EX-10.1.3 12 file004.htm BANK HAPOALIM CREDIT FACILITY AGREEMENT


                                                                  Exhibit 10.1.3


================================================================================





                            CREDIT FACILITY AGREEMENT

                          DATED AS OF SEPTEMBER 5, 2000

                                 BY AND BETWEEN

                          ORMAT MOMOTOMBO POWER COMPANY

                                   AS BORROWER

                                       AND

                               BANK HAPOALIM B.M.,

                                    AS LENDER



           MOMOTOMBO FIELD AND POWER PLANT REHABILITATION (NICARAGUA)



================================================================================


                              HOLLAND & KNIGHT LLP
                    2100 PENNSYLVANIA AVENUE, N.W., SUITE 400
                             WASHINGTON, D.C. 20037










                                                       CREDIT FACILITY AGREEMENT
================================================================================

================================================================================




                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1.         DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION...............1

   SECTION 1.01    DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION...............1


ARTICLE 2.         AMOUNT AND TERMS OF THE CREDIT.............................1

   SECTION 2.01    THE TOTAL COMMITMENT.......................................1

   SECTION 2.02    PROCEDURES FOR DISBURSEMENT OF THE LOANS...................2

   SECTION 2.03    INTEREST...................................................3

   SECTION 2.04    REPAYMENT..................................................4

   SECTION 2.05    FEES.......................................................4

   SECTION 2.06    PAYMENTS...................................................5

   SECTION 2.07    PAYMENT ALLOCATION.........................................5

   SECTION 2.08    CURRENCY OF PAYMENT........................................5

   SECTION 2.09    TAXES......................................................6

   SECTION 2.10    TERMINATION OF TOTAL COMMITMENT............................7

   SECTION 2.11    VOLUNTARY PREPAYMENT.......................................7

   SECTION 2.12    INTENTIONALLY OMITTED......................................7

   SECTION 2.13    FUNDING COSTS..............................................7

   SECTION 2.14    MAINTENANCE AMOUNT.........................................7

   SECTION 2.15    ILLEGALITY.................................................9

   SECTION 2.16    SUBSTITUTE BASIS OF BORROWING..............................9

   SECTION 2.17    MITIGATION PROVISION......................................10

   SECTION 2.18    CERTIFICATE OF LENDER.....................................10

   SECTION 2.19    SURVIVAL..................................................10


ARTICLE 3.         REPRESENTATIONS AND WARRANTIES............................10

   SECTION 3.01    STATUS....................................................10

   SECTION 3.02    POWER AND AUTHORITY.......................................11

   SECTION 3.03    NO VIOLATION..............................................11

   SECTION 3.04    ORGANIZATION..............................................11

   SECTION 3.05    SUBSIDIARIES..............................................12

   SECTION 3.06    SINGLE-PURPOSE BORROWER...................................12


                                       i               CREDIT FACILITY AGREEMENT
================================================================================

================================================================================


   SECTION 3.07    FINANCIAL STATEMENTS; FINANCIAL CONDITION: UNDISCLOSED
                   LIABILITIES; ETC...........................................12

