EXECUTION COPY
Ormat Funding Corp.
$190,000,000
8.25% Senior Secured Notes due 2020
Note Purchase Agreement
February 6, 2004
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
Ormat Funding Corp., a Delaware corporation (the "Company"),
proposes
to issue and sell to Lehman Brothers Inc. (the "Purchaser"),
$190,000,000 in
aggregate principal amount of 8.25% Senior Secured Notes due 2020
(the "Notes")
on the terms and in the manner set forth herein. The Notes will
initially be
unconditionally guaranteed when issued on a senior secured basis
(the
"Guarantees") by Brady Power Partners, a Nevada general
partnership, Steamboat
Geothermal LLC, a Delaware limited liability company, Steamboat
Development
Corp., a Utah corporation, OrMammoth Inc., a Delaware corporation,
ORNI 1 LLC, a
Delaware limited liability company, ORNI 2 LLC, a Delaware limited
liability
company and ORNI 7 LLC, a Delaware limited liability company (each
a "Guarantor"
and collectively, the "Guarantors"). In addition, the Company has
agreed to
cause Ormesa LLC, a Delaware limited liability company, to
unconditionally
guarantee the Notes on a senior secured basis on the Ormesa Support
Date (as
defined in the Offering Memorandum (defined below)). The Notes and
the
Guarantees are referred to collectively herein as the "Securities."
The Notes will initially be sold by the Company to the Purchaser
without being registered under the Securities Act of 1933, as
amended (the
"Securities Act"), in reliance on certain exemptions from
registration. On the
Closing Date (as defined below), the Company and the Guarantors
will enter into
the Registration Rights Agreement (as defined below) providing the
Holders of
Securities from time to time with the registration rights discussed
below.
The Securities are to be issued pursuant to an indenture among the
Company, the Guarantors and Union Bank of California, N.A., as
trustee (the
"Trustee") dated as of February 13, 2004 (as amended, modified,
supplemented and
in effect from time to time, the "Indenture").
The Purchaser is entitled to resell, subject to the conditions set
forth herein, all of the Securities to subsequent investors at any
time after
the date of this Note Purchase Agreement (this "Agreement"). The
Securities are
to be offered and sold through the Purchaser to such subsequent
investors
without being registered under the Securities Act in reliance upon
certain
exemptions from registration. As used herein, (a) "Preliminary
Offering
Memorandum" means the preliminary offering memorandum dated January
26, 2004,
including the annexes thereto and the documents incorporated by
reference
therein, relating to both the Securities to be resold outside the
United States
pursuant to Regulation S under the Securities Act ("Regulation S")
and the
Securities to be resold in the United States pursuant to Rule 144A
("Rule 144A")
under the Securities Act, (b) the "Offering Memorandum" means the
offering
memorandum dated February 6, 2004, including the annexes thereto
and the
documents incorporated by reference therein, relating to the
foregoing, and (c)
the Preliminary Offering Memorandum and the Offering Memorandum, as
either may
be amended or supplemented prior to the Time of Delivery (as
defined in Section
5(a) hereof), are referred to herein collectively as the "Offering
Materials."
The Notes are being issued by the Company and sold to the Purchaser
for
the purposes set forth in the Offering Materials including, without
limitation,
the acquisition of all of the outstanding Capital Stock of
Steamboat Development
Corp. and the lessor portion of a lease related to the Steamboat
2/3 project
(the "Steamboat Acquisition") and (ii) the acquisition of OrMammoth
Inc., which
includes a 50% ownership interest in Mammoth-Pacific, L.P. The
Company hereby
agrees to cause Steamboat Development Corp. to become a party to
this Agreement
on the Closing Date with all of the rights and obligations of the
Guarantors
party to this Agreement on the date hereof. For purposes hereof,
unless
otherwise indicated, all references to the "Subsidiaries" shall
include
Steamboat Development Corp. as if it was a Subsidiary of the
Company on the date
hereof.
Capitalized terms used but not defined herein shall have the
meanings
assigned thereto under "Description of Notes" and "Description of
Principal
Financing Documents" in the Offering Memorandum.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Securities
will be offered and sold (or in the case of the Guarantees, issued)
to the
Purchaser without registration under the Securities Act, in
reliance on an
exemption pursuant to Section 4(2) under the U.S. Securities Act of
1933, as
amended (the "Securities Act"). The Company has prepared the
Offering Materials,
setting forth information regarding the Company, the Guarantors,
the Securities
and the Exchange Securities (as defined below). The Company hereby
confirms that
it has authorized the use of the Offering Materials in connection
with the
offering and resale of the Securities by the Purchaser.
