compared to income tax provision of $11.0 million for the three months ended March 31, 2017. Our effective tax rate for the three months ended March 31, 2018 and March 31, 2017, was (58.4)% and 21.1%, respectively. Our effective tax rate is primarily based upon the composition of our income in different countries and changes related to valuation allowances for certain countries. Our aggregate effective tax rate for the three months ended March 31, 2018 is lower than the 21% U.S. federal statutory tax rate due to: (i) movement in the valuation allowance on U.S. deferred tax assets discussed below; (ii) forecasted generation of production tax credits; (iii) impact of U.S. permanent tax adjustments (iv) lower tax rate in Israel of 16% (v) a tax credit and tax exemption related to the Company’s subsidiaries in Guatemala and Honduras; and (vi) as a result of amendments and interpretations to the Tax Cuts and Jobs Act during the first quarter of 2018, the Company recorded a tax benefit of $44.4 million for the reduction of the valuation allowance related to foreign tax credits and production tax credits.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to include in taxable income an amount on certain repatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax (BEAT), a new minimum tax; (7) creating a new limitation on deductible interest expense; and (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

See Note 11 for discussion regarding incremental accounting adjustments related to the Tax Act as of March 31, 2018.

Equity in Earnings (losses) of investees, net

Equity in earnings (losses) of investees, net for the three months ended March 31, 2018 was a profit of $1.2 million, compared to a loss of $1.6 million for the three months ended March 31, 2017. Equity in losses of investees, net is derived from our 12.75% share in the earnings or losses of the Sarulla project.

Net Income

Net income for the three months ended March 31, 2018 was $74.3 million, compared to $39.6 million for the three months ended March 31, 2017, which represents an increase of $34.7 million. This increase in net income was primarily attributable to a decrease in income tax provision of $37.9 million and an increase in equity in earnings of investees, net of $2.8 million, partially offset by a decrease in operating income of $4.9 million and a decrease of $2.9 million in derivatives and foreign currency transaction gains, all as discussed above.

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Net Income attributable to the Company’s Stockholders

Net income attributable to the Company’s stockholders for the three months ended March 31, 2018 was $69.5 million, compared to $35.2 million for the three months ended March 31, 2017, which represents an increase of $34.3 million. This increase was primarily attributable to the increase in net income of $34.7 million as discussed above.

Liquidity and Capital Resources

Our principal sources of liquidity have been derived from cash flows from operations, proceeds from third party debt such as borrowings under our credit facilities, private offerings and issuances of debt securities, project financing, tax monetization transactions, short term borrowing under our lines of credit, and proceeds from the sale of equity interests in one or more of our projects. We have utilized this cash to develop and construct power plants, fund our acquisitions, pay down existing outstanding indebtedness, and meet our other cash and liquidity needs.

As of March 31, 2018, we had access to (i) $54.7 million in cash and cash equivalents, of which $47.3 million is held by our foreign subsidiaries; and (ii) $148.3 million of unused corporate borrowing capacity under existing lines of credit with different commercial banks.

Our estimated capital needs for the remainder of 2018 include approximately $231.0 million for capital expenditures on new projects under development or construction, exploration activity, storage activity, investment in our manufacturing facility and operating projects, as well as $51.6 million for debt repayment.

We expect to finance these requirements with: (i) the sources of liquidity described above; (ii) positive cash flows from our operations; and (iii) future project financings and refinancings (including construction loans and tax equity). Management believes that, based on the current stage of implementation of our strategic plan, the sources of liquidity and capital resources described above will address our anticipated liquidity, capital expenditures, and other investment requirements.

During the second quarter of 2017, in conjunction with the final approval of our PPA with Southern California Public Power Authority (SCPPA) which will require the Company to make significant capital expenditures in the U.S., the fact that the Company is currently looking for acquisitions in the U.S, and the acquisition of our Viridity business for a price of $35.3 million with an additional earn-out payment expected to be made in 2021, we re-evaluated our position with respect to a portion of the unrepatriated earnings of Ormat Systems Ltd. (OSL), our wholly owned subsidiary in Israel, and determined that we can no longer maintain the permanent reinvestment position with respect to a portion of its unrepatriated earnings which will be repatriated to support our capital expenditures in the U.S. Accordingly, and as further described in Note 11, the permanent reinvestment assertion of foreign unremitted earnings of OSL was reassessed and removed and the related deferred tax assets and liabilities as well as the estimated withholding taxes on the expected remittance of OSL earnings to the U.S. were recorded in the second quarter of 2017. The estimated U.S. deferred tax assets and liabilities were adjusted as part of the year-end provision based on changes to U.S. tax law resulting from U.S. tax reform.

Although we plan to repatriate undistributed earnings related to Ormat Systems to support expected capital expenditure requirements in the U.S., based upon our plans to increase operations outside of the U.S. it is our intention to reinvest undistributed earnings of its other foreign subsidiaries and thereby indefinitely postpone their remittance given that we require existing and future cash to fund our anticipated investment and development activities as well as debt service requirements in those jurisdictions. In addition, we believe that existing and anticipated cash flows as well as borrowing capacity in the U.S. and cash to be remitted to the U.S. from Ormat Systems will be sufficient to meet our needs in the U.S. If plans change, we may be required to accrue and pay U.S. taxes to repatriate these funds.

Third-Party Debt

Our third-party debt consists of (i) non-recourse and limited-recourse project finance debt or acquisition financing debt that we or our subsidiaries have obtained for the purpose of developing and constructing, refinancing or acquiring our various projects and (ii) full-recourse debt incurred by us or our subsidiaries for general corporate purposes.

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Non-Recourse and Limited-Recourse Third-Party Debt

OFC Senior Secured Notes — Non-Recourse

In February 2004, our subsidiary Ormat Funding Corp. (“OFC”) issued $190.0 million of Senior Secured Notes (“OFC Senior Secured Notes”) for the purpose of refinancing the acquisition cost of the Brady, Ormesa and Steamboat 1, 1A, 2 and 3 power plants, and financing the acquisition cost of 50% of the Mammoth complex. Principal and interest on the OFC Senior Secured Notes, which would have matured on December 30, 2020, were payable semi-annually. The OFC Senior Secured Notes were collateralized by substantially all of the assets of OFC and those of its wholly owned subsidiaries and fully and unconditionally guaranteed by all of the wholly owned subsidiaries of OFC. In September 2017, the Company fully prepaid the outstanding amount of $14.3 million of OFC Senior Secured Notes, plus an additional make-whole premium of $1.3 million.

OrCal Geothermal Senior Secured Notes — Non-Recourse

In December 2005, our subsidiary OrCal Geothermal Inc. (“OrCal”) issued $165.0 million of Senior Secured Notes (“OrCal Senior Secured Notes”) for the purpose of refinancing the acquisition cost of the Heber complex. The OrCal Senior Secured Notes have been rated BBB- by Fitch Ratings. Principal and interest on the OrCal Senior Secured Notes, which mature on December 30, 2020, are payable semi-annually. The OrCal Senior Secured Notes are collateralized by substantially all of the assets of OrCal and those of its wholly owned subsidiaries and are fully and unconditionally guaranteed by all of the wholly owned subsidiaries of OrCal. There are various restrictive covenants under the OrCal Senior Secured Notes which include limitations on additional indebtedness of OrCal and its wholly owned subsidiaries. Failure to comply with these and other covenants will, subject to customary cure rights, constitute an event of default by OrCal. In addition, there are restrictions on the ability of OrCal to make distributions to its shareholders, which include a required historical and projected 12-month debt service coverage ratio of not less than 1.25 (measured semi-annually as of June 30 and December 31 of each year). If OrCal fails to comply with the debt service coverage ratio it will be prohibited from making distributions to its shareholders. We are only required to measure these covenants on a semi-annual basis and as of December 31, 2017, the last measurement date of the covenants, the actual historical 12-month debt service coverage ratio was 1.54 and the pro-forma 12-month debt service coverage ratio was 2.63. There was $27.3 million aggregate principal amount of OrCal Senior Secured Notes outstanding as of March 31, 2018.

OFC 2 Senior Secured Notes — Limited Recourse

In September 2011, our subsidiary OFC 2 LLC (“OFC 2”) and its wholly owned project subsidiaries (collectively, the “OFC 2 Issuers”) entered into a note purchase agreement (the “Note Purchase Agreement”) with the OFC 2 Noteholder Trust, as purchaser, John Hancock Life Insurance Company (USA), as administrative agent, and the Department of Energy (DOE), as guarantor, establishing a financing program to offer and sell up to $350.0 million aggregate principal amount of OFC 2 Senior Secured Notes in connection with the development and phased construction of the Jersey Valley, McGinness Hills and Tuscarora geothermal power plants, which are owned by the OFC 2 Issuers.

In October 2011, the OFC 2 Issuers sold $151.7 million aggregate principal amount of 4.687% Series A Notes due 2032 (the “Series A Notes”) under the Note Purchase Agreement. The proceeds from the sale of the Series A Notes net of transaction fees and expenses were approximately $141.1 million and were used to finance a portion of the construction costs of Phase I of the McGinness Hills and Tuscarora power plants and to fund certain reserves. Principal and interest on the Series A Notes are payable quarterly in arrears on the last day of March, June, September and December of each year, with a final maturity of December 2032.

On August 29, 2014, the OFC 2 Issuers sold $140.0 million aggregate principal amount of OFC 2 Senior Secured Notes (the “Series C Notes”) under the Note Purchase Agreement to finance the construction of Phase II of the McGinness Hills project. The Series C Notes bear interest at a rate of 4.61%, with principal to be repaid on the last day of March, June, September and December of each year, with a final maturity of December 2032.

As of March 31, 2018, $228.0 million in aggregate principal amount of OFC 2 Senior Secured Notes was outstanding. No further OFC 2 Senior Secured Notes of any outstanding or other series will be issued under the Note Purchase Agreement. The OFC 2 Senior Secured Notes are collateralized by substantially all of the assets of OFC 2 and those of its wholly owned subsidiaries and are fully and unconditionally guaranteed by all of the wholly owned subsidiaries of OFC 2. There are various restrictive covenants under the OFC 2 Senior Secured Notes, which include limitations on additional indebtedness of OFC 2 and its wholly owned subsidiaries. Failure to comply with these and other covenants will, subject to customary cure rights, constitute an event of default by OFC 2. In addition, there are restrictions on the ability of OFC 2 to make distributions to its shareholders, including a historical debt service coverage ratio requirement of at least 1.2 (on a blended basis for all OFC 2 power plants), measured, at the time of any proposed distribution, over each of the two six-months periods comprised of distinct consecutive fiscal quarters immediately preceding the proposed distribution, and a projected future debt service coverage ratio requirement of at least 1.5 (on a blended basis for all OFC 2 power plants), measured, at the time of any proposed distribution, over each of the two six-months periods comprised of distinct consecutive fiscal quarters immediately following such proposed distribution. As of March 31, 2018, our historical debt service coverage ratio was 2.6 and 2.3, respectively for each of the two six-month periods, and our projected future debt service coverage ratio was 1.96 and 2.21, respectively for each of the two six-month periods. The DOE guarantees payment of 80% of principal and interest on the OFC 2 Senior Secured Notes pursuant to Section 1705 of Title XVII of the Energy Policy Act of 2005, as amended.

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We provided a guarantee in connection with the issuance of the Series A Notes and Series C Notes, which may be drawn upon if any loss, liability, damage, expense or cost to the Jersey Valley facility is incurred as a result of the interconnection related agreements of the Dixie Meadows project that we may develop in the future.

Olkaria III Finance Agreement with OPIC — Limited Recourse

In August 2012, our subsidiary OrPower 4 Inc. (OrPower 4) entered into a finance agreement with the Overseas Private Investment Corporation (“OPIC”), an agency of the U.S. government, to provide limited-recourse senior secured debt financing in an aggregate principal amount of up to $310.0 million (the “OPIC Loan”) for the financing and refinancing of our Olkaria III geothermal power complex in Kenya. The finance agreement was amended on November 9, 2012.

The OPIC Loan is comprised of three tranches:

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Tranche I in an aggregate principal amount of $85.0 million, which matures on December 15, 2030, bears interest at a fixed rate of 6.34% and was drawn in November 2012, was used to prepay approximately $20.5 million (plus associated prepayment penalty and breakage costs of $1.5 million) of the DEG Loan, as described below under “Full Recourse Third Party Debt”. The remainder of the Tranche I proceeds were used for reimbursement of prior capital expenditures and other corporate purposes. As of March 31, 2018, Tranche I has an outstanding balance of $60.2 million.

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Tranche II in an aggregate principal amount of $180.0 million, which matures on June 15, 2030 and bears interest at a fixed rate of 6.29%, was used to fund the construction and well field drilling for Plant 2 of the Olkaria III complex. In November 2012 and February 2013, $135.0 million and the remaining $45.0 million, respectively, was drawn under this Tranche II. As of March 31, 2018, Tranche II has an outstanding balance of $129.7 million.

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Tranche III in an aggregate principal amount of $45.0 million, which matures on December 15, 2030 and bears interest at a fixed rate of 6.12%, was used to fund the construction of Plant 3 of the Olkaria III complex and was drawn down in full in November 2013. As of March 31, 2018, Tranche III has an outstanding balance of $34.3 million.

OrPower 4 may voluntarily prepay all or a portion of the OPIC Loan, subject to prior notice, minimum prepayment amounts, without premium thereafter, plus a redemption premium. In addition, the OPIC Loan is subject to customary mandatory prepayment in the event of certain reductions in generation capacity of the power plants in the Olkaria III complex, unless such reductions will not cause the projected ratio of cash flow to debt service to fall below 1.7.

The OPIC Loan is secured by substantially all of OrPower 4’s assets and by a pledge of all of the equity interests in OrPower 4.

The finance agreement includes customary events of default, including failure to pay any principal, interest or other amounts when due, failure to comply with covenants, breach of representations and warranties, non-payment or acceleration of other debt of OrPower 4, bankruptcy of OrPower 4 or certain of its affiliates, judgments rendered against OrPower 4, expropriation, change of control, and revocation or early termination of security documents or certain project-related agreements, subject to various exceptions and notice, cure and grace periods.

There are various restrictive covenants under the OPIC Loan, which include a required historical and projected 12-month debt service coverage ratio of not less than 1.4 (measured as of March 15, June 15, September 15 and December 15 of each year). If OrPower 4 fails to comply with these financial ratio covenants, it will be prohibited from making distributions to its shareholders. In addition, if the debt service coverage ratio falls below 1.1, subject to certain cure rights, such failure will constitute an event of default by OrPower 4. This covenant in respect of Tranche I became effective on December 15, 2014. As of March 31, 2018, the actual historical and projected 12-month debt service coverage ratio was 2.56 and 3.13, respectively.

As of March 31, 2018, $224.1 million of the OPIC Loan was outstanding.

Amatitlan financing — Limited Recourse

On July 31, 2015, one of our indirect wholly-owned subsidiaries, Ortitlản, Limitada, obtained a 12-year secured term loan in the principal amount of $42.0 million for the 20 MW Amatitlàn power plant in Guatemala. Under the credit agreement with Banco Industrial S.A. and Westrust Bank (International) Limited, we can expand the Amatitlàn power plant with financing to be provided either via equity, additional debt from Banco Industrial S.A. or from other lenders, subject to certain limitations on expansion financing in the credit agreement.

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The loan is payable in 48 quarterly payments commencing September 30, 2015. The loan bears interest at a rate per annum equal to the sum of LIBO Rate (which cannot be lower than 1.25%) plus a margin of (i) 4.35%, as long as the Company’s guaranty of the loan (as described below) is outstanding or (ii) 4.75% otherwise. Interest is payable quarterly on March 30, June 30, September 30 and December 30 of each year, on the stated maturity date of the loan and on any prepayment or payment of the loan. The loan must be prepaid upon the occurrence of certain events, such as casualty, condemnation, certain asset sales and expansion financing not provided by the lenders under the credit agreement, among others. The loan may be voluntarily prepaid if certain conditions are satisfied, including payment of a premium (ranging from 100-50 basis points) if prepayment occurs prior to the eighth anniversary of the loan.

There are various restrictive covenants under the Amatitlàn credit agreement. These include, among others, (i) a financial covenant to maintain a Debt Service Coverage Ratio (as defined in the credit agreement) of not less than 1.15 to 1.00 as of the last day of any fiscal quarter and (ii) limitations on Restricted Payments (as defined in the credit agreement) that, among other things, would limit dividends distribution unless the historical and projected Debt Service Coverage Ratio is not less than 1.25 to 1.00 for the four fiscal quarterly periods (calculated as a single accounting period). As of March 31, 2018, the actual historical and projected 12-month Debt Service Coverage Ratio was 1.46 and 1.89, respectively. The credit agreement includes various events of default that would permit acceleration of the loan (subject in some cases to grace and cure periods). These include, among others, a Change of Control (as defined in the credit agreement) and failure to maintain certain required balances in debt service and maintenance reserve accounts. The credit agreement includes certain equity cure rights for failure to maintain the Debt Service Coverage Ratio and the minimum amounts required in the debt service and maintenance reserve accounts.

The loan is secured by substantially all the assets of the borrower and a pledge of all of the membership interests of the borrower.

The Company has guaranteed payment of all obligations under the credit agreement and related financing documents. The guaranty is limited and the Company is only required to pay the guaranteed obligations if a “trigger event” occurs. Trigger events include the occurrence and continuation of a default by Instituto Nacional de Electricidad (“INDE”) in its payment obligations under the PPA for the Amatitlàn power plant or a refusal by INDE to receive capacity and energy sold under that PPA. Our obligations under the guaranty may be terminated prior to payment in full of the guaranteed obligations under certain circumstances described in the guaranty. If our guaranty is terminated early, the interest rate payable on the loan would increase as described above.

As of March 31, 2018, $32.4 million of this loan is outstanding.

Don A. Campbell Senior Secured Notes — Non-Recourse

On November 29, 2016, ORNI 47 LLC (“ORNI 47”) entered into a note purchase agreement (the “ORNI 47 Note Purchase Agreement”) with MUFG Union Bank, N.A., as collateral agent, Munich Reinsurance America, Inc. and Munich American Reassurance Company (the “Purchasers”) pursuant to which ORNI 47 issued and sold to the Purchasers $92.5 million aggregate principal amount of its 4.03% Senior Secured Notes due September 27, 2033 (the “DAC1 Senior Secured Notes”) in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. ORNI 47 is the owner of the Don A. Campbell Phase I (“DAC1”) geothermal power plant.

The net proceeds to ORNI 47 from the sale of the DAC1 Senior Secured Notes, net of certain transaction expenses and the funding of a debt service reserve account, were approximately $87.1 million. ORNI 47 used the proceeds from the sale of the DAC1 Senior Secured Notes to refinance the development and construction costs of the DAC 1 geothermal power plant, which were originally financed using equity.

ORNI 47 paid a scheduled amount of principal of the DAC1 Senior Secured Notes beginning on December 27, 2016 and then quarterly on the 27th day of each March, June, September and December, until the DAC1 Senior Secured Notes mature.

The DAC1 Senior Secured Notes constitute senior secured obligations of ORNI 47 and are secured by all of the assets of ORNI 47. Under the ORNI 47 Note Purchase Agreement, ORNI 47 may prepay at any time all, or from time to time any part of, the DAC1 Senior Secured Notes in an amount equal to at least $2 million or such lesser amount as may remain outstanding under the DAC1 Senior Secured Notes at 100% of the principal amount to be prepaid plus the applicable make-whole amount determined for the prepayment date with respect to such principal amount. Upon the occurrence of a Change of Control (as defined in the ORNI 47 Note Purchase Agreement), ORNI 47 must make an offer to each holder of DAC1 Senior Secured Notes to repurchase all of the holder’s DAC1 Senior Secured Notes at 101% of the aggregate principal amount of DAC1 Senior Secured Notes to be repurchased plus accrued and unpaid interest, if any, on the DAC1 Senior Secured Notes to be repurchased to, but not including, the date of repurchase. Each holder of DAC1 Senior Secured Notes may accept such offer in whole or in part. Upon the occurrence of certain events, including certain asset sales outside the ordinary course of business, ORNI 47 must make mandatory prepayments of the DAC1 Senior Secured Notes at 100% of the principal amount to be prepaid. The ORNI 47 Note Purchase Agreement requires ORNI 47 to comply with certain covenants, including, among others, restrictions on the incurrence of indebtedness or liens, amendment or modification of material project documents and the ability of ORNI 47 to merge or consolidate with another entity. The ORNI 47 Note Purchase Agreement also contains customary events of default. In addition, there are restrictions on the ability of ORNI 47 to make distributions to its shareholders, which include a required historical and projected debt service coverage ratio not less than 1.20 for the four fiscal quarterly periods. As of March 31, 2018, the historical and projected debt service coverage ratio was 1.78 and 1.56, respectively.

As of March 31, 2018, $86.7 million of DAC1 Senior Secured Notes is outstanding.

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Full-Recourse Third-Party Debt

Credit Agreements

Union Bank . In February 2012, our wholly owned subsidiary Ormat Nevada Inc. ("Ormat Nevada") entered into an amended and restated credit agreement with Union Bank N.A. ("Union Bank"). Under the credit agreement, the credit termination date is June 30, 2018. On December 31, 2016, the aggregate amount available under the credit agreement was increased by $10 million to $60.0 million. The facility is limited to the issuance, extension, modification or amendment of letters of credit. Union Bank is currently the sole lender and issuing bank under the credit agreement but is also designated as an administrative agent on behalf of banks that may, from time to time in the future, join the credit agreement as lenders. In connection with this transaction, we entered into a guarantee in favor of the administrative agent for the benefit of the banks, pursuant to which we agreed to guarantee Ormat Nevada’s obligations under the credit agreement. Ormat Nevada’s obligations under the credit agreement are otherwise unsecured.

There are various restrictive covenants under the credit agreement, including a requirement for Ormat Nevada to comply with the following financial ratios, which are measured quarterly: (i) a 12-month debt to EBITDA ratio not to exceed 4.5; (ii) a 12-month debt service coverage ratio of not less than 1.35; and (iii) a distribution leverage ratio not to exceed 2.0. As of March 31, 2018: (i) the actual 12-month debt to EBITDA ratio was 2.07; (ii) the 12-month debt service coverage ratio was 3.1; and (iii) the distribution leverage ratio was 1.11. In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such financial ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of Union Bank.

As of March 31, 2018, letters of credit in the aggregate amount of $39.0 million remain issued and outstanding under this committed credit agreement with Union Bank.

HSBC. In May 2013, Ormat Nevada entered into a credit agreement with HSBC Bank USA, N.A (“HSBC”) for one year with annual renewals. The current expiration date of the credit facility is August 31, 2018. The aggregate amount available under the credit agreement is $35.0 million. Other than $10.0 million of this credit facility which may be drawn for our working capital needs, this credit facility is limited to the issuance, extension, modification or amendment of letters of credit. HSBC is currently the sole lender and issuing bank under the credit agreement but is also designated as an administrative agent on behalf of banks that may, from time to time in the future, join the credit agreement as lenders. In connection with this transaction, we entered into a guarantee in favor of the administrative agent for the benefit of the banks, pursuant to which we agreed to guarantee Ormat Nevada’s obligations under the credit agreement. Ormat Nevada’s obligations under the credit agreement are otherwise unsecured.

There are various restrictive covenants under the credit agreement, including a requirement to comply with the following financial ratios, which are measured quarterly: (i) a 12-month debt to EBITDA ratio not to exceed 4.5; (ii) a 12-month debt service coverage ratio of not less than 1.35; and (iii) a distribution leverage ratio not to exceed 2.0. As of March 31, 2018: (i) the actual 12-month debt to EBITDA ratio was 2.07; (ii) the 12-month debt service coverage ratio was 3.1; and (iii) the distribution leverage ratio was 1.11. In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such financial ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of HSBC.

As of March 31, 2018, letters of credit in the aggregate amount of $4.6 million remain issued and outstanding under this committed credit agreement.

CHUBB Surety Bond . In May 2017, the Company entered into a surety bond agreement (the “Surety Agreement”) with Chubb Limited (“Chubb”) pursuant to which the Company may request that Chubb issue up to an aggregate $200.0 million of surety bonds with respect to the contractual obligations of the Company and its subsidiaries in exchange for bank letters of credit or as otherwise may be required. There is no expiration date for the Surety Agreement, but it may be terminated by the Company at any time upon twenty days’ prior written notice to Chubb. Delivery of such termination notice will not affect any surety bonds issued and outstanding prior to the date on which such notice is delivered. As of March 31, 2018, Chubb issued a surety bond in the amount of $114.9 million under the Surety Agreement, primarily in respect of the Company’s obligations under its PPA with SCPPA.

O ther Banks . We also have committed credit agreements with five other commercial banks for an aggregate amount of $373.0 million. Under the terms of these credit agreements, we or our Israeli subsidiary, Ormat Systems, can request (i) extensions of credit in the form of loans and/or the issuance of one or more letters of credit in the amount of up to $233.0 million and (ii) the issuance of one or more letters of credit in the amount of up to $140.0 million. The credit agreements mature between June 2018 and July 2019. Loans and draws under the credit agreements or under any letters of credit will bear interest at the applicable bank’s cost of funds plus a margin. As of March 31, 2018, $38.5 million in the aggregate was outstanding under these credit agreements.

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As of March 31, 2018, letters of credit with an aggregate stated amount of $190.1 million were issued and outstanding under these credit agreements.

Letters of Credits under the Credit Agreements

Some of our customers require our project subsidiaries to post letters of credit in order to guarantee their respective performance under relevant contracts. We are also required to post letters of credit to secure our obligations under various leases and licenses and may, from time to time, decide to post letters of credit in lieu of cash deposits in reserve accounts under certain financing arrangements. In addition, Ormat Systems is required from time to time to post performance letters of credit in favor of our customers with respect to orders of products.

As of March 31, 2018, committed letters of credit in the aggregate amount of $233.7 million remained issued and outstanding under the credit agreements with Union Bank, HSBC and five of the commercial banks as described under “Credit Agreements”.

Senior Unsecured Bonds . We issued approximately $142.0 million aggregate principal amount of senior unsecured bonds in August 2010 and an additional $107.5 million aggregate principal amount of senior unsecured bonds in February 2011. Subject to early redemption, the principal of the bonds was repayable in a single bullet payment upon the final maturity of the bonds on August 1, 2017. The bonds bore interest at a fixed rate of 7.00%, payable semi-annually. The bonds that we issued in February 2011 were issued at a premium which reflected an effective fixed interest rate of 6.75%.

On September 8, 2016, the Company concluded an auction tender and accepted subscriptions for $204.0 million aggregate principal amount of two tranches of senior unsecured bonds (approximately $67.0 million aggregate principal amount of “Series 2 Bonds” and approximately $137 million aggregate principal amount of “Series 3 Bonds”). The proceeds from the Series 2 Bonds and Series 3 Bonds were used on September 29, 2016 to prepay the Company’s $250 million senior unsecured bonds described above.

The Series 2 Bonds will mature in September 2020 and bear interest at a fixed rate of 3.7% per annum, payable semi-annually. The Series 3 Bonds will mature in September 2022 and bear interest at a fixed rate of 4.45% per annum, payable semi-annually. The Series 2 Bonds and Series 3 Bonds will be repaid at maturity in a single bullet payment, unless earlier prepaid by the Company pursuant to the terms and conditions of the trust instrument that governs such bonds. Both tranches received a rating of ilA+ from by Standard and Poor’s Global Ratings Maalot Ltd.in Israel with a stable outlook.

Senior Unsecured Loan . On March 22, 2018 the Company entered into a definitive loan agreement (the "Migdal Loan Agreement") with Migdal Insurance Company Ltd., Migdal Makefet Pension and Provident Funds Ltd. and Yozma Pension Fund of Self Employed Ltd., all entities within the Migdal Group, a leading insurance company and institutional investor in Israel. The Migdal Loan Agreement provides for a loan by the lenders to the Company in an aggregate principal amount of $100.0 million (the "Migdal Loan"). The Migdal Loan will be repaid in 15 semi-annual payments of $4.2 million each, commencing on September 15, 2021, with a final payment of $37.0 million on March 15, 2029. The Migdal Loan bears interest at a fixed rate of 4.8% per annum, payable semi-annually, subject to adjustment in certain circumstances as described below.

The Loan is subject to early redemption by the Company prior to maturity from time to time (but not more frequently than once per quarter) and at any time in whole or in part, at a redemption price set forth in the Migdal Loan Agreement. If the rating of the Company is downgraded to "ilA-"(or equivalent) , of any of Standard and Poor’s, Moody’s or Fitch (whenever in Israel or outside of Israel) (each a “Credit Rating Agency”), the interest rate applicable to the Migdal Loan will increase by 0.50%. If the rating of the Company is further downgraded to a lower level by any Credit rating Agency, the interest rate applicable to the Migdal Loan will be increased by 0.25% for each additional downgrade. In no event will the cumulative increase in the interest rate applicable to the Loan exceed 1% regardless of the cumulative rating downgrade. A subsequent upgrade or reinstatement of a rating by any Credit Rating Agency will reduce the interest rate applicable to the Migdal Loan by 0.25% for each upgrade (but in no event will the interest rate applicable the Migdal Loan fall below the base interest rate of 4.8%). Additionally, if the ratio between short-term and long-term debt to financial institutions and bondholders, deducting cash and cash equivalents to EBITDA is equal to or higher than 4.5, the interest rate on all amounts then outstanding under the Migdal Loan shall be increased by 0.5% per annum over the interest rate then-applicable to the Migdal Loan.

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The Migdal Loan Agreement includes various affirmative and negative covenants, including a covenant that the Company maintain (i) a debt to adjusted EBITDA ratio below 6, (ii) a minimum equity amount (as shown on its consolidated financial statements, excluding noncontrolling interests) of not less than $650 million, and (iii) an equity attributable to Company's stockholders to total assets ratio of not less than 25%. In addition, the Migdal Loan Agreement restricts the Company from making dividend payments if its equity falls below $800 million and otherwise restricts dividend payments in any one year to not more than 50% of the net income of the Company of such year as shown on the Company’s consolidated annual financial statements as long as any of the Company's bonds issued in Israel prior to March 27, 2018 remain outstanding. The Migdal Loan Agreement includes other customary affirmative and negative covenants and events of default.

Loan Agreement with DEG (The Olkaria III Complex) . OrPower 4 entered into a project financing loan (the “DEG Loan”) to refinance its investment in Plant 1 of the Olkaria III complex located in Kenya with a group of European development finance institutions arranged by Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG). The DEG Loan will mature on December 15, 2018, and is payable in 19 equal semi-annual installments. Interest on the loan was variable based on 6-month LIBOR plus 4.0%. We fixed the interest rate on most of the loan at 6.90%. In September 2017, the Company prepaid the outstanding amount of $11.8 million of the DEG Loan, plus an additional prepayment fee of $0.1 million.

On October 20, 2016, OrPower 4 entered into a new $50 million subordinated loan agreement with DEG (the “DEG 2 Loan Agreement”) and on December 21, 2016, OrPower 4 completed a drawdown of the full loan commitment amount of $50 million, which bears interest at a fixed interest rate of 6.28% for the duration of the loan (the “DEG 2 Loan”). The DEG 2 Loan, which matures on June 21, 2028, will be repaid in 20 equal semi-annual principal installments commencing December 21, 2018. Proceeds of the DEG 2 Loan were used by OrPower 4 to refinance Plant 4 of the Olkaria III Complex, which was originally financed using equity. The DEG 2 Loan is subordinated to the senior loan provided by OPIC for Plants 1-3 of the Olkaria III Complex. The DEG 2 Loan is guaranteed by the Company.

Under the DEG 2 Loan Agreement, OrPower 4 may prepay at any time all, or from time to time any part of the DEG 2 Loan in an amount equal to at least $5 million or such lesser amount as may remain outstanding under the DEG 2 Loan at 100% of the principal amount to be prepaid plus the applicable make-whole amount and certain prepayment premium amount determined for the prepayment date with respect to such principal amount. In certain events, OrPower 4 must make mandatory prepayments of the DEG 2 Loan at 100% of the principal amount to be prepaid plus the applicable make-whole amount and certain prepayment premium amount determined for the prepayment date with respect to such principal amount. The DEG 2 Loan Agreement requires OrPower 4 to comply with certain covenants, including, among others, restrictions on the incurrence of indebtedness or liens. The DEG 2 Loan Agreement also contains customary events of default.

As of March 31, 2018, $50.0 million is outstanding under the DEG 2 Loan.

Restrictive covenants

Our obligations under the credit agreements, the loan agreements, and the trust instrument governing the bonds, described above, are unsecured, but we are subject to a negative pledge in favor of the banks and the other lenders and certain other restrictive covenants. These include, among other things, a prohibition on: (i) creating any floating charge or any permanent pledge, charge or lien over our assets without obtaining the prior written approval of the applicable lenders; (ii) guaranteeing the liabilities of any third party without obtaining the prior written approval of the applicable lenders; and (iii) selling, assigning, transferring, conveying or disposing of all or substantially all of our assets, or a change of control in our ownership structure. Some of the credit agreements, the term loan agreements, and the trust instrument contain cross-default provisions with respect to other material indebtedness owed by us to any third party. In some cases, we have agreed to maintain certain financial ratios, which are measured quarterly, such as: (i) equity of at least $600.0 million and in no event less than 25% of total assets; (ii) 12-month debt, net of cash, cash equivalents, and short-term bank deposits, to Adjusted EBITDA ratio not to exceed 6.0; and (iii) dividend distributions not to exceed 35% of net income in any calendar year. As of March 31,2018: (i) total equity was $1,385.0 million and the actual equity to total assets ratio was 51.1% and (ii) the 12-month debt, net of cash and cash equivalents, to Adjusted EBITDA ratio was 2.74. During the three months ended March 31, 2018, we distributed interim dividends in an aggregate amount of $11.6 million. The failure to perform or observe any of the covenants set forth in such agreements, subject to various cure periods, would result in the occurrence of an event of default and would enable the lenders to accelerate all amounts attributable under each such agreement.

As described in Note 12 to the condensed consolidated financial statements, in relation to covenants in certain debt agreements, which require timely filing of quarterly financial statements, the Company received waivers from each of its and its subsidiaries’ lenders as follows:

● The Company received waivers extending the period required to file the quarterly condensed consolidated financial statements for the three months ended March 31, 2018 for all debt facilities with a May 30, 2018 filing deadline. The Company subsequently filed such financial statements within the period provided by the waivers.

● The deeds of trust governing the Company’s Series 2 Bonds and Series 3 Bonds contain a June 14, 2018 filing deadline for the quarterly condensed consolidated financial statements for the three months ended March 31, 2018. Nevertheless, the failure to file is not a default under the bonds unless a majority of bondholders votes to take action to accelerate the maturity date of the bonds, which did not occur prior to the late filing of the Form 10-Q for the quarter ended March 31, 2018. However, since the ability of the bondholders to accelerate may trigger a cross default under certain of the Company other debt facilities, the Company received waivers of any potential cross default under those facilities.

Following the filing of such condensed consolidated financial statements and the filing of the restated consolidated financial statements for the fiscal year ended December 31, 2017 and the restated condensed consolidated financial statements for the second and third quarters of 2017, the Company believes that it and its subsidiaries are in compliance with the reporting covenants and all other covenants under their debt facilities. We believe that the restrictive covenants, financial ratios and other terms of any of the Company’s (or Ormat Systems’) full-recourse bank credit agreements will not materially impact our business plan or operations.

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Future minimum payments

As of March 31, 2018, future minimum payments under long-term obligations, excluding revolving credit lines with commercial banks and lease payments under the Puna lease transaction described below, are as follows:

	(Dollars in thousands)

Year ending December 31:
2018	$	41,137
2019		55,539
2020		123,093
2021		50,779
2022		192,548
Thereafter		497,504
Total	$	960,600

Puna Power Plant Lease Transactions

In May 2005, our subsidiary Puna Geothermal Venture (“PGV”), entered into a transaction involving the original geothermal power plant of the Puna complex located on the Big Island (the “Puna Power Plant”).

Pursuant to a 31-year head lease (the “Head Lease”), PGV leased the Puna Power Plant to an unrelated lessor (the “Puna Lessor”) in return for prepaid lease payments of $83.0 million. The carrying value of the leased assets as of March 31, 2018 was $24.7 million, net of accumulated depreciation of $36.2 million. The Puna Lessor simultaneously leased back the Puna Power Plant to PGV under a 23-year lease (the Project Lease). PGV’s rent obligations under the Project Lease will be paid solely from revenues generated by the Puna Power Plant under a PPA that PGV has with HELCO. The Head Lease and the Project Lease are non-recourse lease obligations. PGV’s rights in the geothermal resource and the related PPA have not been leased to the Puna Lessor as part of the Head Lease but are part of the Puna Lessor’s security package.

The transaction was completed with financing parties by means of a leveraged lease transaction. A secondary stage of the lease transaction relating to two new production and injection geothermal wells that PGV drilled in the second half of 2005 was completed on December 30, 2005.

There are various restrictive covenants under the lease agreements, including a requirement to have certain reserve funds that need to be managed by the indenture trustee in accordance with certain balance requirements. Such reserve funds amounted to $8.1 million and $7.9 million as of March 31, 2018 and December 31, 2017, respectively, and were included in restricted cash accounts in the consolidated balance sheets and were classified as current as they were used for current payments.

Opal Transaction

On December 16, 2016, Ormat Nevada entered into an equity contribution agreement (the “Equity Contribution Agreement”) with OrLeaf LLC (“OrLeaf”) and JPM Capital Corporation (“JPM”) with respect to Opal Geo. Also, on December 16, 2016, OrLeaf, a newly formed limited liability company formed by Ormat Nevada and ORPD LLC, entered into an amended and restated limited liability company agreement of Opal Geo (the “LLC Agreement”) with JPM. The transactions contemplated by the Equity Contribution Agreement and LLC Agreement will allow the Company to monetize PTCs and certain other tax benefits relating to the operation of five geothermal power plants located in Nevada.

In connection with the transactions contemplated by the Equity Contribution Agreement and the LLC Agreement, Ormat Nevada transferred its indirect ownership interest in the McGinness Hills (Phase I and Phase II), Tuscarora, Jersey Valley and Don A. Campbell Phase 2 (“DAC 2”) geothermal power plants to Opal Geo. Prior to such transfer, Ormat Nevada held an approximately 63.25% indirect ownership interest in DAC 2 through ORPD LLC, a joint venture between Ormat Nevada and Northleaf, and held, directly or indirectly, a 100% ownership interest in the remaining geothermal power plants that were transferred to Opal Geo.

Pursuant to the Equity Contribution Agreement, JPM contributed approximately $62.1 million to Opal Geo in exchange for 100% of the Class B Membership Interests of Opal Geo. JPM also agreed to make deferred capital contributions to Opal Geo based on the amount of electricity generated by the DAC 2 and McGinness Hills Phase II power plants which are eligible for the PTC. The Company expects the aggregate amount of JPM’s deferred capital contributions to equal approximately $21 million and to be paid over time covering the period through December 31, 2022. In the first quarter of 2018 we received $4.1 million.

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Under the LLC Agreement, until December 31, 2022, OrLeaf will receive distributions of 97.5% of any distributable cash generated by operation of the power plants while JPM will receive distributions of 2.5% of any distributable cash generated by operation of the power plants. Unless JPM has already achieved its target internal rate of return on its investment in Opal Geo, from December 31, 2022 until JPM has achieved its target internal rate of return, JPM will receive 100% of any distributable cash generated by operation of the power plants. Thereafter, OrLeaf will receive distributions of 97.5%, and JPM will receive 2.5%, of any distributable cash generated by operation of the power plants.

Under the LLC Agreement, all items of Opal Geo income and loss, gain, deduction and credit (including the federal PTCs relating to the operation of the two PTC eligible power plants) will be allocated, until JPM has achieved its target internal rate of return on its investment in Opal Geo (and for so long as the two PTC eligible power plants are generating PTCs), 99% to JPM and 1% to OrLeaf, or 5% to JPM and 95% to OrLeaf if PTCs are no longer available to either of the two PTC eligible power plants. Once JPM achieves its target internal rate of return, all items of Opal Geo income and loss, gain, deduction and credit will be allocated 5% to JPM and 95% to OrLeaf.

Under the LLC Agreement, OrLeaf, which owns 100% of the Class A Membership Interests in Opal Geo, will serve as the managing member of Opal Geo and control the day-to-day management of Opal Geo and its portfolio of five power plants. However, in certain limited circumstances (such as bankruptcy of Orleaf, fraud or gross negligence by OrLeaf) JPM may remove OrLeaf as the managing member of Opal Geo. JPM, as the Class B Member of Opal Geo, has consent and approval rights with respect to certain items that are designated as major decisions for Opal Geo and the five power plants. In addition, by virtue of certain provisions in OrLeaf’s own limited liability company agreement, and consistent with the ORPD LLC formation documents, Northleaf has similar consent and approval rights with respect to OrLeaf’s determination of major decisions pertaining to the DAC 2 power plant. In both cases, these major decisions are generally equivalent to customary minority protection rights. As a result, Ormat Nevada, which serves as the managing member of OrLeaf and as the managing member of ORPD LLC, will effectively retain the day-to-day control and management of Opal Geo and its portfolio of five power plants.

The LLC Agreement contains certain customary restrictions on transfer applicable to both OrLeaf and JPM with respect to their respective Membership Interests in Opal Geo, and also provides OrLeaf with a right of first offer in the event JPM desires to transfer any of its Class B Membership Interests, pursuant to which OrLeaf may purchase such Class B Membership Interests. The LLC Agreement also provides OrLeaf with the option to purchase all of the Class B Membership Interests on either December 31, 2022 or the date that is 9 years after the closing date under the Equity Contribution Agreement at a price equal to the greater of (i) the fair market value of the Class B Membership Interests as of the date of purchase (subject to certain adjustments) and (ii) $3 million.

Pursuant to the Equity Contribution Agreement, the Company has provided a guaranty for the benefit of JPM of certain of OrLeaf’s indemnification obligations to JPM under the LLC Agreement. In addition, Ormat Nevada also provided a guaranty for the benefit of JPM of all present and future payment and performance obligations of OrLeaf under the LLC Agreement and each ancillary document to which OrLeaf is a party.

JPM’s contribution of approximately $62.1 million to Opal Geo in exchange for 100% of the Class B Membership Interests of Opal Geo was recorded as a $3.7 million allocation to noncontrolling interests and a $58.5 million allocation to liabilities associated with the sale of tax benefits.

Liquidity Impact of Uncertain Tax Positions

The Company has a liability associated with unrecognized tax benefits and related interest and penalties in the amount of approximately $9.1 million as of March 31, 2018. This liability is included in long-term liabilities in our condensed consolidated balance sheet because we generally do not anticipate that settlement of the liability will require payment of cash within the next twelve months. We are not able to reasonably estimate when we will make any cash payments required to settle this liability.

Dividends

The following are the dividends declared by us since March 31, 2016:

Date Declared	Dividend Amount per Share		Record Date	Payment Date
May 4, 2016	$	0.07	May 18, 2016	May 24, 2016
August 2, 2016	$	0.07	August 16, 2016	August 30, 2016
November 7, 2016	$	0.07	November 21, 2016	December 6, 2016
February 28, 2017	$	0.17	March 15, 2017	March 29, 2017
May 8, 2017	$	0.08	May 22, 2017	May 31, 2017
August 3, 2017	$	0.08	August 15, 2017	August 29, 2017
November 7, 2017	$	0.08	November 21, 2017	December 5, 2017
March 1, 2018	$	0.23	March 14, 2018	March 29, 2018
May 7, 2018	$	0.10	May 21, 2018	May 30, 2018

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Historical Cash Flows

The following table sets forth the components of our cash flows for the periods indicated:

	Three Months Ended March 31,
	2018			2017
	(Dollars in thousands)
Net cash provided by operating activities	$	19,769		$	71,463
Net cash used in investing activities		(68,034	)		(103,121	)
Net cash provided by financing activities		56,677			1,199
Net change in cash and cash equivalents and restricted cash		8,412			(30,459	)

For the Three Months Ended March 31, 2018

Net cash provided by operating activities for the three months ended March 31, 2018 was $19.8 million, compared to $71.5 million for the three months ended March 31, 2017. The net decrease of $51.7 million was primarily due to: (i) a decrease in accounts payable and accrued expenses of $49.0 million in the three months ended March 31, 2018, compared to an increase of $0.7 million in the three months ended March 31, 2017, mainly due to a withholding tax payment of approximately $44 million due to a distribution from Ormat Systems as a result of the change in our assertion on unrepatriated earnings of Ormat Systems to the U.S, in the second quarter of 2017, as discussed above and as a result of timing of payments to our suppliers; and (ii) a decrease in receivables of $9.8 million in the three months ended March 31, 2018, compared to a decrease of $19.1 million in the three months ended March 31, 2017, as a result of timing of collection from our customers. The decrease was partially offset by a decrease in billing in excess of costs and estimated earnings on uncompleted contracts, net of $10.0 million in our Product segment in the three months ended March 31, 2018, compared to $18.4 million in the three months ended March 31, 2017 as a result of timing in billing of our customers.

Net cash used in investing activities for the three months ended March 31, 2018 was $68.0 million, compared to $103.1 million for the three months ended March 31, 2017. The principal factors that affected our net cash used in investing activities during the three months ended March 31, 2018 were: (i) capital expenditures of $67.0 million, primarily for our facilities under construction; and (ii) an investment in an unconsolidated company of $1.3 million. The principal factors that affected our net cash used in investing activities during the three months ended March 31, 2017 were: (i) capital expenditures of $52.9 million, primarily for our facilities under construction; (ii) $35.3 million net cash paid for the acquisition of our Viridity business; and (iii) an investment in an unconsolidated company of $14.9 million.

Net cash provided by financing activities for the three months ended March 31, 2018 was $56.7 million, compared to $1.2 million net cash for the three months ended March 31, 2017. The principal factors that affected the net cash provided by financing activities during the three months ended March 31, 2018 were $100.0 million of proceeds from a senior unsecured loan, partially offset by: (i) the repayment of long-term debt in the amount of $16.7 million; (ii) a net decrease of $13.0 million against our revolving lines of credit with commercial banks; (iii) a $11.6 million cash dividend paid; and (iv) $4.7 million cash paid to noncontrolling interest. The principal factors that affected our net cash provided by financing activities during the three months ended March 31, 2017, were: (i) the repayment of long-term debt in the amount of $13.4 million; (ii) a $8.4 million cash dividend paid; and (iii) $6.8 million cash paid to noncontrolling interest, offset by a net increase of $30 million against our revolving lines of credit with commercial banks.

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Non-GAAP Measures: EBITDA and Adjusted EBITDA

We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for (i) termination fees, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities, (iv) any mark-to-market gains or losses from accounting for derivatives, (v) merger and acquisition transaction costs (vi) stock-based compensation, (vii) gains or losses from extinguishment of liability, (viii) gains or losses on sales of subsidiaries and property, plant and equipment and (ix) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the U.S. (U.S. GAAP) and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or as an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA are presented because we believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of a company’s ability to service and/or incur debt. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

Net income for the three months ended March 31, 2018 was $74.3 million compared to $39.6 million for the three months ended March 31, 2017.

Adjusted EBITDA for the three months ended March 31, 2018 was $98.4 million compared to $91.8 million for the three months ended March 31, 2017.

The following table reconciles Net income to EBITDA and Adjusted EBITDA for the three month periods ended March 31, 2018 and 2017:

	Three Months Ended March 31,
	2018			2017
Net income	$	74,256		$	39,617
Adjusted for:
Interest expense, net (including amortization of deferred financing costs)		14,231			14,679
Income tax provision (benefit)		(26,942	)		11,004
Adjustment to investment in an unconsolidated company: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla		3,530			-
Depreciation and amortization		29,437			25,542
EBITDA	$	94,512		$	90,842
Mark-to-market gains or losses from accounting for derivative		962			(1,523	)
Stock-based compensation		1,707			1,713
Merger and acquisition transaction costs		1,095			800
Write-off of unsuccessful exploration activities		123			-

Adjusted EBITDA	$	98,399		$	91,832

On May 2014, the Sarulla consortium (“SOL”) closed $1,170 million in financing. As of March 31, 2018, the credit facility has an outstanding balance of $1,120.5 million. Our proportionate share in SOL credit facility is $142.9 million.

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Capital Expenditures

Our capital expenditures primarily relate to: (i) the development and construction of new power plants, (ii) the enhancement of our existing power plants; and (iii) investment in activities under our strategic plan.

The following is an overview of projects that are fully released for construction:

Olkaria III Plant 1 Repowering (Kenya). We are currently repowering Plant 1 of the 139MW Olkaria complex in Kenya and expect to add approximately 10MW to the complex through the addition of an additional OEC. The electricity generated by the new unit will be sold under the amended PPA. The repowering is expected to be completed in the second quarter of 2018.

McGinness Hills 3 Power Plant (Nevada). We are currently developing the 48 MW McGinness Hills 3 geothermal power plant in Lander County, Nevada that will be added to the McGinness complex. Engineering, procurement and equipment transportation is ongoing. Drilling is in process and we plan to drill five new production wells and three injection wells. Commercial operation is expected by the end of 2018.

Western Watersheds Project (WWP) recently filed a notice of appeal and petition for standing with respect to a BLM decision approving Addendum 2 to Operation Plan & Utilization Plan for the MGH project. The appeal alleges that the BLM decision authorizing construction and operation of MGH Phase 3 causes harm to WWP and its members by allowing degradation of the wildlife habitat of the Greater sage-grouse in that area. The issue was recently resolved, and the settlement was approved by the Interior Board of Land appeals

The following is an overview of projects that are in initial stages of construction:

Carson Lake Project. We plan to develop the 10 MW Carson Lake project on Bureau of Land Management (BLM) leases located in Churchill County, Nevada. We drilled one well in 2016 that did not meet our commercial criteria and another in 2017 that tested favorably. Planning is in process for next steps including a flow test to evaluate reservoir volume. We signed a Small Generator Interconnection Agreement with NV Energy in December 2017. Management decided to hold off on additional flow testing or drilling until 2019.

CD 4 Project. We plan to develop a 20 MW to 30 MW project at the Mammoth complex on primarily BLM leases. We have completed two production wells, one of which was previously considered an injection well. In 2017 we drilled a core well to begin baseline monitoring, as required by our permit. Continued drilling is planned for 2018. We signed a Wholesale Distribution Access Tariff Cluster Large Generator Interconnection Agreement with Southern California Edison in December 2017.

We have estimated approximately $366.7 million in capital expenditures for construction of new projects and enhancements to our existing power plants (including Heber and Brady that we have completed their enhancements), of which we have invested approximately $187.6 million as of March 31, 2018. We expect to invest approximately $111.0 million of the total amount during the remainder of 2018 and the remaining of approximately $68.0 million thereafter.

In addition, we estimate approximately $120.0 million in additional capital expenditures in the remainder of 2018 to be allocated as follows: (i) $20.0 million for development of new projects; (ii) $40 million for maintenance capital expenditures to our operating power plants (including $18 million one-time investment for stand-by wells that we plan to drill at our Puna power plant); (iii) $15.0 million for continued exploration activity under various leases for geothermal resources where we have already started exploration activity; (iv) $36.0 million for the construction and development of storage projects; and (v) $9.0 million for enhancement to our production facilities.

In the aggregate, we estimate our total capital expenditures for the remainder of 2018 will be approximately $231.0 million.

Exposure to Market Risks

Based on current conditions, we believe that we have sufficient financial resources to fund our activities and execute our business plans. However, the cost of obtaining financing for our project needs may increase significantly or such financing may be difficult to obtain.

We, like other power plant operators, are exposed to electricity price volatility risk. Our exposure to such market risk is currently limited because many of our long-term PPAs (except for the 25 MW PPA for the Puna complex and the between 30 MW and 40 MW PPAs in the aggregate for the Heber 2 power plant in the Heber complex, and the G2 power plant in the Mammoth complex) have fixed or escalating rate provisions that limit our exposure to changes in electricity prices.

The energy payments under the PPAs of the Heber 2 power plant in the Heber complex, and the G2 power plant in the Mammoth complex are determined by reference to the relevant power purchaser’s SRAC. A decline in the price of natural gas will result in a decrease in the incremental cost that the power purchaser avoids by not generating its electrical energy needs from natural gas, or by reducing the price of purchasing its electrical energy needs from natural gas power plants, which in turn will reduce the energy payments that we may charge under the relevant PPA for these power plants. The Puna complex is currently benefiting from energy prices which are higher than the floor under the 25 MW PPA for the Puna complex as a result of the high fuel costs that impact HELCO’s avoided costs.

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As of March 31, 2018, 95.9% of our consolidated long-term debt was fixed rate debt and therefore was not subject to interest rate volatility risk. As of such date, 4.1% of our long-term debt was floating rate debt, exposing us to interest rate risk in connection therewith. As of March 31, 2018, $39.8 million of our long-term debt remained subject to some interest rate risk.

We currently maintain our surplus cash in short-term, interest-bearing bank deposits, money market securities and commercial paper (with a minimum investment grade rating of AA by Standard & Poor’s Ratings Services).

Our cash equivalents are subject to interest rate risk. Fixed rate securities may have their market value adversely impacted by a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. As a result of these factors, our future investment income may fall short of expectations because of changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value because of changes in interest rates.

We are also exposed to foreign currency exchange risk, in particular the fluctuation of the U.S. dollar versus the Israeli shekel and euro. Risks attributable to fluctuations in currency exchange rates can arise when we or any of our foreign subsidiaries borrow funds or incur operating or other expenses in one type of currency but receive revenues in another. In such cases, an adverse change in exchange rates can reduce such subsidiary’s ability to meet its debt service obligations, reduce the amount of cash and income we receive from such foreign subsidiary, or increase such subsidiary’s overall expenses. Risks attributable to fluctuations in foreign currency exchange rates can also arise when the currency denomination of a particular contract is not the U.S. dollar. Substantially all of our PPAs in the international markets are either U.S. dollar-denominated or linked to the U.S. dollar except for our operations on Guadeloupe, where we own and operate the Boulliante power plant which sells its power under a Euro-denominated PPA with Électricité de France S.A. Our construction contracts from time to time contemplate costs which are incurred in local currencies. The way we often mitigate such risk is to receive part of the proceeds from the contract in the currency in which the expenses are incurred. Currently, we have forward contracts in place to reduce our foreign currency exposure and expect to continue to use currency exchange and other derivative instruments to the extent we deem such instruments to be the appropriate tool for managing such exposure. We do not believe that our exchange rate exposure has or will have a material adverse effect on our financial condition, results of operations or cash flows.

We performed a sensitivity analysis on the fair values of our long-term debt obligations, and foreign currency exchange forward contracts. The foreign currency exchange forward contracts listed below principally relate to trading activities. The sensitivity analysis involved increasing and decreasing forward rates at March 31, 2018 and December 31, 2017 by a hypothetical 10% and calculating the resulting change in the fair values.

At this time, the development of our strategic plan has not exposed us to any additional market risk. However, as the implementation of the plan progresses, we may be exposed to additional or different market risks.

The results of the sensitivity analysis calculations as of March 31, 2018 and December 31, 2017 are presented below:

	Assuming a 10% Increase in Rates						Assuming a 10% Decrease in Rates
Risk	March 31, 2018			December 31, 2017			March 31, 2018		December 31, 2017			Change in the Fair Value of
	(Dollars in thousands)
Foreign Currency		(2,957	)		(5,181	)		3,614		6,332		Foreign currency forward contracts
Interest Rate		(181	)		(193	)		182		195		Orcal Senior Secured Notes
Interest Rate		(6,534	)		(6,393	)		6,829		6,662		OFC 2 Senior Secured Notes
Interest Rate		(6,722	)		(6,710	)		7,042		7,015		OPIC Loan
Interest Rate		(3,630	)		(3,678	)		3,717		3,766		Senior Unsecured Bonds
Interest Rate		(1,382	)		(1,384	)		1,443		1,442		DEG 2 Loan
Interest Rate		(2,523	)		(2,476	)		2,654		2,596		DAC 1 Senior Secured Notes
Interest Rate		(762	)		-	⁽¹⁾		794		-	⁽¹⁾	Amatitlan Loan
Interest Rate		(3,148	)		-			3,280		-		Migdal Loan
Interest Rate		(182	)		(171	)		189		177		Other long-term loans

⁽¹⁾ The application of a 10% increase and decrease to the interest rate, did not exceed the minimum rate as set in the loan agreement.

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Effect of Inflation

We do not expect that inflation will be a significant risk in the near term, given the current global economic conditions, however, that could change in the future. To address rising inflation, some of our contracts include certain provisions that mitigate inflation risk.

In connection with the Electricity segment, none of our U.S. PPAs are directly linked to the Consumer Price Index (CPI). Inflation may directly impact an expense we incur for the operation of our projects, thereby increasing our overall operating costs and reducing our profit and gross margin. The negative impact of inflation may be partially offset by price adjustments built into some of our PPAs that could be triggered upon such occurrences. The energy payments pursuant to our PPAs for some of our power plants such as the Brady power plant, the Steamboat 2 and 3 power plants and the McGinness complex, increase every year through the end of the relevant terms of such agreements, though such increases are not directly linked to the CPI or any other inflationary index. Lease payments are generally fixed, while royalty payments are generally calculated as a percentage of revenues and therefore are not significantly impacted by inflation. In our Product segment, inflation may directly impact fixed and variable costs incurred in the construction of our power plants, thereby increasing our operating costs in the Product segment. We are more likely to be able to offset all or part of this inflationary impact through our project pricing. With respect to power plants that we build for our own electricity production, inflationary pricing may impact our operating costs which may be partially offset in the pricing of the new long-term PPAs that we negotiate.