It is understood and acknowledged that upon original issuance
thereof,
and until such time as the same is no longer required under the
applicable
requirements of the Securities Act,
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the Notes (and all securities issued in exchange therefor or in
substitution
thereof) will bear the following legend (along with such other
legends as
required by the Indenture):
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(A)
(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS
OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO
AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE
144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7)
UNDER
THE SECURITIES ACT, IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, (5) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS) OR
(6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES
ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE BLUE SKY LAWS OF THE
STATES OF THE UNITED STATES."
You have advised the Company that you will make offers (the "Exempt
Resales") of the Securities purchased by you hereunder on the terms
set forth in
the Offering Memorandum, solely to (i) persons whom you reasonably
believe to be
"qualified institutional buyers" as defined in Rule 144A under the
Securities
Act ("QIBs") and (ii) outside the United States to certain persons
in offshore
transactions in reliance on Regulation S under the Securities Act.
Those persons
specified in clauses (i) and (ii) are referred to herein as the
"Eligible
Purchasers"). You will offer the Securities to Eligible Purchasers
initially at
a price equal to 100% of the principal amount thereof. Such price
may be changed
at any time without notice.
Holders (including subsequent transferees) of the Securities will
have
the registration rights set forth in the registration rights
agreement in the
form of Annex A hereto (the "Registration Rights Agreement"), among
the Company,
the Guarantors and the Purchaser, to be dated as of the Closing
Date, for so
long as such Securities constitute Transfer Restricted Securities
(as defined in
the Registration Rights Agreement). Pursuant to the Registration
Rights
Agreement, the Company and the Guarantors will agree to file with
the U.S.
Securities and Exchange Commission (the "Commission") under the
circumstances
set forth therein (i) a registration statement under the Securities
Act (the
"Exchange Offer Registration Statement") relating to the Company's
8.25% Senior
Secured Notes due 2020 (the "Exchange Notes") and the guarantees
thereof (the
"Exchange Guarantees" and, together with the Exchange Notes, the
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"Exchange Securities") to be offered in exchange for the Notes and
the
Guarantees (such offer to exchange being referred to as the
"Exchange Offer")
and (ii) a shelf registration statement pursuant to Rule 415 under
the
Securities Act (the "Shelf Registration Statement" together with
the Exchange
Offer Registration Statement, the "Registration Statements")
relating to the
resale by certain holders of the Securities and to use their
commercially
reasonable efforts to cause such Registration Statements to be
declared
effective and to consummate the Exchange Offer.
2. Representations, Warranties and Agreements.
I. As of the date hereof, the Company and each of the Guarantors
(other
than Steamboat Development Corp., except with respect to any
representation or
warranty that speaks as of the Time of Delivery) jointly and
severally,
represent and warrant to the Purchaser, as follows:
(a) Accurate Disclosure. The Offering Materials, including any
amendments or supplements thereto issued by the Company, and the
information
required to be delivered to holders and prospective purchasers of
the Securities
on or prior to the Time of Delivery pursuant to the Indenture and
in accordance
with Rule 144A(d)(4) under the Securities Act do not and will not,
as of their
respective dates, contain an untrue statement of a material fact or
omit to
state a material fact necessary in order to make the statements
therein, in
light of the circumstances under which they were made, not
misleading; provided,
however, that this representation and warranty shall not apply to
(i) any
statements or omissions made in reliance upon and in conformity
with information
furnished in writing to the Company by the Purchaser expressly for
use therein
(as set forth in Section 9(a) hereof), (ii) the Independent
Engineer's Report or
excerpts therefrom (except as set forth in the next sentence),
(iii) the
Geothermal Consultant's Report or excerpts therefrom (except as set
forth in the
next sentence), (iv) the projections referenced in 2(x) below. The
factual
information provided by the Company to Stone & Webster
Consultants, Inc. (the
"Independent Engineer") for inclusion in the Independent Engineer's
Report and
to GeothermEx, Inc. (the "Geothermal Consultant") for inclusion in
the
Geothermal Consultant's Report does not, as of the date hereof, and
will not, as
of the Time of Delivery, contain an untrue statement of a material
fact or omit
to state a material fact necessary in order to make the statements
in the
factual information so provided, in the light of the circumstances
under which
they were made, not misleading.
(b) Use of Offering Materials. The Offering Memorandum has been
prepared by the Company for use by the Purchaser in connection with
the Exempt
Resales. No order or decree prohibiting the use of the Offering
Materials, or
any order or decree asserting that the transactions contemplated by
this
Agreement are subject to the registration requirements of the
Securities Act,
has been issued and no proceeding for that purpose has commenced or
is pending
or, to the knowledge of the Company, the Guarantors or any person
acting on
their behalf, is contemplated.