Concentration of Credit Risk

Our credit risk is currently concentrated with the following major customers: SCPPA, Kenya Power and Lighting Company (KPLC), Sierra Pacific Power Company and Nevada Power Company (subsidiaries of NV Energy). If any of these electric utilities fails to make payments under its PPAs with us, such failure would have a material adverse impact on our financial condition . Also, by implementing our multi-year strategic plan we may be exposed, by expanding our customer base, to different credit profile customers than our current customers.

Sierra Pacific Power Company and Nevada Power Company accounted for 17.4% and 18.8% for the three months ended March 31, 2018 and 2017, respectively.

SCPPA accounted for 16.3% and 9.0% for the three months ended March 31, 2018 and 2017, respectively.

KPLC accounted for 15.1% and 14.3% for the three months ended March 31, 2018 and 2017, respectively.

Government Grants and Tax Benefits

The federal government encourages production of electricity from wind, solar and geothermal resources through certain tax subsidies. For a new geothermal power plant in the U.S. that started construction by December 31, 2017, we are permitted to claim an investment tax credit for 30 percent of the project cost in the year the project is put in service or production tax credits over time on the power produced. The production-based credits, which in 2017 were 2.4 cents per kWh, are adjusted annually for inflation and may be claimed for 10 years on the net electricity output sold to third parties after the project is first placed in service. Any project that started construction by December 2017 must ordinarily be put in service within four years after the end of the year in which construction started to qualify for tax credits at these rates. For a new geothermal power plant in the U.S. that started construction after 2017, we are permitted to claim an investment tax credit of 10 percent of the project cost.

New solar projects that are under construction by December 2019 will qualify for a 30 percent investment tax credit. The credit will fall to 26 percent for projects starting construction in 2020 and 22 percent for projects starting construction in 2021. Projects that are under construction before these deadlines must be placed in service by December 31 2023 to qualify for investment tax credits at these rates. Solar projects placed in service after December 31, 2023 will only qualify for a 10 percent investment tax credit, on par with the permanent credit provided to geothermal. Under current tax rules, any unused tax credit has a one-year carry back and a twenty-year carry forward.

We are also permitted to depreciate, or write off, most of the cost of the plant. In cases where we claim the one-time 30% (or 10%) tax credit, our tax basis in the plant that we can recover through depreciation is reduced by one-half of the tax credit. In cases where we claim the production tax credit, there is no reduction in the tax basis for depreciation. Projects that are placed in service in 2016 and 2017 are eligible for “bonus” depreciation and we will be permitted to write off 50% of the cost of that equipment in the year the power plant is placed in service. Projects placed in service in 2018 would qualify for a 40% bonus and projects placed in service in 2019 would qualify for a 30% bonus. After applying any depreciation bonus that is available, we can write off the remainder of our tax basis in the plant, if any, over five years on an accelerated basis, meaning that more of the cost may be deducted in the first few years than during the remainder of the depreciation period. The Tax Act, allows full expensing for certain assets acquired and placed in service after September 27, 2017. We will continue to analyze this new provision under the Tax Act and determine if an election is appropriate as it relates to their business needs .

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Ormat System received “Benefited Enterprise” status under Israel’s Law for Encouragement of Capital Investments, 1959 (the "Investment Law"), with respect to two of its investment programs through 2011. In January 2011, new legislation amending the Investment Law was enacted. Under the new legislation, a uniform rate of corporate tax will apply to all qualified income of certain industrial companies, as opposed to the previous law’s incentives that are limited to income from a “Benefited Enterprise” during their benefits period. As a result, we now pay a uniform corporate tax rate of 16% with respect to that qualified income.

Ormat System tax assessment for fiscal years 2010-2014 was finalized and settled in January 2017. The settlement resulted in no impact to income statement due to release of the related uncertain tax position liability.

As previously reported by the Company, the Kenya Revenue Authority ("KRA") conducted an audit related to the Company’s operations in Kenya for fiscal years 2012 - 2013. In January 2017, KRA concluded its audit for the subject period and issued a demand letter to the Company for additional tax payments of approximately $16.1 million, including interest and penalties. KRA’s assessment, among other points, rejected the Company's income tax deduction of 150% of its investment in geothermal well drilling during the relevant period, on the basis that such work falls under mining activities (and not geothermal activities) which have a different allowable deduction under the Kenya Income Tax Act. The KRA audit and assessment is not final and is subject to objection by the Company. The Company's operations in Kenya utilize a geothermal resource license from the Ministry of Energy and Petroleum. The Company does not conduct and is not involved in any mining activity under applicable Kenyan law. Therefore, the Company believes that its original tax position was and remains correct under Kenyan tax law and regulations and has submitted a notice of objection to the KRA which it intends to pursue vigorously. If the KRA position prevails and is applied to subsequent periods, our deferred tax asset of $49.4 million recorded in 2015 may be impacted. At present, the Company has recorded a provision based on its assessment of its reasonably expected potential exposure.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information appearing under the headings “Exposure to Market Risks” and “Concentration of Credit Risk” in Part I, Item 2 of this quarterly report on Form 10-Q is incorporated by reference herein.

ITEM 4. CONTROLS AND PROCEDURES

a. Evaluation of disclosure controls and procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted the evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by Rules 13a-15(b) or 15d-15(b) under the Exchange Act, as amended. Based upon that evaluation, as a result of the material weakness in internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2018 to ensure that information required to be disclosed in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Previously Identified Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We previously disclosed in the 2017 Annual Report the following material weakness which still existed as of March 31, 2018. In connection with the change in our repatriation strategy and the related release of the US income tax valuation allowance in the second quarter of 2017, we did not perform an effective risk assessment related to our internal controls over the accounting for income taxes. As a result, we identified a deficiency in the design of our internal control over financial reporting related to our accounting for income taxes, which resulted in the restatements of the Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2017, the three and nine months ended September 30, 2017, and the restatement of the Company’s consolidated financial statements for the year ended December 31, 2017. Additionally, this control deficiency could result in a misstatement of the aforementioned balances and disclosures that would result in a material misstatement to the interim or annual consolidated financial statements that would not be prevented or detected. Our management has concluded that this deficiency constitutes a material weakness in our internal control over financial reporting.

Remediation Plan for Material Weakness

Building on our efforts during 2017, our management, with the oversight of the Audit Committee of our Board of Directors, continued in the first quarter of 2018 to dedicate significant resources and efforts to improve our control environment and take steps to remediate the material weakness identified above. The remediation efforts, outlined below are intended both to address the identified material weakness and to enhance our overall financial control environment. However, our management may amend this plan to include additional remedial action in light of its continuing evaluation of the identified deficiency in internal control over financial reporting. In 2018, we:

	•	augmented the personnel within our finance and accounting organization by recruiting additional tax and accounting personnel;
	•	engaged an external tax and accounting firm to prepare and review our annual and quarterly income tax provision including to review and recommend additional control enhancements;
	•	adjusted the financial reporting closing timelines to allow earlier and longer time for income tax review; and
	•	continued to strengthen the income tax controls with improved documentation standards and oversight.

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We continue to actively plan for and implement additional control procedures, communication and oversight as well as consider the need to recruit additional personnel during 2018 and we may take additional measures as deemed necessary.

This material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time. We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures, however, there can be no assurance that this will occur within 2018.

b. Changes in internal controls over financial reporting

There were no changes in our internal controls over financial reporting in the first quarter of 2018 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There were no material developments in any legal proceedings to which the Company is a party during the first quarter of 2018, other than as described below.

●

Following the announcement of the Company’s acquisition of U.S. Geothermal Inc. (“USG”), a number of putative shareholder class action complaints were initially filed on behalf of USG shareholders between March 8, 2018 and March 30, 2018 against USG and the individual members of the USG board of directors. All of the class action suits filed in Federal Court in Idaho and Delaware have been voluntarily dismissed. The single remaining class action complaint is a purported class action filed in the Delaware Chancery Court, entitled Riche v. Pappas, et al., Case No. 2018-0177 (Del. Ch., Mar. 12, 2018). The Riche complaint alleges state law claims for breach of fiduciary duty against former USG directors, and seeks post-closing damages. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

●

On February 18, 2018, Western Watersheds Project filed a notice of appeal and petition with the U.S. Department of the Interior Board of Land Appeals for standing with respect to the January 16, 2018 BLM decision approving Addendum 2 to Operation Plan & Utilization Plan for the McGinness Hills Geothermal Project. The appeal alleges that the January 2018 BLM decision authorizing construction and operation of Phase 3 of McGinness Hills causes harm to WWP and its members by allowing degradation of the wildlife habitat of the Greater sage-grouse in that area. The Company has filed a motion to intervene as an interested party in support of the BLM. The litigation was resolved, and the settlement was approved by the Interior Board of Land appeals. The settlement amount was immaterial to the Company’s consolidated financial statements.

●

On August 5, 2016, George Douvris, Stephanie Douvris, Michael Hale, Cheryl Cacocci, Hillary E. Wilt and Christina Bryan, acting for themselves and on behalf of all other similarly situated residents of the lower Puna District, filed a complaint in the Third Circuit Court for the State of Hawaii seeking certification of a class action for preliminary and permanent injunctive relief, consequential and punitive damages, attorney’s fees and statutory interest against PGV and other presently unknown defendants. On December 12, 2016, the federal district court granted plaintiffs’ motion for joinder of HELCO as a co-defendant, and the case, which had previously been removed to the U.S. District Court for the District of Hawaii, was remanded back to the Third Circuit Court. The amended complaint alleged that injuries and other damages in an undisclosed amount were caused to the plaintiffs as a result of an alleged toxic release by PGV in the wake of Hurricane Iselle in August 2014. On June 14, 2017, the Third Circuit Court denied HELCO’s motion to dismiss the complaint against HELCO. Discovery is underway. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

●

On March 29, 2016, a former local sales representative in Chile, Aquavant, S.A., filed a claim against Ormat’s subsidiaries in the 27th Civil Court of Santiago, Chile on the basis of unjust enrichment. The claim requests that the court order Ormat to pay Aquavant $4.8 million in connection with its activities in Chile, including the EPC contract for the Cerro Pabellon project and various geothermal concessions, plus 3.75% of Ormat geothermal products sales in Chile over the next 10 years. Pursuant to various motions submitted by the defendants and the plaintiffs to various courts, including the Court of Appeals, the case was removed from the original court and then refiled before the 11th Civil Court of Santiago. In February 2018 preliminary defenses, filed by the Company, were denied by the lower court and are pending on appeal. The Company’s answer to the complaint, plaintiff’s response and the Company’s rejoinder were duly filed. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

●

Jon Olson and Hilary Wilt, together with Puna Pono Alliance filed a complaint on February 17, 2015 in the Third Circuit Court for the State of Hawaii, requesting declaratory and injunctive relief requiring that Puna Geothermal Venture comply with an ordinance that the plaintiffs allege will prohibit PGV from engaging in night drilling operations at its KS-16 well site. On May 17, 2015, the original complaint was amended to add the County of Hawaii and the State of Hawaii Department of Land and Natural Resources as defendants to the case. On October 10, 2016, the court issued its decision in response to each of the plaintiffs’ and defendants’ motions for summary judgment, denying plaintiffs’ motion and granting defendant PGV's and the County of Hawaii’s cross motions for summary judgment, effectively rendering the plaintiffs’ action moot. On January 23, 2017, the plaintiffs filed a motion requesting that the Intermediate Court of Appeals address appellate jurisdiction, which was denied by the court on April 20, 2017 as premature. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

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●

In addition, from time to time, the Company is named as a party to various other lawsuits, claims and other legal and regulatory proceedings that arise in the ordinary course of our business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to such lawsuits, claims and proceedings, the Company accrues reserves when a loss is probable, and the amount of such loss can be reasonably estimated. It is the opinion of the Company’s management that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Part I — Item 1A — Risk Factors” in our Form 10-K/A, for the fiscal year ended December 31, 2017. The risks described in our Form 10-K/A and herein are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We previously identified a material weakness in our internal control over financial reporting and subsequently restated certain of our financial statements as a result of factors related to that weakness. This may adversely affect the accuracy and reliability of our financial statements and impact our reputation, business and the price of our common stock, as well as lead to a loss of investor confidence in us.

In connection with the change in our repatriation strategy and the related release of the U.S. income tax valuation allowance in the second quarter of 2017, we did not perform an effective risk assessment related to our internal controls over the accounting for income taxes. As a result, we identified a deficiency in the design of our internal control over financial reporting related to our accounting for income taxes, which affected the recording of income tax accounts by us in our interim and annual consolidated financial statements during 2017. Our management previously concluded that this deficiency constituted a material weakness in our internal control over financial reporting and, accordingly, our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2017. The material weakness still existed as of March 31, 2018. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

On May 16, 2018, we concluded that we would restate our previously issued consolidated financial statements as of and for the year ended December 31, 2017 to correct for (i) errors in our income tax provision, primarily related to our ability to utilize foreign tax credits in the United States (“U.S.”) prior to their expiration starting in 2027 and the resulting impact on the deferred tax asset valuation allowance, and (ii) the inappropriate netting of certain deferred income tax assets and deferred income tax liabilities across different tax jurisdictions that was not permissible under U.S. generally accepted accounting principles. In addition, we also concluded that we would revise our previously issued consolidated financial statements as of and for the years ended December 31, 2016 and December 31, 2015 to correct for errors in our income tax provision primarily related to the translation of deferred tax liabilities in a foreign subsidiary. These tax and tax-related errors also resulted in the restatement, for 2017, and revision, for 2016, of the Company’s previously issued unaudited condensed consolidated financial statements for the three months ended March 31, 2017, for the three and six months ended June 30, 2017 and 2016 and for the three and nine months ended September 30, 2017 and 2016.

While we have developed and are in the process of implementing a plan to remediate this material weakness, there can be no assurance that this will occur within 2018. We may identify additional material weaknesses in our internal control over financial reporting in the future. If we are unable to remediate this material weakness or we identify additional material weaknesses in our internal control over financial reporting in the future, our ability to analyze, record and report financial information accurately, to prepare our financial statements within the time periods specified by the rules and forms of the SEC and to otherwise comply with our reporting obligations under the federal securities laws, and in relation to cevenants in certain debt facilities will likely be adversely affected. The occurrence of, or failure to remediate, and any future material weaknesses in our internal control over financial reporting may adversely affect the accuracy and reliability of our financial statements, and our reputation, business and the price of our Common Stock or any other securities we may issue, as well as lead to a loss of investor confidence in us.

Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital.

We did not file our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 within the timeframe required by the SEC, meaning we were not current in our reporting requirements with the SEC. Even though we have regained compliance with our SEC reporting obligations, we will be not be eligible to use a short-form registration statement on Form S-3 that would allow us to incorporate by reference our SEC reports into the registration statement, or to use “shelf” registration statements, until one year from the date we regained and maintain status as a current filer. If we wish to pursue a public offering during this time period, we would be required to file a long-form registration statement on Form S-1 and have it reviewed and declared effective by the SEC. Doing so would likely take significantly longer than using a short-form registration statement on Form S-3, increase transaction costs and adversely impact our ability to raise capital or complete acquisitions of other companies in a timely manner.

Certain of our facilities face risks from seismic disturbances, volcanic eruptions and lava flows.

Active geothermal areas, such as the areas in which our power plants are located, are subject to frequent low-level seismic disturbances. Serious seismic disturbances, volcanic eruptions and lava flows are possible and could result in damage to our power plants (or transmission lines used by customers who buy electricity from us) or equipment or degrade the quality of our geothermal resources to such an extent that we could not perform under the PPA for the affected power plant, which in turn could reduce our net income and materially and adversely affect our business, financial condition, future results and cash flow. If we suffer a serious seismic disturbance, volcanic eruptions and lava flows, our business interruption and property damage insurance may not be adequate to cover all losses sustained as a result thereof. In addition, insurance coverage may not continue to be available in the future in amounts adequate to insure against such seismic disturbances, volcanic eruptions and lava flows.

On May 3, 2018, the Kilauea volcano located in close proximity to the Company’s 38 MW Puna geothermal power plant in the Puna district of Hawaii's Big Island erupted following a significant increase in seismic activity in the area in recent weeks. While the Company has taken steps to secure the Puna facilities, including, among others, taking electricity generation offline and placing physical barriers around, and protective coverings over, the geothermal wells, and has evacuated non-essential personnel at the power plant and removed all pentane from the site, it is still assessing the impact of the volcanic eruption and seismic activity on the Puna facilities. The approaching lava covered the wellheads of three geothermal wells and the substation of the Puna complex and an adjacent warehouse that stored a drilling rig were burned due to the approaching lava. The damages are expected to be covered by the Company’s insurance policies. The net book value of the Puna property, plant and equipment is approximately $109 million. The Company cannot currently estimate when the lava flow will stop nor when it will be able to assess all of the damages. Any significant physical damage to, or extended shut-down of, the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on the Company’s business and results of operations. The Company continues to monitor the condition of the Puna facilities, coordinate with HELCO and local authorities, and is taking steps to both further secure the power plant and restore its operations as soon as it is safe to do so. In addition, The Company will be assessing the accounting implications of this event on the assets and liabilities on its balance sheet and whether a impairment will be required.

In addition to our power plant in Puna, Hawaii, our power plant in Amatitlan, Guatemala is located in proximity to an active volcano. As a result of recent events impacting our Puna facility, we cannot be certain how investors will assess the risks to which our facilities are subject and whether this assessment will adversely impact perceptions of our business and our share price.

U.S. federal income tax reform could adversely affect us.

On December 22, 2017, U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law, significantly reforming the U.S. Internal Revenue Code. The Tax Act, among other things, includes changes to U.S. federal tax rates (including reduction of the corporate tax rate from 35% to 21%), imposes significant additional limitations on the deductibility of interest, allows for the expensing of capital expenditures, puts into effect the migration from a “worldwide” system of taxation to a territorial system and modifies or repeals many business deductions and credits.

The Tax Act is likely to make some borrowing more expensive. It denies interest deductions on debt starting in 2018 to the extent a company's net interest expense exceeds 30 percent of its adjusted taxable income. Its income for this purpose means income ignoring interest expense, interest income, net operating losses and -- only through 2021 -- depreciation, amortization and depletion. Thus, the 30-percent limit is more likely to come into play after 2021 when depreciation, amortization and depletion are no longer added back to the 30-percent base. Any interest that cannot be deducted in a year can be carried forward indefinitely.

The Tax Act subjects U.S. corporations with offshore subsidiaries to a one-time U.S. tax on untaxed earnings in offshore holding companies as if the earnings had been brought back to the U.S. thereby triggering a tax. All post-1986 net "earnings and profits" in offshore holding companies will be taxed at a 15.5 percent rate to the extent they are being held in cash or cash equivalents and at an eight percent rate otherwise. Companies must calculate the earnings as of November 2, 2017 and December 31, 2017 and pay U.S. tax on whichever amount is higher. The tax can be paid ratably over eight years. Eight percent of the tax would have to be paid in each of the first five years starting in 2017, increasing to 15 percent in year six, 20 percent in year seven and 25 percent in year eight.

Corporations will no longer be able to use net operating losses incurred after 2017 to reduce income by more than 80 percent in a year, and corporations will no longer be able to carry such losses back two years as they have been allowed to do in the past.

Starting in 2018, the U.S. will no longer allow some cross-border interest and royalty payments to related companies to be deducted. This would happen if the other country treats the payments as something other than interest or royalties for its tax purposes or the two countries treat the U.S. company making the payments differently: for example, one treats it as a corporation and the other treats it as fiscally transparent or vice versa. Once the provision is triggered, deductions would be denied in the U.S. to the extent the payment does not have to be reported as income in the foreign country.

The Company has made provision estimates in its accounting for certain income tax effects of the Tax Act in its financial statements. As additional interpretive guidance from Treasury and the IRS is issued, the Company may be required to revise its provisional estimates and such adjustments may be material to the Company’s financial statements.

We continue to examine the impact the Tax Act may have on our business. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the Tax Act is uncertain, and our business, financial condition, future results and cash flow, as well as our stock price, could be adversely affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS

We hereby file, as exhibits to this quarterly report, those exhibits listed on the Exhibit Index immediately following the signature page hereto.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ORMAT TECHNOLOGIES, INC.

	By:	/s/ Doron Blachar
		Name: Doron Blachar
		Title: Chief Financial Officer

Date: June 19, 2018

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EXHIBIT INDEX

Exhibit No .	Document
10.1	Loan Agreement, dated March 22, 2018, by and among Ormat Technologies, Inc. and Migdal Insurance Company Ltd., Migdal's Makefet Pension and Provident Funds Ltd. and Yozma Pension Fund of Self Employed Ltd.
10.2	Finance Agreement, dated April 30, 2018 between Geotermica Platanares, S.A. DE C.V. and Overseas Private Investment Corporation
31.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.
101.IN*	XBRL Instance Document.
101.SC*	XBRL Taxonomy Extension Schema Document.
101.CA*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DE*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LA*	XBRL Taxonomy Extension Label Linkbase Document.
101.PR*	XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit 10.1

LOAN AGREEMENT

Dated March 22, 2018

$100,000,000

LOAN AGREEMENT

for

Ormat Technologies, Inc.

as Borrower

with

The Lenders Listed in Part II of Schedule 1

Contents

1.	Definitions and Interpretation	4

2.	The Loan	12

3.	Purpose	12

4.	Conditions of Utilisation	13

5.	Utilisation of the loan	13

6.	Repayment of loan	14

7.	Prepayment	14

8.	Interest	15

9.	Interest Periods	17

10.	Fees	17

11.	Tax Gross Up and Indemnities	17

12.	Increased Costs	20

13.	Other Indemnities	21

14.	Costs and Expenses	22

15.	Representations	23

16.	Information Undertakings	28

17.	Financial Covenants	30

18.	General Undertakings	33

19.	Events of Default	36

20.	Changes to the Lenders	41

21.	Changes to the Borrower	43

22.	Conduct of business by the Finance Parties	43

23.	Payment Mechanics	44

24.	Set-Off	45

25.	Notices	46

26.	Calculations and Certificates	48

27.	Partial Invalidity	48

28.	Remedies and Waivers	48

29.	Amendments and Waivers	48

30.	Confidential Information	48

31.	Counterparts	51

32.	Governing Law	51

33.	Enforcement	51

Schedules

SCHEDULE 1	THE PARTIES

SCHEDULE 2	FORM OF ASSIGNMENT AGREEMENT

SCHEDULE 3	FORM OF COMPLIANCE CERTIFICATE

SCHEDULE 4	SUBORDINATED SHAREHOLDER LOANS CONDITIONS

SCHEDULE 5	REPAYMENT SCHEDULE

SCHEDULE 6	PREPAYMENT FEE

SCHEDULE 7	FORM OF TRANSFER CERTIFICATE

SCHEDULE 8	UTILISATION REQUEST

SCHEDULE 9	CONDITIONS PRECEDENT

THIS AGREEMENT is dated March 22, 2018, and made between:

Ormat Technologies, I nc . a Delaware corporation (as Borrower); and

The entities listed in part II of Schedule 1 (The Parties) (as Lenders).

IT IS AGREED as follows:

1.	Definitions and Interpretation

1.1

Definitions

In this Agreement:

Accounting Principles means generally accepted accounting principles in the United States of America, and the requirements of any applicable securities law.

Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

Assignment Agreement means an agreement substantially in the form set out in Schedule 2 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.

Auditors means PWC or any other "Big 4" accounting firm selected by the Borrower or any other accounting firm approved in advance by the Lenders (which approval shall not be unreasonably withheld or delayed).

Authorisation means an authorisation, permit, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

Bankruptcy Code means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor statute or any similar statute in any other Relevant Jurisdiction.

Basel III means:

(a)

the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee in December 2010, each as amended;

(b)

the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee in November 2011, as amended; and

(c)

any further guidance or standards published by the Basel Committee relating to paragraph (a) or (b) above.

Basel Committee means the Basel Committee on Banking Supervision.

Borrower means Ormat Technologies, Inc.

Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in both New York and Tel Aviv.

Code means the US Internal Revenue Code of 1986, as amended.

Compliance Certificate means a certificate substantially in the form set out in Schedule 3 (Form of Compliance Certificate).

Confidential Information means all information that was identified in writing at the time of delivery as confidential, or that by the nature of the circumstances surrounding the disclosure or receipt ought to be treated as confidential relating to the Borrower and its Affiliates or the Loan of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under or the Loan from the Borrower or its Affiliates or any of its advisers but excludes information that:

(a)

is or becomes public information other than as a direct result of any breach by that Finance Party of Clause 30 ( Confidential Information ); or

(b)

is known by that Finance Party before the date the information is disclosed to it or is obtained by that Finance Party from a third party (other than the Borrower or any of its Affiliates) after that date and which, as far as that Finance Party is aware after clarifying with such third party, does not have confidentiality obligations to the Borrower and/or its Affiliates with respect to the information disclosed.

CRD IV means:

(a)

Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU No 648/2012); and

(b)

Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87EC and repealing Directives 2006/48/EC and 2006/49/EC.

Credit Rating Agency means any credit agency, whether in Israel or outside of Israel, including Standard & Poor's (S&P), Moody's, and Fitch Group.

Default means an Event of Default or any event or circumstance specified in Clause 19 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

Delegate means any delegate, agent or attorney appointed by any Finance Party.

Discharge Date means the date on which all of the Total Obligations have been unconditionally and irrevocably paid and discharged in full.

Dispute means any dispute arising out of or in connection with this Agreement or any other Finance Document (including relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with the Finance Documents).

Disruption Event means either or both of:

(a)

a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

(b)

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

(i)

from performing its payment obligations under the Finance Documents; or

(ii)

from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

Environmental Claim means any claim, proceeding, formal notice or investigation alleging liability pursuant to Environmental Law.

Environmental Law means any applicable law which relates to pollution or protection of the environment, or hazardous substances, or harm to or the protection of human health, or the living of any organism, or compensation relating to any harm referred to above.

Environmental Permits means any Authorisation required under any Environmental Law for the operation of the business

Event of Default means any event or circumstance specified as such in Clause 19 (Events of Default).

Fair Spread means Fair Spread Ltd. ( 'Mirvah Hogen '), or any substitute entity thereof appointed by law as provider of quotation services to Israeli institutional investors with respect to non-traded debt.

Finance Document means:

(a)

this Agreement;

(b)

a Transfer Certificate;

(c)

the Utilization Request; and

(d)

any other document designated as such by the Lenders and the Borrower.

Finance Party means each Lender.

Financial Indebtedness means the Borrower's short-term and long-term debt to Financial Institutions (including current maturities of long-term debts to such bodies) including debts to bondholders, and deducting cash, cash equivalents. marketable securities and debt service reserve accounts, as determined according to U.S. GAAP according to which the Borrower’s financial statements shall be prepared and all according to their value in the financial statements.

It is hereby clarified that: (i) shareholder loans provided to the Borrower by any of its shareholders that are subordinated to the Borrower's obligation to the Lenders under the Finance Documents, pursuant to a subordinated shareholder loan agreement which meets the conditions set forth in Schedule 4 (Subordinated Shareholder Loans Conditions) (unless otherwise was agreed in advance and in writing by the Lenders) shall not be included in the scope of Financial Indebtedness; and (ii) obligations in relation to a sale of rights of ownership in connection with a transaction the substance of which is the sale of tax benefits (tax monetization transaction) shall not be deemed to be a Financial Indebtedness.

In the event of the introduction of a New Accounting Treatment (as such term is defined in paragraph 17.4(a) below), the provisions of Clause 17.4(b) below will apply.

Financial Institutions means third parties that are banks, insurance companies, investment houses, mezzanine funds, and any other entity whose main business is extending of loans and/or making investments.

Governmental Authority means any government and/or governmental department, ministry, cabinet, commission, board, bureau, agency, tribunal, regulatory authority, instrumentality, judicial legislative or administrative body or entity, domestic or foreign, regional, provincial or local, having or exercising jurisdiction over the matter or matters in question.

Group means the Borrower and any entity controlled by it for the time being, and “ member of the Group ” shall be construed accordingly.

Holding Company means, in relation to a person, any other person in respect of which it is a Subsidiary.

Interest Payment Date means (i) September 15, 2018, and (ii) the 15 ^th day of each March and September thereafter until the Last Repayment Date, and all as set forth in Schedule 5 (Repayment Schedule).

Interest Period means, in relation to the Loan and any Unpaid Sum (including with respect to any increased interest pursuant to the provisions of this Agreement), each period determined in accordance with Clause 9.1 ( Interest Period ).

Last Repayment Date has the meaning given to it in Clause 6 (Repayment of Loan) .

Lender means:

(a)

any Original Lender; and

(b)

any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 20 ( Changes to the Lenders ).

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

Loan means the term loan made available under this Agreement as described in Clause 2.1 ( The Loan ), or the principal amount outstanding for the time being of that loan.

Loan Amount means:

(a)

in relation to an Original Lender, the amount set opposite its name under the heading "Loan Amount" in Part II of Schedule 1 (The Parties) and any other Loan Amount transferred to it under this Agreement; and

(b)

in relation to any other Lender, the Loan Amount transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

Material Adverse Effect means a change, effect, event or circumstances or development, which, at the reasonable discretion of the Lenders has or is reasonably likely to have, individually or in the aggregate, a material adverse effect on either:

(a)

the business, prospects, assets (whether tangible or intangible), properties, results of operations (including cash flows) or financial condition (including its liabilities (including contingent liabilities)), of the Group, taken as a whole; or

(b)

the ability of the Borrower to conduct its business in the manner in which it is currently operated; or

(c)

the ability of the Borrower to perform its obligations under the Finance Documents; or

(d)

the rights or remedies of any Finance Party under any of the Finance Documents.

Material Group Company means, any member of the Group, that either: (a) its turnover for any period set forth in the recent annual audited consolidated financial statements or quarterly reviewed financial statements of the Borrower, was at least 10% (ten percent) of the consolidated turnover of the Borrower as per such financial statements; or (b) its EBITDA for any period set forth in the recent annual consolidated audited financial statements or quarterly reviewed financial statements of the Borrower was at least 10% (ten percent) of the consolidated EBITDA of the Borrower as per such relevant financial statements.

Money Laundering Laws has the meaning given to that term in Clause 15.18 ( Anti-corruption law ).

Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

(a)

subject to paragraph (c) below if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;

(b)

if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and

(c)

if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.

The above rules will only apply to the last Month of any period.

New Lender has the meaning given to that term in Clause 20 ( Changes to the Lenders ).

Original Financial Statements means the Borrower's quarterly reviewed consolidated financial statements for September 30, 2017.

Original Lenders means (a) Migdal Insurance Company Ltd. (reg. number 52-000489-6); (b) Migdal's Makefet Pension and Provident Funds Ltd. (reg. number 51-223774-4); and (c) Yozma Pension Fund of Self Employed Ltd. (reg. number 52-003256-6).

Party means a party to this Agreement.

Permitted Liens means (a) any lien arising by operation of law; and (b) any security interest created directly by the Borrower in accordance with the provisions of Clause 18.3 ( Negative pledge ) below.

Prepayment Fee shall have the meaning set out in Schedule 6 ( Prepayment Fee ).

Quarter means a calendar quarter (January 1- March 31; April 1- June 30; July 1- September 30; and October 1- December 31).

Relevant Jurisdiction means: in relation to any entity:

(a)

its jurisdiction of incorporation; and

(b)

any jurisdiction where it conducts its business.

Repayment Date means each date set out in paragraph (a) of Clause 6.1 ( Repayment of Loans ).

Repeating Representations means each of the representations set out in Clauses 15.1 ( Status ), 15.2 ( Binding Obligations ), 15.3 ( Non-conflict with other obligations ), 15.4 ( Power and Authority ), 15.5 ( Validity and admissibility in evidence ), 15.6 ( Security Interests ), 15.7 ( No requirements with respect to the Lenders ), 15.8 ( Solvency ), 15.9 ( No filing stamp taxes ), 15.10 ( N o Default ), 15.11 ( No Misleading information ), 15.14 ( Pari passu ranking ), 15.15 ( No proceedings pending or threatened ), 15.17 ( Immunity ), 15.18 ( Anti-corruption law ), 15.19 ( Sanctioned Persons ), 15.20 ) E nvironmental Matters ) and 15.21 ( E nvironmental Laws ).

Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

" Solvency II " means the Solvency II Directive (Directive 2009/138/EC) on the taking-up and pursuit of the business of Insurance and Reinsurance, as amended by the Omnibus II Directive (Direction 2014/51/EC).

Securities Law means the Israeli Securities Law, 1968.

Subsidiary has the same meaning as that which is assigned to a “subsidiary” under the Securities Law. For the avoidance of doubt, a company in which a limited partnership holds 50% (fifty percent) or more of the nominal value of its issued share capital (or its foreign equivalent) or of the voting power therein or is entitled to appoint half or more of its directors or its general manager shall be deemed a Subsidiary of such limited partnership.

Tax means any present or future tax, levy, impost, duty (including, stamp duty, registration tax and capital duties) or other deductions, charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

Total Obligations means all present and future obligations and liabilities (whether actual or contingent, whether owed jointly or severally or in any capacity whatsoever), of the Borrower under the Finance Documents, including all costs, charges and expenses (including legal and other advisors fees) incurred by any Finance Party, pursuant to, or in connection with, the Finance Documents in connection with the protection, preservation or enforcement of their rights under the Finance Documents.

Transfer Certificate means a certificate substantially in the form set out in Schedule 7 (Form of Transfer Certificate) or any other form agreed between the Lenders and the Borrower.

Transfer Date means, in relation to an assignment or a transfer, the later of:

(a)

the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and

(b)

the date on which a Lender executes the relevant Assignment Agreement or Transfer Certificate.

Unpaid Sum means any sum due and payable but unpaid by the Borrower under the Finance Documents.

US means the United States of America.

Utilisation Date means the date on which the Loan is made.

Utilisation Request means a notice substantially in the form set out in Schedule 8 (Utilisation Request).

VAT means value added tax as provided for in the Israeli VAT Law 1975 or any other tax of a similar nature in jurisdiction of incorporation of the Borrower.

1.2

Construction

(a)

Unless a contrary indication appears, any reference in this Agreement to:

(i)

any Finance Party , any Lender , the Borrower or any Party shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents.

(ii)

assets includes present and future properties, revenues and rights of every description.

(iii)

control shall bear the meaning ascribed to such term in Section 1 of the Securities Law and, without derogating from the generality of the foregoing, a general partner of a limited partnership shall be deemed to control such partnership.

(iv)

a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended or restated.

(v)

indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent.

(vi)

a person includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality).

(vii)

a regulation includes any Israeli or US regulation, treaty, rule, official directive, request or guideline (whether or not having the force of law) of any governmental or regulatory body, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation, including, the guidelines of the Israeli Supervisor of Banks with respect to proper conduct of banking affairs (“Hora’ot Nihul Bankai Takin”) as well as any guidelines (“Hozrim”) of the Israeli Commissioner of the Capital Markets, Insurance and Savings Division, or any other request or guideline of any such banking or capital markets, insurance and savings authority.

(viii)

a law includes any Israeli or US statute, law and regulation.

(ix)

means of control shall bear the meaning assigned to such term in Section 1 of the Israeli Banking (Licensing) Law, 1981.

(x)

Any reference to a certain rating by a Credit Rating Agency in a Finance Document is stated in accordance with Standard & Poors Maalot's rating scale as at the date of this Agreement. However, (A) such reference will be changed to conform to any change in Standard & Poors Maalot's rating scale; and (B) without derogating from the above, any such reference shall also be construed, as a reference to any equivalent rating received by any other Credit Rating Agency (at the applicable time).

(xi)

a provision of law is a reference to that provision as amended or re-enacted. and

(xii)

a time of day is a reference Tel-Aviv time.

(b)

Section, Clause and Schedule headings are for ease of reference only.

(c)

Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

(d)

A Default (other than an Event of Default) is continuing if it has not been remedied or waived and an Event of Default is continuing if it has not been remedied or waived.

1.3

Currency symbols and definitions

$ , USD and dollars denote the lawful currency of the United States of America.

1.4

Third party rights

(a)

Unless expressly provided to the contrary in a Finance Document a person who is not a Party is not intended to, and shall not have any rights to enforce or to enjoy the benefit of any term of this Agreement.

(b)

Notwithstanding any term of any Finance Document the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

2.	The Loan

2.1

The Loan

Subject to the terms of this Agreement, the Lenders shall make to the Borrower a Loan in an aggregate amount of USD 100,000,000 (one hundred million US dollars).

2.2

Finance Parties' rights and obligations

(a)

The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

(b)

The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from the Borrower is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by the Borrower which relates to a Finance Party's participation in the Loan or its role under a Finance Document, is a debt owing to that Finance Party by the Borrower.

(c)

A Finance Party may, except as specifically provided otherwise in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents (but subject to any law and regulation, they will cooperate to enforce such rights together).

3.	Purpose

3.1

Purpose

Amounts borrowed by the Borrower under the loan shall be used for ongoing activities and general purposes of the Borrower.

3.2

Monitoring

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

4.	Conditions of Utilisation

Initial conditions precedent

4.1

The Lenders will only be obliged to make the Loan if, on the date of the Utilization Request and on the proposed Utilization Date:

(a)

the Lenders have received:

(i)

all of the documents and other evidence listed in Schedule 9 ( Conditions Precedent ) in form and substance satisfactory to the Lenders; and

(ii)

a duly completed Utilization Request, in accordance with the provisions of Clause 5.1 ( Delivery of a Utilisation Request ) below.

(b)

no Default is continuing or would result from the Loan; and

(c)

all representations made by the Borrower under the Finance Documents are true.

In the event that any of the conditions precedent set forth above are not fulfilled on the date of the execution of this Agreement and on the Utilisation, then, save for clauses 11, 14, 30, 32 and 33 this Agreement shall no longer be of any force or effect, and save as aforesaid, no Party shall have any claim against the other Party arising out of or in connection with this Agreement.

4.2

The Lenders shall be entitled to waive any of the Conditions Precedent set out in Clause 4.1(a) above.

5.	Utilisation of the loan

5.1

Delivery of a Utilisation Request

The Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

(a)

the Utilisation Request is delivered to lenders on the date of the execution of this Agreement.

(b)

the amount of the requested loan is the total amount of the Loan (USD 100,000,000).

(c)

The currency specified in the Utilisation Request is US dollars.

(d)

The proposed Utilisation Date specified in the Utilisation Request will be 3 (three) Business days following the date hereof.

5.2

Advancing the Loan

Subject to the terms and conditions of this Agreement, on the Utilisation date, the Lenders shall advance the Loan to account number 78556092 in branch number 10 (Tel Aviv main branch) of Israel Discount Bank Ltd, in the name of the Borrower (Swift code: IDBLILIT; IBAN (USD): IL39-0110-1000-0007-8556-092).

6.	Repayment of loan

The Borrower shall repay the principal of the Loan in instalments, as follows:

6.1

a principal amount of USD 63,000,000 (sixty three million) of the Loan shall be repaid in 15 (fifteen) equal semi-annual instalments, every March 15 and September 15, with the first payment being on September 15, 2021 and the last repayment date being September 15, 2028.

6.2

a principal amount of USD 37,000,000 (thirty seven million) of the Loan shall be repaid in one bullet payment on March 15, 2029 (the " Last Repayment Date "),

and all as set forth in Schedule 5 (Repayment Schedule).

7.	Prepayment

7.1

Illegality

If, in the applicable jurisdiction, (i) it becomes unlawful for any Lender to perform any of its obligations as contemplated by this Agreement; or (ii) it becomes unlawful to fund or maintain its participation in the Loan in a manner requiring termination of the Loan (in whole or in part); or (iii) it turns out that the choice of the Israeli law as the governing law of the Finance Documents will not be recognised and enforced in any of the Borrower's Relevant Jurisdictions with respect to any Dispute, or it turns out that a judgment obtained in relation to a Finance Document in Israel will not be recognised and enforced in any of the Borrower's Relevant Jurisdictions with respect to any Dispute:

(a)

that Lender shall promptly notify the Borrower upon becoming aware of that event;

(b)

Upon that Lender notifying the Borrower, the Borrower shall repay without any Prepayment Fee, penalty or premium all of the Lender's participation in the outstanding amounts of the Loan (but without derogating from any other obligations (including financial obligation from any kind) of the Borrower to such Lender under the Finance Documents), on (A) with respect to events specified in paragraphs (i)-(ii) of the opening paragraph of this clause 7.1 ( Illegality ) - the last day of the Interest Period occurring after that Lender has notified the Borrower or, if earlier, the date specified by that Lender in the notice delivered to the Borrower (being no earlier than 30 days after notice of the Lender is delivered to the Borrower); and (B) with respect to events specified in paragraphs (iii) of the opening paragraph of this clause 7.1 ( Illegality ) - the date specified by that Lender in the notice delivered to the Borrower.

7.2

Voluntary prepayment of the Loan

(a)

The Borrower may, if it gives the Lenders not less than thirty (30) Business Days' (or such shorter period as the Lenders may agree) prior notice, prepay the whole or any part of the principal amount of the Loan, together with Prepayment Fee as set forth in Clause 10 ( fees ). Any partial prepayment shall be made on an Interest Payment Date.

(b)

A prepayment of part of the principal amount of the Loan pursuant to this Clause 7.2 must be in a minimum amount of USD 10,000,000 (ten million US Dollars) and an integral multiple of USD 5,000,000 (five million US Dollars).

7.3

Restrictions

(a)

Any notice of prepayment given by any Party under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the prepayment is to be made and the amount of that prepayment.

(b)

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid, and (if applicable) any Prepayment Fee payable under this Agreement, without any additional premium or penalty.

(c)

The Borrowers shall not repay or prepay all or any part of the Loan except at the times and in the manner expressly provided for in this Agreement.

(d)

The Lenders may agree on a shorter notice period for a voluntary prepayment in respect of the Loan.

(e)

The Borrower shall not be entitled to re-borrow any amount prepaid on account of the Loan.

7.4

Application of prepayments

(a)

All prepayments of the Loan under this Clause 7 or Clause 12.4, other than a prepayment of a specific Lender's participation in the Loan pursuant to Clause 7.1(b) above or Clause 12.4 ( Increased Costs ) below, shall be applied pro rata to each Lender's participation in the Loan.

(b)

All prepayments of the Loan under this Clause 7 and Clause 12.4, other than a prepayment of a specific Lender's participation in the Loan pursuant to Clause 7.1(b) above shall be applied on a pro rata basis from each payment of the Loan.

8.	Interest

8.1

Interest rate

The rate of interest of the Loan is a fixed rate of 4.8% per annum.

8.2

Payment of interest

The Borrower shall pay the accrued interest on the Loan on each Interest Payment Date.

8.3

Default interest and Increased Interest

(a)

Increased Interest

(i)

If at any time during the term of this Agreement, the Financial Indebtedness to EBITDA Ratio (as defined in Clause 17.1 below) is equal to or higher than 4.5, then, as of the date at which the relevant financial statements tested pursuant to Clause 17.3 ( Testing ) below were drawn up and so long as no consolidated financial statements of the Borrower evidencing that such deviation is cured have been published, the interest rate on all the sums then outstanding on account of the Loan shall be increased by 0.5% per annum over the then applicable interest rate on the Loan.

(ii)

If at any time during the term of this Agreement, the rating of the Borrower drops below ilA, then, so long as the rating remains below ilA, the interest rate on all principal amounts outstanding of the Loan shall be increased by the Additional Rate Key (as defined below) and this for the period commencing on the date of publishing of such rating by the relevant Credit Rating Agency and until the full repayment of the Loan or until the relevant Credit Rating Agency updates the rating of the Borrower to ilA or higher, according to the earlier. Any change in the rating outlook of the Borrower or any change in rating of the Borrower due to a change in the methodology or rating scales of the applicable Credit Rating Agency shall not be deemed a change in the rating and shall not have any effect on (either by way of increase or decrease of) the then applicable interest rate applicable on the Loan.

Addition al Rate Key means, (a) 0.5% per annum if a rating of ilA- has been received from any Credit Rating Agency (and so long as the rating remains ilA-); (b) 0.75% per annum if a rating of ilBBB+ has been received from any Credit Rating Agency (and so long as the rating remains ilBBB+); or (c) 1% per annum if a rating of ilBBB or lower has been received from any Credit Rating Agency (and so long as the rating remains ilBBB or lower); For the avoidance of doubt, the Additional Rate Key shall apply during any down grade and also during any upgrade (i.e., if the rating is improved from ilBBB to IlA-, then the then interest rate applicable on the Loan shall be decreased by 0.5% per annum, provided that in any event, the interest rate shall not be lower than the original interest rate specified in Clause 8.1 (Interest rate) above).

(iii)

In any case where more than one of paragraphs (i)-(ii) above has been triggered (and only as long as such paragraphs are applied together), there will be no aggregation of Increased interests and only the provisions of the paragraph that entails the highest increased interest will apply.

(b)

Default Interest

(i)

If the Borrower fails to pay any amount payable by it under the Finance Documents on its due date (whether such amount constitutes a Loan or any other amount payable under this Agreement), interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is equal to the rate of the interest of the Loan at such time plus 2% per annum.

(ii)

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

(c)

Any increased interest under paragraph (a) above (subject to the provisions of paragraph (a)(iii) above) and any default interest under paragraph (b) above shall be calculated cumulatively.

(d)

Any default interest or increased interest arising under paragraph (b) above shall be immediately payable by the Borrower on demand by the Lenders.

9.	Interest Periods

9.1

Interest Period

(a)

The Interest Periods for the Loan shall be (i) from the Utilization Date until the first Interest Payment Date and (ii) thereafter, from one Interest Payment Date to the next, until the Last Repayment Date.

(b)

An Interest Period shall not extend beyond the Discharge Date.

9.2

Non-Business Days

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

10.

Fees

10.1

Prepayment Fee

The Borrower shall pay the Lenders Prepayment Fee with respect to any amount prepaid under Clause 7.2 ( Voluntary prepayment of the Loan ) above and under clause 19.21 ( Acceleration ) below (except for Clause 19.10 ( Unlawfulness )).

10.2

Non-Refundable Fees

All fees and commissions payable under this Agreement are non-refundable.

11.	Tax Gross Up and Indemnities

11.1

Definitions

(a)

In this Agreement:

FATCA means

(i)

sections 1471 to 1474 of the Code or any associated regulations;

(ii)

any treaty, law of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law referred to in paragraph (i) above; or

(iii)

any agreement pursuant to the implementation of any treaty, law referred to in paragraph (i) or (ii) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

Protected Party means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

Tax Deduction means a deduction or withholding for or on account of Tax from any payment under a Finance Document.

(b)

Unless a contrary indication appears, in this Clause 11 a reference to "determines" or "determined" means a determination made in the absolute discretion of the person making the determination.

11.2

Tax gross-up

(a)

The Borrower shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

(b)

The Borrower shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Lenders accordingly. Similarly, a Lender shall notify the Borrower on becoming so aware in respect of a payment payable to that Lender.

(c)

If a Tax Deduction is required by law to be made by the Borrower, the amount of the payment due from the Borrower shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required. The Borrower is not required to pay any increase under this Clause 11.2(c) to the extent the relevant Tax Deduction is in respect of a (i) Tax imposed as a result of a present or former connection between the relevant Lender and the jurisdiction imposing such Tax (other than connections arising solely from such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Finance Document, or sold or assigned an interest in the Loan), Tax imposed on or measured by net income (however denominated), franchise Tax, or branch profits Tax, (ii) Tax imposed on amounts payable to or for the account of the relevant Lender with respect to an applicable interest in the Loan pursuant to a law in effect on the date on which (x) such Lender acquires such interest in the Loan (other than pursuant to an assignment request by the Borrower) or (y) such Lender changes its lending office, except in either case, to the extent that such Taxes gave rise to increased payment under the first sentence of this Clause 11.2(c) to such Lender's assignor immediately before such Lender became an assignee thereof or to such Lender immediately before it changed its lending office, (iii) Tax attributable to such Lender’s failure to provide the Borrower with an accurate, current and complete executed copy of IRS Form W-8 or W-9 (or other applicable Tax documentation, as applicable) claiming the maximum available exemption from US withholding Tax and FATCA, (iv) Tax imposed under FATCA or (v) Tax imposed on income under Israeli Law.

(d)

If the Borrower is required to make a Tax Deduction, it shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

(e)

Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall deliver to the Finance Party entitled to the payment a statement or other evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

11.3

Tax indemnity

(a)

The Borrower shall (within three Business Days of demand by the relevant Protected Party) pay to that Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

(b)

A Protected Party making, or intending to make a claim under paragraph (a) above shall promptly notify the Borrower of the event which will give, or has given, rise to the claim.

(c)

A Protected Party shall, on receiving a payment from the Borrower under this Clause 11.3, notify the other Finance Parties.

(d)

Clause 11.3(a) above shall not apply to the extent a loss, liability or cost (i) is compensated for by an increased payment made under Clause 11.2 ( Tax gross-up ), or (ii) is in respect of one of the exclusions in Clause 11.2(c) ( Tax gross-up ).

11.4

Stamp taxes

Except for Tax imposed with respect to a transfer described in Clause 21 (other than a transfer requested by the Borrower), the Borrower shall pay and, within three Business Days of demand delivered to the Borrower, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

11.5

VAT

Except to the extent otherwise required by law, the Borrower shall pay to each Finance Party all VAT, if any, payable in respect of any payment to be made by the Borrower to any such Finance Party (including, any fees and expenses to be paid pursuant to clause 10 ( Fees ) above or clause 14 ( Costs and Expenses ) below) under this Agreement or under any other Finance Document, such VAT to be paid by the Borrower at the same time it makes the relevant payment (and such Finance Party must promptly provide an appropriate VAT invoice to the Borrower).

11.6

Tax Credit

If any Lender determines, in its sole discretion, that it has actually received a refund of any Taxes as to which it has been indemnified pursuant to Clause 11, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made under this Clause 11 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). The Borrower, upon the request of such Lender, shall repay to such Lender the amount paid over pursuant to this Clause 11.6 (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such Lender is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Clause 11.6, in no event will such Lender be required to pay any amount to the Borrower pursuant to this Clause 11.6 the payment of which would place such Lender in a less favorable net after-Tax position than the Lender would have been in if the Tax subject to indemnification had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts in respect of such Tax had never been paid. This paragraph shall not be construed to require any Lender to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other person.

12.	Increased Costs

12.1

Increased costs

(a)

The Borrower shall, within 30 Days of a demand delivered by a Finance Party to the Borrower, pay for the account of that Finance Party the amount of any Increased Costs incurred directly by that Finance Party as a result of:

(i)

the introduction of or any change in (or in the interpretation, administration or application by any Government Authority having jurisdiction over such Finance Party of) any applicable law after the date of this Agreement;

(ii)

the implementation or application of or compliance with Basel III, Solvency II or CRD IV or any other law which implements Basel III, Solvency II or CRD IV (whether such implementation, application or compliance is required by a government, or regulator of a Finance Party).

(b)

In this Agreement Increased Costs means:

(iii)

a reduction in the rate of return from the Loan;

(iv)

additional or increased costs; or

(v)

a reduction of any amount due and payable by the Borrower under any Finance Document,

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

(c)

Clause 12.1 ( Increased costs ) does not apply to the extent any Increased Cost:

(i)

is attributable to a Tax Deduction required by law to be made by the Borrower;

(ii)

is compensated for in accordance with the provisions of Clause 11.3 ( Tax indemnity ) or would have been compensated for under Clause 11.3 ( Tax indemnity ) but was not so compensated solely because of any of the exclusions in paragraph (d) of Clause 11.3 ( Tax indemnity ); or

12.2

Increased cost claims

(a)

A Finance Party intending to make a claim pursuant to Clause 12.1 ( Increased costs ) shall notify the Borrower of the event giving rise to the claim and the amount of the claim.

(b)

Each Finance Party shall, as soon as practicable after a demand by the Borrower, provide a certificate and relevant details confirming the amount of its Increased Costs.

12.3

Mitigation

(a)

Each Finance Party shall take reasonable steps to mitigate any circumstances which arise and which result or would result in any Increased Cost being payable to that Finance Party. The foregoing does not in any way limit the obligations of the Borrower under the Finance Documents.

(b)

The Borrower shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of any direct step taken by it under this Clause.

(c)

A Finance Party is not obliged to take any step under this Clause, if to do so will be prejudicial to it.

12.4

Prepayment

In the event that a Finance Party claims for Increased Costs according to this Clause 12, the Borrower will be entitled to notify the Lenders of its request to perform prepayment of the relevant Finance Party's participation in the Loan, together with accrued and unpaid interest (from any kind) thereon, and all other amounts owed to such Lender under the Finance Documents, provided that such prepayment shall be made within 30 Days of a demand delivered in accordance with the provisions of Clause 0 ( Notices ) below by a Finance Party to the Borrower to pay the Increased Costs. A prepayment under this Clause 12.4 shall not be subject to any Prepayment Fee, nor any other penalty or additional payment. If the Borrower has made a prepayment in accordance with the provisions of this Clause 12.4, it shall not be required to pay the Increased Costs demanded by such Finance Party.

13.	Other Indemnities

13.1

The Borrower shall within 30 Days of demand delivered by a Finance Party to the Borrower, indemnify each Finance Party against any direct cost, loss or liability incurred by that Finance Party as a result of:

(a)

the occurrence of any Event of Default;

(b)

a failure by the Borrower to pay any amount due under a Finance Document on its due date;

(c)

a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.

13.2

The Borrower shall indemnify (within 10 Days of demand delivered by a Finance Party to the Borrower), defend and hold harmless the Finance Parties and the Indemnified Parties from and against any and all direct liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel in connection with any investigative, administrative or judicial proceeding commenced or threatened), that may be imposed on, incurred by, or asserted against any Finance Party or the Indemnified Parties in any manner relating to or arising out of (i) any breach by an the Borrower of its obligations under, or any misrepresentation by the Borrower as contained in the Finance Documents, (ii) the use or intended use of the proceeds of the Loan in a manner which constitutes a violation of any law, or (iii) the past, present or future violation of any Environmental Laws by or related to the Borrower or any member of the Group whether or not caused by or within the control of such member of the Group.

“ Indemnified Party ” means each director of a Finance Party or its: officer, member of investment or credit committees, employee, agent, representative, advisor and successor and assign of any and all of the foregoing persons.

13.3

A Finance Party shall, as soon as reasonably practicable after receiving a claim by a third party in respect of which that Finance Party claims an indemnity under Clause 13.2 above, give notice of that third party claim to the Borrower. Without derogating from the provisions of Clauses 13.2 and 13.3 above, the Lenders will allow the Borrower, subject to any law or regulation and provided that no such permission shall cause any harm to the Lenders, to lead the defence proceedings (at the Borrower's expense) and will reasonably cooperate with the Borrower with respect to the defence.

13.4

The Borrower shall promptly indemnify the Lenders against any direct cost, loss or liability incurred by the Lenders as a result of: (a) investigating any event which they reasonably believe is a Default; or (b) acting or relying on any notice, request or instruction given by or on behalf of the Borrower or any representative of the Borrower, which it reasonably believes to be genuine, correct and appropriately authorised, if such notice, request or instruction was not genuine, correct or appropriately authorised, as applicable.

13.5

the Borrower shall promptly indemnify the Lenders and each Delegate against any loss or liability and reasonable costs incurred by any of them as a result of the exercise (or failure to exercise) of any of the rights, powers, discretions and remedies vested in each Delegate by the Finance Documents or by law.

14.	Costs and Expenses

14.1

Transaction expenses

The Borrower shall promptly on demand pay the Original Lenders the amount of legal Fees (capped at NIS 130,000 plus VAT) incurred by them in connection with the negotiation, preparation, printing, execution and perfection of:

(a)

this Agreement and any other documents referred to in this Agreement; and

(b)

any other Finance Documents executed after the date of this Agreement.

14.2

Amendment costs

If the Borrower requests an amendment, waiver or consent, the Borrower shall, within seven Business Days of demand, reimburse the Lenders for the amount of all costs and expenses (including legal fees) reasonably incurred by the Lenders in responding to, evaluating, negotiating or complying with that request or requirement.

14.3

Enforcement costs

The Borrower shall, within 10 Business Days of demand delivered by a Finance Party to it, pay to each Finance Party the amount of all direct costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document and any proceedings instituted by or against the Lenders as a consequence of enforcing these rights against the Borrower.

15.	Representations

The Borrower makes the representations and warranties set out in this Clause 15 to each Finance Party on the date of this Agreement.

15.1

Status

(a)

It is a corporation, duly organised under the laws of its jurisdiction of organisation.

(b)

It and each Material Group Company has the power to own its assets and carry on its business as it is being conducted.

(c)

It and each Material Group Company is in good standing and authorized and qualified to conduct business in each jurisdiction where such authorization or qualification is required (except where an absence of a negligible authorisation which does not adversely affects the Borrower's or each of the Material Subsidiary's ongoing business, or the ability of the Borrower to perform its obligations herein).