(c) Compliance with GAAP. The audited consolidated financial
statements (including the related notes and supporting schedules,
if any) of the
Company, Mammoth Pacific, L.P., Steamboat Development Corp., Ormesa
Geothermal,
Ormesa Geothermal II, GEM Resources LLC and East Mesa Partners
contained in the
Offering Materials have been prepared in conformity with GAAP and
fairly present
the financial condition, results of operations and cash flows of
such entities
as of and for the dates set forth therein. The pro forma financial
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statements contained in the Offering Materials have been prepared
on a basis
consistent with the historical financial statements contained in
the Offering
Materials (except for the pro forma adjustments specified therein)
and to the
knowledge of the Company and the Guarantors, include all material
adjustments to
the historical financial statements required by Rule 11-02 of
Regulation S-X
under the Securities Act and the Exchange Act to reflect the
transactions
described in the Offering Materials.
(d) Interim Financial Statements. The unaudited consolidated
interim financial statements of each of the Company, Mammoth
Pacific, L.P. and
Steamboat Development Corp. contained in the Offering Materials
were prepared in
conformity with GAAP on a basis consistent with each such entity's
respective
most recent audited financial statements so included and fairly
present the
financial condition, results of operations and cash flows of each
entity as of
and for the dates set forth therein.
(e) Marketable Title; Absence of Liens. Except as disclosed in
the Offering Materials, the Company and each of its Subsidiaries
has, and, to
the knowledge of the Company and the Guarantors, Mammoth-Pacific
L.P. has, good
and marketable title to all real properties and all other
properties and assets
respectively owned by it (collectively, the "Assets"), in each case
free from
all Liens other than Permitted Liens. Except as disclosed in the
Offering
Materials, the Company and each of its Subsidiaries and, to the
knowledge of the
Company and the Guarantors, Mammoth-Pacific L.P., holds any leased
real or
personal property (including without limitation, geothermal
resources) under
valid and enforceable leases (including without limitation,
Geothermal Resource
Leases (as defined below)) and has rights of access and use under
valid and
enforceable easements, in the case of each lease and easement with
no material
exceptions. The Material Project Documents are valid and binding
agreements
enforceable by the Company, its Subsidiaries and Mammoth-Pacific,
L.P., as
applicable, in accordance with their terms except as such
enforceability (i) may
be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent
conveyance, moratorium or other similar laws affecting the
enforcement of
creditors' rights and remedies generally and (ii) is subject to
general
principles of equity (regardless of whether enforceability is
considered in a
proceeding in equity or at law).
(f) Operation of Projects. (i) The material mechanical,
electrical and other operating systems on and in the Projects are
in all
material respects in good working order (ordinary wear and tear
excepted) and
repair and are adequate in all material respects for the operation
of the
Projects by the Company and its Subsidiaries as described in the
Offering
Memorandum; and
(ii) Except as described in the Offering Memorandum, the use
of the Projects as described in the Offering Memorandum does not in
any material
respect depend on any variance, special exception or other local or
municipal
Governmental Approval that has not been obtained by or for the
benefit of the
Company, its Subsidiaries or Mammoth Pacific, L.P., as applicable,
and all
material building, construction, ownership, operation and
maintenance,
environmental, water and use related Governmental Approvals
necessary for such
use have been issued and are in full force and effect, except in
the case of the
Galena Re-Powering and the Mammoth Project enhancement, such
Governmental
Approvals that are required or expected to
5
be obtained prior to or in connection with the commencement of the
Galena
Re-powering or the Mammoth Project enhancement, as the case may be.
(g) Due Organization, etc. (i) Each of the Company and Ormat
Nevada Inc. has been duly organized, is validly existing and in
good standing as
a corporation under the laws of the State of Delaware;
(ii) The entities listed on Schedule B hereto will be all of
the direct and indirect subsidiaries of the Company (the
"Subsidiaries") at the
Time of Delivery. Each Subsidiary (other than Steamboat Development
Corp.) has
been duly organized, is validly existing and is in good standing as
a
corporation, limited liability company, or general partnership, as
the case may
be, under the laws of the States indicated on Schedule B hereto;
Mammoth-Pacific, L.P. has been duly organized, is validly existing
and in good
standing under the laws of the State of California; and; Steamboat
Development
Corp., at the Time of Delivery, will have been duly organized, will
be validly
existing and will be in good standing as a corporation under the
laws of the
State of Utah.