15.2

Binding obligations

The obligations expressed to be assumed by it in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations.

15.3

Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not conflict with:

(a)

any law applicable to it;

(b)

its constitutional documents; or

(c)

any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument.

15.4

Power and authority

(a)

It has the power to enter into, perform and deliver, and has taken all necessary action (including any applicable entity action) to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.

(b)

No limit on its powers will be exceeded as a result of the borrowing, or giving of indemnities contemplated by the Finance Documents.

15.5

Validity and admissibility in evidence

(a)

All Authorisations required or desirable:

(i)

for the conduct of the business, trade and ordinary activities of the Borrower and any Material Group Company;

(ii)

to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents; and

(iii)

to make the Finance Documents admissible in evidence in its Relevant Jurisdiction,

have been obtained or effected and are in full force and effect, except for the Authorisations the absence or loss of which has or is reasonably likely to have a Material Adverse Effect.

(b)

It is not aware of:

(i)

any steps to revoke, cancel, challenge or annul any Authorisation, the loss of which has or is reasonably likely to have a Material Adverse Effect; or

(ii)

any reason why any Authorisation, the loss of which has or is reasonably likely to have a Material Adverse Effect, will not be renewed when it expires;

15.6

Security Interests

(a)

The Borrower has not created any lien or charge over any of its assets, except for Permitted Liens.

(b)

No member of the Group has created any lien or charge over any of its assets, in any manner that is prohibited under Clause 18.3 ( Negative Pledge ).

15.7

No requirements with respect to the Lenders

It is not necessary under the laws of the State of Israel or the jurisdiction of incorporation of the Borrower:

(a)

in order to enable any Finance Party to enforce its rights under any Finance Document; or

(b)

by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,

that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in the jurisdiction of incorporation of the Borrower.

15.8

Solvency

(a)

The Borrower is not "insolvent", within the meaning of the Israeli Companies Ordinance [New Version] 5743-1983 or the Bankruptcy Code, or unable to pay its debts and liabilities (including contingent, future or subordinated) when due, nor could it be deemed by a court to be insolvent or unable to pay such debts when due, nor, in any such case, will it become so as a result of entering into this Agreement, or performing any transaction contemplated by the Finance Documents.

(b)

No:

(i)

corporate action, legal proceeding or other procedure or step described in Clause 19.7 ( Insolvency proceedings );

(ii)

legal proceeding for the bankruptcy, winding-up, insolvency, reorganization of or for any moratorium or other similar legal proceeding with respect to the Borrower; or

(iii)

creditors' process described in Clause 19.8 ( Creditors' process ),

has been taken or, to the knowledge of the Borrower threatened in relation to the Borrower or any Material Group Company; and none of the circumstances described in Clause 19.6 ( Insolvency ) applies to any the Borrower or any Material Group Company.

15.9

No filing or stamp taxes

Under the laws of the State of Israel and the US it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction, for the due execution of the Finance Documents.

15.10

No default

No Event of Default is continuing or might reasonably be expected to result from the making of the Loan or the entry into, the performance of, or any transaction contemplated by, any Finance Document.

15.11

No misleading information

(a)

All factual information provided by the Borrower in connection with the Finance Documents was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.

(b)

All information provided by the Borrower in any of its recent financial statements was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.

(c)

There is no other fact or circumstance relating to its affairs that has not been disclosed to the Lenders where such non-disclosure renders any of that information misleading in any material respect and all expression of expectation, intention, belief and opinion contained in any of that information were made honestly on reasonable grounds after due and careful consideration.

(d)

The Borrower has not omitted to supply any information which, if disclosed, would make any other information referred to in paragraph (a) above untrue or misleading in any material respect.

(e)

At the Utilization Date, nothing has occurred since the date information referred to in paragraph (a) above was supplied which, if disclosed, would make that information untrue or misleading.

15.12

Financial statements

(a)

The Original Financial Statements were prepared in accordance with the Accounting Principles consistently applied.

(b)

The Original Financial Statements fairly represent its financial condition as at the end of the relevant financial year and operations during the relevant financial year.

(c)

There has been no material adverse change in the assets, business or consolidated financial condition of the Group, as a whole, since the date of the Original Financial Statements.

15.13

Borrower's Reports

Since December 31, 2016, the Borrower has filed or furnished all forms, reports and documents with the SEC and ISA that have been required to be filed or furnished by it under any applicable securities law in all material respects (all such forms, reports and documents, including exhibits and schedules, filed or furnished since December 31, 2016, together with any amendments thereto, the “ Borrower's Reports ”). As of its filing or furnishing date (or, if amended or superseded by a filing or furnishing prior to the date of this Agreement, on the date of such amended or superseded filing or furnishing), (i) the Borrower's Reports complied as to form in all material respects with the applicable requirements of (A) the Securities Act, the Exchange Act and the Sarbanes-Oxley Act; or (B) if the Borrower will at any time be listed in the Tel Aviv Stock Exchanges only - the Securities Law and the regulations promulgated thereunder, as the case may be, each as in effect on the date on which each of such Borrower's Reports was filed or furnished, and (ii) The Borrower's Reports did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

15.14

Pari passu ranking

The Borrower's payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

15.15

No proceedings pending or threatened

The Borrower is not aware of any litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect that has or have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened against any member of the Group.

15.16

Previous proceedings

None of the following events has taken place (in Israel or outside of Israel) during the Seven years that preceded the date hereof: the involuntary liquidation of or a creditor's arrangement pursuant to Section 350 of the Israeli Companies Law, 1999 (or any similar law) in relation to the Borrower or any other member of the Group.

15.17

Immunity

It is not entitled to claim immunity from suit, execution, attachment or any other legal process in Israel.

15.18

Anti-corruption law

(a)

Neither the Borrower nor to the best of the Borrower's knowledge, other any member of the Group is in violation of any applicable anti-bribery or anti-corruption law enacted in any Relevant Jurisdiction. The Borrower and each other member of the Group maintain at all times adequate systems, controls and procedures to prevent its employees from engaging in bribery or making other unlawful payments prohibited under any applicable anti-bribery or anti-corruption law enacted in Relevant Jurisdiction. Neither the Borrower nor any other member of the Group, nor to the Borrower's knowledge, any employee acting in his or her capacity as such or other person acting on behalf of them has offered, promised, paid, received, requested or agreed to receive a bribe or other unlawful payment or offered, promised or given any financial or other advantage to a foreign public official (or to a third party at the request or acquiescence of the foreign public official) in an attempt to influence them in their capacity as a foreign public official to obtain or retain business, or to obtain an advantage in the conduct of business, where such offer, promise or payment is not permitted under applicable laws.

(b)

The operations of the Group are conducted in compliance with applicable financial record keeping and reporting requirements of all applicable money laundering and anti-terrorism financing laws, regulations and rules of the jurisdictions in which the Group conducts business and any related or similar applicable regulations, rules or guidelines issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”), and:

(i)

no suit, action or proceeding in respect of any Money Laundering Laws by or before any court or governmental agency, authority or body or any arbitrator involving the Borrower or any other member of the Group or any of their respective employees (in their capacity as such), is pending or threatened; and

(ii)

neither the Borrower nor any other member of the Group or any of their respective employees (in their capacity as such), has:

(A)

used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity;

(B)

made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds;

(C)

caused any of their respective Affiliates or Subsidiaries to be in violation of any provision of any supranational, national, local or other law regulating the payments of bribes to government officials or employees; or

(D)

made any bribe, rebate, pay-off, influence payment, kickback or other unlawful payment.

15.19

Sanctioned Persons

Neither the Borrower nor any other member of the Group, nor, to the Borrower's knowledge, any director, officer, employee of any such entity is a Person subject to any means of any economic or financial sanctions, or laws and regulations providing for such sanctions, trade embargoes or similar measures enacted, administered or enforced by any Governmental Authority (or by any regulatory agency).

15.20

Environmental Matters

It is not subject to any judicial, administrative, government, regulatory or arbitration proceeding alleging a material violation of any applicable Environmental Laws.

For the purposes of Clauses 15.20 and 15.21 hereof, the term " material " refers to a violation or an Environmental Claim that has or is reasonably likely to result in a Material Adverse Effect.

15.21

Environmental Laws

(a)

The Borrower and any other members of the Group are to the best of the Borrower's knowledge in compliance with Clause 15.20 ( Environment al matters ), except for such non-compliance which does not have a Material Adverse Effect and, to the Borrower's knowledge, no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

(b)

No material Environmental Claim has been commenced or to the Borrower's knowledge is threatened in writing against the Borrower or any other member of the Group, where that claim has or is reasonably likely, if determined against such entity, to have a Material Adverse Effect.

15.22

Controlling shareholder

The Borrower has no controlling shareholder.

For the purpose of this Clause 15.22 ( Controlling shareholder ), the term "Control" shall have the meaning ascribed to such term in the Control of Financial Services Law (Insurance) of 1981.

15.23

Repetition

The Repeating Representations are deemed to be made by the Borrower by reference to the facts and circumstances then existing on:

(a)

the date of the Utilisation Request; and

(b)

the first day of each Interest Period.

16.	Information Undertakings

The undertakings in this Clause 16 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents.

16.1

Financial statements

The Borrower shall supply to each Lender, a copy of:

(a)

as soon as the same become available, but in any event within 120 days after the end of each of its financial years, the audited consolidated financial statements of the Borrower for that financial year.

(b)

as soon as the same become available, but in any event within 90 days after the end of each Quarter of each of its financial years, the consolidated reviewed financial statements of the Borrower for that Quarter.

(c)

Publication of the financial statements mentioned in (a) and (b) above on the Magna or the Edgar websites, shall be deemed as their delivery to the Lenders as required hereunder.

16.2

Compliance Certificate

(a)

The Borrower shall supply to the Lenders, within 7 business days of the publication or delivery of the financial statements pursuant to paragraph (a) or (b) of Clause 16.1 ( Financial statements ), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 17 ( Financial Covenants ) as at the date as at which those financial statements were drawn up.

(b)

Each Compliance Certificate shall be signed by the CFO of the Borrower.

16.3

Information: miscellaneous

(a)

The Borrower shall supply to each Lender a copy of:

(i)

all documents dispatched by it to its shareholders (or any class of them) as such or its creditors generally, at the same time as they are dispatched;

(ii)

promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against the Borrower or any member of the Group, and which might reasonably be expected to have a Material Adverse Effect.

(iii)

promptly, such further information regarding the financial condition (including any questions that the Lenders will see relevant with respect to any financial statements ) business and operations of the Borrower as any Finance Party may reasonably request.

(b)

The Borrower shall, promptly upon receiving a rating below ilA (and thereafter, upon any additional change in rating), notify the Lenders about such event.

For the purpose of this Clause 16.3, any information published on the EDGAR/MAYA systems, shall be considered as having been duly supplied under this section.

16.4

Notification of default

(a)

The Borrower shall notify the Lenders of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

(b)

Promptly upon a request by the Lenders, the Borrower shall supply to the Lenders a certificate signed by its CFO or any of it executive vice presidents on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

16.5

"Know your customer" checks

If:

(a)

the introduction of or any change in (or in the interpretation, administration or application of) any law made after the date of this Agreement;

(b)

any change in the status of the Borrower after the date of this Agreement; or

(c)

a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer subject to 20.1(a) (Changes to the Lenders) below,

obliges any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Lenders (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Lenders, such Lender or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

17.	Financial Covenants

17.1

Definitions

In this Clause 17 the following terms shall have the meanings set forth below.

Adjusted EBITDA means, at any relevant time, the EBITDA, adjusted to (i) termination fees, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities, (iv) mark-to-market gains or losses from accounting of derivatives, (v) merger and acquisition transaction costs (vi) stock-based compensation, (vii) gain or losses from extinguishment of liabilities (viii) gains or losses on sale of subsidiaries and property, plant and equipment, and (ix) other unusual or non-recurring items, as set forth in the Discussion and Financial Analysis item in the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be), or any other parallel item if the location of presenting such data changes.

EBITDA means, at any relevant time, the net income before interest, taxes, depreciation and amortization, during the last four successive Quarters at such time, according to the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be).

Equity means, the equity in the Borrower’s consolidated balance sheet, according to the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be).

Equity to Total Assets Ratio means, the ratio of (a) Equity to (b) Total Assets.

“ Examination period ” - Any period of two Quarters for which two consecutive and successive financial statements (annual audited or quarterly reviewed, as the case may be) are published.

Financial Indebtedness means, the Financial Indebtedness (as defined in Clause 1 above) in the end of the relevant period, to be determined in accordance with the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be).

Financial Indebtedness to EBITDA Ratio means, the ratio of (a) Financial Indebtedness to (b) Adjusted EBITDA.

Total Assets means the total assets of the Borrower on the last day of the relevant period, as set forth in the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be).

17.2

Financial covenants

(a)

During the period commencing from the date hereof and ending on the Discharge Date, the Borrower hereby undertakes that:

(i)

The Equity to Total Assets Ratio (after neutralizing cash and cash equivalents from both the Equity and the Total Assets) for a period exceeding the Examination Period shall not be less than 25%.

(ii)

The Equity (excluding minority rights and including shareholder loans provided to the Borrower by any of its shareholders that are subordinated to the Borrower's obligation to the Lenders under the Finance Documents, pursuant to a subordination shareholder loan agreement which meets the conditions set forth in Schedule 4 (Subordinated Shareholder Loans Conditions) (unless otherwise was agreed in advance and in writing by the Lenders)) during a period exceeding the Examination Period, shall not be lower than USD 650,000,000.

(iii)

The Financial Indebtedness to EBITDA Ratio as set forth in the Managenent's Discussion and Analysis of Financial Condition and Results of Operations item in the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be), or any other parallel item if the location of presenting such data changes, shall not exceed 5 unless such exceeding is cured within twelve months after the occurrence of such event, and provided that the Financial Indebtedness to EBITDA Ratio shall not exceed 6 at any time during such twelve months (and it is being clarified that during such twelve months in which the Financial Indebtedness to the EBITDA ratio exceeds 5 but not exceeds 6, such event shall not constitute an Event of Default).

(iv)

(b)

Additional Financial Covenants

(i)

The Borrower confirms that on the date hereof it has no obligation to any of its other creditors, to comply with any financial covenant that is not included in this Clause 17 ( Financial Covenants ) or Clause 18.7 ( Distributions ) , or that is containing terms that are more onerous to such creditor than the terms of this Clause 17 ( Financial Covenants ) or Clause 18.7 ( Distributions ) (including any financial covenant with respect to distributions or any other types of payments to any of the shareholders of the Borrower) (" Additional Financial Covenant ").

(ii)

Any Additional Financial Covenant (whether exists now or will be existed in the future) is or will be, as the case may be, automatically applied to this Agreement and form an integral part of this Clause 18 ( Financial Covenants ) or Clause 18.7 ( Distributions ), as the case may be.

(iii)

Without derogating from the provisions of Clause 17.2(b)(ii) above, the Borrower shall inform the Lenders in any case in which it undertakes to comply with any Additional Financial Covenant.

(iv)

Notwithstanding the above, the provisions of Clause 17.2(b)(ii) above shall not be applied to any Additional Financial Covenant that (a) was made prior to the date hereof with respect to a certain loan or an ongoing facility, or was renewed thereafter for the purpose of extending the maturity date of such loan or ongoing facility; and (b) is referring to an identical financial covenant as set forth in Clause 18.7(b)(i) below.

(v)

The Borrower will inform the Lenders reasonably time in advance, regarding the expiration date of any Additional Financial Covenant, and as of such expiration date, such relevant Additional Financial Covenant shall no longer form an integral part of this Agreement.

(c)

The calculation of each financial covenant included in Clause 17.2(a) or 17.2(b) above will be performed consistently with the calculation of such financial covenant under the agreements with other creditors of the Borrower.

17.3

Testing

The financial covenants set out in this Clause 17 shall be tested by reference to the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be).

17.4

New Accounting Treatment

(a)

The Borrower shall inform the Lenders on any change in its accounting principles or policies (any such change, to be referred to hereinafter as the “ New Accounting Treatment ”), that caused and/or may cause any change to its relevant financial statements which may materially and adversely affect the financial covenants set forth in Clause 17.2 above.

(b)

In the event of the introduction of a New Accounting Treatment (as such term is defined in paragraph (a) above), that in the view of any of the Parties, caused and/or may cause any change to the relevant financial statements which may affect the financial covenants set forth above, the Lenders and the Borrower shall negotiate any amendments to the financial covenants set out above required, if at all, in order to revise the relevant financial covenants contained therein, to take into account such New Accounting Treatment with the intention of adjusting such financial covenants to preserve the original commercial and economic effect which such financial covenants were intended to achieve. In case no agreement is reached with respect to such revisions in the financial covenants within 30 (thirty) days of the commencement of such negotiations, the Lenders shall be entitled (without derogating from any other rights they may have under this Agreement) to nominate any of the managing partners of any of the Auditors to perform (at the Borrower's expense) such revisions to this Clause 17 (including any changes to the definitions or any defined terms used herein) required in his opinion in order to revise the relevant financial covenants contained herein to adjust such financial covenants to preserve the original commercial and economic effect which such financial covenants were intended to achieve. Any such revisions shall be binding from the end of the Quarter in which such revisions were made.

18.	General Undertakings

The undertakings in this Clause 18 shall remain in force from the date of this Agreement until the Discharge Date.

18.1

Authorisations

The Borrower shall promptly obtain, comply with and do all that is necessary to maintain in full force and effect; and supply certified copies to each Lender of, any Authorisation required under any law of its Relevant Jurisdiction to:

(a)

enable it to perform its obligations under the Finance Documents;

(b)

ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document in the State of Israel and the jurisdiction of incorporation of the Borrower; and

(c)

carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.

18.2

Compliance with laws

The Borrower shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.

18.3

Negative pledge

The Borrower shall not create a floating charge over all of its direct assets in favour of any third party to secure its debts to it, nor will it create a fixed charge over any of its direct holdings in any Subsidiary in favour of any third party (each such charge floating or first charge, a " Charge "), unless all of the following conditions were met: (i) the Charge is registered, concurrently with the registration of an identical fixed or floating charge (as the case may be) in favour of the Lenders, and each such charge in favour of the Lenders shall be ranked at any time pari passu with each other Charge, in accordance with the portion of each creditor (to whom the Borrower has granted a Charge) out of the total Borrower's Financial Indebtedness; (ii) the creation of the Charge shall be made in collaboration with the Lenders, and in a form approved by them; (iii) notwithstanding the provisions of paragraph (ii) above, the Borrower shall be entitled to create a fixed and floating Charges over any of its direct holdings in any direct Subsidiary, without the need to obtain the consent of the Lenders, provided that such Charge is created to secure Financial Indebtedness incurred by it for the sole purpose of (A) execution of a project finance; or (B) financing or refinancing the acquisition by the Borrower of the asset that will be secured under such Charge.

The above does not limit: (a) any corporation controlled by the Borrower from creating floating or fixed charges on all and/or part of their assets (provided that such charge shall not secure any Financial Indebtedness of the Borrower); (b) the Borrower to create fixed and floating charges over specific asset of the Borrower (except for direct holdings of the Borrower in any Subsidiary of it) in favour of any third party.

18.4

Disposals

(a)

The Borrower (and the Borrower shall procure that any entity controlled by it whether directly or indirectly) shall not enter into a single transaction or a series of transactions (whether related or not) to sell, lease, transfer or otherwise dispose of any asset (including by way of amalgamation, demerger, merger or corporate reconstruction) in the aggregate, amounts to Most of the Borrower's Assets, during any financial year (a " Trigger Event "), without the Lenders' consent.

(b)

" Most of the Borrower 's Assets " - Shall mean any asset (including number of assets cumulatively) owned by the Borrower's or any entity controlled by it (whether directly or indirectly), whose total value, as per the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be), constitutes at least 50.01% of the Borrower's total assets (consolidated, including cash and cash equivalents, deposits and marketable securities).

18.5

Merger

The Borrower will not enter into any amalgamation, demerger, merger or corporate reconstruction (" Merger "), except where the Borrower remains the surviving entity after the Merger and such Merger has not prejudiced its obligations herein and has no adverse effect on the rights of the Lenders under any Finance Document.

18.6

Activities

The Borrower shall procure that no substantial change is made to the general nature of the business of the Group from that carried on at the date of this Agreement. Without derogating from the generality of this Clause 18.6, the Borrower shall continue to be a reporting company, and its common stock shall continue to be listed and traded on the New York Stock Exchange or the Tel Aviv Stock Exchange (and/or may replace any of the foregoing with the listing of its common stock on Nasdaq), provided however , that the Borrower may delist its securities from both these stock exchanges subject to reaching prior written approval with the Lenders as to the reports and corporate governance that shall apply thereto for the full satisfactions of the Lenders in their sole discretion.

18.7

Distributions

(a)

Except as permitted under paragraph (b) below, the Borrower shall not declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in any kind) on or in respect of its share capital (or any class of its share capital) (a " Distribution ").

(b)

Notwithstanding the Provisions of paragraph (a) above, the Borrower will be entitled to make, commit to make or declare, Distributions with respect to an applicable financial year, which, if relevant, comply with the provisions of any law and any contractual limitation applicable thereto, and provided that all the following conditions were met:

(i)

The amount of Distribution shall not exceed 50% of the net profit of that financial year, as reflected under the audited consolidated financial statements of the Borrower for that financial year. It is being clarified that this condition shall be expired on the date on which all outstanding amounts under all the Israeli bonds issued by the Borrower prior to the date hereof will be repaid in full. The above clarification shall not derogate from any right of the Lenders under Clause 17.2(b) above in accordance with its terms (including with respect to any Additional Financial Covenant (as defined in such Clause), from any kind, relating to Distributions).

(ii)

The equity of the Borrower immediately after giving effect to such Distribution shall be at least equal to USD 800,000,000 (excluding minority rights).

(iii)

No Default has occurred and is continuing at the date of such Distribution and no Default shall occur as a result of such Distribution.

18.8

Related party transactions

The Borrower (and the Borrower shall procure the no member of the Group) shall not enter into any agreement or transaction or make any payment or incurrence of any liability or obligation for the benefit of, any entity that holds at the date of such agreement or transaction 20% (twenty percent) of any means of control in the Borrower, unless (a) it is made on an arms' length basis; and (b) the Borrower has approved it as required by applicable law including NYSE rules, if applicable.

18.9

Pari Passu ranking

The Borrower shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

18.10

Environmental matters

(a)

The Borrower (and the Borrower shall procure that each member of the Group) will:

(i)

comply with all Environmental Laws applicable thereto in all material respects;

(ii)

obtain, maintain and ensure compliance in all material respects with all requisite Environmental Permits applicable to it and its operations; and

(iii)

implement procedures to monitor compliance with any Environmental Law applicable to it or its operations,

(b)

The Borrower must, promptly upon becoming aware, notify the Lenders of:

(i)

any material Environmental Claim started against the Borrower or any other member of the Group, or to its knowledge, threatened;

(ii)

any circumstances reasonably likely to result in a material Environmental Claim against the Borrower or any other member of the Group; or any suspension, cancellation or revocation of any material Environmental Permit of the Borrower or any other member of the Group.

For the purposes of this Clause 18.10, the term "material" shall have the meaning ascribed to such term in Clause 15.20 above.

18.11

Borrower's Reports

The Borrower shall timely file and furnish all forms, reports and documents with the SEC and ISA which shall comply in all material respects with the applicable requirements of (A) the Securities Act, the Exchange Act and the Sarbanes-Oxley Act and any other similar law (and if applicable. the Securities Law and the regulations promulgated thereunder and any other similar law); or (B) if the Borrower will at any time be listed in the Tel Aviv Stock Exchanges only - the Securities Law and the regulations promulgated thereunder and any other similar law; as the case may be. Each such form, report and document shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

18.12

Rating

If at any time the Lenders will require so, the Borrower shall maintain a rating by a Credit Rating Agency, at its own expense.

18.13

Governing law and enforcement

(a)

The Borrower shall not object to the application of the Israeli law to any Dispute with the Lenders, or to the exclusive jurisdiction of the courts of Tel-Aviv-Jaffa to settle any Dispute.

(b)

If any of the events specified in paragraph (iii) of the opening paragraph of Clause 7.1 ( Illegality ) above has occurred, the Borrower shall cooperate actively with the Finance Party's, for applying the Israeli law and the exclusivity of the jurisdiction of the courts of Tel-Aviv-Jaffa with respect to any Dispute.

19.	Events of Default

Each of the events or circumstances set out in this Clause 19 is an Event of Default (save for Clause 19.20 ( Reduction of Period ) and 19.21 ( Acceleration ).

19.1

Non-payment

The Borrower does not pay on the due date any amount payable pursuant to a Finance Document at the place and in the currency in which it is expressed to be payable, unless the non-payment is remedied within five Business Days of the due date of such payment.

19.2

Financial covenants

Any requirement of Clause 17.2 ( Financial Covenants ) is not satisfied.

19.3

Other obligations

The Borrower does not comply with any of its obligations under the Finance Documents (other than those referred to in Clause 19.1 ( Non-payment ) and Clause 19.2 ( Financial covenants ), unless the non-compliance is: (i) capable of remedy and is remedied within 30 days of the earlier of (a) the Lenders giving notice to the Borrower; and (b) the Borrower is becoming aware of the failure to comply.

19.4

Misrepresentation

Any representation or statement made or deemed to be made by the Borrower in the Finance Documents or any other document delivered by or on behalf of the Borrower under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made or repeated, unless such failure to comply:

(a)

is capable of remedy; and

(b)

is remedied within 14 days of the earlier of (i) the Lenders giving notice to the Borrower; and (ii) the Borrower is becoming aware of such failure to comply.

19.5

Cross default

(a)

Any Financial Indebtedness of the Borrower or any single Material Group Company is not paid when due (after the expiry of any originally applicable grace period), in (i) an amount exceeding USD 50,000,000 (fifty million US dollars) in any single event; or (ii) an aggregated amount exceeding USD 75,000,000 (seventy five million US dollars), for any several events that occurred during any nine (9) months.

(b)

Financial Indebtedness of the Borrower or any single Material Group Company in (i) an amount exceeding USD 50,000,000 (fifty million US dollars) in any single event; or (ii) the aggregate amount exceeding USD 75,000,000 (seventy five million US dollars), for any several events that occurred during any nine (9) months:

(i)

is declared to be or otherwise becomes due and payable prior to its specified maturity; or

(ii)

is capable of being declared by a creditor to be due and payable prior to its specified maturity or being placed on demand,

in each case, as a result of an event of default (howsoever described) that is continuing;

(c)

Any commitment for any Financial Indebtedness of the Borrower or any of its Material Group Company, in an amount exceeding USD 50,000,000 (fifty million US dollars), is cancelled or suspended by a creditor of such entity as a result of an event of default (however described) that is continuing.

Paragraphs (a)-(c) above do not apply to an event in respect of which all of the following conditions are met: (a) such event has occurred with respect to Financial Indebtedness that is part of a non-recourse project finance of a Material Group Company; and (b) the value of such project as per the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be) constitute less than 15% (fifteen percent) of the total assets of the Borrower, as set forth in the relevant financial statements of the Borrower.

19.6

Insolvency

Any of the following occurs in respect of any the Borrower or any Material Group Company:

(a)

it is, or is deemed for the purposes of any applicable law to be, unable to pay its debts as they fall due or insolvent;

(b)

it admits its inability to pay its debts as they fall due;

(c)

it declares an insolvency under any applicable law under its Relevant Jurisdiction;

(d)

it suspends making payments on any of its debts when due for payment, or announces an intention to do so;

(e)

by reason of actual or anticipated financial difficulties, it (A) begins negotiations with any of its creditor for the rescheduling of its indebtedness; or (B) enters into a compromise, arrangement, assignment or composition with one or more of its creditors; or

(f)

A moratorium is declared in respect of its indebtedness. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.

19.7

Insolvency proceedings

(a)

Except as provided below, any of the following occurs in respect of the Borrower or any Material Group Company:

(i)

any step is taken with a view to a moratorium or a composition, compromise, assignment or similar arrangement with any of its creditors (including proceedings under or in connection with sections 350 or 350A of the Israeli Companies Law, 1999);

(ii)

any person presents a petition, or files documents with a court or any registrar for its winding-up, liquidation, administration or dissolution (including on a temporary basis);

(iii)

any involuntary case shall be commenced against it under the Bankruptcy Code, Companies Law, Companies Ordinance [New Version] 5743-1983, Bankruptcy Ordinance 1980 or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect (excluding the actions specified in paragraph (ii) above);

(iv)

the suspension of payments on any of its debts when due, a moratorium of any indebtedness, winding-up, bankruptcy, liquidation, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) (including on a temporary basis); or a court of competent jurisdiction enters a decree, freeze order (Hakpaat Halichim) or order for relief in respect of it in an involuntary case under the Bankruptcy Code, Companies Law, Companies Ordinance [New Version] 5743-1983, Bankruptcy Ordinance 1980 or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or any other similar relief shall be granted under any applicable federal or state law or Israeli law;

(v)

any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, sequestrator, administrative receiver, administrator or similar officer is appointed in respect of it or any of its assets (including on a temporary basis); or

(vi)

enforcement of any Security over any asset or assets owned (directly or indirectly) by the Borrower, in an aggregated value exceeding USD 50,000,000 (fifty million US dollars) in any period of 12 (twelve) consecutive months.

(vii)

its partners, shareholders, directors or other officers request the appointment of, or give notice of their intention to appoint a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer (including on a temporary basis);

including, in each of the above cases, without limitation any decision, application or order relating to a reorganisation application (‘ bakashat havra’a ’) or any other application or remedy under the third chapter (‘ perek shlishi ’) of the ninth part (‘ helek tshi’i ’) of the Companies Law – 1999 or any relevant provision of the Partnership Ordinance 1975 or the Bankruptcy Ordinance 1980.

(b)

Paragraph (a) above does not apply to:

(i)

any step or procedure which is taken with the prior consent of the Lenders; or

(ii)

any of the steps specified in paragraph (a)(ii) above which:

(A)

is being contested in good faith and with due diligence; and

(B)

is discharged or struck out within 45 days;

(c)

Paragraphs (a)(iv)-(a)(vi) above, do not apply to an event in respect of which all of the following conditions are met: (a) such event has occurred only with respect to Financial Indebtedness that is part of a non-recourse project finance of a Material Group Company; and (b) the value of such project as per the Borrower's recent consolidated financial statements (annual audited or quarterly reviewed, as the case may be) constitute less than 15% (fifteen percent) of the total assets of the Borrower, as set forth in the relevant financial statements of the Borrower.

19.8

Creditors' process

Any expropriation, attachment, sequestration, distress or execution affects any asset or assets owned (directly or indirectly) by the Borrower, in an aggregate value exceeding USD 50,000,000 (fifty million US dollars) in any period of 12 (twelve) consecutive months, except where all of the following conditions have been fulfilled: (i) the entity that owns such asset or assets is in good faith and on reasonable grounds contesting the expropriation, attachment, sequestration or distress by appropriate Proceedings diligently pursued; (ii) the Lenders are satisfied that the ability of the Borrower to comply with its obligations under the Finance Documents will not be adversely affected whilst such expropriation, attachment, sequestration or distress is being so contested; and (iii) such processes are cancelled or withdrawn not later 45 (forty five) days after the institution thereof.

19.9

Voluntary Bankruptcy; Appointment of Receiver, etc.

The Borrower or any Material Group Company shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code, Companies Law, Companies Ordinance [New Version] 5743-1983, Bankruptcy Ordinance 1980 or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or the Borrower or any Material Group Company shall make any assignment for the benefit of creditors.

19.10

Unlawfulness

(a)

It is or becomes unlawful for the Borrower to perform any of its obligations under any Finance Document.

(b)

Any obligation or obligations of the Borrower under any Finance Documents are not or cease to be legal, valid, binding or enforceable for any reason.

19.11

Going concern qualification

If a going concern qualification has been noted in any of the Borrower's financial statements.

19.12

Activities

If the Borrower fails to comply with the provisions of Clause 18.6 ( Activities ) above.

19.13

Litigation

Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened in writing against the Borrower or any other member of the Group which has or is reasonably likely to have a Material Adverse Effect, if adversely determined.

19.14

Disposals

If the Borrower fails to comply with the provisions of Clause 18.4 ( Disposals ) above.

19.15

Merger

If the Borrower fails to comply with the provisions of Clause 18.5 ( Merger ) above.

19.16

Ownership of the Borrower

If any Person will hold (alone or together with others) 50% or more of the issued and paid up share capital (on a fully diluted basis) of the Borrower, without the prior written consent of the Lender to such change.

19.17

Rating

If at any time during the term of this Agreement, any Credit Rating Agency has rated the Borrower or any of its Financial Indebtedness below ilBBB. In the case where the Borrower is ranked by more than one rating agency, then, the rating to be examined for the purpose of this Clause 19.17, shall be the lowest rating received.

19.18

Negative Pledge

If the Borrower or any member of the Group fails to comply with the provisions of Clause 18.3 ( Negative Pledge ) above.

19.19

Material Adverse Effect

Any event or circumstance occurs which, has or is reasonably likely to have a Material Adverse Effect.

19.20

Reduction of cure period

Notwithstanding anything to the contrary in this Clause 19, in the event that the Lenders believe that delay in acting pursuant to Clause 19.21 below due to the operation of any cure period specified under the Finance Documents is likely to materially prejudice the ability of the Finance Parties to receive full payment in accordance with the terms of the Finance Documents of all of the Total Obligations such that an urgent action is required to preserve the Finance Parties' rights, the Lenders may, by written notice to such effect to the Borrower, shorten or cancel any such cure period.

19.21

Acceleration

On and at any time after the occurrence of an Event of Default which is continuing the Lenders may:

(a)

declare that all or part of the Loan, together with accrued interest and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or

(b)

declare that all or part of the Loan and the other Total Obligations be payable on demand, whereupon it shall immediately become payable on demand by the Lenders.

(c)

exercise any or all of their rights, remedies, powers or discretions under the Finance Documents, including enforcing their rights with respect to any of the Collateral, or against any Guarantor in the discretion of the Lenders.

20.	Changes to the Lenders

20.1

Assignments and participations by the Lenders

Subject to this clause 20 below, a Lender (the “ Existing Lender ”) may transfer or assign any of its rights and obligations in connection with the Loan, directly or by way of participation, without the consent of the Borrower, subject to the terms set forth below (the “ New Lender ”):

(a)

Notwithstanding anything to the contrary herein, no transfer or assignment shall be made unless The New Lender is (a) any entity included in sections (2) to (4) to the first supplement to the Israeli Securities Law (b) foreign bank ("bank hutz") according to the Israeli Banking (Licensing) Law, 5741-1981 (subject to the receipt of the Borrower's confirmation that no litigation proceedings are pending against the Borrower by such foreign bank, and the Borrower shall provide such confirmation no later than 10 Days after a written demand by the Lenders); (c) any affiliate of any Lender (and with respect to the Original Lenders, only entities which are controlled, directly or indirectly by Migdal Insurance & Financial Holding Ltd.); (d) any wholly owned SPV of the entities specified in sub-clauses (a)-(c) above specifically formed for the purpose of acquiring debt under a securitization or any similar transaction; or (e) any investment basket ( Sal Hashkaot ) comprising the activities of entities included in sub-clauses (a)-(c) above to consolidate investment activity "financial".

(b)

Any other assignments or transfers are subject to the receipt of the prior written consent of the Borrower.

(c)

Each New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Lenders have authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.

(d)

If:

(i)

a Lender assigns or transfers any of its rights or obligations under the Finance Documents; and

(ii)

as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to make a payment to the New Lender under Clause 11 or 12 above,

then, in the event that the New Lender seeks to receive payments under those clauses in excess of payments to which the Existing Lender would have been entitled if the assignment, transfer or change had not occurred, Borrower, may, not later the 5 Business Days after receiving New Lender's request to receive such excess payments, prepay that part of the Loan on which the New Lender wishes to receive such excess payments, without any Prepayment Fee, penalty or premium. This Clause 20.1(d) applies without prejudice to Clause 11.2(c)(ii) above.

20.2

Notice to the Borrower

The Lenders shall, as soon as reasonably practicable after they have executed an Assignment Agreement, send to the Borrower notification that an assignment has become effective setting forth details of the relevant obligations that have been assigned and the identity of the New Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Finance Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant's interest in any commitments, loans, letters of credit or its other obligations under any Finance Document) to any person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

20.3

Security over Lenders' rights

In addition to the other rights provided to Lenders under this Clause 20, each Lender may without consulting with or obtaining consent from the Borrower, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender to a federal reserve or central bank except that no such charge, assignment or Security shall:

(a)

release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security for the Lender as a party to any of the Finance Documents; or

(b)

require any payments to be made by the Borrower other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents.

21.	Changes to the Borrower

The Borrower shall not assign any of its rights or transfer any of its rights or obligations under the Finance Documents without the prior consent of the Lenders.

22.	Conduct of business by the Finance Parties

No provision of this Agreement will:

(a)

interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

(b)

oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

(c)

except as otherwise provided in Clauses 11 and 12 above, oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

23.	Payment Mechanics

23.1

Payments to the Lenders

All payments to be made by the Borrower under the Finance Documents shall be made in USD, directly to the accounts specified in the table appearing in Part II I of Schedule 1 (The Parties), pro rata between such accounts, in accordance with the respective rate specified with respect to each account in such table.

23.2

Distributions to the Borrower

The Lenders may (with the consent of the Borrower or in accordance with Clause 24 (Set-Off)) apply any amount received by them for the Borrower in or towards payment (on the date and in the currency and funds of receipt) of any amount due from the Borrower under the Finance Documents.

23.3

Partial payments

(a)

If the Lenders receive a payment that is insufficient to discharge all the amounts then due and payable by the Borrower under the Finance Documents, the Lenders shall apply that payment towards the obligations of the Borrower under the Finance Documents in the following order:

(i)

first , in or towards payment, pro rata, of any fee or commission due but unpaid under this Agreement;

(ii)

second , in or towards discharge of all costs and expenses incurred and which may be incurred in connection with the collection of the Total Obligations, the above in such order and applied in such proportion between such amounts due but unpaid under the Finance Documents as the Lenders shall deem fit;

(iii)

third , in or towards payment, pro rata, of any other amount due, but unpaid, under the Finance Documents (other than principal), including interest, default interest, additional interest and all other costs;

(iv)

fourth , in or towards payment, pro rata, on account of the due and unpaid principal of the Loan; and

(b)

The Lenders may after the occurrence and continuation of an Event of Default vary the order set out in paragraphs (i)-(iv) above.

(c)

Paragraphs (a) and (b) above will override any appropriation made by the Borrower.

23.4

No set-off by the Borrower

All payments to be made by the Borrower under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

23.5

Business Days

(a)

Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

(b)

During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

23.6

Currency of account

(a)

Subject to paragraphs (b) and (c) below, USD is the currency of account and payment for any sum due from the Borrower under any Finance Document.

(b)

Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

(c)

Any amount expressed to be payable in a currency other than euro shall be paid in that other currency.

23.7

Disruption to payment systems etc

If either the Lenders determine (in their discretion) that a Disruption Event has occurred or the Lenders are notified by the Borrower that a Disruption Event has occurred:

(a)

the Lenders may, and shall if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Loan as the Lenders may reasonably deem necessary in the circumstances;

(b)

the Lenders shall not be obliged to consult with the Borrower in relation to any changes mentioned in paragraph (a) if, in their opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

(c)

any such changes agreed upon by the Lenders and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 29 (Amendments and Waivers);

(d)

the Lenders shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Lenders) arising as a result of their taking, or failing to take, any actions pursuant to or in connection with this Clause 23.7.

24.	Set-Off

A Finance Party may set off any matured obligation due from the Borrower under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to the Borrower under the Finance Documents, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

25.	Notices

25.1

Communications in writing

Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

25.2

Addresses

The address (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

	(a)	in the case of the Borrower at:

		Ormat Technologies, Inc.

		Address: 6225 Neil Road, Reno 895111136, Nevada, USA

		Attention: Doron Blachar, CFO, Tel: 00-1-775-3569029, Email: dBlachar@ormat.com

	(b)	in the case of any Lender at:

		Migdal Insurance Company Ltd.

		Address: 4 Efal st. Petah Tikva, 4951104, Israel

	Attention:	Lior Sosonkin, Head of Infrastructure and project finance Department, Tel: +972-76-8868682, Email: liors@migdal.co.il; and

		Sarit Finkel, Manager of Credit Array Operation Department, Tel: +972-76-8868625, Email: saritfe@migdal.co.il.

or any substitute address or department or officer as the Party may notify to all other parties by not less than five Business Days' notice.

25.3

Delivery

(a)

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

(i)

if by way of fax, when received in legible form; or

(ii)

if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;

and, if a particular department or officer is specified as part of its address details provided under Clause 25.2 (Addresses), if addressed to that department or officer.

(b)

All the Lenders confirm that all notices from or to the Borrower shall be sent through Migdal Insurance Company Ltd. (or in any case where the Lenders have transferred or assigned more the 50% of their rights and obligations under the Finance Documents to a New Lender (as defined in Clause 20.1 above) - any other entity which will replace Migdal Insurance Company Ltd. according to a written notification sent to the Borrower by all the Lenders), and any such notice will be deemed as received or sent (as the case may be) by all the Lenders.

(c)

Any communication or document which becomes effective, in accordance with paragraphs (a) to (b) above, after 4pm in the place of receipt shall be deemed only to become effective on the following day.

25.4

Notification of address and fax number

Promptly upon changing its address or fax number, Migdal Insurance Company Ltd. or the Borrower, as the case may be shall notify the other Parties.

25.5

Electronic communication

(a)

Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means (including, without limitation, by way of posting to a secure website) if those two Parties:

(i)

notify each other in writing of their electronic mail address and/or any other information required to enable the transmission of information by that means; and

(ii)

notify each other of any change to their address or any other such information supplied by them by not less than five Business Days' notice.

(b)

Any such electronic communication as specified in paragraph (a) above to be made between the Borrower and a Finance Party may only be made in that way to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication.

(c)

Any such electronic communication as specified in paragraph (a) made between any two Parties will be effective only when actually received (or made available) in readable form and in the case of any electronic communication made by a Party to Migdal Insurance Company Ltd. only if it is addressed in such a manner as Migdal Insurance Company Ltd. shall specify for this purpose.

(d)

Any electronic communication which becomes effective, in accordance with paragraph (c) above, after 4 pm in the place in which the Party to whom the relevant communication is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following day.

(e)

Any reference in a Finance Document to a communication being sent or received shall be construed to include that communication being made available in accordance with this Clause 25.5.

25.6

Language

(a)

Any notice given under or in connection with any Finance Document must be in English or Hebrew.

(b)

All other documents provided under or in connection with any Finance Document must be in English or Hebrew.

26.	Calculations and Certificates

26.1

Accounts

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

26.2

Certificates and Determinations

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

26.3

Day count convention

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 365 or 366 days.

27.	Partial Invalidity

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

28.	Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any of the Finance Documents. No election to affirm any Finance Document on the part of any Finance Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.

29.	Amendments and Waivers

Required consents

Any term of the Finance Documents may be amended or waived only with the written consent of all the Lenders and the Borrower and any such amendment or waiver will be binding on all Parties.

30.	Confidential Information

30.1

Confidentiality

Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 30.2 ( Disclosure of Confidential Information ) and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

30.2

Disclosure of Confidential Information

Any Finance Party may disclose:

(a)

to any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

(b)

to any person:

(i)

to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as agent and, in each case, to any of that person's Affiliates, Representatives and professional advisers;

(ii)

with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or the Borrower and to any of that person's Affiliates, Representatives and professional advisers;

(iii)

appointed by any Finance Party or by a person to whom paragraph (b)(i) or (b)(ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;

(iv)

who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (b)(i) or (b)(ii) above;

(v)

to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law;

(vi)

to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

(vii)

to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 20.3 ( Security over Lenders' rights ).

(viii)

who is a Party; or

(ix)

with the consent of the Borrower;

In each case, such Confidential Information as that Finance Party shall consider appropriate if:

(A)

in relation to paragraphs (b)(i), (b)(ii) and (b)(iii), the person to whom the Confidential Information is to be given has entered into a confidentiality undertaking except that there shall be no requirement for a confidentiality undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

(B)

in relation to paragraph (b)(iv) above the person to whom the Confidential Information is to be given has entered into a confidentiality undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

(C)

in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances; and

(c)

to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Borrower if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information; and

(d)

to Fair Spread, from time to time, with all data, documents and information required under law (including the regulations codex issued by the Commissioner of Capital Market, Insurance and Savings). The Borrower shall fully cooperate with the Lenders and provide all data, documents and information required thereby, including in relation to any Collateral, in order to enable the Lenders to meet their regulatory obligations, in the manner and at such times as the Lenders shall so request.

30.3

Entire agreement

This Clause 30 constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

30.4

Inside information

Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.

30.5

Notification of disclosure

Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrower:

(a)

of the circumstances of any disclosure of Confidential Information made pursuant to paragraph (b)(v) of Clause 30.2 ( Disclosure of Confidential Information ) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

(b)

upon becoming aware that Confidential Information has been disclosed in breach of this Clause 30.

30.6

Continuing obligations

The obligations in this Clause 30 are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:

(a)

the date on which all of the Total Obligations have been paid in full; and

(b)

the date on which such Finance Party otherwise ceases to be a Finance Party.

31.	Counterparts

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

32.	Governing Law

This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by the laws of the State of Israel.

33.	Enforcement

Jurisdiction

(a)

The courts of Tel-Aviv-Jaffa shall have exclusive jurisdiction to settle any Dispute.

(b)

The Parties agree that the courts of Tel-Aviv-Jaffa are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(c)

This Clause 33 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to any Dispute in any other court in which the assets of any Obligor are located or in any other Relevant Jurisdiction for any purpose. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

IN WITNESS WHEREOF, the parties have signed this agreement on the date first mentioned above.

(Signature pages follow)

Signatories

Ormat Technologies, Inc.

As Borrower

By:
	Name:
	Title:
By:
	Name:
	Title

Attorney Confirmation

I, the undersigned, legal counsel of Ormat Technologies, Inc., hereby confirm that ______________ [is/are] duly authorized to sign this Loan Agreement for and on behalf of Ormat Technologies, Inc. and that [his/their] signature on the printed name of Ormat Technologies, Inc. binds Ormat Technologies, Inc. in this Loan Agreement.

		Date: March 22, 2018
Adv.

Migdal Insurance Company Ltd.

As Original Lender

By:
	Name:
	Title:
By:
	Name:
	Title:

Migdal's Makefet Pension and Provident Funds Ltd.

As Original Lender

By:
	Name:
	Title:
By:
	Name:
	Title:

Yozma Pension Fund of Self Employed Ltd.

As Original Lender

By:
	Name:
	Title:
By:
	Name:
	Title:

Signature page for the Loan Agreement dated March 22, 2018

Exhibit 10.2

FINANCE AGREEMENT

between

GEOTÉRMICA PLATANARES, S.A. DE C.V.

and

OVERSEAS PRIVATE INVESTMENT CORPORATION

Dated as of April 30 , 2018

OPIC/ 9000003553

NOTE:

THIS DRAFT IS FOR DISCUSSION PURPOSES ONLY AND HAS NOT BEEN APPROVED BY OPIC. THIS DRAFT DOES NOT CONSTITUTE AN AGREEMENT BY OPIC OR A COMMITMENT BY OPIC TO ENTER INTO AN AGREEMENT AND REMAINS SUBJECT TO CHANGE. ANY REPRESENTATION TO THE CONTRARY IS VOID.

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS AND INTERPRETATION		1
SECTION 1.01.	Definitions and Interpretation	1
ARTICLE II AMOUNT AND TERMS OF THE LOAN		1
SECTION 2.01.	Amount and Disbursement	1
SECTION 2.02.	Interest; Default Interest	2
SECTION 2.03.	Repayment of the Loan	2
SECTION 2.04.	Voluntary Prepayment	2
SECTION 2.05.	Mandatory Prepayment	3
SECTION 2.06.	Loan Fees and Cancellation	4
SECTION 2.07.	Tax Gross-Up; Stamp Duties; Proper Legal Form	4
SECTION 2.08.	Miscellaneous	5
ARTICLE III REPRESENTATIONS AND WARRANTIES		6
SECTION 3.01.	Representations and Warranties	6
ARTICLE IV CONDITIONS PRECEDENT TO FIRST DISBURSEMENT		12
SECTION 4.01.	Transaction Documents	12
SECTION 4.02.	Authorization	14
SECTION 4.03.	Ownership	14
SECTION 4.04.	Consents	14
SECTION 4.05.	Site	15
SECTION 4.06.	Security Interest	15
SECTION 4.07.	Insurance	15
SECTION 4.08.	Auditors	15
SECTION 4.09.	Legal Opinions	16
SECTION 4.10.	Appointment of Agent	16
SECTION 4.11.	Accounts; Offshore Well Reserve Account	16
SECTION 4.12.	Financial Projections	16
SECTION 4.13.	Construction COD Reports	16
SECTION 4.14.	Environmental and Social Requirements	17
SECTION 4.15.	ESAP	17
SECTION 4.16.	Due Diligence	17
SECTION 4.17.	Lien Waivers	17
SECTION 4.18.	Advisor Reports	17
SECTION 4.19.	Geothermal Resource	17
SECTION 4.20.	Equity Contributions; Subordinated Loans	17
SECTION 4.21.	Funding Arrangements	18
SECTION 4.22.	Notices to SERNA and MINOSA	18
ARTICLE V CONDITIONS PRECEDENT TO EACH DISBURSEMENT		18
SECTION 5.01.	Disbursement Request	18
SECTION 5.02.	Representations and Defaults	18
SECTION 5.03.	No Event of Default; Change in Circumstances	18
SECTION 5.04.	Notes	19
SECTION 5.05.	Closing Certificate	19
SECTION 5.06.	Financial Information and Project Progress	19
SECTION 5.07.	Payment or Reimbursement of Expenses	19
SECTION 5.08.	Central Bank Registration; Consents	19
SECTION 5.09.	DSR Requirement	19
SECTION 5.10.	Debt to Equity Ratio	19

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TABLE OF CONTENTS

(continued)

Page

SECTION 5.11.	Reservoir Monitoring Report	20
SECTION 5.12.	Project Costs	20
SECTION 5.13.	Independent Engineer Certificate	20
SECTION 5.14.	Funding	20
SECTION 5.15.	Insurance	20
SECTION 5.16.	Lien Waivers	20
SECTION 5.17.	Other Documents	20
ARTICLE VI AFFIRMATIVE COVENANTS		21
SECTION 6.01.	Company Operations	21
SECTION 6.02.	Maintenance of Rights and Compliance with Laws	22
SECTION 6.03.	Maintenance of Insurance	22
SECTION 6.04.	Accounting and Financial Management	23
SECTION 6.05.	Financial Statements and Other Information	23
SECTION 6.06.	Annual Operating Budget	24
SECTION 6.07.	Access to Records; Inspection; Meetings	24
SECTION 6.08.	Notice of Default and Other Matters	24
SECTION 6.09	Security Documents	25
SECTION 6.10.	Financial Ratios; DSR Requirement; Well Reserve Requirement	25
SECTION 6.11.	Environmental, Health and Safety Compliance	26
SECTION 6.12.	Worker Rights	27
SECTION 6.13.	Additional Project Documents	28
SECTION 6.14.	Drilling Program	29
SECTION 6.15.	SERNA Direct Agreement	29
ARTICLE VII NEGATIVE COVENANTS		29
SECTION 7.01.	Liens	29
SECTION 7.02.	Indebtedness	30
SECTION 7.03.	No Alteration or Assignment of Agreements	30
SECTION 7.04.	Restricted Payments and Shareholder Payments	31
SECTION 7.05.	Conduct of Business with Affiliates	31
SECTION 7.06.	No Sale of Assets; Mergers	31
SECTION 7.07.	Lease Obligations	31
SECTION 7.08.	Ordinary Conduct of Business	31
SECTION 7.09.	OFAC Compliance	32
SECTION 7.10.	Prohibited Payments	32
SECTION 7.11.	Accounts	32
SECTION 7.12	Project; Site	33
SECTION 7.13	Project Documents	33
ARTICLE VIII DEFAULTS AND REMEDIES		33
SECTION 8.01.	Events of Default	33
SECTION 8.02.	Remedies upon Event of Default	36
SECTION 8.03.	Arbitration	37
SECTION 8.04.	Borrower Consent to Suit; Exclusive Forum for Certain Actions	37
SECTION 8.05.	Judgment Currency	38
SECTION 8.06.	No Immunity	38
ARTICLE IX MISCELLANEOUS		39
SECTION 9.01.	Notices	39
SECTION 9.02.	English Language	40

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(continued)

Page

SECTION 9.03.	GOVERNING LAW	40
SECTION 9.04.	Succession; Assignment; Benefit	40
SECTION 9.05.	Survival of Agreements	40
SECTION 9.06.	Integration; Amendments	40
SECTION 9.07.	Severability	40
SECTION 9.08.	No Waiver	41
SECTION 9.09.	WAIVER OF JURY TRIAL	41
SECTION 9.10.	Indemnity	41
SECTION 9.11.	Cooperation; Loan Servicing	42
SECTION 9.12.	Further Assurances	42
SECTION 9.13.	Counterparts	42
SECTION 9.14.	Waiver of Litigation Payments	42
SECTION 9.15.	Conflict of Terms	42

SCHEDULES

X	Defined Terms and Rules of Interpretation
2.03	Amortization Schedule
2.08(b)	Wire Transfer Instructions for Remittance of Payments to OPIC
3.01(d)	Capitalization
3.01(l)	Complaints
3.01(m)	Financial Plan
3.01(x)	Contractors and Subcontractors
4.04	Consents
4.13(b)(i)	Punchlist Items
4.13(b)(ii)	Construction Payments
4.15	Environmental and Social Action Plan (ESAP)
4.19-A	Drilling Program
4.19-B	Reservoir Monitoring Plan
4.19-C	Form of Reservoir Monitoring Report
6.03	Insurance
6.05(d)	Form of Operating Report
6.06	Form of Annual Operating Budget
6.12	Worker Rights Action Plan
7.01	Liens
7.02	Indebtedness
7.07	Leases
8.03	Arbitration Provisions

TABLE OF CONTENTS

(continued)

Page

EXHIBITS

A-1	Form of New York Law Promissory Note
A-2	Form of Honduran Law Pagaré
A-3	Form of Authorization to Complete
B	Form of Disbursement Request
C-1	Form of Authorization Certificate of the Borrower (pursuant to Section 4.02)
C-2	Form of Authorization Certificate of the Shareholders (pursuant to Section 4.02)
D	Form of Closing Certificate (pursuant to Section 5.05)
E	Form of Independent Engineer Certificate (pursuant to Section 5.13)
F	Form of Compliance Certificate (pursuant to Section 6.05(a))
G	Form of Final Disbursement Certificate (pursuant to Section 6.05(g))
H-1	Form of Written Notice to SERNA
H-2	Form of Written Notice to MINOSA
I	Form of SERNA Direct Agreement

FINANCE AGREEMENT

THIS FINANCE AGREEMENT (this “ Agreement ”), dated as of April 30, 2018 (the “ Effective Date ”), is made by and between GEOTÉRMICA PLATANARES, S.A. DE C.V. , a sociedad anónima de capital variable organized and existing under the laws of the Republic of Honduras (the “ Borrower ”), and OVERSEAS PRIVATE INVESTMENT CORPORATION , an agency of the United States of America (“ OPIC ”).

The Borrower intends to implement the Project and has requested that OPIC provide a credit facility pursuant to Section 234(b) of the Foreign Assistance Act of 1961, as amended, which OPIC is willing to do on the terms and conditions set forth herein. Accordingly, in consideration of the foregoing and of the agreements contained herein, it is agreed as follows:

ARTICLE I
DEFINITIONS AND INTERPRETATION

SECTION 1.01. Definitions and Interpretation.

In this Agreement, including the Exhibits and Schedules hereto, (a) capitalized terms used but not otherwise defined have the meanings set forth in the attached Schedule X, and (b) the rules of interpretation set forth in Schedule X apply.

ARTICLE II
AMOUNT AND TERMS OF THE LOAN

SECTION 2.01. Amount and Disbursement .

(a) Commitment . Subject to the terms and conditions hereof, OPIC agrees to make, and the Borrower agrees to accept, a Loan for the Project in a principal amount not to exceed $124,700,000.

(b) Disbursement; Term . During the Commitment Period, the Borrower may request a Disbursement by delivering to OPIC a Disbursement Request not less than twenty (20) Business Days prior to the applicable Closing Date. Each Disbursement shall be evidenced by (i) a Note under New York law and (ii) a pagaré under Honduran law, dated the Closing Date, in the principal amount of the Disbursement and maturing on the Note Maturity Date. The Loan shall not exceed the amount of the Commitment, and Loan amounts repaid or prepaid may not be reborrowed.

(c) Number and Amount of Disbursements . There shall be no more than one (1) Disbursement in each fiscal quarter and no more than three (3) total Disbursements. Each Disbursement shall be in an amount of not less than $10,000,000 and in multiples of $100,000 in excess thereof. Notwithstanding anything to the contrary, (i) no Disbursement prior to the True-Up Date shall be in an amount that, together with all then previous Disbursements made, exceeds $114,700,000; and (ii) no Disbursement on or following the True-Up Date, shall be in amount that, together with all then previous Disbursements made, exceeds $124,700,000.