(iii) The Company, each of the Subsidiaries (other than
Steamboat Development Corp.), Mammoth-Pacific, L.P. and Ormat
Nevada Inc. has
all requisite power and authority to own, lease and/or operate and
maintain its
properties and conduct its business as described in the Offering
Materials and
to execute, deliver and perform its obligations under, or as
contemplated by,
the Transaction Documents and Steamboat Development Corp., at the
Time of
Delivery, will have all requisite power and authority to own, lease
and/or
operate its and maintain its properties and conduct its business as
described in
the Offering Materials and to execute, deliver and perform its
obligations
under, or as contemplated by, the Transaction Documents; and
(iv) The Company, each of the Subsidiaries (other than
Steamboat Development Corp.), Mammoth-Pacific, L.P. and Ormat
Nevada Inc., is in
good standing as a foreign corporation in each jurisdiction in
which its
ownership or lease of property or the conduct of its business
requires such
qualification; and Steamboat Development Corp., at the Time of
Delivery, will be
in good standing as a foreign corporation in each jurisdiction in
which its
ownership or lease of property or the conduct of its business
requires such
qualification; except, in each case, where the failure to be so
qualified or in
good standing would not, individually or in the aggregate, have a
Material
Adverse Effect.
(h) ERISA. (i) The Company and each of the Subsidiaries are, and
to the knowledge of the Company and the Guarantors,
Mammoth-Pacific, L.P. is, in
compliance in all material respects with the applicable provisions
of ERISA and
the Code and the regulations and published interpretations
thereunder to the
extent that they relate to any Plan. None of the Company or any
ERISA Affiliate,
and to the knowledge of the Company and the Guarantors, none of
Mammoth-Pacific,
L.P. or any of its ERISA Affiliates, maintains or contributes to or
has
maintained or contributed to a Plan subject to Title IV of ERISA or
Section 412
of the Code or Section 302 of ERISA with respect to which any
liability,
including, without limitation, any contingent, potential or
secondary liability,
continues to exist. Neither the Company, any of the Subsidiaries
nor
Mammoth-Pacific, L.P. is (A) an employee benefit plan or plan
described in
Section 3(3) of ERISA or Section 4975 of the Code or an entity
whose underlying
assets include
6
"plan assets" by reason of any such employee benefit plan's or
plan's investment
in the Company, any Subsidiary or Mammoth-Pacific, L.P., as the
case may be, or
(B) a "foreign person" as defined in Section 1445 of the Code; and
(ii) Assuming the Securities are initially resold by the
Purchaser in the manner contemplated by the Offering Memorandum,
the issuance,
purchase and sale, and holding by the Purchaser, of the Securities
will not
constitute a non-exempt "prohibited transaction" within the meaning
of Section
406 of ERISA or Section 4975(c)(1) of the Code (or any violation of
similar
federal, state, local or non-U.S. law).
(iii) As used in this paragraph (h):
(A) "Code" means the Internal Revenue Code of 1986, as
amended;
(B) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended;
(C) "ERISA Affiliate" means any trade or business
(whether or not incorporated) that is member of a group of which
the Company, any Subsidiary or Mammoth-Pacific, L.P., as the case
may be, is a member and which is treated as a single employer
under Section 414 of the Code; and
(D) "Plan" means any "employee benefit plan" within the
meaning of Section 3(3) of ERISA (1) which is maintained in whole
or in part for current or former employees (or any beneficiary
thereof) of the Company, a Subsidiary or Mammoth-Pacific, L.P.,
as the case may be or (2) with respect to which the Company, any
Subsidiary, Mammoth-Pacific, L.P., as the case may be, or any
ERISA Affiliate could have a direct or indirect, actual or
contingent liability; included (without limitation) in this
category shall be any multiemployer plan (as defined in Section
4001(a)(3) of ERISA) to which the Company, any Subsidiary,
Mammoth-Pacific, L.P., as the case may be, or any ERISA Affiliate
is making or has an obligation to make contributions, or has at
the Time of Delivery (as defined in Section 5(a) hereof) any
outstanding actual or contingent liability.
(i) Business Activities. Except as described in the Offering
Memorandum, neither the Company, nor any of the Subsidiaries, have,
and to the
knowledge of the Company and the Guarantors, Mammoth-Pacific, L.P.
does not
have, any direct or indirect equity ownership interest in any
corporation,
partnership, joint venture or other entity other than the
Subsidiaries. The
Company and the Subsidiaries have not, and, to the knowledge of the
Company and
the Guarantors, Mammoth-Pacific, L.P. has not, engaged in any
business or
activity other than as disclosed in the Offering Memorandum.
(j) Capitalization. The capitalization of the Company and the
Subsidiaries, after giving effect to the offering of the Notes and
the
application of the proceeds therefrom, will be as set forth in the
Offering
Memorandum; the issued and outstanding shares of Capital Stock of
the Company
and the Subsidiaries (other than Steamboat Development Corp.), as
the case
7
may be, have been duly and validly authorized and issued, are fully
paid and
nonassessable and are free from all Liens; and there are no
outstanding rights,
warrants or options to acquire, or instruments convertible into or
exchangeable
for, any equity interest in the Company or the Subsidiaries (other
than
Steamboat Development Corp.). As of the consummation of the
Steamboat
Acquisition, the issued and outstanding shares of Capital Stock of
Steamboat
Development Corp. will have been duly and validly authorized and
issued, will be
fully paid and nonassessable and will be free from all Liens; and
there will be
no outstanding rights, warrants or options to acquire, or
instruments
convertible into or exchangeable for, any equity interest in
Steamboat
Development Corp. All of the issued and outstanding Capital Stock
of the Company
is owned, free from all liens and encumbrances, by Ormat Nevada
Inc.
(k) Authorization and Enforceability of Transaction Documents.
(i) All action on the part of the Company and the Guarantors (other
than
Steamboat Development Corp.) that is required for the
authorization, execution,
delivery and performance of this Agreement has been and, at or
prior to the Time
of Delivery, all action on the part of the Company, the Guarantors
(including
Steamboat Development Corp.) and, Ormat Nevada Inc. that is
required for the
authorization, execution, delivery and performance of each other
Transaction
Document (including this Agreement with respect to Steamboat
Development Corp.)
and the Letter of Representations to The Depository Trust Company
("DTC")
relating to the eligibility of the Securities for inclusion in the
DTC
book-entry system (the "Letter of Representations"), in each case
has been or
will be duly and effectively taken, and, at or prior to the Time of
Delivery,
the execution, delivery and performance of each Transaction
Document and the
Letter of Representations will not require the approval or consent
of any holder
or trustee of any debt or other obligations or securities of the
Company, any
Guarantor or Ormat Nevada Inc. which will not have been obtained.
(ii) This Agreement has been (other than with respect to
Steamboat Development Corp.) and, at or prior to the Time of
Delivery, each
other Transaction Document to which the Company or any Guarantor is
a party and
the Letter of Representations has been or will be, duly executed
and delivered
by the Company and the Guarantors. Notwithstanding the foregoing,
this Agreement
will be duly executed and delivered by Steamboat Development Corp.
on the
Closing Date. Each Transaction Document to which the Company, any
Subsidiary or
Ormat Nevada Inc. is a party, other than this Agreement the
Securities and the
Exchange Securities, will constitute, at the Time of Delivery, a
legal, valid
and binding obligation of the Company, each Subsidiary and Ormat
Nevada Inc.
enforceable against the Company, each Subsidiary and Ormat Nevada
Inc. in
accordance with the terms hereof or thereof, except as such
enforceability (i)
may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the
enforcement of
creditors' rights and remedies generally and (ii) is subject to
general
principles of equity (regardless of whether enforceability is
considered in a
proceeding in equity or at law).
(l) Authorization and Enforceability of Securities. The
Securities and the Exchange Securities have been duly authorized
(other than by
Steamboat Development Corp., which will authorize the Guarantees
and the
Exchange Guarantees as of the Closing Date) and, when issued and
authenticated
in accordance with the terms of the Indenture and delivered against
payment
therefor in accordance with the terms of this Agreement (in the
case of the
Securities), the Registration Rights Agreement (in the case of the
Exchange
Securities) and the
8
Indenture, will have been duly executed, authenticated, issued and
delivered and
will constitute valid and legally binding obligations of the
Company and the
Guarantors enforceable against the Company and the Guarantors in
accordance with
the terms thereof, except as such enforceability (i) may be limited
by
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance,
moratorium or other similar laws affecting the enforcement of
creditors' rights
and remedies generally and (ii) is subject to general principles of
equity
(regardless of whether enforceability is considered in a proceeding
in equity or
at law). The Securities, the Indenture and each of the other
Financing Documents
will conform in all material respects to the description thereof in
the Offering
Memorandum, and the Securities will be entitled to the benefits
provided by the
Indenture and each of the other Financing Documents.
(m) Ranking. When the Securities are issued and authenticated in
accordance with the terms of the Indenture and delivered against
payment
therefor in accordance with the terms of this Agreement and the
Indenture, and
when the Exchange Securities, if issued and authenticated in
accordance with the
terms of the Indenture and the Registration Rights Agreement, each
of the
Securities and the Exchange Securities (i) will rank pari passu
without any
preference among themselves and (ii) will constitute Senior Secured
Obligations
as defined in the Offering Memorandum.
(n) Property Rights. The Geothermal Resources Leases (as defined
below), leases, easements, licenses, rights of way and other rights
possessed by
the Company, the Subsidiaries and Mammoth-Pacific, L.P. provide the
Company, the
Subsidiaries, as the case may be, and to the knowledge of the
Company and the
Guarantors, Mammoth-Pacific, L.P., with all rights and property
interests
required to enable the Company, the Subsidiaries and Mammoth
Pacific, L.P. to
obtain, in all material respects, all services, materials
(including without
limitation geothermal resources) or rights (including without
limitation access
rights and rights to extract and develop geothermal resources)
required for the
operation and maintenance of the Projects, as contemplated by the
Offering
Memorandum including, without limitation, as contemplated in the
Pro Forma
Projections (as defined below).