SECTION 2.0 2 . Interest; Default Interest .

(a) Payment of Interest; OPIC Note Interest Rate . On each Payment Date, beginning on the first Payment Date immediately following the first Closing Date and ending on the Note Maturity Date, the Borrower shall pay to the order of OPIC interest in arrears on the daily outstanding principal balance of each Note, less any amount of principal on which interest is payable at the Default Rate pursuant to Section 2.02(b), accrued at a rate per annum, subject to Section 2.02(c), equal to the sum of the following (subject to Section 2.02(c), the “ OPIC Note Interest Rate ” with respect to each Note):

(i) The Certificate Interest Rate; and

(ii) The OPIC Guaranty Fee;

provided , that if the Payment Date immediately following any Closing Date occurs within fifteen (15) Business Days of such Closing Date, the Borrower shall make its first interest payment under the related Note on the second Payment Date following such Closing Date.

(b) Default Rate . If the Borrower fails to pay when due any amount due to OPIC under any Financing Document, such unpaid amount shall bear interest at the Default Rate from the date such amount is due until the date on which such amount is paid in full.

(c) Adjustment to OPIC Note Interest Rate . If OPIC shall have made payment of any principal, interest or other guaranteed amount on account of a defaulted payment under any Note pursuant to OPIC’s guaranty under the Funding Documents (an “ OPIC Guaranty Payment ”), then, with respect to the amount of such OPIC Guaranty Payment, the OPIC Note Interest Rate from the date of such OPIC Guaranty Payment to the date of payment in full to OPIC of the amount of such OPIC Guaranty Payment may, at OPIC’s option, be converted to a fixed per annum rate of interest equal to the sum of the following:

(i) the highest Certificate Interest Rate set forth in any Note then outstanding (or, at OPIC’s option, the U.S. Treasury Cost); and

(ii) the OPIC Guaranty Fee,

and the Borrower shall, on demand, pay to OPIC the amount of such OPIC Guaranty Payment, together with interest thereon at the Default Rate, adjusted as provided in this Section 2.02(c).

SECTION 2.03. Repayment of the Loan .

The Borrower shall repay the Loan in fifty-eight (58) approximately equal quarterly installments (collectively, the “ Principal Installments ”) beginning on June 20, 2018 as set forth in Schedule 2.03.

SECTION 2.04. Voluntary Prepayment .

Subject to the requirements of the Funding Documents, including payment of any Redemption Premium payable thereunder, on any Designated Prepayment Date following the last day of the Commitment Period, the Borrower may, upon not less than forty-five (45) days’ nor more than sixty (60) days’ prior notice to OPIC, prepay the Loan, in whole or in part, in a minimum partial prepayment amount of $5,000,000, together with the payment to OPIC of (a) interest accrued to the date of prepayment on the portion of the principal amount of each Note that is to be prepaid in the case of a prepayment on a Payment Date or a prepayment in whole, and (b) a premium (the “ Prepayment Premium ”), calculated as a percentage of the Loan amount prepaid, in accordance with the following schedule:

Year Following Expiration of Commitment Period	Prepayment Premium
Year 1	2%
Year 2	2%
Year 3	1%
Year 4 and thereafter	None

All voluntary prepayments shall be applied in accordance with the terms of the OPIC Funding Agreement, or, if not provided for in the OPIC Funding Agreement, then as OPIC may otherwise determine.

SECTION 2.05. Mandatory Prepayment .

Subject to the requirements of the Funding Documents, including payment of any Redemption Premium payable thereunder, on any Designated Prepayment Date the Borrower shall, upon not less than forty-five (45) days and not more than sixty (60) days’ prior notice to OPIC, prepay the Loan in the event that and in the amount (net of the Borrower’s best estimate as of the date of such notice of the documented and reasonable costs, expenses and Taxes to be incurred or paid by the Borrower in connection with the collection and conversion, if in a currency other than Dollars, of such amount) by which (and only to the extent any of the following arise, accrue or are incurred on or after the Effective Date):

(a) Insurance Proceeds or other compensation proceeds for loss or damage to asset(s) received by the Borrower during any Fiscal Year that are not applied or committed to the repair or replacement of assets insured thereby or otherwise reinvested in the Project in a manner satisfactory to OPIC within one hundred-eighty (180) days after receipt by the Borrower, in an amount equal to the amount by which such unapplied or uncommitted proceeds, in the aggregate, exceed one million Dollars ($1,000,000);

(b) compensation or damages are received by the Borrower following a dispute that results in a material adverse change to the ENEE PPA;

(c) compensation or damages, other than payments in the nature of delay liquidated damages, paid to the Borrower pursuant to any Project Document (other than as described in clause (b) above), in an amount equal to the amount by which such compensation or damages, in the aggregate, exceed $350,000;

(d) the Borrower receives any Termination Payment or Expropriation Proceeds, in the amount equal to the lesser of (i) the Secured Obligations and (ii) such Termination Payment or Expropriation Proceeds, as the case may be; and

(e) Sale Proceeds resulting from one or more Dispositions in any year of all or any part of the Property of the Borrower received by the Borrower (except as permitted pursuant to Section 7.06(a)), in an amount equal to the amount by which such Sale Proceeds, in the aggregate, exceed $350,000.

Prepayments made pursuant to this Section 2.05 shall be subject to any Redemption Premium or other amounts payable pursuant to the Funding Documents and shall be applied in the same manner as if made pursuant to Section 2.04 (except that no Prepayment Premium shall be due). For purposes of Section 2.05(a), the prepayment shall be applied against payments due to OPIC taking into account the Redemption Premium, if payable pursuant to the Funding Documents in connection with such prepayment.

SECTION 2.06. Loan Fees and Cancellation .

(a) Commitment Fee . During the Commitment Period, the Borrower shall pay to OPIC, in arrears, on each Payment Date beginning on the first Payment Date after the Effective Date and on the last day of the Commitment Period, or, if earlier, the date this Agreement is terminated, a commitment fee (the “ Commitment Fee ”), accruing on a daily basis at the rate of half of one percent (0.50%) per annum , calculated for each day during the Commitment Period, on the amount of the Commitment.

(b) Cancellation Fee . The Borrower may cancel all or any part of the Commitment at any time upon written notice and payment to OPIC of a cancellation fee (the “ Cancellation Fee ”) equal to one percent (1%) of the amount of the Commitment canceled, provided , always, that the Borrower demonstrates to OPIC’s satisfaction that there are sufficient funds available, to operate the Project. Any part of the Commitment not disbursed at the end of the Commitment Period or that is terminated for any reason shall be deemed to have been canceled, and such Cancellation Fee shall be payable with respect thereto.

(c) Facility Fee. The Borrower shall pay OPIC a facility fee (the “ Facility Fee ”) in an amount equal to one percent (1%) of the amount of the Commitment on or prior to the first Closing Date.

(d) Maintenance Fee . The Borrower shall pay to OPIC an annual maintenance fee to cover OPIC’s administrative costs and expenses, including, but not limited to, systems infrastructure costs (the “ Maintenance Fee ”), which Maintenance Fee shall include an annual fee in the amount of forty-five thousand Dollars ($45,000), payable to OPIC on the first anniversary of the Payment Date immediately following the first Closing Date and on each anniversary of such Payment Date for so long as any portion of the Loan remains outstanding.

(e) Modification Fee. In the event that the Borrower requests an amendment to, waiver of, or consent under, any provision of this Agreement or any other Financing Document, OPIC will consider such a request on its merits upon payment by the Borrower, at the time of such request, of a fee which, in OPIC’s determination, shall be commensurate with the complexity and timing constraints of such amendment, waiver or consent (the “ Modification Fee ”); provided , however , that no Modification Fee will be payable if the amendment, waiver or consent is necessary, in OPIC’s determination: (i) to correct an error or omission in any Financing Document, or (ii) to improve the operations of the Project without materially altering the risks undertaken by OPIC. OPIC is under no obligation to agree to any amendment or waiver or to grant any consent. The Borrower acknowledges that OPIC may request a Modification Fee in connection with providing its consent to, or any amendment or waiver required for, (a) restructurings of any kind, (b) any prepayment requiring releases of collateral (other than prepayment in full of all obligations secured thereby) or (c) other similar actions by OPIC.

SECTION 2.07. Tax Gross-Up; Stamp Duties; Proper Legal Form .

(a) All sums payable by the Borrower hereunder and under any other Financing Document shall be paid in full, free of any deductions or withholdings of any and all present and future Taxes. If the Borrower is required by Applicable Law to deduct any Taxes from or to withhold any Taxes in respect of any amount payable to OPIC hereunder or under any Financing Document, then the Borrower shall pay such additional amount as may be necessary so that the actual amount received by OPIC after such deductions or withholdings equals the full amount under the Financing Documents it would have received had no such deductions or withholdings been required.

(b) In addition to the obligations set forth in Section 6.02(c), the Borrower shall pay before they become overdue any and all present and future Taxes payable on or in connection with the execution, delivery, registration, or notarization, or for the legality, validity, or enforceability of this Agreement or any other Transaction Document directly to the Governmental Authority responsible for collecting such Taxes, except for any Taxes that the Borrower is contesting in good faith by appropriate proceedings and for which adequate reserves have been set aside in accordance with Accounting Standards; provided , that the Borrower hereby indemnifies OPIC and holds OPIC harmless from and against any and all liabilities, fees, or additional expenses with respect to or resulting from any delay in paying, or omission to pay, any such Taxes. Within thirty (30) days after payment by the Borrower of any such Taxes, the Borrower shall furnish OPIC with the original or a Certified copy of the receipt evidencing payment thereof, together with any other information OPIC may reasonably request. OPIC shall have the right, but not the obligation, to pay any such Taxes not paid by the Borrower, and the Borrower shall, upon OPIC’s demand, promptly reimburse OPIC in full for all such payments.

(c) As of each Closing Date, the Borrower shall take all action to ensure that each signature to each of the Financing Documents that has been executed by such Closing Date has been duly legalized for use in Honduras, so that no further action will be required for the enforceability of such Financing Document in Honduras.

SECTION 2.08. Miscellaneous .

(a) Payment or Reimbursement of Expenses . OPIC may retain such consultants as determined by OPIC to be necessary, including U.S. and local legal counsel, at any time until the Loans are indefeasibly repaid in full. Upon request, the Borrower shall promptly pay or reimburse OPIC for all of OPIC’s reasonable and documented costs and expenses incurred in connection with the negotiation, preparation, execution, delivery, notarization, recordation and implementation of the Financing Documents (and other documents, instruments and approvals required to be delivered thereunder), including (i) the fees and expenses of outside U.S., Cayman and Honduran legal counsel and business consultants, and (ii) the costs of communications, preparation of any documents, authentication, registration, and recordation of any of the Financing Documents, preparation of a monitoring memorandum for OPIC’s use, and preparation of bound volumes or an electronic closing set of the Financing Documents for OPIC’s use, and the creation, perfection and termination of the Liens created pursuant to the Security Documents and any filings prepared in connection therewith. The Borrower shall also reimburse OPIC, upon demand, for all costs and expenses (A) (including attorneys’ fees and expenses and costs of travel) incurred by OPIC in preserving in full force and effect, or enforcing its rights under, any of the Financing Documents and (B) (including reasonable and documented attorneys’ fees and expenses and costs of travel) incurred by OPIC in addition to the Modification Fee, in connection with any amendment, waiver or consent related to any provision of any Financing Document.

(b) Currency and Place of Payment . All payments to OPIC shall be made in Dollars by wire transfer in immediately available funds without counterclaim, offset, or deduction. Unless instructed otherwise by OPIC, wires should be sent to OPIC’s account with the U.S. Treasury Department in New York by either Fedwire transfer or international electronic funds transfer, and any such wire must include the required information set forth in Schedule 2.08(b). Whenever any payment would otherwise fall due on a day that is not a Business Day, the due date for payment shall be the immediately succeeding Business Day, and interest and fees shall be computed through such immediately succeeding Business Day in accordance with Section 2.08(c); provided , however , that the last payment shall include interest through the actual date of receipt of such payment.

(c) Computation of Interest on Notes and of Certain Fees . Except as otherwise provided herein, in the Funding Documents or in any Note:

(i) interest on any Note (including interest calculated at any OPIC Note Interest Rate or the Default Rate) and default interest calculated at the Default Rate due on any unpaid amount of Redemption Premium, if any, shall accrue on a daily basis and shall be computed as provided therein; and

(ii) the Commitment Fee and any default interest calculated at the Default Rate on any amounts past due other than amounts described in Section 2.08(c)(i) above shall accrue on a daily basis and shall be computed on the basis of three hundred sixty (360)-day years composed of twelve (12) thirty (30)-day months.

(d) Application of Payments to OPIC . Except as otherwise provided herein, in the Funding Documents or in any Note, payments received by OPIC under any of the Financing Documents shall be applied to amounts due to OPIC in such manner as OPIC in its sole discretion may determine.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

SECTION 3.01. Representations and Warranties .

The Borrower represents and warrants to OPIC that:

(a) Existence and Power . The Borrower (i) is a sociedad anónima de capital variable duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization; (ii) is duly authorized to do business in each jurisdiction in which it conducts business; and (iii) has the power to own its properties, carry on its business and the Project, borrow money, create Liens on its properties, and execute, deliver, and perform each of the Borrower Documents.

(b) Authority. The Borrower’s execution, delivery, and performance of each of the Borrower Documents to which the Borrower is a party at the time this representation is made: (i) have been duly authorized by all necessary corporate action; (ii) will not violate any (x) Corrupt Practices Laws, Environmental Laws or Worker Rights Requirements or (y) any other Applicable Law; and (iii) will not breach, or result in the imposition of any Lien upon any of its assets (except as permitted by Section 7.01) under, any of its Charter Documents or any agreement or other requirement by which it or any of its properties may be bound or affected. Each of the Borrower Documents has been duly executed and delivered by the Borrower, and is a legal, valid, and binding obligation of the Borrower, enforceable in accordance with its terms. As of each Closing Date, each of the Borrower Documents executed and delivered by such Closing Date has been duly legalized for use in Honduras with no further action required for the enforceability of such Borrower Documents in Honduras.

(c) Financial Condition . The Borrower’s audited Financial Statements, dated December 31, 2016, which have been furnished to OPIC and any other Financial Statements that have been furnished to OPIC pursuant to Section 6.05, are complete and correct and fairly present its financial condition and results of its operations for the period then ended. Except for obligations incurred in the ordinary course of business, the Borrower has no obligation, contingent or otherwise, of any kind except as disclosed in such Financial Statements. Since the Effective Date, no dividend, Restricted Payment or Shareholder Payment has been declared or paid to the Shareholders or any other Person, except as permitted in Section 7.04.

(d) Capitalization . (i) The Borrower’s authorized capital and issued stock is as set forth on Schedule 3.01(d). All such capital stock has been duly authorized and validly issued and is fully paid and nonassessable. Other than pursuant to the Project Structuring Agreement (but subject to the terms of the Security Documents), there are no rights or claims of any character that restrict the transfer of, require the issuance of, or otherwise relate to any class of the Borrower’s capital stock.

(ii) (A) The Sponsor holds the direct legal and beneficial title to OII’s share capital; (B) OII holds the direct legal and beneficial title to Ormat Holding Corp.’s share capital; (C) Ormat Holding Corp. holds the direct legal and beneficial title to the Intermediate Shareholder’s share capital; (D) the Intermediate Shareholder holds the direct legal and beneficial title to OrPower 19’s share capital; (E) OrPower 19 holds the direct legal and beneficial title to the Borrower’s ordinary capital stock (excluding the Preferred Nonvoting Share); and (F) Elcosa holds the direct legal and beneficial title to the Borrower’s Preferred Nonvoting Share, in each case in the percentage amounts set forth next to their names on Schedule 3.01(d). Except as provided in this Section 3.01(d), no Person holds direct or indirect legal or beneficial title to the Borrower’s capital stock, and the Borrower does not own or otherwise control any voting stock of, or have any ownership interest in, any other Person.

(iii) No transfer of (a) the Borrower’s assets or the ordinary shares of the Borrower, except for the transfer of assets and shares into the trusts governed by the Honduran Asset Trust Agreement, the Administration and Guaranty Trust Agreement and the Honduran Share Trust Agreement, or (b) the shares of OrPower 19, except for the pledges of shares under the Cayman Pledge Agreements, has been made to Elcosa or any other party.

(e) Liens . The Security Documents are, or upon filing and registration will be, effective to create in favor of OPIC legal, valid, and enforceable first priority Liens, subject only to liens with statutory priority under Applicable Law with respect to claims of labor, tax and software licenses, on all of the Borrower’s assets intended to be covered thereby. The Borrower does not have outstanding, nor is it contractually bound to create, any Lien on or with respect to any of its assets, rights, or revenues, except for Permitted Liens.

(f) Taxes and Reports . The Borrower has filed all tax returns and reports required by Applicable Law to be filed and has paid (or provided adequate reserves for) all Taxes due.

(g) Defaults . No Default or Event of Default has occurred and is continuing other than any failure of ENEE to make payments in accordance with the ENEE PPA but which payments are nonetheless made within the applicable grace period, provided , that, in the case of any Default or Event of Default with respect to any party other than the Borrower or any of the Ormat Parties, such representation is limited to the Knowledge of the Borrower and the Ormat Parties. Neither the Borrower nor, to the Knowledge of the Borrower and the Ormat Parties, any other party is in breach of any provision of any contract to which the Borrower is a party, which breach could be a Material Adverse Effect.

(h) Litigation . No action, suit, other legal or arbitral proceeding, or investigation is pending by or before any domestic or foreign court or Governmental Authority or in any arbitral or other forum or is threatened in writing, that (i) relates to any of the transactions contemplated by any Transaction Document, or (ii) if adversely determined, could be a Material Adverse Effect.

(i) Compliance with Law; Corrupt Practices; Anti-Money Laundering.

(i) The Borrower has conducted and is conducting its business in compliance with (A) Corrupt Practices Laws, Environmental Laws and Worker Rights Requirements and (B) in all material respects, all other Applicable Laws and its Charter Documents.

(ii) Without limiting the effect of clause (i), the Borrower and its officers, directors, employees, and agents have complied with applicable Corrupt Practices Laws in obtaining all Consents in respect of the Borrower’s business and the Project and are otherwise conducting the Project and the Borrower’s business in compliance with applicable Corrupt Practices Laws. The Borrower’s internal management and accounting practices and controls are sufficient to provide reasonable assurances of compliance with applicable Corrupt Practices Laws and the prevention of Prohibited Payments. Neither the Borrower nor, to the Knowledge of the Borrower and the Ormat Parties, any Person acting on behalf of the Borrower has made any Prohibited Payment.

(vi) The Borrower is in compliance with the applicable requirements of (A) the Anti-Money Laundering Laws, (B) OFAC Regulations, and (C) all other applicable export control, anti-boycott and economic sanctions laws of the U.S. and other jurisdictions relating to its business and facilities.

(vii) None of the Borrower, its directors, members of senior management, or the Persons listed on Schedule 3.01(d) is a Person included in any OFAC List or otherwise subject to sanctions under OFAC Regulations.

(j) Status of C onsents.

(i) As of the Effective Date and the date of first Disbursement, Schedule 4.04 lists (and as of any other date on which this representation is given or deemed repeated, such Schedule 4.04, as updated in writing prior to the time of such representation, lists) each Consent necessary for: ( x ) the conduct of the Borrower’s business and the implementation of the Project; ( y ) the due execution, delivery, validity and enforceability of, and performance by the Borrower of its obligations under, the Borrower Documents, including Financing Documents, the incurrence of Indebtedness thereunder and the payment of amounts due or to become due with respect thereto (including Consents necessary for such amounts to be free of withholding Taxes and Consents necessary to permit the exemptions from other applicable Taxes assumed by the Financial Model); and ( z ) the due execution, delivery, validity and enforceability of, and performance by any Shareholder of its obligations under, any Transaction Documents to which it is a party ; in each case , other than (A) Consents of a routine nature that are not yet required based on the then-current stage of the Project and which the Borrower reasonably expects to obtain in the ordinary course of business without materially delaying the Project or exceeding the costs set forth in the Financial Plan and (B ) such other Consents that may become required in the future for the Project as a result of a change in Applicable Law.

(ii) As of the Effective Date and the date of first Disbursement, all Consents specified in Part A of Schedule 4.04 have been obtained and are in full force and effect. As of any other date on which this representation is given or deemed repeated, all Consents specified in Part A of Schedule 4.04 and all other Consents provided to OPIC through such date pursuant to Section 6.02 are in full force and effect.

(iii) As of the Effective Date and the date of first Disbursement, the Borrower and its agents or designees have applied (or are making arrangements to apply) or will apply (or cause third parties to apply) for all Consents specified in Part B of Schedule 4.04. As of the Effective Date and the date of first Disbursement, the status of such Consents is accurately described in such Part B. As of any other date on which this representation is given or deemed repeated, the status of such Consents is accurately described in such Part B of such Schedule 4.04, as updated in writing prior to the time of such representation, and the Borrower has obtained all such Consents by the time required based on the then-current stage of the Project.

(k) Good Title, Use of Site; Easements, Property Interests, Utilities, Etc . The Borrower either (a) owns and has good, legal and marketable title to, and, in respect of real property, a lawful and valid ownership title in all property that it purports to own, including in those parcels of land comprising the Site, or (b) has a lawful, valid, exclusive and irrevocable right of use of those parcels of land comprising the Site, in each case free and clear of all Liens (other than Permitted Liens). The Borrower does not own any parcel of land comprising the Site that is not subject to a valid, effective and first-priority Lien created by means of the Administration and Guaranty Trust Agreement. The Borrower has a lawful, valid, exclusive and irrevocable right of use and a possessory interest in all necessary easements and other rights of ingress to and egress from the Site and lawfully possesses a valid and subsisting leasehold estate in and to all of its leased property (if any) in each case free and clear of all Liens (other than Permitted Liens). Other than the rights referred to in the preceding sentences, no property rights (including easements or other rights of ingress or egress) are required or can reasonably be expected to be necessary for the design, development, construction, supply, start-up, commissioning, testing, financing, implementation, operation or maintenance of the Project in accordance with Applicable Law and the Transaction Documents. All utility and other services, means of transportation, facilities, other materials, and other rights that are or can reasonably be expected to be necessary for the Project in accordance with Applicable Law and the Transaction Documents have been procured or are commercially available to the Project. No material licenses (other than those granted pursuant to the Warranty Agreement) relating to intellectual property, trademarks, patents, or other similar agreements are necessary for the Project nor are there any payments owed due or accruing to the Sponsor or any of its Affiliates with respect to the usage of any intellectual property, trademarks, copyrights or patents related to the Project.

(l) Environmental, Health and Safety Matters .

(i) The Borrower has duly complied, and its business, operations, and assets, and the Project, are in compliance with all Applicable Law regarding the environment, health and safety and social performance, including Applicable Law related to labor management and worker rights.

(ii) All Consents with respect to air emissions, discharges to surface water or ground water, noise emissions, solid or liquid waste disposal, the use, generation, storage, transportation or disposal of toxic or hazardous substances or wastes, or other environment, health and safety and social performance matters required as of the current stage of development or operation under Applicable Law for the Project have been issued.

(iii) The Borrower and its contractors have taken commercially reasonable measures to address the risks identified in the Social Risk Assessment of Platanares Geothermal Project conducted by Social Capital Group in October 2016 and there have not been any security incidents, displacements of persons or chance archeological finds associated with the Project.

(iv) Except as described in Schedule 3.01(l), the Borrower has not received any written complaint, order, directive, claim, citation, or notice by any Governmental Authority, or any written complaint or claim from any Person seeking damages, contribution, indemnification, cost recovery, compensation, modification of the Project or the Borrower’s practices or other injunctive relief.

(v) Since the Effective Date, the Borrower has duly complied, and its business, operations, and assets, and the Project, are in compliance, with the Environmental and Social Requirements, it being understood that the Borrower will be able to assess and confirm compliance with the noise standards contained within IFC 2007 Environmental, Health, and Safety General Guidelines only upon completion of the noise assessment referenced in Section 3.1 of the ESAP.

(m) Project Status. At the time of its application for the Loan dated November 21, 2016, the Borrower’s estimate of total Project Costs (including contingencies) was the equivalent of $180,000,000, of which up to $45,000,000 has been contributed in cash and/or assets satisfactory to OPIC as equity or subordinated debt, based on the financial plan set forth on Schedule 3.01(m) (the “ Financial Plan ”).

(n) Disclosure .

(i) All documents, reports, and other written information that have been furnished to OPIC are true and correct in all material respects and do not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained herein or therein, taken as a whole, not materially misleading in light of the circumstances in which the same were made at the time such statements were made; provided , however , that with respect to any information that is in the nature of projections or estimates of future performance, including without limitation any information relating to the performance of the geothermal reservoir, the Borrower represents and warrants only that such projections and such other information were prepared and provided in good faith based on assumptions that are reasonable, but makes no representation or warranty as to the accuracy of such projections. There is no fact known to the Borrower the existence of which could reasonably be expected to be a Material Adverse Effect. No event, development, or circumstance has arisen since the application for the Loan dated November 21, 2016 that has or could be a Material Adverse Effect.

(ii) Except for events occurring after the Effective Date disclosed in writing to OPIC, no force majeure event as the same may be defined in the ENEE PPA, the Warranty Agreement or any other Project Document that has a force majeure event has occurred and is continuing thereunder.

(o) Accounts . The Borrower does not own or maintain any accounts with a bank or other financial institution other than the Accounts.

(p) Suspension and Debarment . No event has occurred and no condition exists that is likely to result in the debarment or suspension of the Borrower from contracting with the U.S. Government or any agency or instrumentality thereof, and the Borrower is not now and has not been subject to any such debarment or suspension.

(q) ERISA and Employees . Neither the Borrower nor any ERISA Affiliate sponsors, maintains, administers, contributes to, participates in, or has any obligation to contribute to or any liability or potential liability under, any Guaranteed Pension Plan or Multiemployer Plan and neither the Borrower nor any ERISA Affiliate has ever sponsored, maintained, administered, contributed to, participated in, or had any obligation to contribute to or any liability or potential liability under, any Guaranteed Pension Plan or Multiemployer Plan. The Borrower does not sponsor, maintain, administer, contribute to, participate in, or have any obligation to contribute to or any liability or potential liability under, any Employee Benefit Plan.

(r) Investment Company Act .

(i) The Borrower is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

(ii) The Borrower does not own, directly or indirectly, any other Person.

(s) Margin Regulation . No part of the proceeds of the Loan will be used for “buying” or “carrying” any margin stock within the meaning of Regulation U, or for any purpose that violates any regulation of the Board of Governors of the Federal Reserve System.

(t) Regulation of Indebtedness . The Borrower is not subject to regulation under any Applicable Law (including, without limitation, any United States Federal or state law) that limits or impairs its ability to incur or guarantee Indebtedness or to comply with any of its obligations under the Financing Documents or that otherwise subjects the financing transactions contemplated by the Financing Documents to regulation by a Governmental Authority.

(u) Material Project Documents .

(i) Except for services, materials, licenses, or rights that can reasonably be expected to be available on commercially reasonable terms at the time required, the Material Project Documents required to be executed by the relevant Closing Date in accordance with the terms hereof, constitute all contracts, agreements, leases, or other documents or instruments that (x) contain warranties or contemplate the payment of liquidated damages, (y) are necessary for the construction, completion, operation, and ownership of the Project as of such date or (z) are necessary for the conduct of the business of the Borrower as contemplated by the Transaction Documents and the Financial Plan.

(ii) The Borrower has not entered into any power purchase agreements except for the ENEE PPA and the MINOSA PPA.

(iii) Other than the Material Project Documents, the MINOSA PPA and the Consents listed in Schedule 4.04, there are no agreements that are material to the construction and operation of the Project, including any that contain warranties or contemplate the payment of liquidated damages.

(iv) Other Parties; Transaction Documents . (i) To the Borrower’s knowledge, each of the Transaction Documents constitutes the legal, valid and binding obligation of each party thereto (other than the Borrower and OPIC) enforceable against such party in accordance with its terms, subject to bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights and general principles of equity.

(v) Following the Effective Date, none of the Transaction Documents to which the Borrower is a party has been amended, modified or terminated, except in accordance with this Agreement or as disclosed to OPIC and consented to in writing by OPIC.

(w) Inverted Domestic Corporation. The Borrower is not an Inverted Domestic Corporation and it is not a Subsidiary Of An Inverted Domestic Corporation.

(x) Payment of Contractors and Subcontractors . All contractors and suppliers performing Works before the Cut-Off Date have been paid in full or will be paid in full for such Works with the proceeds of the first Disbursement or adequate cash reserves have been made for such payments, except for amounts (i) that are, in the aggregate, less than one hundred thousand dollars ($100,000) and (ii) that the failure to pay could not reasonably be expected to have a Material Adverse Effect on, or materially impair, the operation of the Project. Part A of Schedule 3.01(x) sets forth a complete list of all contractors and suppliers that, since the Cut-Off Date have performed Works. All such Works have been paid in full except as set forth in Part B of Schedule 3.01(x). Part B of Schedule 3.01(x) sets forth a complete list of all contractors and suppliers that, since December 31, 2016, have performed or will perform Works and all amounts remaining to be paid (or projected to be paid) to each such contractor and supplier that, since the Cut-Off Date, is performing or will perform Works.

(y) Ranking . The payment obligations hereunder and under the Notes constitute unconditional and unsubordinated Indebtedness of the Borrower and rank at all times at least pari passu in priority of payment with all other present and future unsubordinated Indebtedness of the Borrower.

(z) Notice of Committed Power Capacity for Third Parties . The Borrower has not, without prior consent of OPIC, which consent shall not be unreasonably conditioned, given written notice to ENEE of any Committed Power Capacity for Third Parties (as that term is defined in the ENEE PPA) or self-consumption.

(aa) Repetition of Representations and Warranties. Each of the foregoing representations and warranties in this Section 3.01 shall be deemed to be made as of the Effective Date and as of each Closing Date (except to the extent expressly made only as of a specified earlier date, in which case as of such earlier date). To the extent that any schedule referred to in this Section 3.01 shall need to be updated in order to permit such representation to be true and correct when made or deemed to be made, the Borrower shall provide OPIC with such updated schedule in writing prior to the date such representation is deemed made and shall request that this Agreement be amended in accordance with Section 9.06, provided that no Modification Fee shall be due and payable by the Borrower for any such update that is immaterial unless consideration of such update results in other modifications to, or consents or waivers under, a Financing Document. Unless this Agreement is amended to reflect the changes in any such schedule, no change shall be deemed to have been made.

ARTICLE IV
CONDITIONS PRECEDENT TO FIRST DISBURSEMENT

Unless OPIC otherwise agrees in writing, the obligation of OPIC to make the first Disbursement is subject to the prior fulfillment or written waiver, to OPIC’s satisfaction in its sole discretion, of the following conditions precedent as of the date that is ten (10) days prior to the first Closing Date and to their continued fulfillment on the first Closing Date.

SECTION 4.01. Transaction Documents .

OPIC shall have received the following documents, each of which shall be satisfactory to OPIC in form and substance and, if applicable, shall have been duly executed by the parties thereto and shall be in full force and effect in accordance with its terms without default:

(a) originals of the following documents (the “ Loan Documents ”):

	(i)	this Agreement;

	(ii)	the Notes issued in connection with the Disbursement; provided , that any Note issued in connection with a subsequent Disbursement shall be included in the definition of “Loan Document”;

(iii)

the Share Retention Agreement;

(iv)

the Subordination Agreements;

(v)

the Funding Documents;

(vi)

the Direct Agreements; and

(b) originals (or, at OPIC’s election, Certified copies) of the following documents (the “ Security Documents ”):

	(i)	the Share Pledge Agreement;

	(ii)	the Citi Onshore Account Pledge Agreement;

	(iii)	the New York Security Agreement;

	(iv)	the Accounts Administration and Retention Agreement;

	(v)	the Administration and Guaranty Trust Agreement;

	(vi)	the Honduran Share Trust Agreement;

	(vii)	Cayman Pledge Agreements;

	(viii)	the Accounts Agreement;

	(ix)	the Account Control Agreement and each other document that is required for the creation and perfection, in favor of OPIC, of a valid and enforceable, first-priority Lien, subject only to liens with statutory priority under Applicable Law with respect to claims of labor, tax and software licenses, on all of the Borrower’s assets, of whatever kind and nature, whether tangible or intangible, and wherever situated, both now owned and hereafter acquired, including all accounts receivable, inventory, general intangibles, equipment, real and personal property, accounts, rights under all project agreements, and in the proceeds thereof; and

(c) Certified copies of the following documents (the “ Material Project Documents ”, and all such contracts, together with any other contract required for the construction or operation of the Project and any power purchase agreement entered into by the Borrower, including the MINOSA PPA, that is entered into with respect to the Borrower or the Project subsequent to the date hereof, the “ Project Documents ”):

(i)

the ENEE PPA and the Commercial Operation Start Certificate;

(ii)

the interconnection and wheeling agreements, if any;

(iii)

the Joint Guarantee;

(iv)

contracts among the Shareholders and between OII and/or the Borrower, on the one hand, and Elcosa and its Affiliates, on the other hand, including the Project Structuring Agreement, the ancillary documents related to that structuring agreement, and any revenue sharing and consulting and marketing contracts entered into by the Borrower;

(v)

the Operation Contract;

(vi)

the Warranty Agreement;

(vii)

the MINOSA Cooperation Agreement;

(viii)

all contracts for the purchase of land, lease of land or use of easements and rights of way for the Project, including the La Bufa Comfort Letter and the La Bufa Land Lease Agreement;

(ix)

all contracts for the lease of equipment or facilities for the Project exceeding a value of $1,000,000;

(x)

the Ormat Guaranty;

(xi)

all contracts entered into by the Borrower to provide services to the Project exceeding a value of $200,000;

(xii)

the Water Contract;

(xiii)

the O&M Support Agreement; and

(d) Originals (or, at OPIC’s election, Certified copies) of each of the Funding Documents.

The Loan Documents, the Funding Documents, and the Security Documents, together with any other agreements or instruments entered into in connection with any of the foregoing or pursuant to which the Loan is made, are collectively referred to herein as the “ Financing Documents. ” The Financing Documents and the Project Documents, together with any other agreements or instruments entered into in connection with any of the foregoing or pursuant to which the Loan is made, are collectively referred to herein as the “ Transaction Documents. ”

SECTION 4.02 . Authorization .

OPIC shall have received a certificate of an Authorized Officer of the Borrower dated as of the first Closing Date, substantially in the form of Exhibit C-1 and of each Shareholder, dated as of the first Closing Date, substantially in the form of Exhibit C-2.

SECTION 4.03. Ownership .

OPIC shall have received evidence satisfactory to it, which evidence shall include Certified copies of relevant stock certificates for the entities identified in subclauses (a)(i), (ii) and (iii) below and original stock certificates for the entities identified in subclauses (a)(iv) and (v) below, that (a) (i) the Sponsor holds the direct legal and beneficial title to OII’s share capital; (ii) OII holds the direct legal and beneficial title to Ormat Holding Corp.’s share capital; (iii) Ormat Holding Corp. holds the direct legal and beneficial title to the Intermediate Shareholder’s share capital; (iv) the Intermediate Shareholder holds the direct legal and beneficial title to OrPower 19’s share capital; and (v) OrPower 19 holds the direct legal and beneficial title to the Borrower’s ordinary share capital; and (b) Elcosa holds the direct legal and beneficial title to the Preferred Nonvoting Share, in each case in the percentage amounts set forth next to their names on Schedule 3.01(d).

SECTION 4.04. Consents .

OPIC shall have received Certified copies of all Consents listed in Part A of Schedule 4.04.

SECTION 4.05. Site.

OPIC shall have received evidence in form and substance satisfactory to it that the Borrower, holds lawful, valid, exclusive and irrevocable title of ownership or other real property rights and lawful and valid use of the entire Site, together with lawful, valid, exclusive and irrevocable right of use and a possessory interest in all necessary easements and other rights of ingress and egress for the development, construction, operation and maintenance of the Project free and clear of any Liens other than Permitted Liens, and that such Site (together with such easements and rights of ingress and egress) is sufficient for the Borrower to develop, construct, operate and maintain the Project as contemplated by the Transaction Documents.

SECTION 4.06. Security Interest .

(a) Each Lien created by the Security Documents shall be of first priority, subject only to liens with statutory priority under Applicable Law with respect to claims of labor, tax and software licenses, and (i) to the extent it arises or attaches under the Uniform Commercial Code enacted in any jurisdiction in the U.S., shall be perfected, and (ii) in all other cases, shall be enforceable against the Borrower and third parties (including any holder of a subsequently established Lien). Each of the Security Documents shall be in full force and effect and (i) in the case of the Administration and Guaranty Trust Agreement, as soon as possible but no later than one-hundred twenty (120) days after execution thereof, (ii) in the case of the Share Pledge Agreement, the Honduran Share Trust Agreement and all other Security Documents, no later than the first Closing Date, shall have been duly filed, stamped, registered and recorded in every jurisdiction in which such filing, stamping, registration or recording is necessary to make valid and effective the Liens intended to be created thereby and the rights of OPIC thereunder, and OPIC shall have received evidence satisfactory to it that such filing, stamping, registration or recording has been made. In addition, the Borrower shall have executed all such other agreements or documents, or taken any actions that, in the opinion of counsel to OPIC, are required to secure the payment of all amounts due or to become due hereunder and under the Notes with valid, enforceable, first-priority Liens, subject only to liens with statutory priority under Applicable Law with respect to claims of labor, tax and software licenses, on all of the Borrower’s assets, all of the shares of stock of the Borrower (other than the Preferred Nonvoting Share), the shares of capital stock of OrPower 19 and all other assets described in the applicable Security Documents.

(b) The Honduran Asset Trust Agreement shall have been amended and restated to create the Administration and Guaranty Trust Agreement in form and substance satisfactory to OPIC.

SECTION 4.07. Insurance .

OPIC shall have received all certificates of insurance and other documentation required pursuant to Section 6.03 and Schedule 6.03, to confirm that the Insurance Policies (and reinsurance, as applicable) required by such provisions are issued in accordance with such provisions, are in full force and effect without default, and show OPIC’s endorsement as additional insured and additional loss payee (other than to the extent explicit exceptions to those requirements are provided in such Schedule 6.03 for documents then in place and such other documents as are not yet required pursuant to Schedule 6.03), and such evidence shall have been reviewed by the Insurance Advisor and satisfactory to OPIC.

SECTION 4.08. Auditors .

OPIC shall have received evidence that the Borrower has irrevocably instructed its auditors to communicate directly with OPIC regarding the Borrower’s accounts and operations pursuant to Section 6.05, provided , that, OPIC shall provide the Borrower with copies of its communications to the auditors, including notices and requests for information, and will provide the Borrower with reasonable prior written notice of any discussions or meetings and a reasonable opportunity to participate in the same.

SECTION 4.09. Legal Opinions .

OPIC shall have received acceptable written opinions, dated the Closing Date, satisfactory to OPIC in form and substance, of (a) Matamoros Batson & Asociados, its legal counsel in the Project Country, (b) Aguilar Castillo Love, legal counsel to the Borrower and the Ormat Parties in the Project Country, (c) Freshfields Bruckhaus Deringer US LLP, its legal counsel in the United States, with respect to OPIC funding matters, (d) Norton Rose Fulbright US LLP, legal counsel to the Borrower and the Ormat Parties, (e) Ogier, its legal counsel in the Cayman Islands, (f) Maples and Calder, legal counsel to the Borrower and the Ormat Parties in the Cayman Islands and (g) in-house counsel, or other acceptable counsel, to (i) the Supplier, (ii) Elcosa and (iii) ENEE; provided , that the written opinion of counsel to ENEE may be provided in the form of written certifications from ENEE’s in-house counsel.

SECTION 4.10. Appointment of Agent .

OPIC shall have received evidence that the agent for service of process (a) referred to in Section 8.04(c) with relation to the Borrower and (b) required to be appointed by any other party pursuant to the Financing Documents has been duly appointed and holds such appointment without reservation until six (6) months after the Loan Maturity Date, together with evidence of the prepayment in full of the fees of such agent.

SECTION 4.11. Accounts ; Offshore Well Reserve Account .

Each of the Accounts shall have been established and, if applicable, funded in accordance with the Accounts Agreement or, if applicable, the Accounts Administration and Retention Agreement. OPIC shall have received evidence satisfactory to it that the Offshore Well Reserve Account is funded in an amount at least equal to $2,000,000 or will be funded to such level with proceeds of the first Disbursement.

SECTION 4.1 2. Financial Projections .

OPIC shall have received financial projections for the Project through March 31, 2033, including projected financial statements prepared in English and in Dollars, which shall be satisfactory to OPIC in form and substance.

SECTION 4.1 3. Construction COD Reports .

(a) OPIC shall have received a copy of the Commercial Operation Start Certificate delivered as required under the ENEE PPA.

(b) OPIC shall have received one or more certificate(s) from the Borrower, to OPIC’s satisfaction in its sole discretion (in consultation with the Independent Engineer), on the construction, completion, commissioning, testing and start-up of the Project, which shall include, among other things, confirmation that: (i) all Works have been completed except those listed in Schedule 4.13(b)(i) and paid for on commercially reasonable terms, except those listed in Schedule 4.13(b)(ii); (ii) all Works related to the Project have been carried out in a manner consistent with International Finance Corporation’s Performance Standards 1, 3, 4, 5, 6 and 8 (January 1, 2012) and (iii) all Works related to the Project have been carried out in a manner consistent with International Finance Corporation’s Performance Standard 2 (January 1, 2012), except as listed in Annex 1 to such certificate.

(c) In connection with preparation and review of reports or certificates from the Independent Engineer, including those contemplated in Section 5.13, the Borrower shall have provided to the Independent Engineer and OPIC, as applicable, such information, documents, reports and certificates as may be necessary or reasonably requested to assess the management during construction of environmental issues, worker rights and protections, health and safety, community engagement and consultation and cultural heritage management.

SECTION 4.14. Environmental and Social Requirements .

The Borrower shall deliver all of the Environmental and Social Plans, each of which shall be prepared in accordance with the Environmental and Social Requirements.

SECTION 4.15. ESAP .

The Borrower shall have satisfied the conditions specified in the ESAP that are applicable at the time of the first Disbursement.

SECTION 4.16. Due Diligence .

OPIC shall have completed to its satisfaction its due diligence investigation of the Borrower, the Shareholders, the Project, and all other matters relating thereto, and the results of such investigations shall be satisfactory to OPIC.

SECTION 4.17. Lien Waivers .

With respect to all Project Costs incurred in connection with the Works after the Cut-Off Date but before the first Disbursement, the Borrower shall obtain Lien waivers, or evidence that there are no Liens (including through a legal opinion of counsel, a certification by the Borrower and each Key Contractor related to such Works, or a no lien certificate from the local registries, as applicable), and deliver them prior to the first Disbursement as required by Section 5.16.

SECTION 4.18. Advisor Reports.

OPIC shall have received the final report of (a) the Independent Engineer, (b) the Insurance Advisor, (c) the Environmental and Social Consultants, and (d) OPIC’s Financial Model Auditor, each in form and substance satisfactory to OPIC.

SECTION 4.19. Geothermal Resource .

The Borrower shall be in compliance with the Drilling Program and be in compliance with the Reservoir Monitoring Plan.

SECTION 4.20. Equity Contributions; Subordinated Loans .

Equity contributions and subordinated loans from the Shareholders shall have been made directly or indirectly, including through Ormat Holding Corp., in an amount no less than $41,608,000, and otherwise in accordance with the Financial Plan, and each such contribution shall have been verified to the satisfaction of OPIC.

SECTION 4.21. Funding Arrangements .

Suitable arrangements shall have been made for funding the Loan (all agreements and documents required in connection with such funding arrangements are collectively referred to herein as the “ Funding Documents ”), which funding arrangements and Funding Documents shall be satisfactory to OPIC in form and substance, including without limitation satisfaction by the Borrower of all conditions precedent to the obligations of any other party to the Funding Documents and performance by the Borrower of all other obligations on its part to be performed prior to the making of the first Disbursement pursuant to any Financing Document.

SECTION 4.22. Notices to SERNA and MINOSA.

OPIC shall have received evidence that the Borrower shall have provided written notice to SERNA and MINOSA of (a) the transactions contemplated by this Agreement and (b) the collateral assignment by the Borrower of the Borrower’s rights in the Operation Contract (in the case of SERNA) and the MINOSA Cooperation Agreement and the MINOSA PPA (in the case of MINOSA), to the trust described in the Administration and Guaranty Trust Agreement, which notice shall be in substantially the form of (x) with respect to SERNA, Exhibit H-1 and (y) with respect to MINOSA, Exhibit H-2.

ARTICLE V
CONDITIONS PRECEDENT TO EACH DISBURSEMENT

Unless OPIC otherwise agrees in writing, the obligation of OPIC to make each Disbursement (including the first Disbursement) is subject to the prior fulfillment or written waiver, to OPIC’s satisfaction in its sole discretion, of the following conditions precedent as of the date that is ten (10) days prior to such Closing Date and to their continued fulfillment on such Closing Date.

SECTION 5.01. Disbursement Request .

The Borrower shall have delivered a Disbursement Request in accordance with Section 2.01(b). As part of the Disbursement Request, the Borrower shall have provided to OPIC (a) its U.S. Taxpayer Identification Number or (b) an explanation as to why it does not have or need a U.S. Taxpayer Identification Number.

SECTION 5.02. Representations and Defaults .

Each of the representations and warranties of the Borrower and each Shareholder set forth in this Agreement and in each of the other Financing Documents to which either is a party shall be true and correct in all material respects (except with respect to any provision including the word “material” or words of similar import, with respect to which such representations and warranties shall be true and correct) on such Closing Date as if made on such Closing Date after giving effect to such Disbursement or if any such representation relates exclusively to an earlier date, as of such earlier date, and on such Closing Date no Default or Event of Default shall have occurred and be continuing or will result from the making of such Disbursement or from the application of the proceeds thereof.

SECTION 5.03. No Event of Default; Change in Circumstances .

Both before and after giving effect to the Disbursement, no Default or Event of Default shall have occurred or be continuing and as of such Closing Date, nothing shall have occurred and be continuing that, in the reasonable judgment of OPIC, could be a Material Adverse Effect.

SECTION 5.04. Note s .

The Borrower shall have furnished OPIC with the executed Notes to be issued in connection with such Disbursement in accordance with Section 2.01(b).

SECTION 5.05. Closing Certificate .

The Borrower shall have furnished OPIC with a certificate of an Authorized Officer, dated the Closing Date, substantially in the form of Exhibit D, which shall include Certified copies of all Material Project Documents entered into subsequent to the immediately preceding Closing Date (if any).

SECTION 5.06. Financial Information and Project Progress .

(a) Not less than ten (10) Business Days before such Closing Date, OPIC shall have received all Financial Statements, reports, and other information that the Borrower, pursuant to Section 6.05, would otherwise be required to furnish to OPIC on or before such Closing Date, and the Borrower shall have satisfied any conditions specified in the ESAP that are required to be fulfilled on or before such Closing Date.

(b) Not more than ten (10) Business Days before such Closing Date, OPIC shall have received a certificate from the Borrower, satisfactory to OPIC in form and substance, confirming that, with respect to each report delivered pursuant to clause (a), such report is true and correct in all material respects as of such date or, if there has been a change in the matters set forth therein, updating the relevant information.

SECTION 5.07. Payment or Reimbursement of Expenses .

All Fees and other amounts due, payable or reimbursable by the Borrower with respect to the Loan on or prior to such Closing Date shall have been paid in full.

SECTION 5.08. Central Bank Registration; Consents .

OPIC shall have received evidence satisfactory to it, as may be required by Applicable Law with respect to each Disbursement other than the first Disbursement, that each such Disbursement does not require any registration or recordation with the central bank of the Project Country, and that the Borrower has taken all other steps necessary to obtain any Consents necessary with respect to such Disbursement or otherwise required as of or prior to such Disbursement, including those indicated in Part B of Schedule 4.04 to the extent they are then required for the then-current stage of the Project. OPIC shall have received Certified copies of such Consents or copies of such certificates, legal opinions, or other documents, satisfactory to OPIC in form and substance, as OPIC shall have requested to evidence such Consents.

SECTION 5.09. D SR Requiremen t.

With respect to any Disbursement, OPIC shall have received evidence that funds or assets on deposit in the Offshore Debt Service Reserve Account are at least equal to the DSR Requirement.

SECTION 5.10. Debt to Equity Ratio.

After giving effect to such Disbursement, OPIC shall have received evidence satisfactory to it that the Debt to Equity Ratio shall be no greater than 75:25.

SECTION 5.11. Reservoir Monitoring Report.

With respect to any Disbursement, OPIC shall have received the Reservoir Monitoring Report most recently required to be delivered pursuant to Section 6.01(g) hereof, and evidence satisfactory to it that the Borrower is in compliance with such Reservoir Monitoring Report.

SECTION 5.12. Project Costs .

OPIC shall have (a) in consultation with the Independent Engineer, received, reviewed and approved the milestones reached and invoices received in respect of Project Costs incurred (i) after the Cut-Off Date, in connection with the first Disbursement, and (ii) since the previous Disbursement, in connection with any subsequent Disbursement and (b) received written confirmation from the Borrower’s auditor confirming that the Project Costs incurred through the end of the fiscal quarter most recently ended prior to such Disbursement are in accordance with the accounting records of the Borrower.

SECTION 5.13. Independent Engineer Certificate.

OPIC shall have received from the Independent Engineer, no later than ten (10) Business Days prior to a Disbursement Request, a certificate in the form of Exhibit E and otherwise in form and substance satisfactory to OPIC.

SECTION 5.1 4 . Funding.

Suitable arrangements shall have been made for funding such Disbursement in accordance with the Funding Documents, which funding arrangements and Funding Documents shall be satisfactory to OPIC in form and substance, including without limitation satisfaction by the Borrower of all conditions precedent to the obligations of any other party to the Funding Documents and performance by the Borrower of all other obligations on its part to be performed prior to the making of such Disbursement pursuant to any Transaction Document.

SECTION 5.15. Insurance .

OPIC shall have received certificates of insurance and reinsurance or binders and other documents required for OPIC to confirm, in consultation with the Insurance Advisor, that all Insurance Policies as are then required pursuant to Section 6.03 and Schedule 6.03 are in full force and effect.

SECTION 5.16. Lien Waivers .

If Project Costs are incurred in connection with the Works in an amount greater than the amount set forth in the then current Annual Operating Budget, then OPIC shall have received copies of all Lien waivers, or evidence that there are no Liens (including through a legal opinion of counsel, a certification by the Borrower and each Key Contractor, or a no lien certificate from the local registries, as applicable), related to the Works required to be obtained pursuant to Section 6.01(f) hereof.

SECTION 5.1 7 . Other Documents .

OPIC shall have received any document required to have been delivered pursuant to Article VI and any such other certificates, opinions, agreements, and documents, and translations of any of the foregoing, and evidence of stamping or other local law formalities required, in each case customary for transactions of the type contemplated by this Agreement, each satisfactory to OPIC in form and substance, as it may reasonably request.

ARTICLE VI
AFFIRMATIVE COVENANTS

Unless OPIC otherwise agrees in writing, so long as the Commitment remains outstanding or until all amounts due and to become due hereunder and under the Notes shall have been indefeasibly paid in full, the Borrower agrees as follows:

SECTION 6.0 1 . Company Operations .

(a) The Borrower shall duly and punctually perform its obligations under each of the Borrower Documents.

(b) The Borrower shall in accordance with and subject to the terms of the ENEE PPA, the MINOSA PPA, the Consents set forth in Part A of Schedule 4.04 ( Consents ), the Consents set forth in Part B of Schedule 4.04 ( Consents ), in each case, to the extent then applicable to the Project, applicable legal requirements and Good Industry Practice, promptly remedy defects in the Works in accordance with Good Industry Practice.

(c) The Borrower shall comply with the Reservoir Monitoring Plan and maintain the geothermal resource of the Project, the wells and the surface facilities related thereto at all times in compliance with its obligations under the ENEE PPA and in accordance with Good Industry Practice.

(d) The Borrower shall conduct its business and operations in accordance with (i) Good Industry Practice and on an arm’s-length basis, with due diligence and efficiency and under the supervision of qualified and experienced management, (ii) the conditions to the Borrower’s warranties under the ENEE PPA, (iii) the terms and conditions of all Insurance Policies, (iv) all requirements of Applicable Law, all Consents set forth in Part A of Schedule 4.04 ( Consents ) and all Consents set forth in Part B of Schedule 4.04 ( Consents ) to the extent then applicable to the Project, and (v) the terms of the Material Project Documents (in respect of the Warranty Agreement, only to the extent there are obligations outstanding), the MINOSA PPA and its Charter Documents, in the case of the MINOSA PPA, to the extent necessary to avoid a Material Adverse Effect and, in the case of each of the other foregoing cases, in all material respects. The Borrower shall repair, replace, and protect each of its assets (ordinary wear and tear excepted) so that its business and the Project can be conducted in accordance with the Material Project Documents and Good Industry Practice.

(e) Except as otherwise expressly permitted under this Agreement, the Borrower shall (i) maintain and preserve its existence as a sociedad anónima de capital variable under the laws of Honduras and all rights, privileges and franchises necessary in the normal conduct of its business, and necessary to perform all of its obligations, and exercise all rights, discretion and remedies available to it, under or in connection with all Transaction Documents with due diligence in accordance with Good Industry Practices, and (ii) engage in activities related to the ownership, construction, exploration and development of the Project’s geothermal resource and the erection, installation, commissioning, testing, operation and maintenance of the Project.

(f) If Project Costs are incurred in connection with the Works after the first Disbursement in an amount greater than the amount set forth in the then current Annual Operating Budget, then the Borrower shall obtain Lien waivers, or evidence that there are no Liens (including through a legal opinion of counsel, a certification by the Borrower and each Key Contractor, or a no lien certificate from the local registries, as applicable), related to such Works within seven (7) days of payment for any substantial portion of such Work. Any contractor or supplier performing Works after the Cut-Off Date shall be listed in Part A of Schedule 3.01(x) and an estimate of all amounts owed or owing to such contractor or supplier shall be listed in Part B of Schedule 3.01(x), in each case as required pursuant to Section 3.01(x).

(g) (i) Within thirty (30) days of the end of each fiscal quarter following the Effective Date until the True-Up Date, and (ii) semi-annually, on each April 30 and October 31 following the True-Up Date until the Loan Maturity Date, the Borrower shall provide a Reservoir Monitoring Report to OPIC.

SECTION 6.02 . Maintenance of Rights and Compliance with Laws .

The Borrower shall: (a) obtain, maintain in full force and effect, and renew or cause to be obtained, maintained and renewed all Consents, leases and other rights in land, and franchises necessary for the conduct of its business and the performance of its obligations hereunder and under the other Transaction Documents as of such time as they are needed for the then-current stage of the Project or Borrower’s operations; (b) conduct its business in compliance with all Environmental Laws, Corrupt Practices Laws, Worker Rights Requirements, Consents and with its Charter Documents and with all other Applicable Laws and Consents; and (c) duly pay before they become overdue all Taxes levied or imposed in any jurisdiction upon its property, earnings, or business that, if not paid, could be a Material Adverse Effect, and all Indebtedness and other liabilities in a timely manner in accordance with normal business practices and with the terms governing the same, except amounts being contested in good faith by appropriate proceedings diligently pursued for which adequate reserves shall have been set aside in accordance with Accounting Standards. The Borrower shall promptly deliver to OPIC a Certified copy of any other Consent obtained after the date of first Disbursement.

SECTION 6.03 . Maintenance of Insurance .

The Borrower shall:

(a) deliver to OPIC all certificates of insurance and reinsurance, binders and copies of Insurance Policies on or prior to the time when such documents are required pursuant to part 5 of Schedule 6.03;

(b) maintain or cause to be maintained in effect at all times insurance, with respect to the Project, against such risks and hazards, in such amounts, and in such form, as is usually carried by companies of a similar size that are engaged in the same or a similar business and that own similar properties in the same or similar geographic area as the Project, and in any event in compliance with the minimum insurance requirements set out in Schedule 6.03;

(c) apply all Insurance Proceeds in accordance with the terms of the Accounts Agreement and, if applicable, the Accounts Administration and Retention Agreement;

(d) enforce its rights under the Material Project Documents and the MINOSA PPA, to the extent that it has such rights, so as to ensure that any Person (other than the Borrower) required to provide insurance obtains and maintains Insurance Policies as required thereby; and

(e) observe and comply with each other obligation and agreement set forth in Schedule 6.03.

SECTION 6.04 . Accounting and Financial Management .

(a) The Borrower shall (i) comply with Corrupt Practices Laws; (ii) maintain adequate accounting, management information and cost control systems; (iii) prepare its Financial Statements in accordance with Accounting Standards; (iv) engage PricewaterhouseCoopers, or other independent internationally recognized accountants satisfactory to OPIC, as its regular independent auditors; (v) notify OPIC of any change in such accountants and the reason therefor; and (vi) instruct such accountants to communicate directly with OPIC regarding the Borrower’s accounts and operations. Without limiting the foregoing, the Borrower shall maintain the systems described in clause (ii) and related management and accounting policies and controls that are sufficient to provide reasonable assurances of compliance with applicable Corrupt Practices Laws and the prevention of Prohibited Payments.

(b) The Borrower shall comply with the applicable requirements of (i) the Anti-Money Laundering Laws, (ii) OFAC Regulations, and (iii) all other applicable export control, anti-boycott and economic sanctions laws of the U.S. and other jurisdictions relating to its business and facilities.

SECTION 6.05 . Financial Statements and Other Information .

At its cost, the Borrower shall furnish to OPIC each of the following:

(a) within forty-five (45) days after the end of each of the first three fiscal quarters of each Fiscal Year, its unaudited Financial Statements, all Certified by a Financial Officer as being true and complete and fairly presenting in all material respects the financial position, results of operations and cash flows of the Borrower as of the dates indicated and for the periods specified, subject to the absence of disclosures normally made in footnotes and to customary year-end adjustments, together with such officer’s certificate substantially in the form of Exhibit F (i) that his or her review has not disclosed the existence of any Default or Event of Default, or, if any such Default or Event of Default then exists, specifying the nature and period of existence thereof and what action the Borrower has taken or proposes to take with respect thereto and (ii) demonstrating in reasonable detail the Borrower’s compliance with the financial ratios set forth in Section 6.10 and the basis for such calculations;

(b) within one-hundred twenty (120) days after the end of each Fiscal Year, its audited Financial Statements, together with (i) an auditor’s report in accordance with the Accounting Standards and (ii) a statement from the Borrower’s auditors to the effect that based on their examination, as of the date of the audited financial statements, the Borrower was in compliance with the financial ratios under Section 6.10;

(c) within forty-five (45) days after the end of each fiscal quarter, a Certified report setting forth in reasonable detail all transactions between the Borrower, on the one hand, and any of the Shareholders or any Affiliate of any such Shareholder, on the other hand;

(d) semi-annually, beginning on the first to occur of June 30 or December 31, an Operating Report substantially in the form set out in Schedule 6.05(d) ( Operating Report );

(e) not later than June 30 of each year, beginning on the first June 30 to occur following the first anniversary of the first Closing Date, the Self-Monitoring Questionnaire;

(f) on or prior to the True-Up Date, a certification (expected to be included in the request for final Disbursement) that the Borrower has completed the noise assessment referenced in Section 3.1 of the ESAP and is in compliance with the noise standards contained within IFC 2007 Environmental, Health, and Safety General Guidelines;

(g) within six (6) months of the end of the Commitment Period, a certificate of an Authorized Officer of the Borrower, setting forth in reasonable detail the Project Costs to which the proceeds of the final Disbursement were applied, substantially in the form of Exhibit G; and

(h) copies of all other annual or interim reports and management letters submitted to the Borrower by its independent accountants, and such other information and data with respect to the Borrower’s or the Shareholders’ operations, condition (financial or otherwise), assets, and prospects (including supporting information as to compliance with this Agreement) as OPIC may reasonably request from time to time.

SECTION 6.06. Annual Operating Budget .

(a) As soon as it is available, but in any event at least thirty (30) days prior to the commencement of each Fiscal Year, the Borrower shall submit to OPIC for approval by OPIC the Annual Operating Budget for such Fiscal Year prepared by the Borrower. Each Annual Operating Budget shall be consistent with the Financial Model and be accompanied by a certificate of an Authorized Officer of the Borrower certifying that the budget is a reasonable estimate for the period covered thereby and is in compliance with the requirements of this Section 6.06.

(b) A proposed Annual Operating Budget shall become effective on the later of (i) the first day of the relevant Fiscal Year and (ii) the date OPIC advises the Borrower that OPIC has approved such Annual Operating Budget. If OPIC does not approve an Annual Operating Budget, OPIC shall advise the Borrower of the items that are disapproved and the reason for such disapproval.

(c) With respect to those aspects of any Annual Operating Budget that are not approved, the Borrower and OPIC shall continue to discuss such aspects in good faith and the Annual Operating Budget for the preceding Fiscal Year related to such disapproved items shall be applicable and shall for all purposes hereof be deemed to be part of the approved Annual Operating Budget for the current Fiscal Year until such time as such aspects of the Annual Operating Budget for the current Fiscal Year have been approved in writing by OPIC.

SECTION 6.07 . Access to Records; Inspection; Meetings .

The Borrower shall, upon OPIC’s reasonable prior request, give, or cause to be given, to any representatives of OPIC access, during business hours, to the Project, the Site and the Borrower’s business and permit them to (a) examine, copy, and make extracts from, any and all records and documents in the possession or subject to the control of the Borrower relating to its operations and financial affairs, (b) inspect any of its facilities or properties, and (c) communicate with employees, agents, or contractors of the Borrower who have or may have knowledge of matters with respect to which OPIC seeks information. If an Event of Default shall have occurred and be continuing and if OPIC so requests, the Borrower shall give OPIC not less than five (5) Business Days’ notice of, and shall permit an OPIC representative to attend (either in person, telephonically or by other electronic means), as a non-voting observer, each formal meeting of the Borrower’s shareholders and of its directors. In conducting any visit or inspection under this Section 6.07, OPIC and its representatives shall abide by and comply with all applicable health, safety and environmental policies and insurance requirements relating to the Project of which the Borrower notifies OPIC in writing reasonably in advance of such visit or inspection.

SECTION 6.08. Notice of Default and Other Matters.

The Borrower shall notify OPIC promptly, but in any event within two (2) Business Days in general and within 24 hours when required pursuant to Section 6.11(c), of (i) the occurrence, to its knowledge, of any Default, (ii) the occurrence of any Event of Default that is continuing and any steps the Borrower is taking to remedy such situation, (iii) any legal or arbitral proceedings against the Borrower or any Shareholder or, to its Knowledge, any Material Project Party involving claims that either (x) relate to the Project and individually or in the aggregate at any given time exceed the equivalent of $500,000 or (y) otherwise could reasonably be expected to be a Material Adverse Effect and (iv) the occurrence of any other condition or event (including action by any Governmental Authority) that could reasonably be expected to be a Material Adverse Effect and any steps the Borrower is taking to remedy such situation.

SECTION 6.09 Security Documents .

(a) The Borrower, at its own cost, shall take all actions necessary to maintain each of the Security Documents in full force and effect and enforceable in accordance with its terms and to preserve OPIC’s security, including (i) maintaining all filings and recordations, (ii) paying fees and other charges, (iii) issuing supplemental documentation and continuation statements, (iv) discharging all Liens or other claims adversely affecting the rights of OPIC in the property subject to any Security Document other than Permitted Liens, (v) publishing or otherwise delivering notice to third parties, (vi) delivery of title documents, and (vii) taking all actions necessary to ensure that all after-acquired property of the Borrower is subject to a valid and enforceable, perfected first priority Lien, subject only to liens with statutory priority under Applicable Law with respect to claims of labor, tax and software licenses, in favor of OPIC within one-hundred twenty (120) days after the acquisition of any real property and thirty (30) days after the acquisitions of any equipment or movable goods.

(b) Without limiting the generality of subsection (a) above, in the event that any Governmental Authority issues or adopts any new Applicable Law relating to the creation, preservation, registration, perfection, protection or enforcement of security interests in assets of the same character as those covered by the Security Documents, or issues any clarifications of any existing Applicable Law relating to the same, the Borrower shall, at its own cost, execute and deliver all such additional amendments, assignments, certificates, instruments, notifications, or other documents and give further assurances and do all such other acts and things as OPIC shall reasonably request or as may be provided for in such new Applicable Law or any clarifications of any existing Applicable Law, to create, preserve, register, perfect, protect or enforce the security interest provided for in the Security Documents. All actions to be performed by the Borrower shall be taken by the Borrower within (i) one-hundred twenty (120) in the case of the Administration and Guaranty Trust Agreement, and (ii) fifteen (15) days in the case of the Share Pledge Agreement and Honduran Share Trust Agreement after the issuance and applicability of such Applicable Law or clarification to OPIC’s security interest as provided in the preceding sentence (whether by the receipt of notice from OPIC or otherwise).

SECTION 6.10 . Financial Ratios; D SR Re quirement; Well Reserve Requirement .

(a) The Borrower shall maintain at all times following COD, but calculated at the end of the first full fiscal quarter occurring thereafter, (i) a ratio of Cash Flow for the most recently completed four (4) consecutive full fiscal quarters (or the number of full fiscal quarters completed after COD), taken as a single accounting period, to Debt Service for the most recently completed four (4) consecutive full fiscal quarters (or lesser number of quarters if fewer quarters have been completed as contemplated above), taken as a single accounting period, of not less than 1.1 to 1 (such ratio, the “ Historic DSCR ”); and (ii) a ratio of Cash Flow for the next succeeding four (4) consecutive full fiscal quarters, taken as a single accounting period, to Debt Service for the next succeeding four (4) consecutive full fiscal quarters of not less than 1.1 to 1 (such ratio, the “ Projected DSCR ”).

(b) At all times after the establishment of the Offshore Debt Service Reserve Account pursuant to Accounts Agreement, the Borrower shall maintain funds or assets on deposit in the Offshore Debt Service Reserve Account with a market value at least equal to the DSR Requirement.

(c) At all times following the first Disbursement until the True-Up Date, the Borrower shall maintain funds or assets on deposit in the Offshore Well Reserve Account with a market value at least equal to $2,000,000.

SECTION 6.11 . Environmental, Health and Safety Compliance .

(a) The Borrower shall comply with, and shall conduct its business and operations, and maintain its assets, equipment, property, leaseholds, and other facilities in compliance with (i) the Environmental and Social Requirements, and (ii) all Applicable Laws regarding the environment, health and safety, and social performance. In cases in which land is not voluntarily purchased from existing land owners at market rates, the Borrower shall follow international best practices described in the International Finance Corporation’s Performance Standard Number 5 for Land Acquisition and Involuntary Resettlement. The Borrower shall maintain or cause to be maintained all Consents required for the Project under Applicable Law or the Environmental and Social Requirements relating to: (A) air emissions; (B) discharges to surface water or ground water; (C) noise emissions (it being understood that the Borrower will be able to assess and confirm compliance with applicable noise standards only upon completion of the noise assessment referenced in Section 3.1 of the ESAP); (D) solid or liquid waste disposal; (E) the use, generation, storage, transportation, or disposal of toxic or hazardous substances or wastes; and (F) other environment, health and safety, and social performance matters.

(b) The Borrower shall implement and comply at all times with the Environmental and Social Plans and the requirements of the ESAP (it being understood that the Borrower will be able to assess and confirm compliance with applicable noise standards only upon completion of the noise assessment referenced in Section 3.1 of the ESAP). The Borrower shall not amend the Environmental and Social Plans without OPIC’s prior written consent.

(c) The Borrower shall notify OPIC immediately, and in no event later than twenty-four (24) hours after the Borrower becomes aware, through the exercise of reasonable due diligence and care, of any accident directly or indirectly caused by the Project, occurring at the Site or affecting any Worker engaged in their official duties that results in the loss of life or that has, or that could reasonably be foreseen to have a material adverse impact on the environment. The Borrower shall submit to OPIC within thirty (30) days after the occurrence of such event a summary report thereof.

(d) The Borrower shall require each Project Contractor, with respect to itself and any of its Project Subcontractors, to comply with the requirements described in Sections 6.11(a), 6.11(b) and 6.11(c).

(e) The Borrower shall follow international best practices described in International Finance Corporation’s Performance Standard Number 5 – Land Acquisition and Involuntary Resettlement where the Project results in physical and/or economic displacement of any person(s).

(f) The Borrower shall deliver to OPIC within ninety (90) days of the end of the calendar year on which this Agreement is executed, and annually thereafter within such ninety (90) day period, a report in form and substance satisfactory to OPIC summarizing the Project’s compliance with the Environmental and Social Requirements over the preceding twelve (12) months. Each report shall include:

(i) measures taken to operate the Project in a manner consistent with the Environmental and Social Requirements;

(ii) results of all environmental monitoring or sampling activity (including noise, wastewater discharge, water use, water quality and air emissions) required to be submitted to any Governmental Authority pursuant to Applicable Law or that may be required or requested by OPIC under the Financing Documents;

(iii) summary of training provided to employees;

(iv) material accidents impacting the environment or workers, including significant spills, lost time incidents and corrective actions implemented to address these accidents;

(v) emergency response incidents;

(vi) any recommended revisions to the ESMS;

(vii) any compliance actions taken by the host country or local government;

(viii) summary of stakeholder engagement activities and of community development activities undertaken by the Borrower;

(ix) listing of stakeholder grievances and resolutions, and of worker grievances and resolutions; and

(x) security incidents.

(g) All plans, procedures, notices, reports and other deliverables required under Section 4.15 and this Section 6.11 shall be delivered electronically to eia@opic.gov and copied to notices@opic.gov.

SECTION 6.12 . Worker Rights .

(a) The Borrower shall:

(i) not take any actions to prevent Workers from lawfully exercising their right of association and their right to organize and bargain collectively, or take any actions, or otherwise interfere with, coerce, or penalize, on the basis of the right of association or on the basis of organization and collective bargaining activities or membership, that may result in any form of retaliation, including, but not limited to, the termination, suspension, demotion, blacklisting, or transfer of any Worker by the Borrower, or by an officer, agent, or representative thereof;

(ii) observe Applicable Laws relating to a minimum age for employment of children, acceptable conditions of work with respect to minimum wages, hours of work, and occupational health and safety;

(iii) not use forced or compulsory labor, including, but not limited to any form of slavery or bonded labor;

(iv) explain, document, and make available in writing and orally to each Worker, information regarding all of their working conditions and terms of employment, including their entitlement to wages and any benefits and the Worker Rights Requirements, prior to the later of (A) thirty (30) days after the date hereof or (B) each Worker commencing work;

(v) not employ persons, formally or informally, under the age of fifteen (15) for general work or under the age of eighteen (18) for work involving hazardous activity, which is work that by its nature or the circumstances in which it is carried out is likely to harm the health, safety, or morals of those persons;

(vi) not make employment decisions or discriminate with respect to aspects of the employment relationship on the basis of personal characteristics unrelated to inherent job requirements, including gender, race, religion, nationality, political opinion, or social or ethnic origin;

(vii) not require hourly or quota-based wage Workers to work more than 48 standard hours of work per week and that all Workers shall be guaranteed a weekly 24-hour rest period;

(viii) pay all wages, including all legally-mandated bonus pay and premium pay for overtime work, in full, in legal tender, and in a timely fashion, to Workers except when Workers have agreed otherwise;

(ix) ensure that Workers have the right to remove themselves from hazardous situations without jeopardizing their continued employment;

(x) with respect to security personnel and security arrangements, be guided by the principles of proportionality and good international practice in relation to hiring, rules of conduct, training, equipping, and monitoring of such Workers and by applicable law, and engage such personnel in a manner consistent with the International Finance Corporation’s Performance Standard 4 paragraphs 12-14;

(xi) implement and comply at all times with the Worker Rights Action Plan set forth in Schedule 6.12; and

(xii) require each Project Contractor, with respect to itself and any of its Project Subcontractors, to comply with the foregoing requirements; provided , that if any Applicable Law, or collective bargaining agreement, imposes a requirement that is more protective of worker rights than any of the foregoing requirements, the Borrower shall, and shall cause the Project Contractor(s) and Project Subcontractor(s) to, observe such Applicable Law or collective bargaining agreement (the requirements set forth in this Section 6.12(a), collectively, the “ Worker Rights Requirements ”).

(b) In the event that information concerning non-compliance or potential non-compliance with the Worker Rights Requirements (a “ Worker Rights Non-Compliance ”) comes to the attention of a responsible officer of the Borrower, the Borrower shall give prompt notice thereof to OPIC’s Director of Labor and Human Rights by email to the following address labor@opic.gov. The Borrower shall use all reasonable efforts, including remediation, to cure or to cause the relevant Project Contractor or Project Subcontractor to cure, or prevent the recurrence of, any Worker Rights Non-Compliance.

(c) Notwithstanding the foregoing, the Borrower shall not be responsible for any Worker Rights Non-Compliance resulting from the actions of a government.

SECTION 6.1 3 . Additional Project Documents.

The Borrower shall promptly deliver to OPIC a Certified copy of any Project Document entered into after the first Closing Date, or any amendment to any Project Document pursuant to Section 7.03, which Project Document shall be in form and substance satisfactory to OPIC.

SECTION 6.1 4 . Drilling Program .

The Borrower shall comply with the provisions of the Drilling Program and shall use commercially reasonable efforts to complete the Drilling Program, and confirm the completion thereof to OPIC, by the date on which the True-Up Confirmation is provided.

SECTION 6.15. SERNA Direct Agreement.

The Borrower shall, within six (6) months of the first Closing Date, deliver to OPIC the SERNA Direct Agreement, duly executed by SERNA and the Borrower.

ARTICLE VII
NEGATIVE COVENANTS

SECTION 7.01. Liens .

The Borrower shall not, directly or indirectly, create, assume, or otherwise permit to exist any Lien on any of its assets, whether now owned or hereafter acquired, or in any proceeds or income therefrom, except for the following Liens (collectively, the “ Permitted Liens ”):

(a) the Liens created under the Security Documents or pursuant to any other Financing Documents;

(b) tax, mechanic’s, worker’s or other like Liens arising by mandatory provision of law securing obligations incurred in the ordinary course of business that are not yet overdue or that are being contested or litigated in good faith and for which reserves in an amount equal to or exceeding the amount of the Liens for Taxes, assessments or charges have been made in accordance with Accounting Standards;

(c) any Liens that are created in order to continue an administrative or judicial proceeding in which the Borrower is a party and wishes in good faith to present a defense in accordance with Applicable Law and which do not constitute an Event of Default, provided , that (i) at all times there is a stay of execution, (ii) bonds or other security have been provided in an amount equivalent to the value of the property attached and (iii) the Borrower is diligently proceeding with its defense;

(d) any minor easements, rights of way and other similar encumbrances incurred in the ordinary course of business that, in each case, do not and will not adversely impact the value of the Project or give any Person the right to interfere with the construction, operation, ownership and maintenance of the Project and do not and will not create, in any respect, rights preferred to those legally or contractually held by the Borrower; and

(e) the Liens listed on Schedule 7.01.

SECTION 7.02. Indebtedness .

The Borrower shall not incur, assume, guarantee, or permit to exist, or otherwise become liable for Indebtedness except:

(a) the Loan;

(b) Indebtedness fully subordinated to the Loan on terms satisfactory to OPIC;

(c) Indebtedness consisting of suppliers of goods or services incurred in connection with the construction and operation of the Project, provided , that, such Indebtedness is expressly included in the Annual Operating Budget or otherwise approved by OPIC;

(c) Indebtedness consisting of trade credit from suppliers of goods or services incurred in the ordinary course of business in an aggregate amount not to exceed $250,000 and on terms requiring payment in full in not more than ninety (90) days;

(d) Indebtedness consisting of unsecured short-term credit facilities not exceeding $250,000, in the aggregate, from commercial banks requiring repayment in not more than one hundred and eighty (180) days;

(e) the Priority Fee and the Remainder Fee; and

(f) Indebtedness (other than to any of the Ormat Parties or any Affiliate thereof) listed on Schedule 7.02;

provided , that in no event shall any Indebtedness described above, when incurred, cause the Borrower to fail to meet the financial ratios set forth in Section 6.10.

SECTION 7.03. No Alteration or Assignment of Agreements .

(a) The Borrower shall not terminate, amend, grant any waiver of, or assign any of the respective duties or obligations under, any provision of any Borrower Document or any Consent (other than amendments or waivers, either to correct manifest error or which are of a stylistic, minor, or purely technical nature and do not change materially any Person’s rights or obligations; provided , that the Borrower shall promptly give OPIC notice, and provide OPIC with a copy, of such amendment or waiver).

(b) The Borrower shall not make any changes to the assumptions in the Financial Model for the Project without OPIC’s prior written consent.

(c) The Borrower shall not compromise or settle any claim against any Person, the compromise or settlement of which in the manner contemplated by the Borrower would materially reduce the amount of any payment due to the Borrower or could reasonably be expected to adversely affect the Borrower’s ability to perform its obligations under the Transaction Documents.

SECTION 7.04. Restricted Payments and Shareholder Payments .

The Borrower shall not make, or incur any obligation to make, any Restricted Payment or any Shareholder Payment; provided , however , that after the Borrower has made at least one (1) Principal Installment, the Borrower may (subject to the mandatory prepayment provisions set forth in Section 2.05(b)) make Restricted Payments and Shareholder Payments if, but only if, after giving effect to each such Restricted Payment or Shareholder Payment, (i) no Default or Event of Default shall have occurred and be continuing or will occur as a result of such Restricted Payment or Shareholder Payment, and (ii) the Historic DSCR and the Projected DSCR shall not be less than 1.2 to 1. Notwithstanding the foregoing provisions of this Section 7.04, the Borrower may make (w) Shareholder Payments approved pursuant to the then applicable Annual Operating Budget and payments from proceeds of the Disbursement(s) of the Loan to reimburse the Sponsor and the Shareholders for any equity contributions (including shareholder loans) made prior to the date of COD and which were in excess of the amounts required to be contributed by the Sponsor and the Shareholders under the Financing Documents (as confirmed by OPIC in consultation with its consultants), (x) payment of the Priority Fee in accordance with the terms of the Administration and Guaranty Trust Agreement, (y) payment of the Development Fee to the Shareholders and (z) on an annual basis, payments in respect of the Parent Support Services.

SECTION 7.05. Conduct of Business with Affiliates .

The Borrower shall not conduct any business with or enter into any business transaction involving any Shareholder or any Affiliate of any Shareholder, except on an arm’s-length basis and subject to the reporting requirement set forth in Section 6.05(c).

SECTION 7.06 . No Sale of Assets; Mergers.

The Borrower shall not:

(a) sell, assign, convey, lease, or otherwise dispose of its assets, except for the sale of power and renewable energy credits (if any) and the replacement of a capital asset with a capital asset of equal or greater utility or value at the time of the disposition and the disposition of inventory in the ordinary course of business or worn-out, obsolete, uneconomic, or surplus property;

(b) dissolve, liquidate, or otherwise cease to do business; or

SECTION 7.07. Lease Obligations .

The Borrower shall not enter into any agreement or arrangement to acquire by lease the use of any property or equipment of any kind, if the annual rental payable under such lease, when aggregated with the annual rentals payable under all other leases already entered into by the Borrower, would exceed $350,000 or its equivalent in any Fiscal Year with the exception of any leases listed on Schedule 7.07 or otherwise approved by OPIC (including in the Annual Operating Budget).

SECTION 7.08. Ordinary Conduct of Business .

The Borrower shall not:

(a) engage in any business other than the Project;

(b) change the Project or the Site in any material respect;

(c) change its Charter Documents (other than for amendments or modifications, either to correct manifest error or which are of a stylistic, minor, or purely technical nature and do not change the Charter Documents in any material respect; provided , that the Borrower shall promptly give OPIC notice, and provide OPIC with a copy, of such amendment or modification);

(d) change its name or take any action that might adversely affect the Liens created by the Security Documents;

(e) enter into any partnership, profit-sharing or royalty agreement, or other similar arrangement whereby the Borrower’s income or profits are, or might be, shared with any other Person;

(f) (i) create any subsidiaries, (ii) acquire by purchase or otherwise any of the shares of share capital, other equity interests, or assets of another Person, or (iii) make or permit to exist any loans or advances to, or assume, guarantee, endorse, or otherwise become directly or contingently liable for, any obligation or Indebtedness of, any Person other than the endorsement of negotiable instruments for collection in the ordinary course of business and the prudent investment of idle surplus funds in readily marketable Dollar-denominated debt securities;

(g) fail to maintain its corporate existence and its right to carry on its operations; or

(h) adopt, establish, maintain, sponsor, administer, contribute to, participate in, or incur any liability under or obligation to contribute to, any Employee Benefit Plan, Guaranteed Pension Plan, or Multiemployer Plan or incur any liability to provide post-retirement welfare benefits, except such liability to provide post-retirement welfare benefits as may be required by Applicable Law or other non-material post-retirement welfare benefits.

SECTION 7.09. OFAC Compliance.

(a) The Borrower shall ensure that none of the Borrower, Borrower’s directors, members of senior management or the Shareholders or Elcosa shall be a Person included in any OFAC List or otherwise subject to sanctions under OFAC Regulations.

(b) The Borrower shall not, and shall ensure that none of its directors, officers, employees, Affiliates, agents, or Persons acting on its behalf will, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of proceeds of the Loan to fund any trade, business, or other activities (i) involving or for the benefit of any Person included in any OFAC List or otherwise subject to sanctions under OFAC Regulations, or (ii) that could result in any Person (including OPIC) being in breach of OFAC Regulations, becoming included in any OFAC List, or otherwise becoming subject to sanctions under OFAC Regulations.

SECTION 7.10. Prohibited Payments.

Neither the Borrower nor any Person acting on behalf of the Borrower shall make any Prohibited Payment.

SECTION 7.11. Accounts.

The Borrower shall not establish or maintain any account with a bank or other financial institution other than the Accounts and the Citi Onshore O&M Account, provided that the latter account is used solely for the purpose of funding expenses of the Borrower denominated in Lempiras and (a) deposits to the Citi Onshore O&M Account shall not exceed the aggregate amount requested by the Borrower prior to any quarter in respect of such expenses reasonably anticipated for such quarterly period and approved in writing by OPIC.

SECTION 7.12 Project; Site.

The Borrower shall not use, maintain, operate, or occupy, or allow the use, maintenance, operation, or occupancy of, any portion of the Site or the Project, other than in accordance with the Transaction Documents and pursuant to the Project. Without limiting the foregoing, the Borrower shall not exercise any rights or options to acquire real property, whether under the MINOSA Cooperation Agreement or otherwise, without the prior written consent of OPIC.

SECTION 7.13 Project Documents.

The Borrower shall not, without OPIC’s prior written consent, do any of the following: (a) enter into any Project Documents other than the Material Project Documents and any other Project Documents consented to in writing by OPIC, (b) consent to or otherwise accept or approve any replacement of the Joint Guarantee, (c) commence delivery of power under the MINOSA PPA, (d) deliver notice to ENEE as to any Committed Power Capacity for Third Parties under the ENEE PPA, (e) deliver notice to MINOSA stating that the conditions precedent have been fulfilled to the Borrower’s satisfaction or that the Borrower has been exempted in writing from fulfilling them or (f) supply or consent to supply to MINOSA more than 3 MWe of power in any month; provided that for the foregoing clauses (c), (d) and (e), such prior written consent from OPIC shall not be unreasonably conditioned.

ARTICLE VIII
DEFAULTS AND REMEDIES

SECTION 8.01. Events of Default .

Each of the following events or circumstances shall constitute an “ Event of Default ”:

(a) Payment Default. The Borrower fails to pay when due any amount payable to OPIC pursuant to this Agreement, any Note, or any other Financing Document.

(b) Cross-Default. (i) The Borrower fails to pay any amount due on any of its Indebtedness (including principal, interest and any premium or fee thereon, but excluding Indebtedness evidenced by this Agreement and the Notes) (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) having an aggregate principal amount (including undrawn revolving or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $350,000, and such failure continues beyond the applicable cure period, if any, (ii) a default occurs under any agreement or instrument evidencing, or under which the Borrower has outstanding at the time, any such Indebtedness and such default is continuing beyond the applicable cure period, if any, if the effect of such default is to accelerate or to permit the acceleration of the maturity of such Indebtedness, or (iii) any such Indebtedness shall be declared to be due and payable, or required to be prepaid, prior to the stated maturity thereof as a result of a default or other similar adverse event.

(c) Representation Default. Any representation or warranty made or deemed made by or on behalf of the Borrower or any Shareholder in any Financing Document proves to have been incorrect in any material respect when made or deemed made.

(d) Covenant Default. The Borrower fails to comply with any covenant or provision set forth in Sections 6.08, 6.09, 6.10, 6.11 (except as provided in Section 8.01(f)) or 6.12 (except as provided in Section 8.01(e)) or Article VII.

(e) Worker Rights Non-Compliance . With respect to any Worker Rights Non-Compliance caused by a Project Contractor or Project Subcontractor, the Borrower fails to cause the relevant Project Contractor or Project Subcontractor to cure, or prevent the recurrence of, any Worker Rights Non-Compliance and such failure continues for ninety (90) days after the first occurrence of such Worker Rights Non-Compliance.

(f) Approvals Default . Any Consent necessary for the execution, delivery, or performance of any Transaction Document or for the validity or enforceability of any of the Borrower’s or any Shareholder’s obligations under any of the Transaction Documents is not effected or given or is withdrawn or ceases to remain in full force and effect and (unless the lack of such Consent could have a Material Adverse Effect) such Consent remains not effected or given or is withdrawn or ceases to remain in full force and effect for a period of thirty (30) days or more.

(g) Obligation Default . The Borrower fails to comply with or perform any agreement or covenant contained herein other than those referred to in Sections 8.01(a), (b), (c), (d), (e) or (f) above and such failure continues for thirty (30) days after the occurrence thereof; provided , that, if (i) the Borrower has diligently sought to remedy such breach or default but through its good faith efforts has been unable to do so, and (ii) such breach or default is capable of cure within sixty (60) days, then such thirty (30) day period shall be extended to such date, not to exceed a total of sixty (60) days, as shall be necessary for the Borrower to cure such breach or defaults.

(h) Transaction Document Default . Any Transaction Document at any time for any reason (i) ceases to be in full force and effect (other than upon expiration in accordance with its terms when fully performed or upon termination and replacement, which termination or replacement shall be with OPIC’s prior written consent if such Transaction Document is a Material Project Document or the MINOSA PPA), (ii) is declared to be void or is repudiated, (iii) is suspended or revoked, or terminated (other than upon expiration in accordance with its terms when fully performed or upon termination and replacement with OPIC’s prior written consent), (iv) the validity or enforceability thereof is at any time contested in writing by the Borrower, any Shareholder or any other counter-party (other than OPIC), (v) ceases to give or provide the respective rights, titles, remedies, powers, or privileges intended to be created thereby, or (vi) with respect to the Ormat Guaranty only, any amendment, deletion or other modification takes effect without the prior written consent of OPIC; provided that there shall be no Event of Default hereunder in respect of any Material Project Document referred to in Sections 4.01(c)(ix) and (xi) or any other Project Document that is not a Material Project Document (each, a “ Replaceable Project Document ”) if any such Replaceable Project Document is restored or replaced with an equivalent Project Document (together with any replacement Direct Agreement if applicable) with the original counterparty to such Replaceable Project Document or another Person of similar or superior creditworthiness and experience as such original counterparty at the time of such replacement, in each case, on terms reasonably satisfactory to OPIC within 45 days of the occurrence of such event or circumstance.

(i) Security Default . (i) Any Security Document, once executed and delivered, ceases at any time for any reason to provide the Liens, rights, titles, interests, remedies, powers or privileges created thereby, (ii) any Lien created in any portion of the collateral pledged pursuant to the Security Documents shall cease to be effective or fail to have the priority originally created under the Security Documents, (iii) the validity of the Security Documents or the applicability thereof to the obligations of the Borrower hereunder or any part thereof, shall be disaffirmed in writing by or on behalf of the Borrower, or (iv) OPIC’s security interest or other rights in any portion of the collateral pledged pursuant to the Security Documents shall terminate in any manner other than that contemplated by the Financing Documents.

(j) Other Agreements Default . The Borrower, any Shareholder or any party to a Material Project Document fails to comply with or perform any of its material obligations or undertakings set forth in any Transaction Document to which it is a party (other than this Agreement or the Notes) and such failure continues beyond the applicable cure period, if any; provided that there shall be no Event of Default with respect to a Material Project Party under a Replaceable Project Document if such Material Project Party is replaced with another Person reasonably satisfactory to OPIC within 45 days of the occurrence of such event or circumstance.

(k) Expropriation Default . Any Governmental Authority condemns, nationalizes, seizes, or otherwise expropriates any substantial portion of the assets or the capital stock of the Borrower or takes any action that would prevent the Borrower from carrying on any material part of its business or operations.

(l) Voluntary Bankruptcy Default . The Borrower or any Material Project Party (other than ENEE or SERNA) (i) applies for, or consents to the appointment of, a receiver, trustee, custodian, intervenor, or liquidator of itself or of all or a substantial part of its assets, (ii) files a voluntary petition in bankruptcy, admits in writing that it is unable to pay its debts as they become due, or generally fails to pay its debts as they become due, (iii) makes a general assignment for the benefit of creditors, (iv) files a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, or insolvency laws, (v) files an answer admitting the material allegations of, or consents to, or defaults in answering, a petition filed against it in any bankruptcy, reorganization or insolvency proceeding where such action or failure to act will result in a determination of bankruptcy or insolvency against it, or (vi) takes any corporate action to authorize any of the foregoing; provided that in the case of a Material Project Party, there shall be no Event of Default if such Material Project Party is replaced with another Person reasonably satisfactory to OPIC within 45 days of the occurrence of such event or circumstance.

(m) Involuntary Bankruptcy Default . Without its application, approval, or consent, a proceeding is instituted in any court of competent jurisdiction or by or before any government or governmental agency of competent jurisdiction, seeking in respect of the Borrower or any Material Project Party (other than ENEE or SERNA) adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, a readjustment of Indebtedness, the appointment of a trustee, receiver, liquidator, or the like of it or of all or any substantial part of its property or assets, or other like relief in respect of it under any bankruptcy, reorganization, or insolvency law; and, if such proceeding is being contested by it in good faith, the same continues undismissed for a period of sixty (60) days; provided that there shall be no Event of Default with respect to a Material Project Party under a Replaceable Project Document if such Material Project Party is replaced with another Person reasonably satisfactory to OPIC within 45 days of the occurrence of such event or circumstance.

(n) Final, Non-Appealable Judgment Default . A final and non-appealable judgment or litigation settlement for the payment of money in an aggregate amount in excess of $1,000,000 (with respect to the Borrower) or $5,000,000 (with respect to any Shareholder or Elcosa) or the equivalent of such amount in another currency is rendered against, or entered into by, any of the Borrower, the Shareholders or Elcosa, and such judgment is not satisfied or discharged within ten (10) days of entry; provided that in the case of Elcosa, the Sponsor and OII, any such judgment could reasonably be expected to have a material and adverse effect on the performance of any obligations it may have under the Transaction Documents to which it is a party or otherwise with respect to the Project.

(o) Judgment Default . A judgment for the payment of money in an aggregate amount in excess of $1,000,000 (with respect to the Borrower) or $5,000,000 (with respect to OrPower 19, the Intermediate Shareholder or Elcosa) or the equivalent of such amount in another currency is rendered against, or entered into by, any of the Borrower, OrPower 19, the Intermediate Shareholder or Elcosa, and such judgment is not appealed in a timely manner and, in any case, within ninety (90) days; provided that in the case of Elcosa, OrPower 19 and the Intermediate Shareholder, any such judgment could reasonably be expected to have a material and adverse effect on the performance of any obligations it may have under the Transaction Documents to which it is a party or otherwise with respect to the Project; and provided , always, that such appeal must have the effect of staying the enforcement of such judgment pending the relevant appeal.

(p) Material Adverse Effect Default . Any event, development or circumstance shall have occurred that, in the reasonable determination of OPIC, has or could reasonably be expected to have a Material Adverse Effect.

(q) Political Violence Default . Any acts of war (whether declared or undeclared), revolution, insurrection, civil war, strife of a lesser degree, terrorism, or sabotage occur that cause the destruction, disappearance or physical damage of a substantial portion of the assets of the Borrower or prevent the Borrower from carrying on any material part of its business or operations.

(r) U.S. Persons Default . At any time prior to the end of the Commitment Period, U.S. Persons acceptable to OPIC shall cease to retain an ultimate beneficial ownership interest in the Borrower of at least twenty-five percent (25%).

(s) Change of Control Default. Any Change of Control of the Borrower occurs without the prior approval of OPIC.

(t) Right to Site Default . Except pursuant to the Security Documents, the Borrower ceases to have the right to possess and use, or shall be prevented from possessing or using, the Site or any material portion thereof for the purpose of owning, constructing, maintaining and operating the Project in the manner contemplated by the Transaction Documents, and such loss of right is or could reasonably be expected to be a Material Adverse Effect.

(u) Abandonment Default . The Borrower voluntarily Abandons the Project.

SECTION 8.02. Remedies upon Event of Default .

(a) Except as otherwise provided in Section 8.02(b), if any Event of Default has occurred and is continuing, OPIC may at any time do any one or more of the following (i) suspend or terminate the Commitment, (ii) declare, by written demand for payment, any portion or all of the Loan to be due and payable, whereupon such portion or all of the Loan, together with interest accrued thereon and all other amounts due under the Financing Documents, shall immediately mature and become due and payable, without any other presentment, demand, diligence, protest, notice of acceleration, or other notice of any kind, all of which the Borrower hereby expressly waives, or (iii) except as required by Applicable Law, without notice of default or demand, proceed to protect and enforce its rights and remedies by appropriate proceedings or actions, whether for damages or the specific performance of any provision of any Financing Document, or in aid of the exercise of any power granted in any Financing Document, or by law, or may proceed to enforce the payment of any Note. In addition, upon the occurrence of an Event of Default referred to in Section 8.01(e), OPIC may require the Borrower to terminate, or cause the relevant Project Contractor to terminate, such Project Contractor’s or Project Subcontractor’s Project Contract, as the case may be.

(b) Upon the occurrence of an Event of Default referred to in Sections 8.01(m) or (n), (i) the Commitment shall automatically terminate, and (ii) the Loan, together with interest accrued thereon and all other amounts due under the Financing Documents, shall immediately mature and become due and payable, without any other presentment, demand, diligence, protest, notice of acceleration, or other notice or action of any kind, all of which the Borrower hereby expressly waives.

SECTION 8.03. Arbitration .

(a) Any Dispute shall be settled by arbitration in accordance with the Rules; provided , however , that this agreement to arbitrate Disputes shall not include the arbitration of (i) any Excluded Claims; and (ii) any Disputes that are subject to a pending action, suit or proceeding brought by OPIC in accordance with Section 8.04.

(b) Arbitration pursuant to this Section 8.03 is not a waiver of and shall not impair the enforcement rights of OPIC with respect to any Lien or the right of OPIC to exercise any other similar remedy under this Agreement or any other Financing Document to which the Borrower is a party, pursuant to Section 8.04(a) or otherwise, and such enforcement by OPIC shall not be deemed to be inconsistent with or a violation of the arbitration provisions of this Section 8.03.

(c) Any awards issued by the Arbitral Tribunal shall be final and binding on the Arbitration Parties; any orders so issued shall be binding on the Arbitration Parties. Judgment upon any award issued by the Arbitral Tribunal may be entered by any court having jurisdiction thereof or having jurisdiction over the relevant Arbitration Party or its assets. The Borrower hereby submits to the jurisdiction of the United States District Court for the Southern District of New York for the limited purpose of enforcing this agreement to arbitrate.

(d) The Arbitral Tribunal shall have no jurisdiction to grant any interim measure that limits or prevents, or seeks to limit or prevent, OPIC from exercising any enforcement right with respect to any Lien or enforcing any similar remedy under this Agreement or any other Financing Document to which the Borrower is a party, including without limitation any enforcement action pursuant to Section 8.04. The Borrower covenants and agrees not to seek any such interim measure, either in any arbitration pursuant to this Section 8.03 or otherwise.

(e) Notwithstanding Section 9.03, this Section 8.03 and any arbitration pursuant thereto shall be governed by Title 9 (Arbitration) of the United States Code.

SECTION 8.04. Borrower Consent to Suit; Exclusive Forum for Certain Actions .

(a) Notwithstanding Section 8.03, OPIC in its sole discretion shall have the option at any time and from time to time to bring against the Borrower any action, suit or proceeding in respect of any Dispute, in any of (i) the courts of the State of New York in the County of New York or the United States District Court for the Southern District of New York, or (ii) the courts in any other jurisdiction where the Borrower or any of its property may be found; provided , however , with regard to any Dispute that has been referred to arbitration pursuant to Section 8.03 by the Borrower, OPIC may, in its discretion, initiate an action, suit or proceeding as provided herein in lieu of such arbitration and in respect of such Dispute, so long as OPIC exercises its option to do so prior to the last day on which OPIC’s statement of defense (or equivalent submission) in respect of such Dispute is to be submitted.

(b) The Borrower hereby: (i) irrevocably waives any present or future objection to the venue of any such action, suit or proceeding, and irrevocably consents and submits unconditionally to the non-exclusive jurisdiction of any such court for itself and in respect of any of its property; (ii) irrevocably waives any claim in any such court that any such action, suit, or proceeding brought therein has been brought in an inconvenient forum; (iii) agrees that final judgment against it in any such action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction within or outside the United States of America by suit on the judgment or otherwise, a certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of its obligation; and (iv) covenants and agrees not to resist enforcement of any such final judgment in any jurisdiction where OPIC commences enforcement proceedings.

(c) Prior to the first Disbursement, the Borrower shall irrevocably designate and appoint an agent satisfactory to OPIC for service of process in the County of New York, New York under this Agreement and any other Financing Document governed by the laws of the State of New York, with respect to any action or proceeding in New York, as its authorized agent to receive, accept, and confirm receipt of, on its behalf, service of process in any such proceeding, and shall provide OPIC with evidence of the prepayment in full of the fees of such agent until six (6) months after the Loan Maturity Date. The Borrower agrees that service of process, writ, judgment or other notice of legal process upon said agent shall be deemed and held in every respect to be effective personal service upon it. The Borrower shall maintain such appointment (or that of a successor satisfactory to OPIC) continuously in effect at all times while the Borrower is obligated under this Agreement or any Note. Nothing herein shall affect OPIC’s right to effect service of process in any other manner permitted by Applicable Law.

(d) Any enforcement action, suit, or other judicial, administrative or arbitral proceeding by the Borrower against OPIC (or the United States government) in respect of an Excluded Claim shall be brought exclusively in a United States federal court of competent jurisdiction in the District of Columbia.

SECTION 8.05. Judgment Currency .

This is an international loan transaction in which the specification of Dollars is of the essence and such currency shall be the currency of account in all events. The payment obligations of the Borrower to OPIC under any Financing Document shall only be discharged by an amount paid in another currency, whether pursuant to a judgment or otherwise, to the extent of the amount in Dollars received by OPIC (after any premium and costs of exchange) on the prompt conversion to Dollars in the U.S. of the amount so paid in another currency under normal banking procedures. In the event that any payment by the Borrower in another currency, whether pursuant to a judgment or otherwise, upon conversion and transfer, does not result in the payment of the amount of Dollars then due at the place such amount is due, OPIC shall be entitled to demand immediate payment of and shall have a separate cause of action against the Borrower for the additional amount necessary to yield the amount of Dollars then due. In the event that OPIC upon the conversion of a payment in another currency into Dollars receives an amount greater than that to which it was entitled, the Borrower shall be entitled to prompt reimbursement of the excess amount.

SECTION 8.06 . No Immunity .

The Borrower represents and warrants that it is subject to civil and commercial law with respect to its obligations under each of the Borrower Documents, that the making and performance of such Borrower Documents and the borrowings by the Borrower pursuant hereto constitute private and commercial acts rather than governmental or public acts, and that neither the Borrower nor any of its properties or revenues has any right of immunity from suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment, set-off, execution of a judgment, or from any other legal process with respect to its obligations under such Borrower Documents. To the extent that the Borrower may hereafter be entitled, in any jurisdiction in which judicial or arbitral proceedings may at any time be commenced with respect to any Borrower Document, to claim for itself or its revenues or assets any such immunity, and to the extent that in any such jurisdiction there may be attributed to the Borrower such an immunity (whether or not claimed), the Borrower hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity. The foregoing waiver of immunity shall have effect under the United States Foreign Sovereign Immunities Act of 1976.

ARTICLE IX
MISCELLANEOUS

SECTION 9.01. Notices .

Except as provided in Sections 6.11(g) and 6.12(b), each notice, demand, or other communication relating to this Agreement shall be in writing, shall be hand-delivered or sent prepaid by mail or overnight delivery service or e-mail (with a copy by mail to follow, receipt of which copy shall not be required to effect notice), and shall be deemed duly given when sent to the following addresses:

To the Borrower:

Geotérmica Platanares, S.A. de C.V.

Plaza Saavedra, Modulo #20 y 21

Bo. Mercedes, 1a Calle NE 3a Av NE, Frente a Hotel VIP Copan

Santa Rosa de Copán, Honduras, Centroamerica

HONDURAS

Attn.: Elio Orozco

E-mail: eorozco@ormat.com

Phone: 504-2662-1066

with a copy to:

Ormat Technologies, Inc.

6225 Neil Road

Reno, Nevada 89511

Attn: Chief Financial Officer

To OPIC:

Overseas Private Investment Corporation

1100 New York Avenue, N.W.

Washington, D.C. 20527

United States of America

Attn.: Vice President, Structured Finance and Insurance

And attn.: Managing Director, Portfolio Management Division

E-mail: notices@opic.gov

Re: Platanares Geothermal Project (Honduras) Transaction No. 9000003553

Either party may, by written notice to the other, change the address to which such notices, demands, or other communications should be sent to it. No notice to OPIC, including notices delivered pursuant to Sections 6.11(g) and 6.12(b), shall be effective unless such notice includes the project name and number, as listed above, and, prior to the first Disbursement, attention to Vice President, Structured Finance and Insurance and, subsequent to the first Disbursement, attention to Managing Director, Portfolio Management Division.

SECTION 9.02. English Language .

All documents to be furnished or communications made under each of the Financing Documents shall be in English or, if in another language, shall be accompanied by a Certified translation into English, which translation shall govern between the Borrower and OPIC.

SECTION 9.03. Governing Law.

THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.

SECTION 9.04. Succession; Assignment ; Benefit .

This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto; provided , however , that the Borrower shall not, without the prior written consent of OPIC, assign or delegate all or any part of its interest herein or obligations hereunder. This Agreement is for the sole benefit of the Borrower and OPIC, and no other Person (other than the Indemnified Persons and permitted successors or assigns of the parties hereto) shall be a direct or indirect beneficiary of, be entitled to rely hereon, or have any direct or indirect cause of action or claim in connection with this Agreement or any of the Transaction Documents.

SECTION 9.05. Survival of Agreements .

Each agreement, representation, warranty, and covenant contained or referred to in this Agreement shall survive any investigation at any time made by OPIC and shall survive all disbursements of the Loan, except for changes permitted hereby, and, except as otherwise provided in this Section, shall terminate only when all amounts due or to become due under the Financing Documents are indefeasibly paid in full. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.07, 2.08(a), and 9.10 shall survive the payment in full of principal and interest hereunder and under the Notes.

SECTION 9.06. Integration; Amendments .

This Agreement, including the Exhibits and Schedules hereto, and the agreements referred to herein embody the entire understanding of the parties and supersede all prior negotiations, understandings, and agreements between them with respect to the subject matter hereof. The provisions of this Agreement may be waived, supplemented, or amended only by an instrument in writing signed by the parties hereto.

SECTION 9.07. Severability .

If any provision of this Agreement is prohibited or held to be invalid, illegal, or unenforceable in any jurisdiction, the parties hereto agree to the fullest extent permitted by law that it shall not affect the validity, legality, and enforceability of the other provisions of this Agreement and shall not render such provision prohibited, invalid, illegal, or unenforceable in any other jurisdiction. If, and to the extent that, any obligation of the Borrower (including that under Section 9.10) is unenforceable for any reason it agrees, independently of any other obligation hereunder, to make the maximum contribution to the payment and satisfaction thereof as is permissible under Applicable Law.

SECTION 9.08. No Waiver.

(a) No failure or delay by OPIC in exercising any right, power, or remedy shall operate as a waiver thereof or otherwise impair any of its rights, powers, or remedies. No single or partial exercise of any such right, power, or remedy shall preclude any other or further exercise thereof or the exercise of any other legal right, power or remedy. No waiver of any such right, power, or remedy shall be effective unless given in writing.

(b) The rights, powers, or remedies provided for herein are cumulative and are not exclusive of any other rights, powers or remedies provided by law. The assertion or employment of any right, power or remedy hereunder, or otherwise, shall not prevent the concurrent assertion of any other right, power or remedy.

SECTION 9.09. WAIVER OF JURY TRIAL .

THE BORROWER AND OPIC EACH IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM ESTABLISHED BY ANY FINANCING DOCUMENT.

SECTION 9.10. Indemnity .

The Borrower shall, at all times, indemnify OPIC and its directors, officers, employees, and agents (each, an “ Indemnified Person ”) against, and hold each Indemnified Person harmless from, any losses, claims, damages, liabilities, penalties, judgments, or other costs (including costs, fees, and expenses incurred by or imposed on any Indemnified Person in defending, analyzing, settling, or resolving any of the foregoing, and the expenses associated with the making of any affirmative claim in connection therewith) of any nature whatsoever to which an Indemnified Person may become subject (“ Loss ”) arising out of, in connection with, or related to the Loan (including any actual or proposed use of the proceeds of the Loan), this Agreement, any other Financing Document, the Project, or any actual or prospective litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto (the “ Borrower Indemnity ”). The Borrower Indemnity shall not apply to the extent that a court or arbitral tribunal with jurisdiction over the Loss and each Indemnified Person who has a Loss in connection therewith renders a final determination that the Loss resulted from (a) the gross negligence or willful misconduct of the Indemnified Person, or (b) OPIC’s failure to perform any act required of it relating to the Loan including under any Financing Document. The Borrower Indemnity is independent of and in addition to (i) any rights of any party hereto in connection with any Loss, and (ii) any other agreement, and shall survive the execution, modification, and amendment of this Agreement and the other Financing Documents, the expiration, cancellation, or termination of the Commitment, the disbursement and repayment of the Loan, and the provisions of any other indemnity. Any exclusion of an obligation to pay any amount under this Section shall not affect the requirement to pay such amount under any other Section hereof or under any other agreement. OPIC and each Indemnified Person shall have the right to control its, his, or her defense; provided , however , that each Indemnified Person shall: (A) notify the Borrower in writing as soon as practicable of any Loss and (B) keep the Borrower reasonably informed of material developments with respect thereto. In exercising the right and power to control his, her, or its actions in connection with a Loss, including a decision to settle any such Loss, each Indemnified Person shall, taking into account the nature and policies of such Indemnified Person (I) consult with the Borrower, and (II) act as such Indemnified Person would act if the Loss or settlement were to be paid by such Indemnified Person. The Borrower acknowledges and agrees that each Indemnified Person is an express, third-party beneficiary of the Borrower’s obligations under this Section 9.10.

SECTION 9.11. Cooperation; Loan Servicing.

At its sole cost, OPIC may assign or delegate all or part of the responsibility for monitoring, managing, administrating or servicing the Loan to a Person that shall act as OPIC’s agent and asset manager in addressing such matters as may be required in connection with the servicing of the Loan. Any Person who so acquires the right to monitor, manage, administrate or service the Loan shall benefit from the indemnity set forth in Section 9.10 (as if the name of such Person had been stated in such provision).

SECTION 9.12 . Further Assurances .

The Borrower shall execute and deliver to OPIC such additional documents and take such additional action as OPIC may require to carry out the purposes of the Financing Documents, to cause the Financing Documents to be duly registered, legalized, notarized, and stamped in any applicable jurisdiction, and to preserve and protect OPIC’s rights as contemplated herein or therein.

SECTION 9.13 . Counterparts .

This Agreement may be executed in counterparts, each of which when so executed and delivered shall be deemed an original and all of which together shall constitute one and the same instrument.

SECTION 9.14 . Waiver of Litigation Payments .

In the event that any action or lawsuit is initiated by or on behalf of OPIC against the Borrower or any other party to any Transaction Document, the Borrower, to the fullest extent permissible under Applicable Law, irrevocably waives its right to, and agrees not to request, plead, or claim that OPIC and its successors, transfers, and assigns (any such Person, an “ OPIC Plaintiff ”) post, pay, or offer, any cautio judicatum solvi bond, litigation bond, or any other bond, fee, payment, or security measure provided for by any provision of law applicable to such action or lawsuit (any such bond, fee, payment, or measure, a “ Litigation Payment ”), and the Borrower further waives any objection that it may now or hereafter have to an OPIC Plaintiff’s claim that such OPIC Plaintiff should be exempt or immune from posting, paying, making, or offering any such Litigation Payment.

Section 9.15. Conflict of Terms.

Except as otherwise provided in this Agreement or any of the other Financing Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement conflicts with any provision in any of the other Financing Documents, the provision contained in this Agreement shall govern and control.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed and delivered on its behalf by its authorized representative as of the date first above written.

	GEOTÉRMICA PLATANARES, S.A. DE C.V.



	By:

	Name:

	Its:
	Authorized Officer


	OVERSEAS PRIVATE INVESTMENT CORPORATION



	By:

	Name:

	Its:

)

) ss:

)

I, ______________________, a notary public in and for ___________________, DO HEREBY CERTIFY that ______________________, the ________________ of Geotérmica Platanares, S.A. de C.V. (the “ Borrower ”) , personally appeared before me in said ___________________, is personally known to me and known by me to be the person who executed on behalf of the Borrower the Finance Agreement annexed hereto, and who acknowledged the same to be his or her own free act and deed and the free act and deed of the Borrower.

Given under my hand and notarial seal this _____ day of __________, 20___.

)

) ss:

)

I, ______________________, a notary public in and for ___________________, DO HEREBY CERTIFY that ______________________, the ________________ of OVERSEAS PRIVATE INVESTMENT CORPORATION (“ OPIC ”) , personally appeared before me in said ___________________, is personally known to me and known by me to be the person who executed on behalf of the Borrower the Finance Agreement annexed hereto, and who acknowledged the same to be his or her own free act and deed and the free act and deed of the Borrower.

Given under my hand and notarial seal this _____ day of __________, 20___.

SCHEDULE X

Defined Terms and Rules of Interpretation

1. Defined Terms . As used in this Agreement, including the Exhibits and Schedules hereto, the following terms shall have the following meanings.

“ Abandon ” means (a) cease to have the right to possess and use the Site for the Project in the manner contemplated in the Transaction Documents or (b) voluntarily suspend all or substantially all of its activities in connection with the Project, in each case for a period of thirty (30) or more consecutive days (other than for force majeure, maintenance, government order or as required by Applicable Law).

“ Account Control Agreement ” means the account control agreement by and among OPIC, MUFG Union Bank, N.A., and the Borrower, in form and substance satisfactory to OPIC.

“ Accounting Standards ” means GAAP, unless OII is required to modify its accounting standards in accordance with SEC rules and regulations.

“ Accounts ” means, collectively, the Offshore Accounts, the Onshore Accounts and any other of the Borrower’s bank accounts, if any, that are pledged to OPIC, including pursuant to the Administration and Guaranty Trust Agreement.

“ Account s Administration and Retention Agreement ” means the agreement for the administration of the Onshore Accounts (other than the Citi Onshore O&M Account) ( Contrato de Administración y Retención de Cuentas ) entered into, or to be entered into, in form and substance satisfactory to OPIC, among the Onshore Administration and Guaranty Trustee, the Borrower, and OPIC.

“ Accounts Agreement ” means the agreement to be entered into by and among the Borrower, OPIC and MUFG Union Bank, N.A., relating to control and administration of the Offshore Accounts.

“ Act of Political Violence ” means any act of war (whether declared or undeclared), revolution, insurrection, civil war, strife of a lesser degree, terrorism, or sabotage.

“ Actual Equity Contribution ” has the meaning set forth in the Share Retention Agreement.

“ Administration and Guaranty T rust Agreement ” means the trust agreement ( Contrato de Fideicomiso de Administración y Garantía Enmendado y Reexpresado ), dated as of November 27, 2013, among the Borrower, OrPower 19 and the Onshore Administration and Guaranty Trustee, to be amended and restated by the parties thereto and Elcosa on or prior to the first Closing Date.

“ Affiliate ” means, with respect to any Person, (a) any other Person that is directly or indirectly controlled by, under common control with, or controlling such Person; (b) any other Person owning beneficially or controlling five percent (5%) or more of the equity interest in such Person; (c) any officer or director of such Person; or (d) any spouse or relative of such Person. As used herein, the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of partnership interests or voting securities, by contract or otherwise.

“ Agreement ” has the meaning set forth in the preamble.

“ Annual Operating Budget ” means, for any Fiscal Year, the operating budget (including the then required levels of maintenance capital expenditures) and operating plan for such Fiscal Year prepared by the Borrower in the form of Schedule 6.06, submitted by the Borrower to OPIC and approved by OPIC.

“ Anti-Money Laundering Laws ” means (a) the Bank Secrecy Act, as amended by, inter alia , the USA PATRIOT Act of 2001, (Pub. L. No. 107-56) and (b) any other law, regulation, order, decree or directive of any relevant jurisdiction having the force of law and relating to anti-money laundering.

“ Applicable Law ” means, with respect to a given Person on a given date, any constitution, statute, law, rule, regulation, ordinance, judgment, order, decree, Consent of a Governmental Authority, or any published directive, guideline, requirement or other governmental restriction that has the force of law, or any determination by, or interpretation of any of the foregoing by, any judicial authority, that is binding on such Person whether in effect as of the date hereof or as of any date thereafter.