(o) Defaults under Material Project Documents. (i) Neither the
Company nor any Subsidiary nor, to the knowledge of the Company and
the
Guarantors, Mammoth-Pacific, L.P. or any other party to a Material
Project
Document, is in default (and no event has occurred which with lapse
of time or
notice or action by a third party could result in a default) in any
material
respect in the performance of or compliance with any Material
Project Document,
(ii) except as described in the Offering Materials each Material
Project
Document is in full force and effect and (iii) to the knowledge of
the Company,
no Force Majeure event has occurred and is continuing under any
Material Project
Document. Except as described in the Offering Materials each of the
other
Project Documents described in the Offering Materials is in full
force and
effect.
(p) Non-contravention. Neither the execution or delivery of this
Agreement, any other Financing Document, the Letter of
Representations or any of
the transactions contemplated hereby or thereby nor the performance
of or
compliance with the terms and conditions hereof or thereof (i)
contravenes in
any material respect any Applicable Law, (ii) constitutes a default
under or
results in the violation of the provisions of the organizational
documents of
the Company, any Subsidiary or Mammoth-Pacific, L.P. (iii) results
in the
creation
9
or imposition of any Liens (other than Permitted Liens) on any
assets or
properties of the Company, any of the Subsidiaries or
Mammoth-Pacific, L.P., or
(iv) constitutes a default under or results in the violation of any
other
material agreement, contract or instrument to which the Company,
any of the
Subsidiaries or Mammoth-Pacific, L.P. is a party or by which they
or any of
their properties or assets are bound.
(q) Governmental Approvals. (i) Other than as set forth in the
Offering Memorandum, the Company, each of the Subsidiaries, the
Projects, and to
the knowledge of the Company and the Guarantors, Mammoth-Pacific,
L.P. is in
compliance in all material respects with all Governmental Approvals
applicable
to the Company, the Subsidiaries, the Projects and,
Mammoth-Pacific, L.P., as
the case may be.
(ii) All Governmental Approvals which are required to be
obtained in connection with (i) the ownership, construction,
operation and
maintenance of the Projects as described in the Offering Materials
and (ii) the
issuance and sale of the Securities and the execution, delivery and
performance
by the Company and the Subsidiaries of the Transaction Documents
have been or
will be at the Time of Delivery duly obtained, were or will be at
the Time of
Delivery validly issued and are or will be at the Time of Delivery
in full force
and effect, final, not subject to appeal (and all applicable
statutory appeal
periods have or will have at the Time of Delivery expired, except
for
Governmental Approvals which do not have statutory limits on appeal
periods),
held in the name of the Company, such Subsidiary or
Mammoth-Pacific, L.P., as
the case may be, or other appropriate party and free from
conditions which the
Company or such Subsidiary, as the case may be, does not reasonably
expect
either it or such other appropriate party, as applicable, will be
able to
satisfy, except (A) as set forth on Part I of Annex C or in the
Offering
Memorandum, (B) those which are not required to be obtained as of
the date
hereof or as of the Time of Delivery and can only be obtained at a
later time
are listed on Part II of Annex C or in the Offering Memorandum or
(C) such as
may be required under state securities or blue sky laws of the
various states in
the United States. There are no proceedings pending, with respect
to the
Company, the Subsidiaries, or to the knowledge of the Company and
the
Guarantors, Mammoth-Pacific, L.P., that may result in a rescission,
termination,
modification, or suspension of any Governmental Approval of the
Company, any
Subsidiary or Mammoth-Pacific, L.P. The Company and the Guarantors
have no
reason to believe that any Governmental Approvals not required to
have been
obtained on the date hereof or as of the Time of Delivery (or
amendments,
renewals or reissuance of any Governmental Approvals required after
the date
hereof) will not be obtained by the Company, the relevant
Subsidiary or
Mammoth-Pacific, L.P., as the case may be on or before the date
such
Governmental Approval, amendment, renewal or reissuance is
required.
(r) Legal and other Proceedings. Other than as set forth in the
Offering Memorandum, there is no material legal or governmental
action, suit,
proceeding or investigation pending before any Governmental
Authority to which
the Company, any Subsidiary, or to the knowledge of the Company and
the
Guarantors, Mammoth-Pacific, L.P., is a party or to which any
property of the
Company, any Subsidiary, or to the knowledge of the Company and the
Guarantors,
Mammoth-Pacific, L.P., is subject or affecting the Company, any
Subsidiary,
Mammoth-Pacific, L.P. or their respective properties.
10
(s) Taxes. The Company and the Subsidiaries have, and to the
knowledge of the Company and the Guarantors, Mammoth-Pacific, L.P.,
has filed
all material federal, state, local and foreign tax returns that are
required to
be filed and have paid all material taxes required to be paid and
any related
assessments, fines or penalties, except for any such tax,
assessment, fine or
penalty that is being contested in good faith and by appropriate
proceedings.