“ Arbitral Tribunal ” means the arbitral tribunal constituted in accordance with the Rules.

“ Arbitration Parties ” means each of (i) OPIC, (ii) the Borrower and (iii) any other party to an arbitration pursuant to Section 8.04; and “Arbitration Party” means any of them, as the context requires.

“ Authorized Officer ” means, with respect to any Person, any officer designated in such Person’s Charter Documents or otherwise in writing as having been authorized to execute and deliver any of the Transaction Documents.

“ Board of Governors of the Federal Reserve System ” means the Board of Governors of the Federal Reserve System, which is an agency of the United States of America responsible for the analysis of domestic and international financial and economic developments, and for regulating the operations of the Federal Reserve Banks and payment systems.

“ Borrower ” has the meaning set forth in the preamble to this Agreement.

“ Borrower Documents ” means each of the Transaction Documents to which the Borrower is or will be a party.

“ Borrower Indemnity ” has the meaning set forth in Section 9.10.

“ Business Day ” means any day other than (a) a Saturday, Sunday, or day on which commercial banks are authorized by law to close in the City of New York or Washington, D.C., United States of America, (b) with respect to any communication to OPIC, a day on which OPIC is not open for business, and (c) with respect to any Disbursement or payment to OPIC, a day on which OPIC or the United States Department of the Treasury is not open for business.

“ Cancellation Fee ” has the meaning set forth in Section 2.06(b).

“ Cash Flow ” of the Borrower, for any period, means the amount resulting from (a) its Net Income for such period, plus (b) all interest expense, any expense for any Fees, and depreciation, amortization, deferred income taxes, and other non-cash expenses for such period (but only to the extent deducted in determining Net Income), minus (c) the amount of net increase or net decrease in Working Capital between the first day of such period and the last day of such period, minus (d) any capital expenditure (excluding any expenditure prior to COD to the extent such expenditure was financed with the proceeds of the Loan, equity contributions or paid from reserves) incurred in such period for repair or replacement of a capital asset.

“ Cayman Pledge Agreements ” means (a) the Equitable Mortgage Over Shares in OrPower 19, Inc. to be executed on or before the first Closing Date between Intermediate Shareholder and OPIC and (b) the Amended and Restated Equitable Mortgage Over Shares in OrPower 19, Inc., to be executed on or before the first Closing Date between Intermediate Shareholder and Elcosa.

“ Certificate Interest Rate ” has the meaning set forth in the OPIC Funding Agreement.

“ Certified ” means, in respect of any document, that such document is being delivered accompanied by a certification from an Authorized Officer that it is true and complete (or a true and complete copy, as the case may be), including all amendments to date, and, if applicable, is in full force and effect in accordance with its terms as of the date of such certification.

“ Change of Control ” means:

(a) before the Closing Date on which the final Disbursement is made, (i) the failure of the Sponsor to be listed on the New York Stock Exchange; (ii) the failure of the Sponsor, directly or indirectly, to own one hundred percent (100%) of the issued and outstanding share capital and economic interests of OII; (iii) the failure of OII, directly or indirectly, to own one hundred percent (100%) of the issued and outstanding share capital and economic interests of Ormat Holding Corp.; (iv) the failure of Ormat Holding Corp., directly or indirectly, to own one hundred percent (100%) of the issued and outstanding share capital and economic interests of the Intermediate Shareholder; (v) the failure of the Intermediate Shareholder to own one hundred percent (100%) of the issued and outstanding share capital and economic interests of OrPower 19; or (vi) the failure of OrPower 19 to own one hundred percent (100%) of the issued and outstanding ordinary capital stock (excluding the Preferred Nonvoting Share) and one hundred percent (100%) of the economic interests of the Borrower (provided that OrPower 19’s transfer of its shares in the Borrower pursuant to the Honduran Share Trust Agreement shall not be deemed a Change of Control); and

(b) at all times from and after the Closing Date on which the final Disbursement is made, the failure of the Sponsor, directly or indirectly (including through assignment of shares in the Borrower pursuant to the Honduran Share Trust Agreement), to own at least 50.1% of the issued and outstanding share capital and economic interests of, and to exercise control over, the Borrower.

“ Charter Documents ” means, in respect of any Person, such Person’s founding act, charter, articles of incorporation and by-laws, memorandum and articles of association, statute, or similar instrument.

“ Citi Onshore Account Pledge Agreement ” means the account pledge agreement ( Contrato de Control y Administración de Cuentas ) in form and substance satisfactory to OPIC, governed by the laws of Honduras to be entered into by the Borrower and OPIC, creating a pledge over the Citi Onshore O&M Account.

“ Citi Onshore O&M Account ” has the meaning set forth in the Accounts Agreement.

“ Closing Date ” for any Disbursement means the Business Day on which a Disbursement is made.

“ COD ” means achievement of the Fecha de Inicio de Operación Comercial , as such term is defined in the ENEE PPA.

“ Code ” means the Internal Revenue Code of 1986, as amended, and any successor statute and all rules and regulations promulgated thereunder.

“ Commercial Operation Start Certificate ” means the Certificado de Inicio de Operación Comercial under the ENEE PPA.

“ Commitment ” means OPIC’s commitment to lend an amount up to $124,700,000 less (a) the portion thereof that pursuant to Section 2.06(b) has been canceled or has been deemed canceled, and (b) any amounts disbursed pursuant to Section 2.01.

“ Commitment Fee ” has the meaning set forth in Section 2.06(a).

“ Commitment Letter ” means the commitment letter, dated as of November 21, 2016, by OPIC in favor of the Borrower and the Sponsor.

“ Commitment Period ” means the period commencing on the date of execution of this Agreement, and ending on the earliest of (a) the first date on which the amount of the Loan equals the amount of the Commitment, (b) the second (2 ^nd ) anniversary of the date of execution of this Agreement, provided , however , if the first Disbursement has not occurred on or before the first anniversary of the date of execution of this Agreement or the eighth (8 ^th ) anniversary of the date of the Commitment Letter, the Commitment Period shall end on the date of such first or eighth anniversary, as applicable, and (c) the date the Commitment has otherwise been terminated in accordance with this Agreement.

“ Congressional Approval of the La Bufa Lease ” means the Decree of the National Congress of Honduras required under numeral 19 of Article 205 of the Constitution of Honduras approving the Municipality of La Union, Department of Copan’s, grant of the La Bufa Land Lease Agreement for the full term of such lease agreement, approved through Decree 125-2017 dated January 18, 2018 and published in the Official Gazette on April 13, 2018.

“ Consents ” means any registration, declaration, filing, consent, license, right, approval, authorization, or permit.

“ Corrupt Practices Laws ” means (a) the Foreign Corrupt Practices Act of 1977 (Pub. L. No. 95-213, §§101-104), as amended, and (b) any other Applicable Law relating to bribery, kick-backs, or similar business practices.

“ Current Assets ” means assets of the Borrower treated as current assets under Accounting Standards, which, for the avoidance of doubt, does not include amounts that may be on deposit in the Offshore Debt Service Reserve Account or otherwise held to satisfy the DSR Requirement.

“ Current Liabilities ” means liabilities of the Borrower treated as current liabilities under Accounting Standards.

“ Cut-Off Date ” means the period beginning on July 1, 2017 through the last date of the period covered by the review performed by the Independent Engineer with respect to Project Costs incurred prior to such date pursuant to Section 4.18.

“ Debt Service ” means, for any period, the sum of all payments of principal, interest, and fees made or required to be made by the Borrower in respect of its Indebtedness (excluding any Indebtedness owed to any Shareholder and any other Indebtedness that is fully subordinated to the Loan on terms acceptable to OPIC) during such period.

“ Debt to Equity Ratio ” means, as of any date of determination, the ratio of (i) the principal amount of the Loan then outstanding to (ii) the aggregate amount of Actual Equity Contributions made on or prior to such date.

“ Default ” means an event or condition that, with the passage of time or the giving of notice, or both, could constitute an Event of Default.

“ Default Rate ” means at the time any amount due to OPIC under any Financing Document is not paid when due (a) with respect to amounts due under a Note, an amount equal to the sum of (i) the applicable OPIC Note Interest Rate (as such rate may be adjusted as provided in Section 2.02(c)) and (ii) two percent (2%) per annum , and (b) with respect to any other amounts due, an amount equal to the sum of (i) the highest OPIC Note Interest Rate set forth in any Note then outstanding (as such rate may be adjusted as provided in Section 2.02(c)) and (ii) two percent (2%) per annum .

“ Designated Prepayment Date ” has the meaning set forth in the OPIC Funding Agreement.

“ Development Fee ” means the development fee payable by the Borrower to the Shareholders as reflected in the Financial Model and approved by OPIC.

“ Direct Agreements ” means (i) the Elcosa Direct Agreement, (ii) the ENEE Direct Agreement, (iii) the consent and agreement, dated on or before the first Disbursement, among OPIC, the Supplier and the Borrower, (iv) the SERNA Direct Agreement and (v) each of the notices described in Section 4.22.

“ Disbursement ” means any disbursement of the Commitment.

“ Disbursement Request ” means a request for disbursement of the Commitment substantially in the form of Exhibit B.

“ Disposition ” means, with respect to any Property, any sale, license, assignment, exchange, conveyance, liquidation or lease or other transfer or disposition thereof, whether by agreement, operation of law or otherwise (and the verb “ Dispose ” shall be construed accordingly).

“ Dispute ” means any dispute, controversy or claim arising out of, relating to, or in connection with this Agreement, the Notes or any other Financing Document to which the Borrower or OPIC is a party, including any dispute, controversy or claim relating to the formation, existence, validity, interpretation, enforceability, breach, performance or termination of thereof.

“ Dollars ” or “ $ ” means U.S. dollars.

“ Drilling Program ” means the drilling program set forth in Schedule 4.19-A hereto.

“ DSR Requirement ” means, for any date, an aggregate Dollar amount equal to the aggregate amount of Debt Service with respect to the Loan for the immediately succeeding six-month period.

“ Effective Date ” has the meaning set forth in the preamble to this Agreement.

“ Elcosa ” means Electricidad de Cortés, S. de R.L. de C.V., a Honduran sociedad de responsabilidad limitada de capital variable .

“ Elcosa Direct Agreement ” means the consent and agreement, dated on or before the first Disbursement, among Elcosa, Bidle Trading, Inc., OPIC, the Borrower, OrPower 19, OII, the Intermediate Shareholder and Inversiones Representaciones Electromecánicas, S.A. de C.V.

“ E lcosa Lie n ” means the first priority security interest in the assets described in the Elcosa Lien Documents.

“ Elcosa Subordination Agreement ” means the Elcosa subordination agreement, dated on or before the first Disbursement, among Elcosa, Bidle Trading, Inc., OPIC, the Borrower, OrPower 19, OII, the Intermediate Shareholder and Inversiones Representaciones Electromecánicas, S.A. de C.V.

“ Employee Benefit Plan ” means any employee benefit plan within the meaning of §3(3) of ERISA maintained or contributed to by the Borrower that is subject to ERISA, other than a Guaranteed Pension Plan or a Multiemployer Plan.

“ ENEE ” means the Empresa Nacional de Energía Eléctrica.

“ ENEE Direct Agreement ” means (i) the consent and agreement, dated on or before the first Disbursement, among ENEE, OPIC and the Borrower and (ii) the operative committee resolutions, dated on or before the first Disbursement, by ENEE’s operative committee.

“ ENEE PPA ” means that certain power purchase agreement ( Contrato No. 086-2010 Suministro de Potencia y su Energía Asociada Generada con Recursos Renovables ) dated as of June 3, 2010 entered into by the Borrower and ENEE, as amended.

“ Environmental and Social Consultants ” means Social Capital Group.

“ Environmental and Social Plans ” means the following, which shall be prepared in accordance with the Environmental and Social Requirements: (a) an overarching policy statement of environmental and social objectives and principles appropriate to the size and nature of the Project and of the Borrower’s organization that will be used to permit the Project to achieve sound and sustainable environmental and social performance; (b) a grievance mechanism appropriate to the size and nature of the Project and of the Borrower’s organization for the Borrower to receive and facilitate resolution of concerns and grievances about the environmental and social performance of the Project and the Borrower’s organization; and (c) the ESAP.

“ Environmental and Social Requirements ” means (a) all Applicable Laws in Honduras regarding environmental, health, and safety requirements; (b) International Finance Corporation’s Performance Standards 1, 2, 3, 4, 5, 6 and 8 (January 1, 2012); (c) applicable provisions of the International Finance Corporation’s April 30, 2007 General Environmental and Health and Safety Guidelines; (d) International Finance Corporation’s Environmental, Health, and Safety Guidelines for Geothermal Power Generation (April 30, 2007); (e) International Finance Corporation’s Environmental, Health, and Safety Guidelines for Electric Power Transmission and Distribution (April 30, 2007) and (f) the applicable provisions of the ESPS of OPIC.

“ Environmental Laws ” means, with respect to any Person, any and all laws applicable to such Person relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended and in effect from time to time, and all rules and regulations promulgated thereunder.

“ ERISA Affiliate ” shall mean any Person that is treated as a single employer with the Borrower under §414 of the Code.

“ ESAP ” shall mean the environmental and social action plan set forth in Schedule 4.15.

“ ESMS ” means the Environmental and Social Management System to be developed by the Borrower, delivered in writing to OPIC, and implemented by the Borrower, all in accordance with the ESAP.

“ ESPS ” means the Environmental and Social Policy Statement dated as of October 15, 2010, which is posted on OPIC’s website at http://www.opic.gov/environment.

“ Event of Default ” has the meaning set forth in Section 8.01.

“ Event of Loss ” means, with respect to any Property of the Borrower, any loss of, destruction of or damage to, such Property (including any such loss, destruction or damage resulting from an Act of Political Violence).

“ Excluded Claim ” means any dispute, controversy or claim (including any counterclaim, defense or set-off) against OPIC, the United States of America, or any instrumentality or agency of the United States of America sounding in tort or other non-contractual basis for liability.

“ Expropriation Event ” means (a) any condemnation, nationalization, seizure or expropriation by a Governmental Authority of all or a substantial portion of the Project or the Property of the Borrower or of its shares, (b) any assumption by a Governmental Authority of control of all or a substantial portion of the Property, assets or business operations of the Borrower or of its shares, (c) any taking of any action by a Governmental Authority for the dissolution or disestablishment of the Borrower, or (d) any taking of any action by a Governmental Authority that would prevent the Borrower from carrying on its business or operations or a substantial part thereof for a period of thirty (30) or more consecutive days.

“ Expropriation Proceeds ” means, with respect any Expropriation Event, any condemnation awards or other compensation, awards, damages and other payments or relief paid or payable by a Governmental Authority with respect to such Expropriation Event.

“ Facility Fee ” has the meaning set forth in Section 2.06(c).

“ Fees ” means the Commitment Fee, the Cancellation Fee, the Facility Fee, the Maintenance Fee and the Modification Fee (if applicable).

“ Financial Model ” means a financial model prepared by the Borrower setting forth financial projections for the Project through March 31, 2032.

“ Financial Officer ” means the chief financial officer, chief operating officer, president, principal accounting officer, treasurer, controller or asset manager of the Borrower or an Affiliate of the Borrower, to the extent such officer is responsible for overseeing the financial operations of the Borrower.

“ Financial Plan ” has the meaning set forth in Section 3.01(m).

“ Financial Statements ” means, with respect to any Person, its quarterly or annual consolidating and consolidated balance sheet and statements of income, retained earnings, and sources and uses of funds for such fiscal period, together with all notes thereto and with comparable figures for the corresponding period of its previous Fiscal Year, each prepared in or translated into English and in Dollars in accordance with Accounting Standards.

“ Financing Documents ” has the meaning set forth in Section 4.01.

“ Fiscal Year ” means, with respect to the Borrower, the period beginning on January 1 and ending on December 31 of each year.

“ Fixed Rate Note ” means any promissory note issued by the Borrower pursuant to this Agreement substantially in the form of Exhibit A-1 of the OPIC Funding Agreement.

“ Funding Documents ” has the meaning set forth in Section 4.21.

“ GAAP ” means generally accepted accounting principles in the United States of America (as amended, supplemented or re-issued from time to time), applied on a consistent basis both as to classification of items and amounts.

“ Good Industry Practice ” means any of the practices, methods, standards and acts employed by, engaged in or approved by a significant portion of the international geothermal power industry and related installation business with respect to the engineering, design, construction, operation and maintenance of geothermal power infrastructure of the type to be incorporated into the Works and which practices, methods and standards shall conform to the requirements of the equipment suppliers and manufacturers of the plant and materials used in the Works, or any of the practices, methods, standards and acts that, 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 result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good Industry Practice is not intended to be limited to the optimum practice, method, or act to the exclusion of all others, but rather to be practices, methods, or acts generally accepted in the industry.

“ Governmental Authority ” means any national, state, county, city, town, village, municipal or other local governmental department, commission, board, bureau, agency, authority or instrumentality of the Project Country or the U.S., as applicable, or any political subdivision thereof, and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any of the foregoing entities, having jurisdiction over the Persons or matters in question.

“ Guaranteed Pension Plan ” means any employee pension benefit plan within the meaning of §3(2) of ERISA which is maintained or contributed to by the Borrower or any ERISA Affiliate, the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.

“ Hedge Agreement ” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate insurance, currency swap agreement, currency option, futures contract, forward contract or any other similar agreement or arrangement with respect to interest rates and currency exchange rates, currencies, commodities or indices or to the hedging of assets or liabilities.

“ Historic DSCR ” has the meaning set forth in Section 6.10(a).

“ Honduran Asset Trust Agreement ” means the trust agreement ( Contrato de Fideicomiso ), dated as of November 27, 2013, among the Borrower, OrPower 19 and Banco del País, S.A., a Honduran sociedad anónima de capital variable in favor of Elcosa.

“ Honduran Share Trust Agreement ” means the share trust agreement ( Contrato de Fideicomiso de Garantía sobre Acciones ), in form and substance satisfactory to OPIC, governed by the laws of Honduras to be entered into by OrPower 19 and the Onshore Share Trustee, providing for Security over 100% of the common shares issued and outstanding of the Borrower, in favor of OPIC.

“ Honduras ” means the Republic of Honduras.

“ Indebtedness ” means, with respect to any Person at any date, total liabilities as defined by Accounting Standards and any obligation created, issued, incurred, or assumed by such Person for borrowed money or arising out of any credit facility, financial accommodation or Hedge Agreement or for the deferred purchase price of goods or services, including, any credit to such Person under any conditional sale or other title retention agreement, all guaranties by such Person of liabilities or Indebtedness of any other Person, liabilities or Indebtedness of any other Person secured by any assets or revenue of such Person, and the net aggregate rentals under any lease by such Person as lessee that under Accounting Standards would be capitalized on the books of the lessee or that is the substantial equivalent of the financing of the property so leased.

“ Indemnified Person ” has the meaning set forth in Section 9.10.

“ Independent Engineer ” means Lummus Consultants International, Inc.

“ Indirect Shareholders ” means OII, the Sponsor and the Intermediate Shareholder.

“ Insurance Advisor ” means INDECS Consulting Limited.

“ Insurance Policy ” means each policy, contract or other instrument of insurance or reinsurance of any kind which is or is required to be taken out by or on behalf of any Obligor or any Project Subcontractor pursuant to Section 6.03 and Schedule 6.03 ( Minimum Insurance Requirements ) hereof and in which the Borrower has any interest (including any of the foregoing taken out by or on behalf of the Borrower under the ENEE PPA).

“ Insurance Proceeds ” means, with respect to any Event of Loss relating to any Property of the Borrower, any insurance or reinsurance (and any other amounts received pursuant to any Insurance Policy), with respect to such Event of Loss (excluding, in each case, if any, the proceeds of general liability insurance, employers’ liability insurance, automobile liability insurance, marine cargo consequential loss insurance, advance loss of profits insurance, delay in start-up insurance and business interruption insurance, Expropriation Proceeds and political risk insurance proceeds of the Shareholders).

“ Intermediate Shareholder ” means OrPower 20, Inc., an exempted company incorporated under the laws of the Cayman Islands.

“ Inverted Domestic Corporation ” means an entity formed outside of the United States which is treated as an inverted domestic corporation under 6 U.S.C. 395(b).

“ Joint Guarantee ” means, collectively, the support letter ( Acuerdo de Apoyo para el cumplimiento del Platanares ) and the joint guarantee ( Aval Solidario del Estado de Honduras ) from the Ministry of Finance of Honduras ( la Secretaría de Estado en el Despacho de Finanzas ) dated June 14, 2011.

“ Key Contractor ” means the Supplier, Geodrill LLC and Ormat Holding Corp.

“ Knowledge ” of a Person that is an organization means the actual knowledge that a responsible officer of such Person has or would have after such inquiry, including through diligent inspection of relevant records and inquiry of relevant employees or such inquiry as may be requested by OPIC, in each case as is practicable and commercially reasonable under the circumstances. For purposes hereof, responsible officer means, for any Person, an officer, director or employee of such Person that is in a position of senior management or policy making for such Person.

“ La Bufa Comfort Letter ” means the comfort letter from Elcosa and Inversiones y Representaciones Electromecanicas, S. de R.L. de C.V., a Honduran sociedad de responsabilidad limitada de capital variable , in favor of the Ormat Parties, dated as of November 27, 2013.

“ La Bufa Land Lease Agreement ” means the land lease agreement ( Contrato de Arrendamiento de Terreno Ejidal ) by the municipality of La Union, Copan in favor of the Borrower, dated as of May 15, 2012.

“ Lempiras ” means the lawful currency of Honduras.

“ Lien ” means any lien, pledge, mortgage, security interest, deed of trust, charge, assignment, hypothecation, title retention, or other encumbrance on or with respect to, or any preferential arrangement having the practical effect of constituting a security interest with respect to the payment of any obligation with, or from the proceeds of, any asset or revenue of any kind.

“ Litigation Payment ” has the meaning set forth in Section 9.14.

“ Loan ” means, on any date, the aggregate of the outstanding unpaid principal amounts of the Notes then outstanding.

“ Loan Documents ” has the meaning set forth in Section 4.01(a).

“ Loan Maturity Date ” means the earlier of (a) the Note Maturity Date and (b) the Business Day before the transfer of the Borrower’s assets, the ordinary shares of the Borrower, or the shares of OrPower 19 to Elcosa or another third party.

“ Long-term Indebtedness ” means, in accordance with Accounting Standards, any Indebtedness, the final maturity of which, by its terms or by the terms of any agreement related to it, falls due more than one year after the date of its incurrence.

“ Loss ” has the meaning set forth in Section 9.10.

“ Maintenance Fee ” has the meaning set forth in Section 2.06(d).

“ Material Adverse Effect ” means any event, development, or circumstance having a material adverse effect on (a) the Project, (b) the business, operations, prospects, condition (financial or otherwise), or property of the Borrower, OII, the Intermediate Shareholder, (c) the ability of the Borrower or any other Material Project Party to perform in a timely manner its payment obligations or other material obligations under any of the Transaction Documents, (d) the validity or enforceability of any material provision of any Transaction Document, (e) the rights and remedies of OPIC under any of the Financing Documents, or (f) the Liens provided to OPIC under the Security Documents.

“ Material Project Documents ” has the meaning set forth in Section 4.01(c).

“ Material Project Party ” means ENEE, Elcosa, the Supplier, SERNA, any Affiliate party to any Project Document and any other counterparty (other than MINOSA under the MINOSA Cooperation Agreement and the MINOSA PPA) under any Material Project Document that remains an executory contract after the Effective Date that is an Affiliate of the Borrower or of any Shareholder.

“ MINOSA ” means Minerales de Occidente S.A. de C.V.

“ MINOSA Cooperation Agreement ” means the cooperation agreement to be entered into between the Borrower and MINOSA.

“ MINOSA PPA ” means the power purchase agreement dated as of May 5, 2007 between the Borrower and MINOSA.

“ Modification Fee ” has the meaning set forth in Section 2.06(e).

“ Multiemployer Plan ” means any multiemployer plan within the meaning of §3(37) of ERISA which is maintained or contributed to by the Borrower or any ERISA Affiliate and subject to Title IV of ERISA.

“ Net Income ” means, with respect to the Borrower, for any period, the net income (loss) of the Borrower for such period, as determined in accordance with Accounting Standards, provided , that there shall be excluded in such determination (a) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of income accrued during such period, (b) any aggregate net gain during such period arising from the sale, conversion, exchange, or other disposition of capital assets, (c) any gains resulting from the write-up of any assets, (d) any net gain arising from the extinguishment, under Accounting Standards, of any Indebtedness of the Borrower, and (e) any net income or gain during such period resulting from (i) any change in accounting principles in accordance with Accounting Standards, (ii) any prior period adjustments resulting from any change in accounting principles in accordance with Accounting Standards, (iii) any extraordinary items, and (iv) any discontinued operations or the disposition thereof.

“ New York Security Agreement ” means the Security Agreement, to be executed on or before the first Closing Date, between the Borrower and OPIC.

“ Note Maturity Date ” means September 20, 2032.

“ Note s ” means (i) any Fixed Rate Note issued by the Borrower pursuant to this Agreement and the Funding Documents substantially in the form of Exhibit A-1 and (ii) any pagaré issued by the Borrower pursuant to this Agreement substantially in the form of Exhibit A-2.

“ O&M Support Agreement ” means the operations and maintenance service support agreement, to be executed on or before the first Closing Date, between the Borrower and Ormat Nevada Inc., a Delaware corporation.

“ Obligor ” means each of the Borrower, the Shareholder, each other Person that owns equity interests in the Borrower, the Intermediate Shareholder and the Sponsor (without duplication).

“ OFAC ” means the Office of Foreign Assets Control of the U.S. Department of the Treasury, which administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted individuals, organizations, and foreign countries and regimes.

“ OFAC List ” means the Specially Designated Nationals and Blocked Persons List and any other lists administered or enforced by OFAC, including but not limited to the Palestinian Legislative Council list and the Part 561 list, in each case as published by OFAC from time to time and available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx or any official successor website.

“ OFAC Regulations ” means (a) the rules and regulations promulgated by OFAC, as may be published in Chapter 31, Part 500 of the Code of Federal Regulations from time to time, and (b) any Executive orders administering or imposing economic sanctions on individuals, organizations or foreign countries and regimes.

“ Official ” means any officer of a political party or candidate for political office in the Project Country or the U.S. or any officer or employee (a) of the government of the Project Country or the U.S. (including any Governmental Authority of the Project Country or the U.S.) or (b) of a public international organization.

“ Offshore Accounts ” has the meaning set forth in the Accounts Agreement.

“ Offshore Debt Service Reserve Account ” has the meaning set forth in the Accounts Agreement.

“ Offshore Well Reserve Account ” has the meaning set forth in the Accounts Agreement.

“ OII ” means Ormat International, Inc., a Delaware Corporation.

“ Onshore Accounts ” has the meaning set forth in the Accounts Agreement.

“ Onshore Administration and Guaranty Trustee ” means Banco del País, S.A., a Honduran sociedad anónima acting solely in its capacity as trustee under the Administration and Guaranty Trust Agreement, or any successor thereto.

“ Onshore Share Trustee ” means Banco del País, S.A., a Honduran sociedad anónima acting solely in its capacity as trustee under the Honduran Share Trust Agreement, or any successor thereto.

“ Operating Report ” means a report in the form set forth in Schedule 6.05(d) ( Operating Report ).

“ Operation Contract ” means that certain operations agreement ( Contrato de Operación para la Generación, Transmisión y Comercialización de Energía Eléctrica ) dated as of January 6, 2009 entered into by the Borrower and SERNA.

“ OPIC ” has the meaning set forth in the preamble to this Agreement.

“ OPIC’s Financial Model Auditor ” means BDO Ziv Haft Consulting and Management Ltd.

“ OPIC Funding Agreement ” means the Funding and OPIC Guaranty Agreement dated on or before the first Disbursement, among the Borrower, the Paying Agent, the Placement Agent and OPIC.

“ OPIC Guaranty Fee ” has the meaning set forth in the Funding Documents.

“ OPIC Guaranty Payment ” has the meaning set forth in Section 2.02(c).

“ OPIC Note Interest Rate ” has the meaning set forth in Section 2.02(a), as adjusted pursuant to Section 2.02(c).

“ OPIC Plaintiff ” has the meaning set forth in Section 9.14.

“ Ormat Guaranty ” means the Guaranty, dated as of November 27, 2013, by OII in favor of Elcosa.

“ Ormat Parties ” means OII, the Intermediate Shareholder and OrPower 19.

“ Ormat Parties Subordination Agreement ” means the Subordination Agreement, to be executed on or before the first Closing Date by and between the Ormat Parties and any Affiliate thereof providing Indebtedness to the Borrower, and OPIC.

“ OrPower 19 ” means OrPower 19, Inc., a Cayman Islands corporation owned by the Intermediate Shareholder.

“ Parent Support Services ” means services provided to the Borrower by its Affiliates for (i) reservoir monitoring and performance assessment of key components, including downhole pumps, turbines and heat exchangers services and (ii) other general services in an amount not to exceed in the aggregate $400,000 on an annual basis, in each case as approved pursuant to the then-applicable Annual Operating Budget.

“ Paying Agent ” means U.S. Bank National Association, or any successor or successors thereto designated as Paying Agent under the Funding Documents.

“ Payment Date ” means the 20 ^th day of each March, June, September and December of each year after the date hereof until the Loan and all amounts due hereunder or under the Notes are paid in full, unless such Payment Date is not a Business Day, in which case the Payment Date will be the next succeeding Business Day.

“ PBGC ” means the Pension Benefit Guaranty Corporation created by §4002 of ERISA and any successor entity or entities having similar responsibilities.

“ Permitted Lien ” has the meaning set forth in Section 7.01.

“ Person ” means an individual, a legal entity, including, a partnership, a joint venture, a corporation, a trust, and an unincorporated organization, and a government or any department or agency thereof.

“ Placement Agent ” means Raymond James & Associates, Inc., or any successor or successors thereto designated as Placement Agent under the Funding Documents.

“ Preferred Nonvoting Share ” has the meaning set forth in the Project Structuring Agreement.

“ Prepayment Premium ” has the meaning set forth in Section 2.04.

“ Principal Installment s ” has the meaning set forth in Section 2.03.

“ Priority Fee ” means 3% of the Gross Revenues (as defined in the Project Structuring Agreement) received by the Borrower pursuant to Section 2.2(a)(i) of the Project Structuring Agreement, which amount is payable as a Project operating cost by the Borrower to Elcosa pursuant to the Elcosa Direct Agreement.

“ Prohibited Payment ” means the giving or making by any Person (such Person, the “Payor”) of any offer, gift, payment, promise to pay or authorization of the payment of any money or anything of value, directly or indirectly, to or for the use or benefit of any Official (including to or for the use or benefit of any other Person if the Payor knows, or has reasonable grounds for believing, that the other Person would use such offer, gift, payment, promise or authorization of payment for the benefit of any such Official), for the purpose of influencing any act or decision or omission of any Official in order to obtain, retain or direct business to, or to secure any improper benefit or advantage for, the Borrower or the Project, or any other Person; provided that any such offer, gift, payment, promise or authorization of payment shall not be considered a Prohibited Payment if it (a) is expressly permitted by Applicable Law or (b) is made for the purpose of expediting or securing the performance of a routine governmental action (as such term is construed under Applicable Law).

“ Project ” means the development, construction and operation of 38 MWe geothermal power plant located in western Honduras.

“ Project Contractor ” means any Person that is a party to a Project Contract with the Borrower.

“ Project Contracts ” means any contract related to the development, construction or operation of the Project between the Borrower and a Project Contractor or between a Project Contractor and a Project Subcontractor.

“ Project Costs ” means all costs incurred by the Borrower on or after the date hereof to finance and construct the Project, including, but not limited to (a) amounts payable under the Project Contracts, (b) interest, fees and expenses payable with respect to the Loan, (c) expenses incurred to obtain use of the Site, (d) costs and expenses of legal, engineering, accounting, construction management, and other advisors incurred in connection with the Project, (e) insurance premiums, (f) funding of the Offshore Debt Service Reserve Account and of the Offshore Well Reserve Account, (g) general and administrative costs such as Working Capital, payroll, utilities, office equipment and supplies, vehicles, communications expenses, and travel expenses, and (h) Taxes.

“ Project Country ” means Honduras.

“ Project Documents ” has the meaning set forth in Section 4.01(c).

“ Project Structuring Agreement ” means the Project Structuring Agreement among, inter alios , Elcosa and the Shareholders dated November 27, 2013.

“ Project Subcontractor ” means any Person, other than the Borrower or a Project Contractor, which is a party to a Project Contract with a Project Contractor.

“ Projected DSCR ” has the meaning set forth in Section 6.10(a).

“ Property ” means any present or future right or interest in, to or under any assets, equipment, facilities, contracts, leaseholds, business, receivables, revenues, accounts or other property of any kind whatsoever, whether real, personal, mixed and whether tangible or intangible.

“ Redemption Premium ” has the meaning set forth in the Funding Documents.

“ Remainder Fee ” means the additional royalty payments payable by the Borrower to Elcosa, after the Borrower’s payment of the Priority Fee, pursuant to the Project Structuring Agreement.

“ Replaceable Project Document ” has the meaning set forth in Section 8.01(h) hereof.

“ Reservoir Monitoring Plan ” means the Borrower’s reservoir monitoring plan set forth in Schedule 4.19-B hereto.

“ Reservoir Monitoring Report ” means the reservoir monitoring report prepared by the Borrower in the form set forth in Schedule 4.19-C hereto.

“ Restricted Payment ” means any of the following made directly or indirectly by the Borrower: (a) any dividend or distribution on any share of capital stock of the Borrower, including any reduction of capital; (b) any payment of principal or interest on any Indebtedness of the Borrower to or for the benefit of any Shareholder or any Affiliate of the Borrower, other than accounts payable for goods or services provided on an arm’s-length basis; (c) any payments to Elcosa or in respect of the Remainder Fee or otherwise; and (d) any purchase, redemption, acquisition, or retirement of any shares of capital stock of the Borrower or any Indebtedness of the Borrower held by any Shareholder or any Affiliate of the Borrower.

“ Rules ” means the International Arbitration Rules of the American Arbitration Association in effect as of the date of the Notice of Arbitration, except as modified by Section 8.03 and Schedule 8.03 or as may be modified by mutual agreement of the Arbitration Parties.

“ Sale Proceeds ” shall mean proceeds from any Disposition of all or any part of any Property of the Borrower, the enforcement of remedies under the Security Documents or otherwise, but excluding any such proceeds (a) included in any Termination Payment, (b) included in any Expropriation Proceeds or Insurance Proceeds, (c) from the sale of electricity and green attributes, if any, or (d) to the extent used in the ordinary course of business to replace the Property so disposed of, or, if not in the ordinary course of business, to the extent used to replace the Property so disposed of or to reinvest in the Project as approved by OPIC in its sole discretion.

“ Secured Obligations ” means all obligations owing to OPIC by the Borrower under or in connection with the Financing Documents including any liability in respect of further advances made under the Financing Documents whether present or future, actual or contingent and whether incurred by the Borrower alone or jointly and whether as principal or surety or in some other capacity. Without limitation, the Secured Obligations shall include interest that accrues, or that would accrue but for the operation of an automatic stay or similar provision, after the filing of a petition initiating any proceeding referred to in Sections 8.01(l) or (m) hereof.

“ Security Documents ” has the meaning set forth in Section 4.01(b).

“ Self-Monitoring Questionnaire ” means the Annual Self-Monitoring Questionnaire used by OPIC to monitor compliance with OPIC’s policy requirements, a copy of which is available and which may be completed online at http://smq.opic.gov.

“ SERNA ” means the Secretaría de Estado en los Despachos de Energía, Recursos Naturales, Ambiente y Minas of Honduras.

“ SERNA Direct Agreement ” means the consent and agreement to be executed within six (6) months of the first Closing Date by and among the Borrower, SERNA and OPIC, in substantially the form attached as Exhibit I.

“ Share Pledge Agreement ” means the share pledge agreement ( Contrato de Prenda Sobre Acciones ) in form and substance satisfactory to OPIC, governed by the laws of Honduras to be entered into by Elcosa and OPIC, creating a pledge upon the single Preferred Nonvoting Share issued and outstanding of the Borrower in the benefit of OPIC.

“ Share Retention Agreement ” means the Share Retention Agreement, to be executed on or before the first Closing Date by and among the Borrower, the Sponsor, OII, the Intermediate Shareholder and OPIC.

“ Shareholder Payment ” means any payment by the Borrower to, or on behalf of, any Shareholder or any Affiliate of any Shareholder other than a Restricted Payment, including any payment in respect of compensation, fees, salaries, bonuses, or commissions or any payment made on behalf of any Shareholder or any Affiliate of any Shareholder that is for the benefit of such party.

“ Shareholders ” means the OrPower 19 and the Indirect Shareholders.

“ Site ” means the land required for the Project including, but not limited to, the power plant, well pads, roads, gathering system piping, and transmission line.

“ Sponsor ” means Ormat Technologies, Inc. (“ Ormat ”), a publicly-traded Delaware Corporation.

“ Subordination Agreements ” means the Elcosa Subordination Agreement and the Ormat Parties Subordination Agreement.

“ Subsidiary Of An Inverted Domestic Corporation ” means an entity that is more than fifty percent (50%) owned (a) directly by an Inverted Domestic Corporation, or (b) through another entity that is more than fifty percent (50%) owned by an Inverted Domestic Corporation.

“ Supplier ” means Ormat Nevada Inc., a fully owned Affiliate of the Sponsor incorporated under the laws of Delaware.

“ Taxes ” means all taxes, charges, fees, levies or other assessments, including without limitation, all net income, gross income, gross receipts, sales, use, ad valorem, value added, turnover, transfer, franchise, profits, license, withholding, payroll, employment, excise, estimated, severance, stamp duties, occupation, property or other taxes, customs duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority and any political subdivision, instrumentality, agency or similar body of any taxing authority.

“ Termination Payment ” means any indemnity or other payment received by the Borrower or any Affiliate thereof from any counterparty other than OPIC under or in connection with any termination of a Project Document (in respect of the Warranty Agreement, only to the extent they arise or accrue after the Effective Date) or a Consent, including pursuant to the ENEE PPA or any Direct Agreement.

“ Transaction Documents ” has the meaning set forth in Section 4.01.

“ True-U p C onfirmation ” means a certificate, in form and substance reasonably satisfactory to OPIC, from the Independent Engineer based on operational data and the Reservoir Monitoring Report(s) covering at least six (6) months of commercial operations for the purposes of allowing the Well Reserve Disbursement to be released and disbursing an amount pursuant to the Accounts Agreement that, together with all then previous Disbursements made, would exceed $114,700,000.

“ True-Up Date ” means the date of the True-Up Confirmation.

“ Uniform Commercial Code ” means the Uniform Commercial Code as in effect in the State of New York or in any other applicable jurisdiction.

“ U.S. ” means the United States of America.

“ U.S. Government ” means the government of the United States of America and its agencies and instrumentalities.

“ U.S. Person ” means a:

(a) U.S. citizen or U.S. lawful permanent resident;

(b) for-profit corporation, partnership, or other entity or association created under the laws of the U.S. or any state or territory thereof, or the District of Columbia, and more than twenty-five percent (25%) beneficially owned by U.S. citizens or U.S. lawful permanent residents;

(c) for-profit corporation, partnership, or other entity or association created under the laws of a foreign jurisdiction, and more than fifty percent (50%) beneficially owned by U.S. citizens or U.S. lawful permanent residents;

(d) non-profit corporation, partnership, or other entity or association created under the laws of the U.S. or any state or territory thereof, or the District of Columbia; or

(e) non-profit corporation, partnership, or other entity or association created under the laws of a foreign jurisdiction and where more than fifty percent (50%) of the members of its board of directors or similar governing body are U.S. citizens or U.S. lawful permanent residents.

“ U.S. Taxpayer Identification Number ” means an identification number used by the Internal Revenue Service, an agency of the United States of America, in the administration of tax laws, which is issued either by the Social Security Administration, an agency of the United States of America, or the Internal Revenue Service.

“ U.S. Treasury Cost ” has the meaning set forth in the OPIC Funding Agreement.

“ Warranty Agreement ” means the warranty agreement between the Borrower and the Supplier, dated on or before the first Disbursement.

“ Water Contract ” means the contract between the Borrower and SERNA, dated as of March 25, 2011 (and which entered into force by order of the National Congress of Honduras as of September 13, 2012).

“ Well Reserve Disbursement ” has the meaning set forth in the Accounts Agreement.

“ Well Reserve Requirement ” has the meaning set forth in the Accounts Agreement.

“ Worker Rights Non-Compliance ” has the meaning set forth in Section 6.12(b).

“ Worker Rights Requirements ” has the meaning set forth in Section 6.12(a)(xii).

“ Workers ” means, collectively, (a) individuals that are employed directly by the Borrower, and (b) individuals that, under a Project Contract, perform continuous on-site work that is either (i) of substantial duration or (ii) material to the primary operations of the Project.

“ Working Capital ” means the amount resulting from Current Assets (excluding cash) minus Current Liabilities (excluding Debt Service for the Loan and for all other Long-term Indebtedness).

“ Works ” means the Completed Work (as defined in the Warranty Agreement), the Resource Works (as defined in the Warranty Agreement) and any other engineering, procurement, construction, drilling, commissioning or testing required to achieve COD.

2. Rules of Interpretation.

In this Agreement, including Exhibits and Schedules hereto, unless otherwise indicated or required by the context: (a) reference to and the definition of any document (including this Agreement) shall be deemed a reference to such document as it may be amended, supplemented, revised, or modified from time to time; (b) all references to an “Article,” “Section”, “Schedule,” or “Exhibit” are to an Article or Section of this Agreement or to a Schedule or an Exhibit attached thereto and shall be deemed to have been made a part thereof; (c) the table of contents and article and section headings and other captions are for the purpose of reference only and do not limit or affect the meaning of the terms and provisions thereof; (d) defined terms in the singular include the plural and vice versa, and the masculine, feminine and neuter gender include all genders; (e) accounting terms not defined in this Schedule X have the meanings given to them under Accounting Standards; (f) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (g) the words “include,” “includes,” and “including” mean include, includes and including “without limitation” and “without limitation by specification”; (h) terms capitalized for other than grammatical purposes that are defined in (i) the preamble, (ii) the recitals, or (iii) the Sections of this Agreement have the meanings ascribed to them therein; (i) phrases such as “satisfactory to OPIC”, “in such manner as OPIC may determine,” “in OPIC’s determination,” “to OPIC’s satisfaction,” “acceptable to OPIC”, “at OPIC’s election”, and phrases of similar import authorize and permit OPIC to approve, disapprove, act or decline to act in its sole discretion; and (j) the words “reasonable”, “reasonably”, “unreasonably”, and words of similar import, when applied to OPIC’s satisfaction, acceptance, determination, consent, discretion or approval, take into account any special consideration affecting decisions of OPIC in its capacity as a governmental entity or its responsibilities as such.

SCHEDULE 2.0 3

AMORTIZATION SCHEDULE

OPIC Platanares Amortization

	6/20/2018	9/20/2018	12/20/2018	3/20/2019	6/20/2019	9/20/2019	12/20/2019	3/20/2020	6/20/2020	9/20/2020	12/20/2020	3/20/2021
Principal	($1,977.59)	($1,977.59)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)

Schedule 2.03 - 1

OPIC Platanares Amortization

	6/20/2021	9/20/2021	12/20/2021	3/20/2022	6/20/2022	9/20/2022	12/20/2022	3/20/2023	6/20/2023	9/20/2023	12/20/2023	3/20/2024
Principal	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)

Schedule 2.03 - 2

OPIC Platanares Amortization

	6/20/2024	9/20/2024	12/20/2024	3/20/2025	6/20/2025	9/20/2025	12/20/2025	3/20/2026	6/20/2026	9/20/2026	12/20/2026	3/20/2027
Principal	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)

Schedule 2.03 - 3

OPIC Platanares Amortization

	6/20/2027	9/20/2027	12/20/2027	3/20/2028	6/20/2028	9/20/2028	12/20/2028	3/20/2029	6/20/2029	9/20/2029	12/20/2029	3/20/2030
Principal	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)

Schedule 2.03 - 4

OPIC Platanares Amortization

	6/20/2030	9/20/2030	12/20/2030	3/20/2031	6/20/2031	9/20/2031	12/20/2031	3/20/2032	6/20/2032	9/20/2032
Principal	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)	($2,156.16)

Schedule 2.03 - 5

SCHEDULE 2.08 ( b )

Wire Instructions for remittance of payments to OPIc

Fedwire Instructions :

Fedwire Field Tag	Fedwire Field Name	Required Information
2000	Amount	[Insert Dollars amount of wire] Note: The amount must be formatted as 12 numeric characters, right-justified with leading zeros. No dollar sign, commas, or decimal point. For example: $39,287.21 must be formatted as 000003928721
3400	Receiver Fedwire Routing Number	021030004
3400	Receiver Fedwire Short Name	US TREAS NYC
3600	Business Function Code	CTR
4200	Beneficiary ID Code	D
4200	Beneficiary Identifier (account number – AGENCY ALC)	71000001
4200	Beneficiary Name	Overseas Private Investment Corporation
5000	Originator ID Code	D
5000	Originator Identifier (Bank Account Number)	[Insert bank account number of remitting party – maximum 34 characters]
5000	Originator Name	Geotérmica Platanares, S.A. de C.V.
6000	Originator to Beneficiary Information – OPIC Loan Number	OPIC/ 9000003553
6000	Originator to Beneficiary Information – Loan Payment Purpose	[Insert type of payment being made – e.g., Principal, Interest & Fees, Reimbursement of Expenses, etc.]

Schedule 2.08(b) - 2

International Electronic Funds Transfers ( ITS Collections ) :

	Field Name			Required Information
	Beneficiary Account			Federal Reserve Bank of New York/ITS ( Can be abbreviated FRBNY/ITS )
	Bank			Citibank N.A. ( New York )
	SWIFT code			CITIUS33
	Account Number			36838868
	Bank Address			388 Greenwich Street, New York, NY 10013
	Amount ( 12 character numeric field, right-justified with leading zeros, no commas, or decimal point. Example: $39,287.21 becomes 000003928721 )
	Payment Details (Line 70) – Mandatory (can abbreviate Agency Name to OPIC)			Overseas Private Investment Corporation, ALC # 71000001, OPIC/ 9000003553, [Invoice # ___], accountingoperations@opic.gov
	Details of Charges (line 71a) - Mandatory			[__________]

Schedule 2.08(b) - 3

SCHEDULE 3.01 ( d )

Capitalization

Entity	Number of issued and authorized shares	Entity holding the shares	Percentage of shares held
Ormat Technologies, Inc.	Issued:49,909,524 (as of June 22,17) Authorized: 150,000,000	Publicly traded interests	100%
Ormat International, Inc.	Issued: 200 Authorized: 1,000	Ormat Technologies, Inc.	100%
Ormat Holding Corp.	Issued: 999.99 Authorized: 50,000	Ormat International, Inc.	100%
OrPower 20, Inc.	Issued: 1,000 Authorized: 50,000	Ormat Holding Corp.	100%
OrPower 19, Inc.	Issued: 1,000 Authorized: 50,000	OrPower 20, Inc.	100%
GEOTÉRMICA PLATANARES, S.A. DE C.V.	Issued: 100,097 Authorized: 125,000	OrPower 19, Inc.	100% of ordinary capital stock
GEOTÉRMICA PLATANARES, S.A. DE C.V.	Issued: 1 Authorized: 125,000	Electricidad de Cortés, S. de R.L. de C.V.	100% of Preferred Nonvoting Share

Schedule 3.01(d) - 1

SCHEDULE 3.01 ( l )

COMPLAINTS

The Borrower received a letter dated July 11, 2017, from an attorney representing the National Human Rights Commission ( Comisionado Nacional de los Derechos Humanos or “CONADEH”). The letter quotes a complaint by a neighbor of the Project alleging that the Project has caused damage to three homes in the area as well as their families’ health due to auditory contamination. The neighbor claims that two notes have been provided to an engineer who works for the Project requesting assistance, but that no response has been received to date.

A note was delivered by hand on May 15, 2017 to security guards at the Project site containing similar complaints alleging auditory contamination from machinery and property damage to homes in the area. Representatives of the Borrower attempted twice to contact the initial complainant (once on May 16, 2017, and again later in the week), Ms. Jessica Peña, but were told by neighbors that she does not reside at the house she owns.

In response to the complaint letter, a meeting was held in the municipality of La Unión Copán, attended by representatives of the Borrower, CONADEH, the municipality and the complaining residents. The Borrower agreed at the meeting to hire a specialist to conduct a sonometric study, witnessed by representatives of CONADEH and the complaining residents, in order to determine the effect of the generated noise. An initial study was conducted on December 6, 2017, following encapsulation work of the turbines and motors intended to reduce noise levels, and a follow-up study was conducted with noise measurements taken from inside the plant on January 19, 2018 and continuous noise measurements taken from outside the plant January 16 – 18, 2018. The work and studies were completed and the studies are attached to this Schedule 3.01(l) as Attachment A . The initial study includes an observation claiming that the complainant was approached and indicated that she was no longer bothered by the noise (see observacion #2 on page 7 of Attachment A). The Borrower plans to implement a mechanism to address similar complaints received during operations.

Ormat has provided to OPIC written evidence in the form of a letter from CONADEH dated January 16, 2018 that CONADEH has closed the case opened as a result of the complaint.