(t) Insurance. The Company and the Subsidiaries have, and to the
knowledge of the Company and the Guarantors, Mammoth-Pacific, L.P.,
has in full
force and effect, insurance with reputable insurers covering the
Projects and
their other assets, properties, operations, personnel and
businesses against
such losses, damage, risks and hazards as are consistent with
customary industry
practice to protect the Company, the Subsidiaries, Mammoth-Pacific,
L.P. and
their respective businesses.
(u) Compliance with Laws; Environmental Laws. Except as set forth
in the Offering Memorandum, (i) each of the Company, the
Subsidiaries and, to
the knowledge of the Company and the Guarantors, Mammoth-Pacific,
L.P., are in
compliance in all material respects with all Applicable Laws, (ii)
the Company,
the Subsidiaries (and their affiliates acting on their behalf), the
Projects
and, to the knowledge of the Company and the Guarantors,
Mammoth-Pacific, L.P.,
are in compliance in all material respects with all applicable
Environmental
Laws; (iii) there are no pending or, to the Company's knowledge,
threatened
administrative, regulatory or judicial actions, suits, demands,
demand letters,
claims, Liens, notices of non-compliance or violation,
investigations or
proceedings relating to any Environmental Law against the Company,
the
Subsidiaries, the Projects, or to the knowledge of the Company,
Mammoth-Pacific,
L.P., and (iv) there are no conditions, events or circumstances
that may
reasonably be expected to form the basis of an order for clean-up
or remedial
action or any action, investigation, claim, suit, or proceeding by
a private
party or government body or agency, against or affecting the
Company, the
Subsidiaries, the Projects, or to the knowledge of the Company,
Mammoth-Pacific,
L.P., relating to Hazardous Substances or Environmental Laws. For
purposes of
this subsection (y),"Environmental Law" means any national,
regional or local
law, statute, ordinance, rule, regulation, code, principle of
common law,
license, permit, authorization, approval, consent, order, judgment,
decree,
injunction, requirement or agreement with any Governmental
Authority relating to
the environment (including, without limitation, air, water vapor,
surface water,
groundwater, drinking water supply, surface land, subsurface land,
plant and
animal life or any other natural resource) or to human health or
safety,
including, without limitation, statutes, regulations, and rules of
common law
regulating or imposing liability or standards of conduct with
respect to (A)
emissions, discharges, releases or threatened releases of
pollutants,
contaminants, chemicals or industrial, toxic or Hazardous
Substances or wastes
into the environment, or (B) the exposure to, or use, storage,
recycling,
treatment, generation, manufacturing, transportation, processing,
handling,
labeling, production, release or disposal of any Hazardous
Substances, in each
case as amended and as now in effect; and "Hazardous Substance"
means any
substance presently or hereafter listed, defined, designated or
classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated
under any
Environmental Law, including asbestos containing materials.
(v) Intellectual Property. To the Company's and the Guarantors'
knowledge, the Company, the Subsidiaries and Mammoth-Pacific, L.P.,
own, possess
or can acquire on reasonable terms, adequate trademarks, trade
names and other
rights to inventions, know-how,
11
patents, copyrights, confidential information and other
intellectual property
(collectively, "intellectual property rights") necessary to operate
the Projects
as contemplated by the Offering Memorandum, and have not received
any notice of
infringement of or conflict with asserted rights of others with
respect to any
intellectual property rights.
(w) Investment Company Act. The Company, the Subsidiaries and, to
the knowledge of the Company, Mammoth-Pacific L.P. are not and,
after giving
effect to the offering and sale of the Securities, neither the
Company, any
Subsidiary nor, to the knowledge of the Company, Mammoth-Pacific,
L.P. will be,
an "investment company," or an entity "controlled" by an investment
company, as
such terms are defined in the Investment Company Act of 1940, as
amended (the
"Investment Company Act").
(x) Projections. The financial projections and other projected
financial and operating data relating to the Company, the
Subsidiaries,
Mammoth-Pacific, L.P. and the Projects contained in the Offering
Memorandum
(including, without limitation, in the Independent Engineer's
Report and the
Geothermal Consultant's Report) (i) are, in the judgment of the
Company and the
Guarantors as to the matters covered thereby, reasonable as of
their date, and
(ii) are based on assumptions that the Company and the Guarantors
consider
reasonable as to all factual and legal matters material to the
estimates
therein, all of which assumptions, to the extent material, are
fairly disclosed
in the Offering Memorandum and (iii) are in all material respects
consistent
with the provisions of the Transaction Documents. To the knowledge
of the
Company and the Guarantors, none of the information forming the
basis of such
projections and assumptions has changed since they were originally
prepared so
as to materially affect such projections and assumptions.