Schedule 3.01(l) - 1

ATTACHMENT A TO SCHEDULE 3.01(l)

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SCHEDULE 3.01 ( m )

Financial Plan

Total Project Costs: $166,976,000

Total OPIC Debt $ 124,700,000

Total Equity $ 42,276,000

Total Sources $ 166,976,000

Schedule 3.01(m) - 1

SCHEDULE 3.01(x)

Contractors and Subcontractors

Part A : Set forth below is a complete list of all contractors and suppliers (other than the Key Contractors) that, since the Cut-Off Date have performed Works. All such Works have been paid in full except as set forth in Part B of this schedule:

Contractor/Subcontractor

	1	Agencia Y Distribuidora Occidental, Santa Rosa de Copán

	2	Alineamiento y Balanceo Computarizado DBA Jesus Arnaldo Garcia Cuellar, Santa Rosa de Copán

	3	Almacenes de Deposito SA Place an, San Pedro Sula

	4	Alquileres Plaza Saavedra DBA Soveyda Gisela Saavedra Perez, Santa Rosa de Copán

	5	Armet Sociedad Anónima, Guatemala City

	6	ASI NETWORK dba Asociacion de Servicios de Internet S. de R.L., Puerto Cortés

	7	AUTOEXCEL SA DE CV, San Pedro Sula

	8	AUTOS LEMUS DBA JUAN GERARDO LEMUS LEMUS, Santa Rosa de Copán

	9	Ayre de Honduras SA de CV, San Pedro Sula

	10	Bakersfield Pipe & Supply, Los Angeles

	11	Banco Del Pais, Banpais, Santa Rosa de Copán

	12	Baruc Express dba Carlos Francisco Hernandez, Santa Rosa de Copán

	13	Bombas y Motores de Honduras SA de CV, San Pedro Sula

	14	Cameron West Coast, Inc., Fontana

	15	CAMOSA, San Pedro Sula

	16	Carlos Alberto Pineda Siercke, San Pedro Sula

	17	Carlos Alberto Tabora Pineda, Santa Rosa de Copán

	18	Carlos Enrique Niño, Santa Rosa de Copán

	19	Casa Comercial Mathews, S.A. De C.V., San Pedro Sula

	20	Casys, S.A. de C.V., San Salvador

Schedule - 3.01(x) - 1

	21	CELAQUE ASESORES S DE RL DE CV, Tegucigalpa

	22	CEMCOL COMERCIAL S.A. DE C.V., San Pedro Sula

	23	Central de Mangueras S.A. (CEMASA), San Pedro Sula

	24	CENTRAL INDUSTRIAL SA DE CV, San Pedro Sula

	25	CENTRO MEDICO SANTA ROSA, Santa Rosa de Copán

	26	Comedor Internacional dba Blanca Lydia Polanco Bueso, Cucuyagua

	27	Comedor Yessy, Venta de comida rapida DBA Iris Yesenia Guevara Aguilar, San Andres Minas

	28	COMERCIAL CASA BUESO, Santa Rosa de Copán

	29	Compañía General de Accesorios y Comercio SA de CV, Puerto Cortés

	30	Comunicaciones y Servicios de Honduras SA, San Pedro Sula

	31	Construcciones Trigueros S. de RL, San Andres Minas

	32	Consultores y Servicios Industriales Cortés S de RL de CV, Puerto Cortés

	33	CONTROL DE RIESGOS EMPRESARIALES SRL DE CV, San Pedro Sula

	34	COOPERATIVA CAFETALERA CAPUCA LIMITADA COCAFCAL, Cucuyagua

	35	Corporacion Hotelera Intercentroamericana S.A. de C.V, Tegucigalpa

	36	COSESAE, San Pedro Sula

	37	CPMJ Consultoria DBA Carla Patricia Miranda Jaime, Leon

	38	Cuerpo de Bomberos, Santa Rosa de Copán

	39	DEICOM, San Pedro Sula

	40	DISTRIBUIDORA ADOC DE HONDURAS SA, San Pedro Sula

	41	Distribuidora de Muebles Kessy, Santa Rosa de Copán

	42	DISTRIBUIDORA DE PRODUCTOS AGROPECUARIOS FERTILIZANTES Y FERRETERIA S. de R.L. de C.V., Santa Rosa de Copán

	43	Distribuidora de Válvulas y Equipos S. DE R.L., San Pedro Sula

	44	DURACRETO S.A DE C.V, San Pedro Sula

	45	EACINSA ARRENDAMIENTOS SA DE CV, San Pedro Sula

Schedule - 3.01(x) - 2

	46	ECONO RENT A CAR, San Pedro Sula

	47	Edson Everardo Caceres, Santa Rosa de Copán

	48	Electro Repuestos Torres DBA Omar Gerardo Torres Espinoza, San Pedro Sula

	49	Empresa Nacional de Energia Electrica (ENEE), Santa Rosa de Copán

	50	EMS PROYECTOS E INSPECCIONES S.A., Villa Nueva

	51	Energia Potencia Y Desarrollo, Las Acacias

	52	Energia y Comunicaciones S. de R. L. de C. V., San Pedro Sula

	53	Equipo Desarrollo e Inversiones S. de R.L., San Pedro Sula

	54	EQUIPOS INDUSTRIALES SA DE CV, Tegucigalpa

	55	ESTACION DE SERVICIO TEXACO CUCUYAGUA, Cucuyagua

	56	Estacion de Servicio Uno San Miguel S de RL de CV, Santa Rosa de Copán

	57	EXA, S.A. de C.V., San Pedro Sula

	58	EXPRECO S DE RL, Santa Rosa de Copán

	59	Falcon Ingenieria SRL, San Pedro Sula

	60	FEG de Honduras SA de CV, San Pedro Sula

	61	FERRECENTRO, Santa Rosa de Copán

	62	FERRETERIA MANANTIAL DBA MIRNA YAQUELI TABORA CHINCHILLA, La Union

	63	FERRETERIA MONTERROSO S.A., San Pedro Sula

	64	Florencia Plaza HOTEL, San Pedro Sula

	65	Francis Ernesto Rojas, Santa Rosa de Copán

	66	Francis Gabriel Zapata Guevara, Cucuyagua

	67	FUNDAEMPRESA (UNITEC), San Pedro Sula

	68	Galvez Matamoros SA de CV, San Pedro Sula

	69	GASOLINERA EL DUENDE S. DE R.L. DE C.V., Santa Rosa de Copán

	70	GEO STRUCTURES S.A. DE C.V., Tegucigalpa

	71	GEOCONSULT S.A. DE C.V., Tegucigalpa

Schedule - 3.01(x) - 3

	72	Geotec S. de R.L., San Pedro Sula

	73	Grainger, Kansas City

	74	Gran Hotel Plaza S. de R. L. de C.V., Santa Rosa de Copán

	75	GRUPO RIO S DE RL, San Pedro Sula

	76	Grupo Vela Roatan, S.A., Tegucigalpa

	77	HOMEWORK S DE RL, San Pedro Sula

	78	HONDUGAS S. DE R.L. DE C.V., San Pedro Sula

	79	Hondutel, Santa Rosa de Copán

	80	Hopkins Oil Tools, Inc., Mound House

	81	Horizon Well Logging, Inc., LOMPOC

	82	Hotel and Convention Center COPÁNTL, San Pedro Sula

	83	Hotel Elvir S.A. de C.V., Santa Rosa de Copán

	84	Hotel Puesta del Sol dba Marbin Orlando Romero Alvarado, Cucuyagua

	85	Hotel VIP Copán, Angel Antonio Guerra Hernandez,, Santa Rosa de Copán

	86	Importadora Ferretera S.A. de C.V., Puerto Cortés

	87	Industria Termica Comercial SA, San Pedro Sula

	88	Industrias Varias Nacionales SRL CV, San Pedro Sula

	89	INFRA DE HONDURAS,S.A.DE C.V., San Pedro Sula

	90	Ingenieros Civiles Asociados Inversiones S de RL, Tegucigalpa

	91	Ingenieros Consultores Constructores y Electromecanicos S.A., Bugambilia

	92	Inmobiliaria de Hospitalidad San Rafael Honduras S.A., Tegucigalpa

	93	Inporsa dba Inversiones Portillo S.A., Cucuyagua

	94	INSDUSTRIAS METALICAS ROJAS NUÑEZ S. DE R. L. DE C.V., San Pedro Sula

	95	Inversiones Alda dba Alan David Espinoza Flores, Santa Rosa de Copán

	96	INVERSIONES Y COMERCIALIZADORA BENITEZ (INCOBE), San Pedro Sula

	97	Javier Adaly Lopez Alvarado, Santa Rosa de Copán

Schedule - 3.01(x) - 4

	98	JAVIER ORLANDO SUAZO DUQUE, Santa Rosa de Copán

	99	JDE Cargo Express, San Pedro Sula

	100	Jeidi Zenayda Lara Robles, La Union

	101	Jim Pairish Surveying Co., Bakersfield

	102	Jorge Alberto Maldonado Paz, San Pedro Sula

	103	Juan Carlos Rodriguez, La Union

	104	Juda Ingenieria y Publicidad, Santa Rosa de Copán

	105	K & R Drilling Tools, Bermuda Dunes

	106	Kaeser Compresores de Honduras SRL de CV, San Pedro Sula

	107	Kevin Humberto Peña Dominguez, Santa Rosa de Copán

	108	Kuster Company, Long Beach

	109	La Atlantica S de RL de CV, San Pedro Sula

	110	La Casa de los Tornillos S de RL, San Pedro Sula

	111	Laboratorio Clinico Barel S de RL, Santa Rosa de Copán

	112	Laboratorios Finlay, S.A., San Pedro Sula

	113	Las Cumbres Eco-Saunas y Gastronomia DBA Delfina Concepcion Castillo Minera, Zunil

	114	Lazarus y Lazarus, S.A. de C.V., San Pedro Sula

	115	Lazaruz Service SA CV, San Pedro Sula

	116	Mapfre Honduras, San Pedro Sula

	117	MARIANA TOUR S.A., San Pedro Sula

	118	MARYS ONEYDA REYES NAJERA, La Union

	119	Mecanizaciones y Tornillera Deras dba Darwin Vicente Deras Romero, Cucuyagua

	120	Mediterranean Shipping Company Honduras SA de CV, San Pedro Sula

	121	Mercado del Plástico S de RL, Santa Rosa de Copán

	122	Metal Convertidora SA de CV, San Pedro Sula

	123	MEXICHEM HONDURAS SA DE CV, San Pedro Sula

Schedule - 3.01(x) - 5

	124	Miguel Terrazas, San Luis

	125	MILTON ADONAY BENITEZ BACA, Tegucigalpa

	126	MINPETCO, El Mirador

	127	Mision Hacia Arriba Mission Upreach INC, Santa Rosa de Copán

	128	Modesto Tabora, Santa Rosa de Copán

	129	Monsol, S.A., San Pedro Sula

	130	MONTAJES ELECTROMECANICOS DE CENTRO AMERICA SA, Puerto Cortés

	131	MSC Industrial Supply Co Inc, St. Louis

	132	Mudanzas Gamundi SA de CV, Tegucigalpa

	133	MULTISERVICIOS RIPORT DBA Ricardo Portillo Guevara, La Union

	134	Nelson Ovidio Lara Erazo, Bo. Santa Teresa

	135	NETWORK PLACE DBA Felipe Antonio Gonzales Madrid, San Pedro Sula

	136	Operadora De Servicios Legales en Honduras, Lexhon, Tegucigalpa

	137	Orellana San Martin & Asociados, Santa Rosa de Copán

	138	Organizacion Hoteltur SA, Guatemala City

	139	Oscar Rolando Moreno Tábora, La Union

	140	PacOcean Forwarding, San Francisco

	141	PDC Honduras SA de CV, San Pedro Sula

	142	PINTURAS SUR DE HONDURAS S.A., Santa Rosa de Copán

	143	Plaza Comercial Santa Isabel DBA Pilar Gonzalez Bosa, Cucuyagua

	144	PREMIER CUSTOMS S. DE R. L. DE C.V., San Pedro Sula

	145	Pricewaterhousecoopers Interamerica S de RL, Santa Rosa de Copán

	146	PROVEEDORA FERRETERA, Santa Rosa de Copán

	147	Rain for Rent, Reno

	148	RAMON ARTURO ROJAS BENITEZ, Santa Rosa de Copán

	149	REMARCO, Santa Rosa de Copán

Schedule - 3.01(x) - 6

	150	Repuestos y Electrodos S. de R.L. de C.V., San Pedro Sula

	151	Resource Cementing, LLC, Rio Vista

	152	Restaurante Asados Tipicos dba Yanira Iveth Lopez Polanco, Cucuyagua

	153	Robert Gonzales DBA Robert Gonzales Consulting, Bakersfield

	154	Roxanna Lizzeth Lanza Parrish, Santa Rosa de Copán

	155	SageRider West, LLC, Bakersfield

	156	San Joaquin Bit Service, Bakersfield

	157	SANTOS OMAR GAMEZ GAMEZ, Santa Rosa de Copán

	158	SCHOSS ORIGINAL SPORT WEAR SRL DE CV, San Pedro Sula

	159	Scientific Drilling International, Inc., Houston

	160	SEL STORE SA DE CV, Santa Rosa de Copán

	161	Servi Gruas Lara (SGL) S. DE R. L., Santa Rosa de Copán

	162	Servicio de Administracion de Rentas SAR, Tegucigalpa

	163	Servicio Electrico Industrial Valladares S.R.L. de C.V., San Pedro Sula

	164	Servicios Integrales de Seguridad Privada, Tegucigalpa

	165	ServiGruasLaras (SGL) S.de R.L, Santa Rosa de Copán

	166	Sistemas Computacionales, Siscomp, Santa Rosa de Copán

	167	Sistemas y Equipo Contra Incendio de Honduras (SISCOINH), San Pedro Sula

	168	SUMINISTROS ELECTRICOS S DE RL DE CV, San Pedro Sula

	169	SUPERMERCADOS EL 20 MENOS, Santa Rosa de Copán

	170	SYCOM SA DE CV, San Pedro Sula

	171	Taller Industrial Sanzio SRL, San Pedro Sula

	172	TEC- DRILLING S DE RL, San Pedro Sula

	173	Technos Design Computadoras SA de CV, Santa Rosa de Copán

	174	Tecnicas en Montajes Industriales Sociedad de Responsabilidad Limitada, San Pedro Sula

	175	TECNIDESA SA, San Pedro Sula

Schedule - 3.01(x) - 7

	176	Tecsys S.A de C.V., San Pedro Sula

	177	TIGO, Santa Rosa de Copán

	178	TNG Energy Services, Inc., Bakersfield

	179	Top Test SA de CV, San Pedro Sula

	180	Transporte la Colonia dba Sandra Yamileth Alvarado Alvarado, Cucuyagua

	181	Transportes Hispanos, S.A., Puerto Cortés

	182	TRANSPORTES MADRID DBA CARLOS EDGARDO MADRID, Santa Rosa de Copán

	183	Weatherford U.S., L.P., Rancho Dominguez

	184	Wicom Telefonica S de RL de CV, San Pedro Sula

	185	Wilfredo Alvarado, Santa Rosa de Copán

Schedule - 3.01(x) - 8

Part B : Set forth below is a complete list of all contractors and suppliers that, since December 31, 2016, have performed or will perform Works and all amounts remaining to be paid (or projected to be paid) to each such contractor or supplier:

	Supplier Name	Document	Remaining Amount (US$)
1.	ORMAT SYSTEMS LTD., Yavne	PO-GPS513	22,144,999
2.	ORMAT SYSTEMS LTD., Yavne	PO-GPS514	19,577,000
3.	ORMAT SYSTEMS LTD., Yavne	PO-GPS1756	14,819,000
4.	Ormat International, Inc., Reno	PO-GPS1729	13,000,000
5.	GeoDrill LLC , RENO	PO-GPS1540	11,591,154
6.	Ormat Nevada Inc., DO NOT USE	PO-GPS1799	7,371,097
7.	Ormat Nevada Inc., DO NOT USE	PO-GPS1730	3,060,000
8.	Ingenieros Garcia Consultores (IGC), Tegucigalpa	PO-GPS1829	1,064,080
9.	INVERSIONES Y COMERCIALIZADORA BENITEZ (INCOBE), San Pedro Sula	PO-GPS1820	529,312
10.	Constructora Zero S. de R.L. de CV, Tegucigalpa	PO-GPS1042	287,434
11.	Casys, S.A. de C.V., San Salvador	PO-GPS1901	144,765
12.	Energía y Comunicaciones S. de R. L. de C. V., San Pedro Sula	PO-GPS1380	141,631
13.	Equipo Desarrollo e Inversiones S. de R.L., San Pedro Sula	PO-GPS1043	141,412
14.	Energía y Comunicaciones S. de R. L. de C. V., San Pedro Sula	PO-GPS1160	129,068
15.	Ormat Holding Corp,	PO-GPS1667	87,666
16.	PREMIER CUSTOMS S. DE R. L. DE C.V., San Pedro Sula	PO-GPS651	65,783
17.	TRANSPORTES MADRID DBA CARLOS EDGARDO MADRID , Santa Rosa de Copán	PO-GPS1833	50,848
18.	MB-LATAMLEX ABOGADOS S.A., Tegucigalpa	PO-GPS1906	50,268
19.	FEG de Honduras SA de CV, San Pedro Sula	PO-GPS1863	48,715
20.	PDC Honduras SA de CV, San Pedro Sula	PO-GPS1743	38,991
21.	Servicio de Administración de Rentas SAR, Tegucigalpa	PO-GPS1926	36,030
22.	Ingenieros Consultores Constructores y Electromecánicos S.A., Bugambilia	PO-GPS1015	36,001
23.	American Telehandler, LLC, St. Augustine	PO-GPS1805	34,910
24.	Servicio de Administración de Rentas SAR, Tegucigalpa	PO-GPS1924	33,700
25.	MSC Industrial Supply Co Inc, St. Louis	PO-GPS1662	31,616
26.	JDE Cargo Express, San Pedro Sula	PO-GPS1894	31,339
27.	Ormat de Proyectos de Generación de Energía, Limitada, Guatemala City	PO-GPS1793	29,260
28.	INVERSIONES Y COMERCIALIZADORA BENITEZ (INCOBE), San Pedro Sula	PO-GPS1910	28,191
29.	Preselección Empresarial S. de R.L., San Pedro Sula	PO-GPS1022	27,220
30.	FEG de Honduras SA de CV, San Pedro Sula	PO-GPS1923	26,551
31.	CONTRATISTAS ELECTROMECANICOS SRL DE CV, San Pedro Sula	PO-GPS1676	25,580
32.	Operadora De Servicios Legales en Honduras, Lexhon, Tegucigalpa	PO-GPS1890	24,700
33.	Servicio de Administración de Rentas SAR, Tegucigalpa	PO-GPS1342	22,202
34.	FEG de Honduras SA de CV, San Pedro Sula	PO-GPS738	22,177
35.	Monkey Forest Consulting Ltd, Central	PO-GPS1522	22,000
36.	Grainger, Kansas City	PO-GPS1567	21,548
37.	Servicio Eléctrico Industrial Valladares S. de R.L. de C.V., San Pedro Sula	PO-GPS1859	20,465
38.	ORMAT SYSTEMS LTD., Yavne	PO-GPS513	22,144,999

Schedule - 3.01(x) - 9

SCHEDULE 4.04

Consents

Part A

1.	Approval granted by the Municipalidad de la Unión, Departamento de Copán , to perform a feasibility study in the area for the possible production of geothermic energy, dated as of February 20, 2006.

2.	Ruling by SERNA, No. 787-2006, dated as of November 6, 2006, to expand the concession for the feasibility study for the construction and operation of the Project in the Municipio de la Unión, Departamento de Copán .

3.	Approval granted by the Municipalidad de la Unión, Departamento de Copán , for the development of the Project in San Andres and Aldea de Platanares , dated as of June 15, 2010.

4.	Operation Contract, dated as of January 6, 2009.

5.	Environmental License No. 014-2010, granted on January 25, 2010, by SERNA to renew the Operation Contract (Exp. No. 2006-A-032) .

6.	Environmental License and Mitigation Measures Agreement for the Project, by and between SERNA and the Borrower, dated as of January 25, 2010 and valid for the duration of the Project.

7.	Certification of ruling No. 297-2005, issued by SERNA, dated as of June 30, 2005, affirming the granting of all the rights held by Trans Pacific Geothermal Corporation to the Borrower and the feasibility study permit for the construction and operation of a geothermal project on the Site.

8.	Interconnection permit, granted by ENEE, dated as of December 1, 2009.

9.	Municipal exploration permits (annual permit obtained in January of each year prior to start-up of operations and during exploration stage), obtained for years 2006 through year 2012.

10.	Municipal environmental fee (annual fee paid in January of each year) to defray Municipality’s costs of environmental resource management, paid for years 2011 through year 2012 and the 2012 year operating permit issued by the Municipalidad de la Unión, Departamento de Copán .

11.	Receipt of payment of the 2017 annual municipal Industry, Service and Commerce Tax.

12.	Honduran Institute of Anthropology Permit dated November 17, 2005 for the usage of the land in the acreage subject to the Operation Contract as per the diagram attached to the Operation Contract.

13.	Approval granted by board of trustees of San Andrés, La Unión, Departamento de Copán , dated as of September 11, 2012, to support and develop the geothermal project.

Schedule 4.04 - 1

14.	Water Contract, dated as of March 25, 2011.

15.	Official approval by the Honduran National Congress on September 13, 2012 (including completion of publication requirement) of the Water Contract.

16.	The ENEE PPA, dated as of June 3, 2010, as amended.

17.	Autorización del Otorgamiento de los Acuerdos de Apoyo para el cumplimiento de los contratos de suministro a las empresas que participaron en el proceso de licitación internacional No. 100-1293/2009 ( entre ellas, “ Geoplatanares ”) published in the Official Gazette on June 7, 2010. This is an authorization for the Joint Guarantee entered into by the Government of Honduras and the Borrower providing assurances of payment for all payments due to the Borrower under the ENEE PPA.

18.	Certification ( Constancia ) issued by the Secretary of the National Congress confirming that pursuant to Decree #109-2012 dated July 31, 2012 the National Congress approved the Joint Guarantee.

19.	Opinion dated March 9, 2012 of ENEE’s attorney to the First Amendment to the ENEE PPA approving the development of the Project in two phases and the obligation of the Borrower to sell to ENEE the first 5 MW generated.

20.	Official approval granted on December 18, 2012 by the National Congress of Honduras of the Operation Contract by and between SERNA and the Borrower in respect of the use of geothermal resources on the Site.

21.	SERNA Resolution 0913-2013, dated as of July 17, 2013, approving and confirming the extension of the area of the Project concession and its corresponding modification of the Operation Contract to encompass the use of the land leased to the Borrower under La Bufa Land Lease Agreement, which supersedes the January 2012 extension by SERNA of the Borrower’s environmental license.

22.	Framework Agreement between ENEE and the Borrower for the construction of a section of the transmission line of 69 kV double circuit parallel to the current 34.5 kV line from Santa Rosa Copán Substation to the Structure No. 23 of Line 336 (draft of agreement has been prepared by the Borrower and ENEE’s engineering management and submitted to ENEE), pending ENEE’s review.

23.	Approval of ENEE of the first amendment to the ENEE PPA (for the development of the Project in two phases and to provide for the sale of the first 5 MW generated to ENEE).

24.	Ministry of Tourism of Honduras qualification of a public-interest project that would allow for title or rights of use of land by Honduran companies not owned 100% by Honduran nationals and located in coastal areas or within 40 km of the Honduran borders or coasts (pursuant to Article 107 of the Constitution of Honduras).

25.	Form TGR-01 evidencing payment of the fine imposed by the Ministry of Tourism relating to item 24 above.

26.	Recommendation dated September 20, 2017 issued by the special committee appointed by the National Congress of Honduras in favor of Congressional Approval of the La Bufa Lease.

27.	Congressional Approval of the La Bufa Lease, approved through Decree 125-2017 dated January 18, 2018 and published in in the Official Gazette on April 13, 2018.

Schedule 4.04 - 2

Tax exonerations:

28.	Exoneration on income tax, capital gains tax, net asset tax, solidarity contribution tax, and all other taxes related to the company’s income – fiscal period 2017.

29.	Exonerations on import taxes and duties on machinery, equipment, and materials intended for the generation of renewable energy – fiscal periods of 2014, 2015, 2016, 2017 and 2018.

30.	Exoneration of sales tax on local purchases of goods, services, equipment, replacements, materials intended for the generation of renewable energy – fiscal period 2016.

31.	Exoneration on income tax and withholding tax on payment of services rendered by Geodrill LLC, a foreign company – fiscal period 2017.

32.	Amendment to exonerations on import taxes and duties on machinery, equipment and materials intended for the generation of renewable energy – fiscal period 2017.

33.	Exonerations on import taxes and duties on machinery, equipment and materials intended for geothermal drilling – fiscal period 2017.

Schedule 4.04 - 3

Part B

34.	Notification to the Instituto Hondureño de Turismo that a guarantee trust has been created and the land in reference has been assigned to the trustee, indicating the name of the trustee appointed.

35.	Resolution issued by the Secretary of Finance of Honduras releasing the Borrower from withholding tax on interest paid to OPIC.


Tax exonerations

36.	Exoneration on income tax and withholding tax obligations regarding payment of services rendered by foreign companies (Ormat International Inc., and Ormat Nevada Inc.), intended for the generation of renewable energy.

Schedule 4.04 - 4

SCHEDULE 4.13 (b)(i)

PUNCH LIST ITEMS

Remaining to Complete	Estimated Cost (Dollars)	Forecast Completion
Power plant site fill slopes: The fill slopes on the north and east sides of the power plant site may be subject to failure in a design basis seismic event.	2,000,000 to 4,000,000	December 15 ^th 2018 (*)
Stability of slopes: The cut slopes at the west end of the power plant site are more steep and higher than had been indicated by the preliminary earthwork drawings provided for the Independent Engineer’s review.	250,000	June 1 ^st , 2018
A limited amount of final grading and surfacing (gravel) is needed at the power plant site.	250,000	This work is nonstructural and it will be completed upon completion of the fill slope work
Dining room, including shower and toilets	35,000	June 1 ^st , 2018
Add shade for 1000 gal fuel diesel tank	30,000	The fuel tank is on site, containment will be completed by May 1 ^st , 2018
Add storage room for lubricants	35,000	May 1 ^st 2018

(*) Subject to analysis and findings of soil study, rainy season land conditions and timely agreement with the IE on preferred work specifications

Schedule 4.13(b)(i) - 1

SCHEDULE 4.13 (b)(ii)

CONSTRUCTION PAYMENTS

None.

Schedule 4.13(b)(ii) - 2

SCHEDULE 4.15

Environmental and Social Action Plan ( ESAP )

No.	Action	Due Date
1	Social and Environmental Management System
1.1	Develop and deliver to OPIC for review and approval a comprehensive project-specific Environmental and Social Management System (ESMS) for construction. The ESMS should include policies, procedures, management plans, risks, impacts, human resources, training, emergency response, record keeping, monitoring and review and should provide sufficient detail for effective implementation of environmental, social, health and safety plans. The ESMS should include an Environmental and Social Management Plan, which should include the specific procedures to implement the mitigation measures including the roles and responsibilities, training requirements, equipment and resources, record keeping, supervision audits, etc. The ESMS should also include an organizational chart detailing the Environmental, Social, Health and Safety teams, structure and relationship at the corporate and project site levels, including contractor and subcontractor levels.	Prior to first disbursement

	The Borrower will develop an ESMS for operation phase of the Project.	Six months prior to start of operations

1.2	Develop and deliver to OPIC a Stakeholder Engagement Plan (SEP) aligned with Annex B of the IFC Performance Standard 1 that identifies key stakeholder groups, prioritizing affected communities; outlines the strategy and frequency with which the Borrower will communicate with stakeholders and community members throughout the life of the Project; outlines monitoring and reporting activities; describes the resources and responsibilities for implementation; and addresses how input from stakeholders will be incorporated into the Project’s management system. Stakeholder communication/information disclosure should include all aspects of potential impact (positive and negative) throughout the life of the Project; for example, in the case of construction scheduling so that affected communities may anticipate increased traffic, personnel, machinery installation, noise, etc. and participate in the development of mitigation measures where appropriate. The SEP should take into consideration the recommendations from the Social Risk Assessment of Geoplatanares Geothermal Project: Main Findings (September 2016, Social Capital Group) including engagement with broader set of stakeholders; increasing capacity to its community relations team; and emphasis on transparency, managing expectations and strong communication strategy.	Prior to first disbursement

Schedule 4.15 - 1

No.	Action	Due Date
1.3	The Borrower shall develop and implement a formalized community grievance mechanism which outlines the manner in which grievances can be submitted to the company, the process by which grievances will be handled, organizational capacity for receiving and responding to grievances and a time frame for addressing grievances.	Prior to first disbursement
1.4	The Borrower shall submit to OPIC a Community Development Plan. The Plan shall include strategy for communicating with stakeholders and community; suggested timelines for activities; monitoring and reporting mechanism; description of resources and responsibilities for implementation; and addresses how input from stakeholders will be incorporated into the Plan.	Prior to first disbursement
2.0	Labor and Working Conditions
2.1	The Borrower shall demonstrate that there are adequate emergency response plans in place to respond to potential well blow-outs, pipeline failures, release of toxic drilling additives, fluids and H2S gas, as well as steam containing heavy metals, acids, mineral deposits and other pollutants.	Prior to first disbursement
3.0	Resource Efficiency and Pollution Prevention
3.1	The Borrower shall conduct a Baseline Noise Study. Once operational, the Borrower shall conduct a Noise Assessment that includes measures at the site boundary and closest residences or businesses and show compliance with the noise guidelines in the IFC 2007 Environmental, Health, and Safety General Guidelines or the IFC 2007 Environmental, Health, and Safety Guidelines for Wind. The results of these studies should be submitted to OPIC for its review and approval.	Prior to first disbursement (Baseline Noise Study) No later than six months after the start of operations (Noise Assessment)
4.0	Community Health, Safety and Security
4.1	OPIC will require that the Project develop and implement a Code of Conduct with respect to interactions with communities and include as part of the Environmental and Social Management Plan trainings and awareness campaigns regarding community health and safety issues, etc.	Prior to first Disbursement
5.0	Land Acquisition and Involuntary Resettlement
5.1	The Borrower shall notify OPIC if any economic or physical displacement should occur and submit to OPIC for its review and approval additional information and plans (Resettlement Action Plan, Livelihood Restoration Plan) as requested.	Ongoing
8.0	Cultural Heritage
8.1	The Borrower shall submit to OPIC for review and approval a Chance Finds Procedure.	Prior to first Disbursement

Schedule 4.15 - 2

SCHEDULE 4.19-A

DRILLING PROGRAM

A. Number of Wells

The following wells were already drilled in respect to Plant Platanares I

	Name of Well	Location of Well		Expected output/capacity
		UTM X	UTM Y
1	OP2	293394	1632047	Exploration
2	OP3	292406	1633001	Injection
3	OP3A	292401	1632990	Injection
4	OP4	292549	1632770	Exploration
5	OP5			Monitoring
6	OP-5A	292023	1633749	Production
7	OP-5B	292013	1633753	Production
8	OP-5C RD	292003	1633757	Production
9	OP-5D	292021	1633756	Production

B. Performance of Wells

From COD on September 1, 2017 through October 13, 2017, field-wide performance was steady, with net generation at the expected output of 35 MW. The OP5A to OP5D production wells were steady in such first 6 weeks of commercial operation:

- Well OP‐5A averaged a flow rate of about 2,715 gpm and a temperature of about 176.7°C

- Well OP‐5B averaged a flow rate of about 2,840 gpm and a temperature of about 177.7°C

- Well OP‐5C averaged a flow rate of about 2,700 gpm and a temperature of about 177°C

- Well OP‐5D averaged a flow rate of about 2,640 gpm and a temperature of about 177.5°C

The total of these rates is 10,800 gpm. During the initial start‐up period, individual wells showed production rates as high as 4,000 gpm, and the sum of the individual maximum rates would be over 14,000 gpm. This suggests that there is a surplus of approximately 30% in the combined capacity of the production wells. The operational data suggests that resource decline is minimal and the production well capacity is more than sufficient for 35 MW of net electrical generation.

C. Drilling Parameters

The Borrower shall ensure that all drilling and well testing activities are conducted in accordance with Good Industry Practice, and that all relevant and testing records have been made available to the Independent Engineer.

Schedule 4.19 -A - 1

SCHEDULE 4.19-B

RESERVOIR MONITORING PLAN

Schedule 4.19 -B - 1

SCHEDULE 4.19-C

FORM OF RESERVOIR MONITORING REPORT

Schedule 4.19 -C - 1

SCHEDULE 6.03

INSURANCE

1.	Definitions

1.1

“ Approved Insurer ” means an insurer of recognized standing which:

(a)

has a financial strength rating of at least A- from Standard & Poor’s or A- from A.M. Best; or

(b)

is otherwise acceptable to OPIC (following consultation with the Insurance Advisor);

provided , that , any insurer which qualifies as an Approved Insurer in accordance with the foregoing shall cease to be an Approved Insurer once OPIC notifies the Borrower:

(i)

that, in OPIC’s sole discretion, such insurer has suffered an adverse change which has affected its standing in the international insurance market such that OPIC (following consultation with the Insurance Advisor) would not have agreed to such insurer qualifying as an Approved Insurer; or

(ii)

at least 30 days prior to the expiry of an existing Insurance Policy of an Approved Insurer, that such Approved Insurer will cease to be an Approved Insurer at the expiry of such existing Insurance Policy.

1.2

“ Approved Reinsurer ” means a reinsurer of recognized standing which:

(a)

has a financial strength rating of at least A- from Standard & Poor’s or A- from A.M. Best; or

(b)

is otherwise acceptable to OPIC (following consultation with the Insurance Advisor);

provided , that , any insurer which qualifies as an Approved Reinsurer in accordance with the foregoing shall cease to be an Approved Reinsurer once OPIC notifies the Borrower:

(i)

that, in OPIC’s sole discretion, such reinsurer has suffered an adverse change which has affected its standing in the international insurance market such that OPIC (following consultation with the Insurance Advisor) would not have agreed to such reinsurer qualifying as an Approved Reinsurer; or

(ii)

at least 30 days prior to the expiry of an existing Insurance Policy of an Approved Reinsurer, that such Approved Reinsurer will cease to be an Approved Reinsurer at the expiry of such existing Insurance Policy.

1.3

“ Not Commercially Available ” means all of the following conditions are satisfied:

(a)

in OPIC’s sole discretion, the required insurance (or reinsurance, as applicable) is obtainable only at excessive costs or under other unreasonable terms that are not justified by the risks being insured against;

(b)

the required insurance (or reinsurance, as applicable) is generally not carried by companies of a similar size that are engaged in the same or a similar business and that own similar properties in the same or similar geographic area as the Project; and

(c)

the required insurance (or reinsurance, as applicable) is not carried by any other geothermal projects owned directly or indirectly by the Shareholders or under the control of the Sponsor.

Schedule 6.03 - 1

2.	Insurance Covering the Borrower. The Borrower shall:

2.1

procure not later than the first Closing Date and maintain or cause to be maintained, at all times thereafter in full force and effect until all Secured Obligations are paid in full (unless otherwise specified below), all insurance specified in Annex A hereto and reinsurance of such policies, in all cases with Approved Insurers and Approved Reinsurers;

2.2

promptly following receipt of request therefor from OPIC (which request shall be provided following consultation with the Borrower), obtain additional insurance coverage of risks or liabilities that are not specified in this Schedule 6.03 as would from time to time be obtained by a prudent power plant similar to the Project that does not self-insure, at the amounts and deductibles specified in such notice;

2.3

promptly following the receipt of a request therefor from OPIC, obtain additional insurance or make modifications to the terms, conditions, amounts or deductibles of any Insurance Policy required pursuant to Sections 2.2 or 2.3 of this Schedule 6.03 as OPIC, in consultation with the Borrower, may determine to be necessary or desirable and, if specified in such request, cover any material change in the identified risk any exposure of the Borrower, its business or its property and adjust for inflation and other relevant factors;

2.4

comply with all warranties under each Insurance Policy;

2.5

not modify (except in accordance with the terms hereof), rescind, terminate, cancel, or cause or consent to a material change to any Insurance Policy without the prior written consent of OPIC;

2.6

on each date that any Insurance Policy in effect on the first Closing Date is first renewed, ensure that OPIC is listed as loss payee on such Insurance Policy; and

2.7

ensure that the terms of any renewals of Insurance Policies that are all risk policies account for the revised replacement cost value of the covered assets;

provided that , OPIC (in consultation with the Insurance Advisor) shall be entitled to review from time to time, in consultation with the Borrower, the monetary limits and deductibles of each Insurance Policy, such review not to be conducted more than once every calendar year with respect to each such policy.

Schedule 6.03 - 2

3.	Borrower Conditions and Requirements.

3.1

Loss Notification: The Borrower shall promptly notify OPIC of any single loss for an amount that is or could reasonably be expected to be in excess of five hundred thousand Dollars ($500,000) covered by any Insurance Policies.

3.2

Loss Adjustment and Settlement: A loss under any Insurance Policies for property damage or business interruption insurance for the Project shall be adjusted with the insurance companies, including the prompt commencement by the Borrower of appropriate proceedings, subject to the approval of OPIC if such loss is valued at an amount greater than $1,000,000. In addition, the Borrower may, in its reasonable judgment, consent to the settlement of any loss; provided that , OPIC’s prior written consent shall be required in the event the amount of the loss exceeds $1,000,000. OPIC shall have, and reserves, the right to participate in settlement negotiations with the insurers.

3.3

Compliance with Policy Requirements: The Borrower shall not violate or permit to be violated any of the conditions, provisions or requirements of any Insurance Policy, and the Borrower shall, in all material respects, (i) perform, satisfy and comply with, or (ii) cause to be performed, satisfied and complied with, all conditions, provisions and requirements of all Insurance Policies.

3.4

Waiver of Subrogation: The Borrower hereby waives any and every claim for recovery from OPIC for any and all loss or damage covered by any of the Insurance Policies. Furthermore, the Borrower shall cause its insurers and reinsurers to waive any and all rights of subrogation against OPIC.

3.5

Annual Overview of Insurances: On an annual basis, the Borrower shall furnish OPIC and the Insurance Advisor with an annual overview of the Borrower’s insurance and reinsurance coverage, which shall include a list of all Insurance Policies and a description of all renewals and other changes to such policies during the previous year. Any certificates of insurance or reinsurance, as applicable, insurance or reinsurance binders, as applicable, certificates from the Borrower’s insurance and reinsurance broker, as applicable, or copies of Insurance Policies required to be delivered pursuant to Section 6.1 of this Schedule 6.03 that have not previously been delivered to OPIC shall be delivered together with such annual overview of insurance and reinsurance. Upon request, the Borrower will promptly furnish OPIC with copies of all Insurance Policies, binders and cover notes or other evidence of such insurance (or reinsurance).

3.6

Payments: The Borrower shall pay when due any premium, commission and any other amounts and take such other action as may be necessary for effecting and maintaining in force each Insurance Policy.

3.7

Notification: The Borrower shall promptly notify the relevant insurers or reinsurers, as applicable, of any event entitling the Borrower to make a claim in excess of the deductible amount under any Insurance Policy written by such insurer or reinsurer, as applicable, and diligently pursue such claim, unless the Borrower has, with the prior written consent of OPIC, decided not to pursue such claim.

Schedule 6.03 - 3

3.8

No Omissions: The Borrower shall not do or fail to do, or permit to be done or not done, anything to:

3.8.1

render any Insurance Policy, or any provision of that Insurance Policy, void or voidable or lead to its suspension or impair or defeat any such policy in whole or in part; or

3.8.2

prejudice the Borrower’s or, where OPIC is the loss payee or an additional insured, OPIC’s right to claim or recover under any Insurance Policy.

3.9

Enforcement of Rights: The Borrower shall enforce its rights under the Project Documents, to the extent it has such rights, so as to ensure that any Person (other than the Borrower) required to provide insurance under a Project Document obtains and maintains Insurance Policies as required thereby.

3.10

Additional Undertakings:

3.10.1

The Borrower shall ensure that each insurer and reinsurer under all Insurance Policies:

(a)

is promptly notified by the Borrower of the Lien created in favor of OPIC under the Security Documents in the Borrower’s title to, and rights, interest and benefits under, such Insurance Policies;

(b)

provides OPIC sixty (60) days (or, if due to non-payment of a premium, ten (10) days) notice of the issuance of any notice of cancellation or suspension of the relevant Insurance Policy;

(c)

acknowledges that OPIC, as a beneficiary of the relevant Insurance Policy and lender under the Transaction Documents, is not liable to the insurers (or reinsurers, as applicable) for (i) the payment of any insurance (or reinsurance, as applicable) premiums; (ii) any other obligations of the Borrower; or (iii) any other obligations of any kind;

(d)

acknowledges that OPIC has the right, but not the obligation, to pay premiums on behalf of the Borrower; and

(e)

includes all lender’s clauses, including non-vitiation, and a waiver of any and all rights of recourse or subrogation against OPIC, howsoever arising.

3.10.2

The Borrower shall, with respect to all Insurance Policies, as applicable, (a) give OPIC forty-five (45) days’ notice (or, if due to non-payment of a premium, ten (10) days’ notice) of the issuance of any notice of cancellation or suspension of any Insurance Policy and of any fact of which it becomes aware that could affect the coverage under any Insurance Policy and (b) as a condition to the first Disbursement, provide to OPIC a certificate covering the matters set forth in Section 6.1(a) of this Schedule 6.03 with respect to the Insurance Policies.

3.10.3

If not provided to OPIC pursuant to Sections 3.10.1(b) or 3.10.2 above, as applicable, the Borrower shall provide OPIC forty-five (45) days’ notice (or, if due to non-payment of a premium, ten (10) days’ notice) of the issuance of any notice of cancellation or suspension of any Insurance Policy and of any fact of which it becomes aware that could affect the coverage under that Insurance Policy and of such other matters as specified in this Schedule 6.03.

Schedule 6.03 - 4

3.10.4

The Borrower shall provide to OPIC letters of undertaking from its insurance brokers and reinsurance brokers in form and substance satisfactory to OPIC, which address, inter alia , notification to OPIC in the event that the brokers become aware of any fact that may materially and adversely affect the coverage under the relevant Insurance Policy, premium payment confirmation, and any changes in the coverage placement of the carrier.

4. Insurance Policy Conditions and Requirements.

4.1

Language: Each Insurance Policy shall be in the English language (to the extent permitted by Applicable Law) or a certified English translation thereof shall be provided to OPIC, and each shall have terms and conditions acceptable to OPIC and be available on commercially reasonable terms and consistent with generally accepted industry practice for prudent power-plant-operating companies similar to the Project that do not self-insure.

4.2

Additional Insured: Except with respect to workers’ compensation and employer’s liability insurance, OPIC and, where required by written contract, all contractors working at the Site shall be included as additional insured parties on all Insurance Policies, and their directors, officers, employees, agents and assigns shall also be included as additional insured parties on all liability Insurance Policies.

4.3

Separate Policies: All Insurance Policy terms and conditions (except those relating to limits of liability) shall operate as if they were a separate Insurance Policy covering each insured party, providing that each insured party is insured individually by such Insurance Policy.

4.4

Loss Payee: OPIC shall be the sole loss payee under (i) each Insurance Policy (except for third party liability insurance, workers’ compensation, employer’s liability and automobile liability insurance) on the Borrower’s property which is the subject of the Security Documents and (ii) each Insurance Policy covering delay in start-up (if any) and business interruption.

4.5

Rights of OPIC: All terms and conditions of each Insurance Policy conferring any right, protection or benefit on OPIC (including, but not limited to, terms and conditions relating to status as sole loss payee and additional or additional named insured and notice requirements) shall at all times remain in full force and effect notwithstanding any act or failure to act on the part of the Borrower, its agents or employees or on the part of its construction contractors or subcontractors, unless such Insurance Policies are permitted to be terminated in accordance with this Schedule 6.03 and so long as a 438 BFU Lender’s Loss Payable Clause or a generally accepted equivalent or alternative is commercially available.

4.6

Separation of Interests: All Insurance Policies shall insure the interests of OPIC regardless of any breach or violation by the Borrower or any other party of warranties, declarations or conditions contained in such Insurance Policies, any action or inaction of the Borrower or others, any foreclosure relating to the Project or any change in ownership of all or any portion of the Project.

4.7

All liability Insurance Policies, except workers’ compensation and employer’s liability, to be maintained by Borrower, shall be endorsed to include a cross liability clause.

4.8

All Insurance Policies shall provide that insurance and reinsurance, as applicable, shall be primary and not in excess of or in addition to any other insurance (or reinsurance, as applicable) (other than (x) reinsurance of terrorism policies, for which the global reinsurance policy in the name of Sponsor existing as of the date hereof shall be sufficient and (y) 50/50 marine cargo loss sharing provisions).

Failure to Maintain Insurance. In the event the Borrower fails to take out or maintain the full insurance and reinsurance coverage required by this Schedule 6.03, OPIC, upon thirty (30) days’ notice (unless the aforementioned insurance or reinsurance would lapse within such period, in which case notice should be given as soon as reasonably possible) to the Borrower of any such failure, may (but shall not be obligated to) take out the required Insurance Policies and pay the premiums on the same. All amounts so advanced by OPIC shall become an additional obligation of the Borrower, and the Borrower shall immediately pay such amounts to OPIC, together with default interest thereon from the date so advanced, in accordance with the Financing Documents.

Schedule 6.03 - 5

6.	Reporting Requirements.

6.1

Certificates of Insurance and Copies of Insurance Policies:

6.1.1

On or prior to the first Closing Date, with respect to any Insurance Policy that is required to be in place as of the Closing Date, or, with respect to any Insurance Policy that is not required until or is renewed after the first Closing Date, within fifteen (15) days after such Insurance Policy is issued or renewed, the Borrower shall cause its insurance or reinsurance broker, as applicable, to provide to OPIC and its Insurance Advisor certificates of insurance or reinsurance binders that (i) identify relevant insurers (or reinsurers, as applicable), the type of insurance (or reinsurance, as applicable), the policy numbers, the insurance (or reinsurance as applicable), limits and the policy term, (ii) include evidence that values reported to the relevant insurers (or reinsurers, as applicable) and reflected in the Insurance Policies’ limits are up-to-date and (iii) specifically list any special provisions and endorsements, including but not limited to all endorsements of OPIC as additional insured or additional loss payee, as applicable, and all other endorsements for the benefit of OPIC that are required by this Schedule 6.03. Such certificates of insurance (or reinsurance, as applicable) and insurance binders (or reinsurance binders, as applicable, shall be accompanied by a certificate from the Borrower’s insurance or reinsurance broker, as applicable, in form and substance acceptable to OPIC and confirming, inter alia , that (t) such Insurance Policy has been issued or renewed, as applicable, and is in full force and effect without default, (u) all premiums then due and payable under such Insurance Policy have been paid, (v) the renewal period, (w) the premium, (x) the amounts insured or reinsured, as applicable, for each asset or item, (y) any changes in terms or conditions from such Insurance Policy’s original issue date or, if applicable, last renewal, and, (z) with respect to any Insurance Policy renewal, confirmation that the terms and conditions naming OPIC as sole or first loss payee and additional insured, as applicable, remain in effect.

6.1.2

Prior to the Closing Date or, with respect to Insurance Policies that are not required until or are renewed after the first Closing Date, within sixty (60) days after the first Closing Date, the Borrower shall provide to OPIC a copy of all Insurance Policies issued to the Borrower, incorporating the loss payee terms and conditions required under this Schedule 6.03. For the avoidance of doubt, the Borrower will provide copies of any facultative reinsurance policies to OPIC.

Schedule 6.03 - 6

6.2

Evidence of Premium Payment: The Borrower shall provide to OPIC such evidence of premium payment as OPIC may from time to time reasonably request.

6.3

Other Information: The Borrower shall provide to OPIC any other information or documents on each Insurance Policy as OPIC reasonably requests from time to time.

7.	Application of Proceeds. The Borrower shall apply all proceeds of Insurance Policies in the manner specified in the Accounts Agreement and, if applicable, the Accounts Administration and Retention Agreement.

8.	Limits on Commercial Availability.

8.1

Construction and erection all risk coverage, operational all risk property coverage, third party liability coverage and all insurance or reinsurance, as applicable, required to be maintained by Applicable Law shall be maintained at all times required by this Agreement and in accordance with all requirements hereof, including those set forth in this Schedule 6.03. In the event that any other insurance (or reinsurance, as applicable) coverage (including the terms and conditions, required lender provisions, limits or deductibles thereof) required to be maintained pursuant to this Section 8 and this Schedule 6.03 is or becomes Not Commercially Available, the Borrower shall promptly notify OPIC of such facts and circumstances, follow the procedures in this Section 8 if the Borrower desires such requirements to be waived or modified, and obtain the best insurance (or reinsurance, as applicable) then available in the commercial insurance market which complies with the requirements of this Schedule 6.03 (and which is satisfactory to OPIC, in consultation with its Insurance Advisor).

8.2

To request a waiver or alteration of insurance requirements (or reinsurance requirements, as applicable) based on limitations in commercial availability, the Borrower shall make a specific request to OPIC in writing, and any such request shall include (x) a report (in form and substance satisfactory to OPIC) containing a detailed analysis by the Borrower’s insurance broker (or reinsurance broker, as applicable) of the applicable market conditions, (y) the Borrower’s proposal for an alternative means of risk mitigation, and (z) the following Certified representations:

8.2.1

that the required insurance or reinsurance, as applicable, coverage is Not Commercially Available; and

8.2.2

in any case where what is Not Commercially Available is the full amount of required insurance (or reinsurance, as applicable), the maximum amount of insurance (or reinsurance, as applicable) coverage that is available on commercially reasonable terms in the commercial insurance market.

8.3

The granting by OPIC of any waiver of insurance requirements (or reinsurance requirements, as applicable) will be at OPIC’s sole discretion and may be subject to a Modification Fee. Any such waiver shall be effective only so long as such insurance (or reinsurance, as applicable) shall continue to be Not Commercially Available. At any time after the granting of any such waiver, OPIC may request, and the Borrower shall furnish to OPIC within fifteen (15) days after such request, supplemental reports acceptable to OPIC updating the prior reports and reaffirming their conclusions that the relevant insurance or reinsurance, as applicable, is Not Commercially Available; it being understood that the failure of the Borrower to furnish any reports required pursuant to this Section 8 shall be deemed to be conclusive evidence that the condition giving rise to the waiver no longer exists and that such waiver is no longer effective.

Schedule 6.03 - 7

ANNEX A TO SCHEDULE 6.03

1. OPERATIONAL INSURANCE

A. PROPERTY ALL RISK INSURANCE

Cover : All assets comprising the Project, including but not limited to, buildings and their contents, machinery, stock, fixtures, fittings and all other personal property, against “all risks” of physical loss or damage, including machinery breakdown, as described within the policy wording.

Sum Insured : An amount sufficient to reinstate the property (or as may be sub-limited therein) as agreed with OPIC from time to time.

Deductibles : PD deductible of (a) 5% of the covered loss (minimum of $500,000 but subject to a maximum of $1,500,000), of each and every occurrence/accident in respect of Flood, Earthquake Shock, Hurricane, Volcanic Eruption and Landslide and (b) $1,500,000 in respect of each and every occurrence of any other losses.

Period of Cover : To be maintained from the earliest of COD or the date from which the assets cease to be insured under the Builder All Risk.

General :

(a)

Automatic reinstatement of sum insured;

(b)

Minor works;

(c)

Capital additions;

(d)

Professional fees clause;

(e)

Removal of debris clause;

(f)

Expediting expenses; and

(g)

Strikes, riots and civil commotion (except if excluded under war exclusion).

B. BUSINESS INTERRUPTION

Cover : Loss of revenue as a direct consequence of physical loss of or physical damage to the Project insured under the Property All Risks policy (or which would be covered but for the application of the deductible).

Sum Insured : Gross profit or an amount at least equal to the estimated debt service (including interest and capital repayment) and fixed expenses during a covered interruption.

Maximum Indemnity Period : 12 months.

Deductible : 45 days.

Period of Cover : As per Property All Risk insurance

Schedule 6.03 - Annex A - 1

General:

(a)

Denial of access;

(b)

Public utilities extension; and

(c)

Customers’ and suppliers’ extensions to the extent available.

C. THIRD PARTY LIABILITY

Cover : Legal liability of the insured parties for death or bodily injury to third parties or loss or damage to their property arising out of the performance of the works.

Limit of Indemnity : To be agreed with OPIC in consultation with the Insurance Advisor.

Deductibles : Not to exceed $25,000 per occurrence for property damage, but no deductible for bodily injury.

Period of Cover: As per Property All Risks insurance.

General:

(a)

Cross liability clause;

(b)

Worldwide jurisdiction (subject to the market standard North American conditions if necessary);

(c)

Sudden and accidental pollution and the costs incurred of third party clean up;

(d)

“Bodily Injury” to be extended to cover false arrest, invasion of privacy, detention, libel, slander and defamation; and

(e)

Cover obstruction, nuisance, and interference with rights of way, water, light, air or easement.

D. TERRORISM

Cover : Physical loss or physical damage and consequent loss of revenue caused by an act of terrorism to the Project.

Sum Insured : At all times to represent a sum which is sufficient to cover the largest foreseeable loss scenario, as reasonably agreed by OPIC, to comprise: (i) all property loss and/or damage costs (based on the full reinstatement value of such lost or damaged property) and (ii) debt service and fixed costs for the duration of any business interruption.

OPIC acknowledges that the sum insured is a combined sum shared among all projects of the Sponsor.

Maximum Indemnity Period : 12 months

Deductibles :

8.4

Assets: $100,000 each and every loss; and

8.5

Revenue: 30 days.

Schedule 6.03 - Annex A - 2

2. OTHER INSURANCES

At all times Borrower to maintain or cause to be maintained, with respect to the Project:

A. CONTROL OF WELL/OPERATORS EXTRA EXPENSE

Risks Insured : Operator’s extra expense including cost of well control, redrilling and extra expenses, seepage and pollution, clean up and contamination.

Cover: All costs associated with regaining control of wells and redrilling, including underground well control, well safety, care custody and control, evacuation expenses, extended redrilling and restoration, and removal of wreck or debris.

Sum Insured: not less than $20,000,000 combined single limit per occurrence, except $2,500,000 for property of others in care, custody and control.

Geographical Limits: Honduras

Maximum Deductible : Not greater than $250,000 per event; $125,000 for equipment in the care, custody and control of the operator.

B. WORKERS COMPENSATION INSURANCE

Employer’s Liability Insurance

As required by Applicable Law, including such other forms of insurance (or reinsurance, if applicable) which the Borrower is required by Applicable Law to maintain, which provide statutory benefits and cover loss resulting from injury, sickness, disability or death of the employees of the Borrower.

C. AUTOMOBILE LIABILITY INSURANCE.

If Borrower has automobiles, automobile liability insurance against claims for bodily injury (including death) and property damage covering all owned, non-owned and hired motor vehicles, in amounts as required by Applicable Law.

D. OTHER INSURANCES

Any other insurances or reinsurances, if applicable, required by Applicable Law.

Schedule 6.03 - Annex A - 3

E. OTHER CONDITIONS

(a)

Non-renewal; “Tail” Coverage.

In the event that any Insurance Policy is written on a “claims-made” basis and such Insurance Policy is not renewed or the retroactive date of such policy is to be changed, the Borrower shall obtain for each such Insurance Policy extended reporting period coverage or “tail” coverage of at least three (3) years for each such Insurance Policy and shall provide OPIC with proof that such basic and supplemental extended reporting period coverage or “tail” has been obtained.

(b)

The governing law with regard to local, Honduran polies shall be that of the Republic of Honduras and, with regard to global corporate insurance and reinsurance policies (if any), shall be English or New York.

(c)

Payment of loss proceeds by insurers and reinsurers, as applicable, shall be in Dollars unless otherwise agreed by OPIC in its sole discretion.

Schedule 6.03 - Annex A - 4

SCHEDULE 6.05(d)

Form of Operating Report ¹

Report Date: [_____]

Subject: Operating report for the period between DD/MM/20XX and DD/MM/20XX

Operating Report

1	Generation Summary

Item	For the period	YTD 20XX
Net Energy Sales (MWh)
Avg. Daily Generation (MW)
Availability (%)

OEC	Operational Hours during Period	Periodical MWh Generation (Gross)	Periodical MW (Gross)	YTD hr	YTD MWh (Gross)	YTD MW (Gross)
OEC-1
OEC-2
Total

Summary of Power Generation :

Indicator	Units	During Reporting Period	Accumulated during Calendar Year
Power Plant Gross Generation Aux. Load Net Energy Sales	MWh
Average Power Delivered	MW
Average Power corrected by ambient temperature	MW
Capacity Factor 35 MW net Equivalent Availability Factor all OECs	%
Average Ambient Temperature	°C

¹ To be provided semi-annually, beginning on the first to occur of June 30 or December 31. Operating Reports to be provided within 30 days of the end of the semi-annual reporting periods ending on June 30 and December 31.

Schedule 6.05(d) - 1

2	Maintenance Summary

2.1	OEC down time.

Definition: OEC is not available if it is stopped for preventive or corrective maintenance.

●

Maintenance Hours:

Preventive – ______ hrs. down time registered

Corrective – ______ hrs. down time registered

2.2	Corrective Maintenance

		Corrective Maintenance	Total	Down
	Date	Events		Time
	[____]	[____]
[BOP] ²	[____]	[____]
	[____]	[____]
	[____]	[____]
	[____]	[____]
OEC 1	[____]	[____]
	[____]	[____]
	[____]	[____]
	[____]	[____]
	[____]	[____]
OEC 2	[____]	[____]
	[____]	[____]
	[____]	[____]
Total

2.3	Maintenance Activities/Events Summary:

Plant Switchyard and Power Grid:

●

[Confirm monthly and weekly preventive maintenance done as per schedule.]

●

[Describe planned and unplanned maintenance outages.]

●

[Describe annual maintenance outages.]

² Include reporting on corrective maintenance that results in substantial downtime.

Schedule 6.05(d) - 2

Balance of Plant:

●

[Confirm monthly and weekly preventive maintenance done as per schedule.]

●

[Describe planned and unplanned maintenance outages.]

●

[Describe annual maintenance outages.]

Well field and Gathering System:

●

[Confirm monthly and weekly preventive maintenance done as per schedule.]

●

[Describe planned and unplanned maintenance outages.]

●

[Describe annual maintenance outages.]

OEC Units:

●

[Confirm monthly and weekly preventive maintenance done as per schedule.]

●

[Describe planned and unplanned maintenance outages.]

●

[Describe annual maintenance outages.]

3	Environmental Compliance Status

[Reporting guidance: Please include results of monthly H2S monitoring program as a report attachment ]

4	Power Plant Safety Monthly Status

Event	Date
Last Safety and Health Committee Training	[_____]
Last Safety and Health Committee Meeting	[_____]
Last Basic Occupational Safety and Health Training	[_____]
Last Safety and Health meeting held (all)	[_____]
Last Annual Fire Fighting Course	[_____]
Last CPR and First Aid course	[_____]
Last Safety Emergency Response Plan Review	[_____]
Last Occupational Accident/Incident Committee Training	[_____]

Schedule 6.05(d) - 3

Health and Safety Report

(The total lost time work hours logged during the specified reporting period should be reported to the appropriate regulatory agency.)

Non-Fatal Injures

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Year-To-Date

Number of Injuries ³

Lost time less than one day

Lost time up to 3 days ⁴

Lost time more than 3 days ⁵

Total Number of Injuries

Time Lost (number of whole days)

Lost time up to 3 days

Lost time more than 3 days

Total Time Lost (days)

Occupational Illness

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Year-To-Date

Number of Positive Diagnoses ⁶

Lost time less than one day

Lost time up to 3 days ⁷

Lost time more than 3 days ⁸

Total Number of Positive Diagnoses

Time Lost (number of whole days)

Lost time up to 3 days

Lost time more than 3 days

Total Time Lost (days)

³ Recorded on the day of the incident.

⁴ The day on which an incident occurs is not included in the total

⁵ The day on which an incident occurs is not included in the total

⁶ Recorded on the day of the positive diagnosis.

⁷ The day on which an incident occurs is not included in the total.

⁸ The day on which an incident occurs is not included in the total.

Schedule 6.05(d) - 4

Non-Fatal Injures

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Year-to-Date

Fatalities

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Year-To-Date

Number of Fatalities ⁹

Immediate

Within a Month of Injury

Within a Year of Injury

Total Number of Fatalities

ENEE PPA Demonstrated Capacity (MW)	[_____]
Date of Last Demonstrated Capacity Test	[_____]

[Reporting guidance: Please provide spreadsheet file that’s the basis for the tabulated monthly report data below along with the semiannual report .pdf file]

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

YTD

OEC 1

Operating Hours

Gross Generation (MWh)

Net Generation (MWh)

OEC 2

Operating Hours

Gross Generation (MWh)

Net Generation (MWh)

⁹ Recorded at time of death.

Schedule 6.05(d) - 5

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

YTD

Plant

Gross Generation (MWh)

Auxiliary Use (MWh)

Energy Sales (MWh)

Scheduled / Preventive Maintenance (MWh)

Unscheduled / Corrective Maintenance (MWh)

Maximum Load (MW)

Minimum Load (MW)

Average Load (MW)

Period Hours

Operating Hours

Total Brine Usage (Tonnes)

Average Brine Temperature

Average Brine Pressure (bar g)

Injection

Total Injected (Tonnes)

Average Injection Temperature

Average Ambient Temperature

5	Comparison Between Operating Budget and Actual Financial Performance

Schedule 6.05(d) - 6

	Actual ¹⁰					Budget ¹¹
	1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	Total	Total
1. Salaries, G&A, etc.
1.1 Salaries (fixed monthly portion)
1.2 Salaries (Other)
1.3 Site G&A
1.4 Property Insurance
1.5 Owner G&A
1.6 Housing
1.7 Safety
1.8 Other / Misc.

Total Fixed Costs Budget
2. Spare Parts, Consumables, etc.
2.1 Spare parts, repairs and consumables
2.2 Other / Misc.
Total Variable Costs Budget
3. Wellfield Maintenance / Capex (excluding draw on reserves)
3.1 Well Maintenance and Workovers
3.2 Well Pumping System Maintenance
3.3 CapEx
3.4 Misc.
Total Wellfield Maintenance / Capex Budget
4. O&M Contingencies & misc.
4.1 O&M Contingencies & misc.
5. Corporate Income Taxes
5.1 Cash corporate income taxes
6. TOTAL

Generation and Revenue	1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	YTD
Projected Net Generation (MWh)
Actual Net Generation (MWh)
Budgeted Revenue (M$)
Invoiced Amounts (M$)

¹⁰ Sums are in thousand dollars.

¹¹ Sums are in thousand dollars.

SCHEDULE 6.05(d) - 7

SCHEDULE 6.06

Form of Annual Operating Budget

From: January 1st [ ____ ]

To: December 31st [ ____ ]



(In US$ thousands)	[____] OPERATING BUDGET

	Annual	Comments
1. Salaries, G&A, etc.
1.1 Salaries (Fixed Monthly Portion)	$ [____]	1/12 per month
1.2 Site G&A	$ [____]
1.3 Insurance	$ [____]	1/12 per month
1.4 Owner G&A	$ [____]
1.5 Safety	$ [____]
1.6 O&M Support	$ [____] ¹²
Total Fixed Costs Budget	$ [____]

2. Maintenance, Spare Parts, etc.
2.1 Spare Parts	$ [____]
2.2 Other / Misc.	$ [____]
Total Variable Costs Budget	$

3. Wellfield Maintenance	(exc, draw on reserves)
3.1 Wellfield maintenance	$ [____]
3.2 Misc.(*)	$ [____]
Total Wellfield Maintenance / Capex	$ [____]

4. O&M Contingencies & misc.
4.1 O&M Contingencies & misc.	$ [____]
5. Income Taxes
5.1 Income Taxes	$ [____]

6. TOTAL OPERATING BUDGET FOR PERIOD(), (*)	$ [____]


The Annual Operating Budget above is not evenly spread across the months within the year, with the exception of the items which are commented with “1/12 per month”. () If miscellaneous amount exceeds twenty percent (20%) of total Wellfield Maintenance / Capex Amount, such costs should be further broken-down by category. () Excluding : deposits to reserve accounts, political risk insurance premiums, all royalty charges on revenue to Elcosa, interest on debitory accounts (if any), VAT and hedging costs (if any). (**) Including : maintenance fee payable to OPIC.

¹² Not to exceed in the aggregate $400,000 on an annual basis.

Schedule 6.06 - 1

SCHEDULE 6.12

Worker Rights Action Plan

No.	Action	Due Date
1	Labor Management System
1.1	The Project shall develop and implement human resource policies appropriate to its workforce consistent with IFC Performance Standard 2 and local labor law.	Prior to first disbursement
1.2	The Project shall submit to OPIC evidence of how terms and conditions of work, including wages, hours of work and overtime, benefits entitlements, and access to the employee grievance mechanism are communicated to all workers during the construction phase.
1.3	The Project shall develop and submit to OPIC procedures for monitoring working conditions, including contractor working conditions, at the Site.
1.4	The Borrower shall develop and submit to OPIC evidence of organizational capacity to manage and monitor working conditions at the Site.
2	Security Risk Assessment and Management
2.1	The Project shall submit a Security Management Plan consistent with the IFC Performance Standard 4. Documentation should be submitted electronically to labor@opic.gov or in hard copy to: Director, Labor and Human Rights Group Overseas Private Investment Corporation 1100 New York Avenue, N.W. Washington, D.C. 20527

Schedule 6.12 - 1

SCHEDULE 7.01

Liens

None.

Schedule 7.01 - 1

SCHEDULE 7.02

Indebtedness

None.

Schedule 7.02 - 1

SCHEDULE 7.07

Leases

Lessor

Purpose

Amount of Purchase

Orders Issued as of

October 4, 2017

Amount of Purchase

Orders expected to be

issued

La Union Municipality

Area for construction of plant components.

HNL 90,000 per annum indexed at 2% following the second operation year.

No additional amounts are expected

Schedule 7.07 - 1

Schedule 8.03

Arbitration Provisions

The provisions of this Schedule 8.03 shall apply to any arbitration under Section 8.03 of this Agreement.

1. Place of Arbitration; Language.

(a)

The seat of the arbitration shall be The City of New York, New York, U.S.A.

(b)

The language of the arbitration shall be English. All hearings shall be conducted in English, all awards and orders shall be issued in English, and all communications, pleadings and documentary evidence shall be presented in English. If any documents are not in English, the offering Arbitration Party shall provide English translations thereof at its own expense.

2. Arbitral Tribunal.

(a)

Number of Arbitrators

The Arbitral Tribunal shall consist of three arbitrators appointed in accordance with Section 2(b) of this Schedule 8.03 , unless, within twenty (20) days after the receipt by the respondent of the notice of arbitration, the Arbitration Parties shall have agreed that the Arbitral Tribunal consist of only one arbitrator, and shall have agreed on the identity of such arbitrator.

(b)

Appointment of Arbitral Tribunal – Three Arbitrators

(i)

If the Arbitral Tribunal is to consist of three arbitrators, each Arbitration Party shall nominate one arbitrator. The claimant shall nominate an arbitrator at the same time as serving the notice of arbitration. The respondent shall nominate an arbitrator within twenty (20) days of receipt of notice of the claimant’s nomination. If either Arbitration Party fails to nominate an arbitrator within such time limits, the other Arbitration Party may request that the International Centre for Dispute Resolution (the “ Administrator ”) appoint the second arbitrator. The Administrator shall promptly make such appointment, and may exercise its discretion (subject to Section 2(c) hereof) in making such appointment. The two arbitrators thus appointed shall choose the third arbitrator who will act as the presiding arbitrator of the Arbitral Tribunal.

(ii)

If within twenty (20) days after the appointment of the second arbitrator the two arbitrators have not agreed on the choice of the presiding arbitrator, the Administrator shall promptly appoint the presiding arbitrator using the following list-procedure, unless (x) all Arbitration Parties agree that the list-procedure should not be used or (y) the Administrator determines in its discretion that the use of the list-procedure is not appropriate for the case:

Schedule 8.03 - 1

(A) At the request of one of the Arbitration Parties the Administrator shall communicate to the Arbitration Parties an identical list containing at least three names;

(B) Within ten (10) days after the receipt of this list, each Arbitration Party may return the list to the Administrator after having deleted the name or names to which it objects and numbered the remaining names on the list in the order of its preference;

(C) After the expiration of the above period of time, the Administrator shall promptly appoint the presiding arbitrator from among the names approved on the lists returned to it and in accordance with the order of preference indicated by the Arbitration Parties; provided , however , that if no approved names remain on the lists returned to it, the Administrator shall promptly appoint the presiding arbitrator in accordance with the Rules.

(D) In making the appointment, the Administrator shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator.

(c)

Qualifications .

Each arbitrator, in addition to meeting the qualification requirements of the Rules, (i) shall be fluent in the English language, and (ii) shall be an attorney admitted to the bar of the State of New York, U.S.A., with experience in international investment and finance.

3. Expedited Proceedings

Unless the Arbitration Parties agree otherwise, the Arbitral Tribunal shall issue its final award within nine (9) months from the date that the Arbitral Tribunal is constituted. Any time limit set by the Rules, the Administrator or the Arbitral Tribunal shall be extended only for extraordinary reasons (as determined in the sole discretion of the Arbitral Tribunal), unless otherwise agreed by the Arbitration Parties.

4. Consolidation

An Arbitral Tribunal shall have the power, at the request of an Arbitration Party, to consolidate any two or more arbitrations commenced pursuant to Section 8.03 hereof; provided , however , that no such consolidation shall be ordered unless (i) the time limits referred to in Section 3 of this Schedule 8.03 can be complied with notwithstanding such consolidation, and (ii) the Arbitration Parties in the consolidated arbitration confirm the appointment of the Arbitral Tribunal.

Schedule 8.03 - 2

EXHIBIT A-1

Form of NEW YORK LAW Promissory Note

For Fixed Rate Notes please follow the form set forth in Exhibit A-1 of the OPIC Funding Agreement. For Weekly Rate Notes, if any, please follow the form set forth in Exhibit A-2 of the OPIC Funding Agreement.

Exhibit A-1 - 1

EXHIBIT A-2

Form of HONDURAN LAW PAGARÉ

ON DEMAND PROMISSORY NOTE FOR

U.S.$ [ ________ ]

I, [ Insert name of signatory ] in my capacity as legal representative of GEOTÉRMICA PLATANARES, S.A. DE C.V. (hereinafter the “ Borrower ”), by this PROMISSORY NOTE hereby promise to pay unconditionally, in name and representation of the Borrower, to the order of OVERSEAS PRIVATE INVESTMENT CORPORATION , an agency of the United States of America in [ Insert place and account number where the payments shall be made] , ON DEMAND and NOT REQUIRED TO BE PROTESTED IN CASE OF NON PAYMENT in Dollars of the United States of America, the sum of [ Insert amount of the Pagaré ], plus interest at an annual rate, equal to the sum of (i) [ Certificate Interest Rate ] ¹³ plus (ii) three point five percent (3.50%) per annum (“ Interest Rate ”); such Interest Rate to be paid quarterly. If this Promissory Note is not paid in full upon presentation, the Borrower hereby agrees to pay a default interest rate equal to two percent (2%) per annum (“ Default Interest Rate ”) in addition to the Interest Rate from the date the amount owed was due and not paid until the date such amount is paid in full; this shall not be considered as an extension or respite for the fulfilment of this obligation. For purposes of Article 536 of the Commerce Code, the presentation term is hereby extended to [ insert term equal to one year beyond the loan repayment schedule) i.e.: 16 years) ] from the date hereof.-

In witness of, I hereby sign in [ Insert place ] this [ Insert date ] (__) of [ Month ] of the year two thousand [ Year ] (20__).

_______________________________________

GEOTÉRMICA PLATANARES, S.A. DE C.V.

By:

Title:

PAGARÉ A LA VISTA POR

U.S.$ [ ________ ]

Yo, [ Insertar nombre representante ], actuando en mi condición de representante legal de la Sociedad GEOTÉRMICA PLATANARES, S.A. DE C.V. (en adelante la “ Deudora ”), por medio del presente PAGARÉ, prometo pagar incondicionalmente, en nombre y representación de la Deudora, a la orden de OVERSEAS PRIVATE INVESTMENT CORPORATION , una agencia de los Estados Unidos de América en [ Insertar lugar y cuenta de banco en la cual se debe hacer el pago ], A LA VISTA Y SIN PROTESTO, y en Dólares de los Estados Unidos de América, la suma de [ Insertar monto del P agaré ], más intereses a una tasa anual equivalente a la suma de: (i) [ Certificate Interest Rate ] más (ii) tres punto cinco por ciento (3.50%) anual (la “ Tasa de Interés ”) pagaderos estos intereses trimestralmente. Si este Pagaré no fuere pagado totalmente a su presentación, la Deudora se obliga a pagar durante todo el tiempo que permanezca total o parcialmente insoluto, un interés moratorio equivalente a dos por ciento (2%) anual (“ Interés Moratorio ”) adicional a la Tasa de Interés desde la fecha en que el pago debió realizarse y no fue realizado y hasta la fecha en que la cantidad adeudada sea pagada en su totalidad, sin que por esto se considere que haya prórroga, quita o espera para el cumplimiento de esta obligación. Para los efectos de lo dispuesto en el Artículo 536 del Código de Comercio, queda ampliado el plazo de su presentación a [ Insertar plazo total del préstamo más un año, ej: 16 años ] contados a partir de la presente fecha.

En fe de lo cual firmo en [ Insertar lugar de emisión ] a los [ Insertar fecha ] (_____) días del mes de [ mes ] del año dos mil [___] (20__).

______________________________________

GEOTÉRMICA PLATANARES, S.A. DE C.V.

Nombre:

Cargo:

¹³ Certificate Interest Rate to be determined.

Exhibit A-2 - 1

EXHIBIT A-3

Form of AUTHORIZATION TO COMPLETE

[__] de [__________] de 2018

[ ]

Asunto: Autorización relacionada a Pagaré emitido en relación a financiamiento a favor de GEOTÉRMICA PLATANARES, S.A. DE C.V.

Estimados Señores:

Hacemos referencia al: (i) contrato denominado en idioma inglés como “Finance Agreement” y que en idioma español se traduce a Contrato de Crédito celebrado en fecha [____] de 2018 entre OVERSEAS PRIVATE INVESTMENT CORPORATION y GEOTÉRMICA PLATANARES, S.A. DE C.V.; y (ii) Pagaré por la suma de US$ [ ] suscrito por GEOTÉRMICA PLATANARES, S.A. DE C.V. a favor de OVERSEAS PRIVATE INVESTMENT CORPORATION (dicho pagaré relacionado como el “ PAGARÉ ”).

En relación a lo anterior, GEOTÉRMICA PLATANARES, S.A. DE C.V., manifiesta lo siguiente:

I. Que GEOTÉRMICA PLATANARES, S.A. DE C.V., por medio de la presente autoriza e instruye de manera irrevocable a:

OVERSEAS PRIVATE INVESTMENT CORPORATION por sí, y/o cualquiera de sus representantes y/o agentes debidamente autorizados completen y/o satisfagan a su libre discreción la información relativa a la fecha de pago en el PAGARÉ en caso de emitir OVERSEAS PRIVATE INVESTMENT CORPORATION de conformidad al Contrato de Crédito, una notificación de que ha ocurrido un Evento de Incumplimiento, en idioma inglés “Event of Default”, bajo el Contrato de Crédito.

II. Que GEOTÉRMICA PLATANARES, S.A. DE C.V., tendrá, a partir del momento en que se realicen, por bien hechas todas las acciones tomadas por OVERSEAS PRIVATE INVESTMENT CORPORATION y/o cualquiera de sus representantes debidamente autorizados cuando dichas acciones se hayan tomado en base a la autorización e instrucción conferida bajo el presente documento; y como consecuencia de ello, GEOTÉRMICA PLATANARES, S.A. DE C.V., libre y expresamente renuncian de manera irrevocable a entablar acciones y/u oponer excepciones judiciales o extrajudiciales en contra de cualquiera de estos, derivadas de cualquier controversia o conflicto relacionado directa o indirectamente con esta autorización e instrucción irrevocable, ya sea de su naturaleza, interpretación, cumplimiento, ejecución o terminación de la misma, pues reconocen que todo lo aquí pactado resguarda los intereses de OVERSEAS PRIVATE INVESTMENT CORPORATION en el Crédito que conferirá a GEOTÉRMICA PLATANARES, S.A. DE C.V.

Emitida el día de hoy ___ de [__________] en la ciudad de San Pedro Sula, Cortés, República de Honduras.

GEOTÉRMICA PLATANARES, S.A. DE C.V.

Firma: ________________________________

RECIBIDO Y ACEPTADO:

Firma: ________________________________

Exhibit A-3 - 1

EXHIBIT B

Form of DISBURSEMENT REQUEST

[ON BORROWER LETTERHEAD]

[ ____ ], 20[__]

Overseas Private Investment Corporation

1100 New York Avenue, N.W.

Washington, D.C. 20527

United States of America

Attention: Vice President for Structured Finance and Insurance

And attn: Managing Director, Portfolio Management Division

Disbursement Request

Dear Sir or Madam:

Reference is made to the Finance Agreement (OPIC No. 9000003553) dated as of [___], 2018 (the “ Agreement ”) between Geotérmica Platanares, S.A. de C.V. , a sociedad anónima de capital variable organized under the laws of Honduras (the “ Borrower ”), and Overseas Private Investment Corporation (“ OPIC ”). All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

Pursuant to Section 5.01 of the Agreement, notice is hereby given that the undersigned requests a Disbursement as follows:

Amount of Disbursement: $[_____]

Closing Date: [__________] ^’ ¹⁴

D-U-N-S® Number: [__________]

The Borrower does not have a U.S. Taxpayer Identification Number because it is not a U.S. entity and does not conduct any business or activities in the U.S.

¹⁴ Not less than 20 Business Days from the date OPIC receives this Disbursement Request . Please note that OPIC’s ability to make disbursements will be limited and subject to mutual agreement of an acceptable Closing Date at certain times during the year, including approximately the last two weeks of September and December (the limitation in December usually only applies to investment guaranties and not direct loans).

Exhibit B-1

A. PROCEEDS AND ADDITIONAL INFORMATION

I, [__________], the [_____] ¹⁵ of the Borrower, DO HEREBY CERTIFY that:

Attached hereto as Annex 1 is a schedule setting forth the Project Costs to which the present Disbursement:

[will be applied, for which the proceeds of this Disbursement are presently needed or will be needed in the ninety (90) days following the Closing Date, including each [written contract][confirmed purchase order][invoice] for such costs, indicating the amount payable, due date, and services performed or to be performed and/or goods delivered or to be delivered (as applicable);

[and/or]]

has been applied and for which the Borrower seeks reimbursement (to the extent such costs exceed required equity contributions) through the proceeds of this Disbursement, including each [written contract][confirmed purchase order][invoices] [audited financial statements] for such costs, indicating the amount paid and services performed and/or goods delivered, and evidence of such payment in the form of [wire transfers][delivery receipt][customs declaration][copies of cancelled checks or cashier’s checks];

in each case, with respect to any Project Costs set forth in Annex 1 that will be paid to any Affiliate of the Borrower or any of the Ormat Parties, together with evidence in the form of [auditor’s confirmation and supporting general ledger][confirmed purchase order][invoice]. The payment of such Project Costs will not constitute a Restricted Payment, and, following payment to any such Affiliate, the Borrower will owe no Indebtedness to such Affiliate, except for Indebtedness subordinated to OPIC pursuant to the Ormat Parties Subordination Agreement or as shall be otherwise satisfactory to OPIC in its sole discretion.

Attached hereto as Annex 2 is the schedule of wire transfer instructions for transfer of the proceeds of the Disbursement.

[Attached hereto as Annex 3 is a schedule setting forth the Project Costs to which the prior Disbursements have been applied, including each [written contract][confirmed purchase order][invoice][audited financial statement] for such costs, indicating the amount paid, payment date, services performed and/or goods delivered, and evidence of such payment in the form of [wire transfers][delivery receipt][customs declaration][copies of cancelled checks or cashier’s checks];] ¹⁶

Attached hereto as Annex 4 is a schedule setting forth the mandatory prepayment events (as set forth in Section 2.05 of the Agreement) that have occurred or continue to occur as of the date hereof.

[Attached hereto as Annex 5 is evidence that the special committee appointed for the purpose of Congressional Approval of the La Bufa Lease by the National Congress of Honduras has recommended the La Bufa Land Lease Agreement for approval. The Borrower has not been notified of any objections to such approval by the National Congress of Honduras.] ¹⁷

¹⁵ Title of Authorized Officer.

¹⁶ Not applicable to first Disbursement.

Exhibit B-2

B. CONDITIONS PRECEDENT SATISFIED

As of the date that is ten (10) days prior to the Closing Date, each of the conditions set forth in [Articles IV and V] ¹⁸ [Article V] ¹⁹ will be satisfied.

[Without limiting the foregoing and for purposes of confirming to OPIC the satisfaction of certain of the conditions set forth or referenced in Section 4.13 of the Agreement, I hereby certify that:

The representations and warranties of the Borrower set forth in Section 3.01(l), of the Agreement are true and correct in all respects.

All Works related to the Project have been carried out in a manner consistent with International Finance Corporation’s Performance Standards 1, 3, 4, 5, 6 and 8 (January 1, 2012). ²⁰

All Works related to the Project have been carried out in a manner consistent with International Finance Corporation’s Performance Standard 2 (January 1, 2012) [except for the deviations and/or resolutions listed in Annex [___] hereto.] ²¹

All Works necessary for safe and sustained commercial operations have been completed in accordance with the Project Documents and paid for on commercially reasonable terms except for any Works remaining to be completed as set forth in Schedule 4.13(b)(ii) of the Agreement. Sufficient funds have been held in reserve by the Borrower to pay for such Works, if any, remaining to be completed. ²²

The Borrower has caused to be submitted any and all notices to Governmental Authorities that are required by Applicable Law in Honduras regarding community and stakeholder engagement, archeological finds, environmental matters, or matters of health, safety or security.

There have not been any security incidents, displacements of persons or chance archeological finds associated with the Project.

The Borrower and its contractors have taken commercially reasonable measures to address the risks identified in the Social Risk Assessment of Platanares Geothermal Project conducted by Social Capital Group in October 2016.

The Borrower has developed and maintained the geothermal resource, the wells and the surface facilities in accordance with the ENEE PPA, the Agreement and Good Industry Practice.]

¹⁷ Only applicable for first Disbursement.

¹⁸ Only applicable for first Disbursement.

¹⁹ Only applicable for subsequent Disbursements.

²⁰ Include in certificate only for first Disbursement.

²¹ Include in certificate only for first Disbursement.

²² Include in certificate for first Disbursement.

Exhibit B-3

3.	[Pursuant to Section [6.05(f)] of the Agreement, I hereby certify that the Borrower has completed the noise assessment referenced in Section 3.1 of the ESAP and is in compliance with the noise standards contained within IFC 2007 Environmental, Health, and Safety General Guidelines]. ²³

[ Signature page follows ]

²³ Include in certificate for final Disbursement, to occur after noise assessment date and on or about the date the True-Up Confirmation is provided.

Exhibit B-4

C. AUTHORIZED OFFICER’S CERTIFICATION

I am an Authorized Officer of the Borrower and have the power to bind the Borrower herein and affirm that I am authorized to make the above certifications on behalf of the Borrower.

	Very truly yours,

	GEOTÉRMICA PLATANARES, S.A. DE C.V.

	By: _____________________________________

	Name: __________________________________

	Its: _____________________________________

Exhibit B-5

Annex 1 to

Disbursement Request

Project Costs

1. The present Disbursement will be applied to the following Project Costs to be incurred:

A. [ ]

B. [ ]

C. [ ]

2. The Project Costs referred to in item (1) above are evidenced by one of the following, in accordance with Accounting Standards, copies of which are attached:

For Goods: Supplier’s invoice, bill of lading, purchase orders or customs declaration. ‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

For Services other than those covered by the Warranty Agreement: Service provider’s claim, purchase order or invoice‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬.

For Services covered by the Warranty Agreement: Claim, invoice or purchase order from contractor‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬.

3. The present Disbursement will be applied to the following Project Costs which have already been incurred:

A. [ ]

B. [ ]

C. [ ]

4. The Project Costs referred to in item (3) are evidenced by one of the following, in accordance with Accounting Standards:

Third-party independent audit opinion : From a firm previously approved by OPIC, opining as to scheduled capital and operating expenditures‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬.

Independent audited Financial Statements : For expenditures from a prior Fiscal Year, if such audit provides sufficient detail as to the specific capital and operating expenditures which to be reimbursed by the Disbursement‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬.

Other : each [written contract][confirmed purchase order][customs declaration][other evidence] for such costs, indicating the amount payable, due date, and services performed or goods delivered; together with copies of such [written contract][confirmed purchase order][customs declaration][other evidence]‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬.

Exhibit B - Annex 1 - 1

Annex 2 to

Disbursement Request

Wire Transfer Instructions for Direct Loans

Please complete one funds transfer box for each transfer requested for this Disbursement. If more than one funds transfer is requested, please copy the relevant table below and add a new “Funds Transfer #[__]” below Funds Transfer # 1. In addition, add or delete sections from the table as needed (for example, if only one wire transfer to a U.S. account is requested, please fill out the U.S. account table and delete the foreign account table under Funds Transfer # 1). Please ensure that the total of all transfers adds up to the total Disbursement amount.

1.	If the ultimate recipient account is in the United States, there are two potential transfer mechanisms:

●

For transfer amounts < $100,000, Automated Clearing House (“ACH”) transfers are used.

●

For transfer amounts ≥ $100,000, regular wire transfers are used.

Please be aware that some U.S. banks have a different 9-digit ABA number for ACH transfers vs. regular wire transfers.

2.	If the ultimate recipient account is outside the United States, there are two potential transfer mechanisms:

●

OPIC prefers to use the U.S. Treasury Department’s International Treasury Services (“ ITS ”) system to send funds directly to foreign recipient accounts. Countries where ITS transfers may be sent are listed at the following URL: http://www.fms.treas.gov/itsgov/destvendor.html

●

If the recipient’s bank account is in a jurisdiction where the ITS system is not available , then the recipient will need to provide OPIC with the information needed to enable OPIC to send the funds to the recipient’s bank through a U.S. correspondent bank. If this is the case, please ask your OPIC contact for the Non-ITS Wire Transfer Instruction Template.

Funds Transfer # 1 :

If the ultimate recipient account is in the U.S., please complete the following table:
Transfer Information	Amount of Transfer
Payee Name:	$[________]
Payee U.S. Tax ID # (if applicable):
Bank Name:
Bank ABA Routing #: [Bank ABA Routing # for ACH payments] ²⁴ [Bank ABA Routing # for wires] ²⁵
Payee’s Account #:
Account Name (if different from Payee Name):
Reference Info (optional):

²⁴ Use if transfer is less than $100,000.

²⁵ Use if transfer is greater than or equal to $100,000.

Exhibit B - Annex 2 - 1

If the ultimate recipient account is not in the U.S., please complete the following table:
Transfer Information	Amount of Transfer
Payee Name:	$[__________]
Payee U.S. Tax ID # (if applicable):	(any amount may be sent this way)
Payee’s Account #:
Bank SWIFT Code:
Bank Name:
Bank Address:
IBAN Code (if avail):
Reference Info (optional):

Note: If a Non-ITS International Transfer is being used, please paste those instructions here.

Amounts to be Withheld for OPIC Payables (delete if not applicable) :

Internal Transfer to OPIC for [Principal] / [Interest] / [Facility Fee] / [Commitment Fee]

$[________]

Total :

Total of All Funds Transfers and Amounts Withheld for OPIC Payables (should equal the aggregate amount of the Disbursement requested)

$[________]

Exhibit B - Annex 2 - 2

[Annex 3 to

Disbursement Request] ²⁶

Application of Prior Disbursements

Attached hereto, with respect to each item listed above, is the corresponding [written contract][confirmed purchase order] or invoice for such costs, indicating the amount paid, due date, and services performed and/or goods delivered, and evidence of such payment in the form of [wire transfers][delivery receipt][customs declaration][copies of cancelled checks or cashier’s checks].

²⁶ This annex is not applicable for the first Disbursement.

Exhibit B - Annex 3 - 1

[Annex 4 to

Disbursement Request]

Mandatory Prepayment Events

Exhibit B - Annex 4 - 1

EXHIBIT C-1

Form of Authorization Certificate of the Borrower

[ON BORROWER LETTERHEAD]

This Certificate is given on behalf of Geotérmica Platanares, S.A. de C.V. , a sociedad anónima de capital variable organized under the laws of Honduras (the “ Borrower ”), pursuant to Section 4.02 of the Finance Agreement (OPIC No. 9000003553) dated as of [___], 2018 (the “ Agreement ”) between the Borrower, and Overseas Private Investment Corporation (“ OPIC ”). All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

I, [__________], the [__________] ²⁷ of the Borrower, on behalf of the Borrower and not in my personal capacity, DO HEREBY CERTIFY that:

1. Attached hereto as Annex 1 is a true and complete copy [and English translation] of the Escritura de Constitución y Estatutos (the “ Articles of Incorporation ”) of the Borrower, as amended to date, which are in full force and effect as of the date hereof, together with a [ Certificado de Inscripción / C ertificación Integra de Asiento ], evidencing that such Articles of Incorporation and amendments have been registered with the competent mercantile public registry of San Pedro Sula, Cortés, Honduras.

2. Attached hereto as Annex 2 are true and complete copies of resolutions [and their respective English translations] duly adopted by the [Board of Directors] of the Borrower [and of all documents evidencing any other necessary corporate or shareholder action taken by the Borrower] to authorize the execution, delivery and performance of the Agreement, the Note(s) and each of the other Transaction Documents to which it is or will be a party, and such resolutions are in full force and effect without amendment as of the date hereof.

3. The following named individuals whose specimen signatures and titles are set forth opposite their names are authorized to execute and deliver on behalf of the Borrower the Agreement, the Note, each of the other Transaction Documents to which the Borrower is or will be a party, and all other notices or instruments contemplated in the Agreement:


Name		Title		Specimen Signature


Name		Title		Specimen Signature


Name		Title		Specimen Signature

[The above-named individuals must include all Persons who have signed any of the Transaction Documents and any Person who will deliver any document, notice, or instrument contemplated by the Agreement in the future, including a [Financial Officer].]

²⁷ Title of Authorized Officer

Exhibit C-1 - 1

4. Defaults . No Default or Event of Default has occurred and is continuing. The Borrower is not in breach of any provision of any contract to which the Borrower is a party, which breach could reasonably be expected to be a Material Adverse Effect.

5. Compliance with Law; Corrupt Practices .

(i) The Borrower is conducting its business in compliance in all material respects with all Applicable Laws, Consents and its Charter Documents.

(ii) Without limiting the effect of clause (i), to the extent applicable, the Borrower and its officers, directors, employees, and agents, have complied with all applicable Corrupt Practices Laws in obtaining any Consents in respect of the Borrower’s business and the Project, and are otherwise conducting the Project and the Borrower’s business in compliance with applicable Corrupt Practices Laws. No Person acting on the Borrower’s behalf has made any Prohibited Payment with respect to the Project or any Transaction contemplated by the Transaction Documents.

WITNESS my hand this [_____] day of [__________], 20[__]. ²⁸

____________________________

By: [_______________________]

Title: [_____________________]

I, [__________], the [_____] ²⁹ of the Borrower, DO HEREBY CERTIFY that [______________] ³⁰ is, and at all times since [__________], 20[__] has been, duly elected and qualified as [______] ³¹ of the Borrower, and that the signature of such [ Title ] set forth above is true and genuine.

WITNESS my hand this [_____] day of [__________], 20[__]. ³²

____________________________

By: [_______________________]

Title: [_____________________]

²⁸ Must be dated the Closing Date. Leave month and day blank and provide written authorization for OPIC to fill in the Closing Date.

²⁹ Title

³⁰ Name of person giving certification

³¹ Title

³² Must be dated the Closing Date. Leave month and day blank and provide written authorization for OPIC to fill in the Closing Date.

Exhibit C-1 - 2

EXHIBIT C-2

Form of Authorization Certificate of the ShareholdeR

[ON SHAREHOLDER LETTERHEAD]

This Certificate is given on behalf of [__________], a [__________] organized and existing under the laws of [__________] (the “ Shareholder ”), pursuant to Section 4.02 of the Finance Agreement (OPIC No. 9000003553) dated as of [___], 2018 (the “ Agreement ”) between Geotérmica Platanares, S.A. de C.V. , a sociedad anónima de capital variable organized under the laws of Honduras (the “ Borrower ”), and Overseas Private Investment Corporation (“ OPIC ”). All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

I, [__________], the [__________] ³³ of the Shareholder, on behalf of the Shareholder and not in my personal capacity, DO HEREBY CERTIFY that:

1. Agreement . The Shareholder is familiar with the terms of the Agreement and has made or caused to be made such examination or investigation as is necessary to enable it to express an informed opinion as to the matters set forth below.

2. Charter Documents . Attached hereto as Annex 1 is a true and complete copy [and English translation] of the Charter Documents of the Shareholder as amended to date, which are in full force and effect as of the date hereof[, together with [________], evidencing that such [Charter Documents] have been registered with the competent governmental agencies and authorities in [_____]].

3. Resolutions . Attached hereto as Annex 2 are true and complete copies of resolutions duly adopted by the [Board of Directors] of the Shareholder [and of all documents evidencing any other necessary corporate or shareholder action taken by the Shareholder] to authorize the execution, delivery and performance of the Transaction Documents to which it is or will be a party, and such resolutions are in full force and effect without amendment as of the date hereof.

4. Existence and Power . The Shareholder (i) is a [______] duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization; (ii) is duly authorized to do business in each jurisdiction in which it conducts business; and (iii) has the power to own its properties, and carry on its business.

5. No Conflict with Shareholder Agreements . The execution, delivery, and performance by the Shareholder of each of the Transaction Documents to which it is or is contemplated to be a party will not breach the Charter Documents of the Shareholder or any agreement or other requirement by which the Shareholder or any of its properties may be bound or affected.

6. Share Capital . [(i) The Sponsor holds the direct legal and beneficial title to OII’s share capital; (ii) OII holds the direct legal and beneficial title to Ormat Holding Corp.’s share capital; (iii) Ormat Holding Corp. holds the direct legal and beneficial title to the Intermediate Shareholder’s share capital; (iv) the Intermediate Shareholder holds the direct legal and beneficial title to OrPower 19’s share capital; and (v) OrPower 19 holds the direct legal and beneficial title to the Borrower’s ordinary share capital (excluding the Preferred Nonvoting Share).] ³⁴

³³ Title of Authorized Officer

Exhibit C-2 - 1

7. Adequate Financial Means. The Shareholder (i) has capital sufficient to carry on its businesses and transactions and all businesses and transactions in which it engages, (ii) is able to pay its debts as they mature and (iii) owns property and other assets having a value, both at fair valuation and at present fair saleable value, greater than the total amount of the probable liabilities of the Shareholder on its debts and obligations as they become absolute and matured.

8. Defaults .

(i) Each of the representations and warranties of the Shareholder set forth in each of the Financing Documents to which it is a party is true and correct in all material respects (except with respect to any provision including the word “material” or words of similar import, with respect to which such representations and warranties are true and correct) as of the date hereof after giving effect to such Disbursement or, if any such representation relates exclusively to an earlier date, as of such earlier date.

(ii) Both before and after giving effect to the Disbursement, to the knowledge of the Shareholder, no Default or Event of Default has occurred or is continuing.

9. Compliance with Law; Corrupt Practices .

(i) The Shareholder is conducting its business in compliance with all Applicable Laws and its Charter Documents.

(ii) Without limiting the effect of clause (i), to the extent applicable, each of the Borrower and the Shareholder, and its officers, directors, employees, and agents, have complied with all applicable Corrupt Practices Laws in obtaining any Consents in respect of the Borrower’s business and the Project, and are otherwise conducting the Project and the Borrower’s business in compliance with applicable Corrupt Practices Laws. The Shareholder has not made any Prohibited Payment with respect to the Project or any Transaction contemplated by the Transaction Documents.

10. Material Adverse Effect . There has been no event, condition or change known to the Shareholder in respect of the Project or the Borrower, the existence of which could reasonably be expected to be a Material Adverse Effect.

11. Incumbency . The following named individuals whose specimen signatures and titles are set forth opposite their names are authorized to execute and deliver on behalf of the Shareholder the Transaction Documents to which the Shareholder is or will be a party, and all other notices or instruments contemplated thereunder:


Name		Title		Specimen Signature


Name		Title		Specimen Signature


Name		Title		Specimen Signature

³⁴ Inclusion of certifications (i)-(v) to be adjusted depending on Shareholder issuing the certificate.

Exhibit C-2 - 2

WITNESS my hand this [_____] day of [__________], 20[__]. ³⁶


	By:
	Title:

I, [__________], [___] ³⁷ of the Shareholder, DO HEREBY CERTIFY that [______] ³⁸ is, and at all times since [__________], 20[__] has been, duly elected and qualified as [____] ³⁹ of the Shareholder, and that the signature of such [_____] ⁴⁰ set forth above is true and genuine.

WITNESS my hand this [_____] day of [__________], 20[__]. ⁴¹


	By:
	Title:

³⁵ This is only necessary if the Shareholder is executing Transaction Documents or will be delivering Certified financials or other documents on an on-going basis. Note that Financial Statements should be required from any person giving a personal guaranty.

³⁶ Must be dated the Closing Date. Leave month and day blank and provide written authorization for OPIC to fill in the Closing Date.

³⁷ Title

³⁸ Name of Person giving certification

³⁹ Title

⁴⁰ Title

⁴¹ Must be dated the Closing Date. Leave month and day blank and provide written authorization for OPIC to fill in the Closing Date.

Exhibit C-2 - 3

EXHIBIT D

Form of CLOSING Certificate

[ON BORROWER LETTERHEAD]

[_____], 20[__] ⁴²

This Certificate is given on behalf of Geotérmica Platanares, S.A. de C.V. , a sociedad anónima de capital variable organized under the laws of Honduras (the “ Borrower ”), pursuant to Section 5.05 of the Finance Agreement (OPIC No. 9000003553) dated as of [___], 2018 (the “ Agreement ”) between the Borrower and Overseas Private Investment Corporation (“ OPIC ”). All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

I, [__________], the [__________] ⁴³ of Geotérmica Platanares, S.A. de C.V. , a sociedad anónima de capital variable organized under the laws of Honduras (the “ Borrower ”), DO HEREBY CERTIFY on behalf of the Borrower and not in my individual capacity that:

1. I am familiar with the terms of the Agreement.

2. Both before and after giving effect to the Disbursement, no Default or Event of Default has occurred or is continuing and as of the date hereof, nothing has occurred and is continuing that could be a Material Adverse Effect.

3. All of the certifications contained in the Disbursement Request dated [__________] remain true and correct and in full force and effect[.][, except for the following:

[______________]

[______________]]

4. [In addition, I hereby certify that [_________]] ^’ ⁴⁴

5. Attached hereto as Annex 1 is a list of any and all deviations of the Borrower from IFC Performance Standard 2 and/or any resolutions since the prior Disbursement to deviations from IFC Performance Standard 2 previously disclosed to OPIC.

⁴² Must be dated the Closing Date. Leave month and day blank and provide written authorization for OPIC to fill in the Closing Date.

⁴³ Title of Authorized Officer

⁴⁴ [Placeholder for any confirmations requested in the form of Disbursement Request that were not available. Relevant only if OPIC agrees to defer certification to the relevant Disbursement Date in which written confirmation of status will be necessary for COP’s launch.]

Exhibit D - 1

6. [Attached hereto as Annex 2 [are][is a] true and complete [copies][copy] (and [their][its] respective English translation[s]), including all amendments to date, of the following documents[s], which [are][is] in full force and effect in accordance with [their][its] terms as of the date hereof:

[List document to be Certified]; and

ii.

[List document to be Certified].] ⁴⁵

WITNESS my hand on the date first written above.

	GEOTÉRMICA PLATANARES, S.A. DE C.V.

	By:

	Name:

	Its:

⁴⁵ Include this provision if there are documents that must be Certified pursuant to the Agreement. If there are many documents that need to be Certified, consider having all documents Certified in a separate certificate (in which case, this provision may be deleted).

Exhibit D - 2

Annex 1

IFC Performance Standard 2 - Deviations and/or Resolutions

[Borrower to provide]

Exhibit D - Annex 1 - 1

EXHIBIT E

[ON INDEPENDENT ENGINEER LETTERHEAD]

Form of INDEPENDENT ENGINEER Certificate

Issued by:	Lummus Consultants International, Inc. (“ *Lummus* ”), 3600 West Sam Houston Parkway, Suite 400, Houston, TX 77042 in the role of “ *Independent Engineer* ” pursuant to the appointment letter signed by Overseas Private Investment Corporation for Geotérmica Platanares, S.A. de C.V. dated May 5, 2016 (the “ *Appointment* ”)

Lender:	Overseas Private Investment Corporation (“ *OPIC* ”), 1100 New York Avenue, N.W., Washington, D.C. 20527-0001

Borrower:	Geotérmica Platanares, S.A. de C.V. (the “ *Borrower* ”), Plaza Saavedra, Modulo #20 y 21 Bo. Mercedes, 1a Calle NE 3a Av NE Frente a Hotel VIP Copán Santa Rosa de Copán HONDURAS

Date of issue:	[_________], 20[__]

Finance Agreement:	Finance Agreement (OPIC No. 9000003553)

Disbursement:	[___] Disbursement

Reference is made to the Finance Agreement (OPIC No. 9000003553), dated as of [___], 2018, 2018 (the “ Agreement ”) by and between the Borrower and OPIC (each, as defined above). All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

The Independent Engineer hereby submits this certificate (the “ Certificate ”) pursuant to [Section 4.13 and] ⁴⁶ Section 5.13 of the Agreement.

The Independent Engineer has discussed matters set forth in this Certificate, where it deems such discussions to be pertinent, with the Borrower and appropriate third parties. The Independent Engineer has performed the services required in connection with the delivery of this Certificate in a professional manner using sound project management and supervisory principles and procedures in accordance with the standard of care for the level of services as practiced by consulting engineers on similar assignments concerning generation facilities similar to the Project. The Independent Engineer hereby represents that it has the required skills and capacity to perform such services in the foregoing manner and has made such reviews, examinations and investigations as the Independent Engineer believes in its professional judgment to be reasonably necessary for the purposes of making the certifications set forth herein.

⁴⁶ Use for first Disbursement.

Exhibit E - 1

On the basis of the foregoing and on the understanding and assumption (after due inquiry) that the Independent Engineer has been provided true, correct and complete information from such other parties as to the matters set forth herein, the Independent Engineer hereby makes the following certifications:

The Disbursement Request referenced above requests funding for Project Costs that have been incurred as of the date of the Disbursement Request.

[The final report prepared by the Independent Engineer dated as of [_____] and delivered to OPIC on [_____] is complete and accurate in all material respects as of the date hereof]. ⁴⁷

We have found no indications that the Borrower has not developed and maintained the geothermal resource, the wells and the surface facilities in accordance with the ENEE PPA, the Agreement and Good Industry Practice.

[Works necessary for safe and sustained commercial operations (except for matters related to slope stability pending completion pursuant to Schedule 4.13(b)(i) of the Agreement) have been completed in accordance with the Project Documents that we have reviewed and have been paid for on an arm’s length basis, except those listed in Schedule 4.13(b)(ii) of the Agreement. Sufficient funds have been held in reserve by the Borrower to pay for such Works, if any, remaining to be completed.] ⁴⁸

[To the best of the Independent Engineer’s knowledge (after due inquiry), all such Works have been carried out in a manner consistent with International Finance Corporation’s Performance Standards 3 (it being understood that the Independent Engineer has not assessed compliance that all wastes generated during construction and operation, including hazardous wastes, sanitary wastes and drilling fluids, have been appropriately disposed of and that that no major environmental incidents, such as big spills, occurred, and if they did occur, that appropriate actions were taken to clean up) and 4 (January 1, 2012) and has not conducted a detailed verification.] ⁴⁹

[COD has been reached in accordance with the ENEE PPA as confirmed by the issuance of the Commercial Operation Start Certificate]. ⁵⁰

[To the best of the Independent Engineer’s knowledge (after due inquiry), all Consents with respect to air emissions, discharges to surface water or ground water, noise emissions, solid or liquid waste disposal, the use, generation, storage, transportation or disposal of toxic or hazardous substances or wastes, or other environment, health and safety and social performance matters required for construction and operation of the Project or otherwise under Applicable Law for the Project have been issued as required since commencement of construction and through the date hereof.]

⁴⁷ Include in certificate for first Disbursement.

⁴⁸ Include bracketed language in certificate for first Disbursement.

⁴⁹ Include in certificate for first Disbursement.

⁵⁰ Include in certificate for first Disbursement.

Exhibit E - 2

The Independent Engineer has performed such inspections, observations, analyses and other procedures which it has deemed necessary for purposes of this certificate, including a site visit on October 12, 2017, and receiving and reviewing all completion test results [and receiving and reviewing at least six months of operations data]. ⁵¹

[Based on performance data from September 1, 2017 through [February 25, 2018], performance has been steady (excluding scheduled ENEE outages), with the Project’s net generation equal to or greater than the Required Plant Capacity.] ⁵²

10.

[Analysis of operational data and Reservoir Monitoring Reports covering at least six months of commercial operations, does not lead us to question (a) the conclusions in the final report prepared by the Independent Engineer dated as of [_____] and delivered to OPIC on [_____] or (b) the assumptions about geothermal reservoir performance and plant capacity used by the Borrower in the Financial Model [, except as set forth in Annex [1].]] ⁵³

The undersigned acknowledges that OPIC will rely on the certifications given herein.

The person signing this Certificate is a duly qualified representative of the Independent Engineer and as such is authorized to execute this Certificate on behalf of the Independent Engineer.

Very truly yours,

Lummus Consultants International, Inc.

The undersigned acknowledges that OPIC will rely on the certifications given herein.

Signed: …………………………

Name: John Senner

Title: Director

Distribution:

Original to:

Duplicate to:

Overseas Private

Investment Corporation

1100 New York Avenue,

N.W.

Washington, D.C. 20527

Geotérmica Platanares, S.A. de C.V.

Plaza Saavedra, Modulo #20 y 21
Bo. Mercedes, 1a Calle NE 3a Av NE
Frente a Hotel VIP Copán
Santa Rosa de Copán
HONDURAS

⁵¹ Include for the True-Up Confirmation, to be included with respect to any Disbursement in an amount that, together with all then previous Disbursements made, would exceed $114,700,000.

⁵² This is the Plant Capacity certification, to be included with respect to the First Disbursement.

⁵³ This is the True-Up Confirmation, to be included with respect to any Disbursement in an amount that, together with all then previous Disbursements made, would exceed $114,700,000.

Exhibit E - 3

[Annex 1

Noted or Exceptions Related to the True-Up Confirmation ] ⁵⁴

[IE to include if applicable]

⁵⁴ Include with respect to any Disbursement in an amount that, together with all then previous Disbursements made, would exceed $114,700,000.

Exhibit E - Annex 1 - 1

EXHIBIT F

[ON BORROWER LETTERHEAD]

Form of COMPLIANCE Certificate

[______], 20[__] ^’ ⁵⁵

This Certificate is given pursuant to Section 6.05 of the Finance Agreement (OPIC No. 9000003553) dated as of [___], 2018 (the “ Agreement ”) between Geotérmica Platanares, S.A. de C.V. , a sociedad anónima de capital variable organized under the laws of Honduras (the “ Borrower ”), and Overseas Private Investment Corporation (“ OPIC ”). All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

I, [__________], a Financial Officer of the Borrower, on behalf of the Borrower and not in my personal capacity, DO HEREBY CERTIFY that:

1. I am familiar with the terms of the Agreement;

2. I have made or caused to be made such examination or investigation as is necessary to enable me to express an informed opinion as to the matters set forth below;

3. [Attached hereto as Annex 1 are the unaudited Financial Statements of the Borrower for the fiscal quarter ending on [_____] pursuant to Section 6.05(a) of the Agreement, all of which are true and complete;] ⁵⁶

4. Attached hereto as Annex 2 is a copy of the report required under Section 6.05(c) of the Agreement setting forth in reasonable detail all transactions between the Borrower, on the one hand, and any of the Shareholders or any Affiliate of any such Shareholder, on the other hand, and such report is true and complete;

5. My review of the unaudited Financial Statements of the Borrower attached hereto [has not disclosed the existence of any Default or Event of Default][has disclosed the existence of the following Defaults or Events of Default relating to [ ________ ], ⁵⁷ for the period of [ ______ ], ⁵⁸ which [have been][are proposed to be resolved] as follows:

[ _____].] ⁵⁹

6. Attached hereto as Annex 3 are the calculations demonstrating in reasonable detail the Borrower’s compliance with the financial ratios set forth in Section 6.10 of the Agreement and the basis for such calculations.

⁵⁵ Must be delivered together with the Borrower’s unaudited Financial Statements as set forth in Section 6.05(a) of the Agreement.

⁵⁶ Include for first three fiscal quarters of each Fiscal Year.

⁵⁷ Describe nature of default.

⁵⁸ Insert period of existence.

⁵⁹ Insert Description of Action the Borrower has Taken or Proposes to Take with Respect to any such Default or Event of Default.

Exhibit F - 1

WITNESS my hand on the date first written above.

By: __________________________

Name: _______________________

Title: Financial Officer

Exhibit F - 2

[ Annex 1

[Attach Financial Statements]] ⁶⁰

⁶⁰ Include for first three fiscal quarters of each Fiscal Year.

Exhibit F - Annex 1 - 1

Annex 2

[Attach Related Party Transactions Report under 6.05(c)]

Exhibit F - Annex 2 - 1

Annex 3

[Insert calculations of financial ratios under Section 6.10]

Exhibit F - Annex 3 - 1

EXHIBIT G

Form of FINAL DISBURSEMENT Certificate

[ON BORROWER LETTERHEAD]

[______], 20[__]

Reference is made to (a) the Finance Agreement (OPIC No. 9000003553) dated as of [___], 2018 (the “ Agreement ”) between Geotérmica Platanares, S.A. de C.V. , a sociedad anónima de capital variable organized under the laws of Honduras (the “ Borrower ”), and Overseas Private Investment Corporation (“ OPIC ”) and (b) the Disbursement Request dated [_____] pursuant to which the Borrower requested the final Disbursement in the amount of $[____] on [_______] ⁶¹ . All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

Pursuant to Section 6.05(g) of the Agreement, I, [__________], the [________] ⁶² of the Borrower, on behalf of the Borrower and not in my personal capacity, DO HEREBY CERTIFY that (a) attached hereto as Annex 1 is a true and complete schedule setting forth the Project Costs to which the proceeds of the final Disbursement were applied, including each evidence for such costs, indicating the amount paid, payment date, and services performed and/or goods delivered, and evidence of such payment [instructions] in the form of [wire transfers][delivery receipt][customs declaration][copies of cancelled checks or cashier’s checks][a flow of funds memorandum], and (b) the application of such proceeds is consistent with the use of proceeds described in the Disbursement Request for such Disbursement.

	WITNESS my hand on the date first written above.


	GEOTÉRMICA PLATANARES, S.A. DE C.V.


	By:

	Name:

	Its:

⁶¹ Insert Closing Date.

⁶² Title of Authorized Officer.

Exhibit G - 1

Annex 1

Application of Final Disbursement

[___________________] ⁶³

Attached hereto, with respect to each item listed in the schedule above, is the corresponding [written contract][confirmed purchase order][invoice][other evidence] for such costs, indicating the amount paid, due date, and services performed and/or goods delivered, and evidence of such payment in the form of [wire transfers][delivery receipt][customs declaration][copies of cancelled checks or cashier’s checks][other evidence].

⁶³ Insert schedule of Project Costs to which proceeds of final Disbursement were applied.

Exhibit G - Annex 1 - 1

EXHIBIT H-1

[PAPEL MEMBRETADO GEOPLATANARES]

Form of Written Notice to SERNA

Tegucigalpa, M.D.C., [____] de [_____] de 2018

Señores

Secretaría de Estado en el Despacho de Energía, Recursos Naturales, Ambiente y Minas (“ MI AMBIENTE ”)

Presente.

Atención: [_____]

Asunto: Notificación de cesión en garantía de los derechos derivados del Contrato de Operación para la Generación, Transmisión y Comercialización de Energía Eléctrica suscrito entre la Secretaría de Recursos Naturales y Ambiente y la empresa “Geotérmica Platanares, S.A. de C.V.”

Estimados Señores:

Hacemos referencia al Contrato de Operación para la Generación, Transmisión y Comercialización de Energía Eléctrica de fecha 06 de Enero de 2009 (en adelante denominado, el “ Contrato de Operación ”) firmado entre la sociedad GEOTÉRMICA PLATANARES, S.A. DE C.V. (en adelante denominada, la “ Empresa ”) y la Secretaría de Estado en los Despachos de Recursos Naturales y Ambiente (SERNA), ahora denominada Secretaría de Estado en los Despachos de Energía, Recursos Naturales, Ambiente y Minas (en adelante “ MI AMBIENTE ”), aprobado por el Congreso Nacional a través de Decreto Legislativo número 197-2012 de fecha 18 de Diciembre de 2012, publicado en el Diario Oficial La Gaceta de fecha 31 de Enero de 2013.

Exhibit H-1 - 1

En virtud del Contrato de Operación, MI AMBIENTE autoriza a la Empresa para operar el Proyecto denominado Central Geotérmica Platanares, en el Municipio de La Unión, Departamento de Copán, destinado al servicio público de electricidad cuyas instalaciones tendrán una capacidad instalada nominal de 35,000 kW y la generación promedio de 297,400,000 kWh/año (el “ Proyecto ”). En fecha 03 de Junio de 2010, la Empresa firmó el Contrato de Suministro de Potencia y Energía Eléctrica No. 086-2010 con la Empresa Nacional de Energía Eléctrica (“ ENEE ”), aprobado por el Congreso Nacional a través de Decreto Legislativo número 159-2010 de fecha 09 de Septiembre de 2010, publicado en el Diario Oficial La Gaceta de fecha 31 de Diciembre de 2010.

A fin de obtener el financiamiento necesario para la construcción, desarrollo y operación del Proyecto, la Empresa [(ha suscrito en fecha [_____]) / (suscribirá) ⁶⁴ ] un contrato de crédito con OVERSEAS PRIVATE INVESTMENT CORPORATION (OPIC) (la “ Institución Financista ”), así como otros documentos relacionados, auxiliares y complementarios de los mismos (colectivamente, los “ Documentos de Financiamiento ”).

Como parte de dichos Documentos de Financiamiento, la Empresa suscribirá un contrato de fideicomiso de administración y garantía con Banco del País, S.A. (el “ Fiduciario ”) en beneficio de la Institución Financista, en virtud del cual la Empresa cederá en garantía todos los derechos y activos derivados del Contrato de Operación, y los derechos derivados de los demás contratos, permisos, autorizaciones y licencias que sean necesarios para la operación del Proyecto.

En consecuencia, por medio del presente documento y en base a lo señalado en la Cláusula SEGUNDA del Contrato de Operación (Vigencia, Duración, Renovación o Prórroga, Cesión) que cita: “…La Empresa Generadora puede otorgar en garantía a las Partes Financistas de la Planta todo o parte de este Contrato con la sola notificación a la Secretaría de tal acto.” , la Empresa formalmente notifica a MI AMBIENTE (antes denominada SERNA) de la cesión en garantía a ser realizada a favor del Fiduciario en beneficio de la Institución Financista tal y como se señala en el párrafo que antecede.

⁶⁴ Dependerá su respectivo uso si la notificación se hace antes de firmar el contrato de préstamo o después de firmar el contrato de préstamo, ambos casos antes de la firma del Fideicomiso de Administración y Garantía.

Exhibit H-1 - 2

Se acompaña a la presente carta el proyecto de Acuerdo Directo que solicitamos sea suscrito por MI AMBIENTE para dar cumplimiento a la relacionada disposición SEGUNDA del Contrato de Operación y como parte de las condiciones pactadas con la entidad Financista del proyecto.

La presente carta es emitida a petición de la Empresa y la Institución Financista para dar fiel cumplimiento a lo requerido en el Contrato de Operación, este día [____] del mes de [___] de dos mil dieciocho (2018).

MI AMBIENTE a través de la recepción de ésta carta reconoce haber sido debidamente notificada de la mencionada cesión y se da por enterada de la misma.

Por la EMPRESA:

P.p.: ________________________________

Por MI AMBIENTE:

Recibido y Conforme:

P.p.: _________________________________

Exhibit H-1 - 3

EXHIBIT H-2

Form of Written Notice to MINOSA

[__________], 20[__]

[__________]
[__________]
[__________]
[__________] ⁶⁵

RE: Notice of Collateral Assignment of Cooperation Agreement

Dear [__________]:

Reference is made to (a) that certain Cooperation Agreement, dated as of [___], 2018 (the “ Cooperation Agreement ”) between Geotérmica Platanares, S.A. de C.V., a Honduran sociedad anónima de capital variable (“ GeoPlatanares ”) and Minerales de Occidente S.A. de C.V., a Honduran sociedad anónima de capital variable (“ Minosa ”) and (b) that certain Electric Energy Supply Contract, dated as of May 5, 2007 (the “ PPA ”) between GeoPlatanares and Minosa. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Cooperation Agreement and the PPA, as applicable.

GeoPlatanares entered into a Finance Agreement, dated as of [____], 2018, with the Overseas Private Investment Corporation (“ OPIC ”), as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof (the “ Finance Agreement ”), in order to obtain debt financing for the Geothermal Project.

As security for GeoPlatanares’s obligations under the Finance Agreement and the other documents and agreements related thereto, GeoPlatanares, OrPower 19, Inc., and Banco del País, S.A., as trustee, (the “ Trustee ”), entered into that certain Amended and Restated Administration and Guarantee Trust Agreement (the Contrato de Fideicomiso de Administración y Garantía Enmendado y Reexpresado ), dated as of [__________], 20[__], as amended, amended and restated, supplemented or otherwise modified from time to time (the “ Administration and Guaranty Trust Agreement ”) and the other documents and agreements related thereto, under which GeoPlatanares has assigned its rights and benefits under and pursuant to each of the Cooperation Agreement and the PPA, to the Trustee.

Section 11.5(b) of the Cooperation Agreement provides that GeoPlatanares may collaterally assign its rights under the Cooperation Agreement to a Financing Party or its agent, representative or nominee.

Clause XXVI of the PPA provides that GeoPlatanares may collaterally assign its rights under the PPA to any Financier with the exception of a public entity. For purposes of the PPA, OPIC is a Financier and is not a public entity.

At the request of OPIC, this letter provides notice to Minosa of our collateral assignment of our rights and benefits under and pursuant to the Cooperation Agreement and the PPA to the Trustee, effective as of the date of execution of the Administration and Guaranty Trust Agreement.

⁶⁵ Insert contact information for Minosa.

Exhibit H-2 - 1

In addition, all amounts payable to GeoPlatanares under and in connection with the Cooperation Agreement and the PPA shall be made directly to the [__________] ⁶⁶ maintained under the [Administration and Guaranty Trust Agreement] by wire transfer as follows:

[__________]
[__________]
[__________]
[__________]
[__________] ⁶⁷

or as otherwise specified by the Trustee in a written notice to GeoPlatanares, Minosa and OPIC.

If you have any questions regarding the collateral assignment described herein, please feel free to contact [Elio Orozco] at [504-2662-1066] or [ eorozco@ormat.com] .

[ Signature page follows ]

⁶⁶ Insert applicable account name.

⁶⁷ Insert wire transfer information.

Exhibit H-2 - 2

	GEOTÉRMICA PLATANARES, S.A. DE C.V.


	By:
		Name:
		Title:

Exhibit H-2 - 3

EXHIBIT I

Form of SERNA DIRECT AGREEMENT

Exhibit I - 1

Exhibit I - 2

Exhibit I - 3

Exhibit I - 4

Exhibit I - 5

Exhibit I - 6

Exhibit 31.1

Ormat Technologies, Inc.

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Isaac Angel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ormat Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	By:	/s/ ISAAC ANGEL
		Isaac Angel
		Chief Executive Officer

Date: June 19, 2018

Exhibit 31.2

Ormat Technologies, Inc.

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Doron Blachar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ormat Technologies, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	By:	/s/ DORON BLACHAR
		Doron Blachar
		Chief Financial Officer

Date: June 19, 2018

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Isaac Angel, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge the quarterly report of Ormat Technologies, Inc. on Form 10-Q for the quarter ended March 31, 2018 (i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) that information contained in such quarterly report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Ormat Technologies, Inc. as of and for the periods presented in such quarterly report on Form 10-Q. This written statement is being furnished to the Securities and Exchange Commission as an exhibit accompanying such quarterly report and shall not be deemed filed pursuant to the Securities Exchange Act of 1934.

	By:	/s/ ISAAC ANGEL
	Name:	Isaac Angel
	Title:	Chief Executive Officer

Date: June 19, 2018

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Doron Blachar, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge the quarterly report of Ormat Technologies, Inc. on Form 10-Q for the quarter ended March 31, 2018 (i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) that information contained in such quarterly report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Ormat Technologies, Inc. as of and for the periods presented in such quarterly report on Form 10-Q. This written statement is being furnished to the Securities and Exchange Commission as an exhibit accompanying such quarterly report and shall not be deemed filed pursuant to the Securities Exchange Act of 1934.

	By:	/s/ DORON BLACHAR
	Name:	Doron Blachar
	Title:	Chief Financial Officer

Date: June 19, 2018