(y) Rule 144A/Regulation S. (i) The Securities are eligible for
resale pursuant to Rule 144A and when the Securities are issued and
delivered
pursuant to the Indenture and this Agreement, the Securities will
not be of the
same class (within the meaning of Rule 144A) as securities which
are listed on a
national securities exchange registered under Section 6 of the
Securities
Exchange Act of 1934, as amended (the "Exchange Act") or quoted in
a U.S.
automated inter-dealer quotation system.
(ii) None of the Company or any of its Affiliates, nor any
person acting on its or their behalf (x) has, within the six-month
period prior
to the date hereof, offered or sold in the United States or to any
U.S. person
(as such terms are defined in Regulation S under the Securities
Act) the
Securities or any security of the same class or series as the
Securities or (y)
has offered or will offer or sell the Securities (A) in the United
States by
means of any form of general solicitation or general advertising
within the
meaning of Rule 502(c) under the Securities Act or (B) with respect
to any such
securities sold in reliance on Rule 903 of Regulation S, by means
of any
directed selling efforts within the meaning of Rule 902(c) of
Regulation S. The
Company, its Affiliates and any person acting on its or their
behalf have
complied and will comply with the offering restrictions requirement
of
Regulation S. Neither the Company nor any of its Affiliates have
entered and
neither the Company nor any of its Affiliates will enter into any
contractual
arrangement with respect to the distribution of the Securities
except for this
Agreement.
12
(iii) The proceeds to the Company from the offering of the
Securities will not be used to purchase or carry any security in
any manner
which would violate Regulations T, U or X of the Federal Reserve
Board.
(z) Securities Act Registration. Subject to compliance by the
Purchaser with the representations, warranties and agreements set
forth in
Section 4 hereof, it is not necessary in connection with the offer,
sale and
delivery of the Securities to the Purchaser (and in connection with
the original
resale of the Securities by the Purchaser) in the manner
contemplated by this
Agreement and the Offering Materials to register the Securities
under the
Securities Act or to qualify the Indenture under the Trust
Indenture Act of
1939.
(aa) Brokerage Commissions. Except as disclosed in the Offering
Materials, there are no contracts, agreements or understandings
between the
Company or any Affiliate of the Company and any other person that
would give
rise to a valid claim against the Company or the Purchaser for a
brokerage
commission, finder's fee or other like payment in connection with
the issuance,
sale or delivery of the Notes.
(bb) Bank Accounts. At the Time of Delivery the Company and the
Subsidiaries will not have any bank accounts, except as expressly
contemplated
in the Offering Memorandum.
(cc) Abandonment. The Company, the Subsidiaries and, to the
knowledge of the Company, Mammoth-Pacific, L.P. have not abandoned
(and do not
intend to abandon) any of the Projects or any Plant.
(dd) Project Documents. All of the Project Documents described in
the Offering Materials and previously provided to the Purchaser are
true,
complete and correct copies in all material respects.
(ee) Solvency. After giving effect to the issuance of the
Securities by the Company and the Guarantors, the use of proceeds
therefrom and
the performance by the Company and the Guarantors of their
respective
obligations pursuant to the Transaction Documents, the sum of the
Assets, at a
fair valuation, of each of the Company and the Subsidiaries, taken
as a whole,
will exceed their respective debts and the Company and the
Guarantors will not
have incurred (as a result of the issuance of the Securities and
the assumption
of their obligations pursuant to the Transaction Documents) and do
not intend to
incur, and do not believe that they will incur, debts beyond their
ability to
pay such debts as such debts mature.
(ff) Labor Matters. Neither the Company, any Subsidiary nor
Mammoth-Pacific, L.P. has any employees. No labor dispute exists
with the
employees of Ormat Nevada, Inc. that provide services to the
Projects that would
result in a Material Adverse Effect.
(gg) Collateral. The Company and the Guarantors have delivered
or, at the Time of Delivery, will deliver to the Collateral Agent
all Collateral
which, pursuant to Applicable Law, must be delivered to the
Collateral Agent in
order to perfect the security interest therein as a first priority
Lien
(including, without limitation, any letters of credit or bonds for
which the
Company or a Guarantor is the beneficiary).
13
(hh) Security Documents. The Security Documents create valid
first priority liens on and/or security interests in all of the
Collateral in
favor of the Secured Parties, subject only to Permitted Liens of
the type
described in clauses (b), (c), (d), (e), and (g) of the definition
thereof.
(ii) Absence of Defaults. No condition exists nor would any such
condition exist at the Time of Delivery which would constitute a
Default or an
Event of Default under the Indenture or a default or event of
default (however
defined) pursuant to any of the other Financing Documents.
(jj) Registrati