   SECTION 3.08    LITIGATION; LABOR DISPUTES.................................12

   SECTION 3.09    TRUE AND COMPLETE DISCLOSURE...............................13

   SECTION 3.10    TAX RETURNS AND PAYMENTS...................................13

   SECTION 3.11    GOVERNMENTAL APPROVALS.....................................13

   SECTION 3.12    COMPLIANCE WITH STATUTES, ETC..............................14

   SECTION 3.13    ENVIRONMENTAL MATTERS......................................14

   SECTION 3.14    PATENTS, LICENSES, FRANCHISES AND FORMULAS.................15

   SECTION 3.15    SUBMISSION TO LAW AND JURISDICTION.........................15

   SECTION 3.16    STATUS OF THE LOANS........................................15

   SECTION 3.17    PROJECT DOCUMENTS; SUFFICIENCY OF PROJECT DOCUMENTS........15

   SECTION 3.18    FEES AND ENFORCEMENT.......................................16

   SECTION 3.19    AVAILABILITY AND TRANSFER OF FOREIGN CURRENCY..............16

   SECTION 3.20    BUSINESS PLAN..............................................16

   SECTION 3.21    TITLES; LIENS..............................................16

   SECTION 3.22    TRANSACTIONS WITH AFFILIATES...............................17

   SECTION 3.23    NO ADDITIONAL FEES.........................................17

   SECTION 3.24    REGULATION OF PARTIES......................................17


ARTICLE 4.         CONDITIONS PRECEDENT.......................................17

   SECTION 4.01    CONDITIONS OF FIRST DISBURSEMENT OF LOAN I.................17

   SECTION 4.02    CONDITIONS OF EACH DISBURSEMENT............................20

   SECTION 4.03    NO WAIVERS.................................................22

   SECTION 4.04    CONDITIONS FOR FIRST DISBURSEMENT OF LOAN II...............22


ARTICLE 5.         COVENANTS..................................................23

   SECTION 5.01    INFORMATION COVENANTS......................................23

   SECTION 5.02    BOOKS, RECORDS AND INSPECTIONS; ACCOUNTING AND AUDIT
                   MATTERS....................................................25

   SECTION 5.03    MAINTENANCE OF PROPERTY; INSURANCE.........................26

   SECTION 5.04    MAINTENANCE OF EXISTENCE; PRIVILEGES; ETC..................27

   SECTION 5.05    COMPLIANCE WITH STATUTES...................................27

   SECTION 5.06    PROJECT IMPLEMENTATION.....................................27

   SECTION 5.07    AUDITORS...................................................27

   SECTION 5.08    TAXES, DUTIES, ETC.........................................27

   SECTION 5.09    PERFORMANCE OF OBLIGATIONS.................................28




                                       ii              CREDIT FACILITY AGREEMENT
================================================================================

================================================================================




   SECTION 5.10    AVAILABILITY AND TRANSFER OF FOREIGN EXCHANGE..............28

   SECTION 5.11    NAME CHANGES; ETC..........................................28

   SECTION 5.12    CONSOLIDATION, MERGER, SALE OF ASSETS......................29

   SECTION 5.13    DISTRIBUTIONS; RESTRICTED PAYMENTS.........................29

   SECTION 5.14    LEASES.....................................................29

   SECTION 5.15    INDEBTEDNESS...............................................29

   SECTION 5.16    LIENS......................................................30

   SECTION 5.17    GUARANTEES.................................................30

   SECTION 5.18    SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS..............30

   SECTION 5.19    TRANSACTIONS...............................................31

   SECTION 5.20    OTHER TRANSACTIONS.........................................31

   SECTION 5.21    MODIFICATIONS OF ORGANIZATION DOCUMENTS; ADDITIONAL
                   AGREEMENTS; ASSIGNMENTS AND  MODIFICATIONS OF
                   AGREEMENTS; ETC............................................31

   SECTION 5.22    NO OTHER BUSINESS..........................................32

   SECTION 5.23    ABANDONMENT................................................32

   SECTION 5.24    IMPROPER USE...............................................32

   SECTION 5.25    BUSINESS PLAN EXPENDITURES.................................33

   SECTION 5.26    ISSUANCE OR TRANSFER OF SHARES.............................33

   SECTION 5.27    AMENDMENT OF BUSINESS PLAN.................................33

   SECTION 5.28    BANK ACCOUNTS..............................................33

   SECTION 5.29    PRESS RELEASES; ADVERTISING................................33

   SECTION 5.30    ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS...............33

   SECTION 5.31    EMPLOYEES AND EMPLOYEE PLANS...............................34

   SECTION 5.32    ACCOUNTING CHANGES.........................................34

   SECTION 5.33    DEBT SERVICE RESERVE ACCOUNT...............................34

   SECTION 5.34    FINANCIAL RATIOS...........................................35

   SECTION 5.35    COMPLETION CERTIFICATE.....................................35

   SECTION 5.36    LENDER'S EXPERTS AND CONSULTANTS...........................35

   SECTION 5.37    REGULATORY STATUS..........................................36

   SECTION 5.38    CHILD LABOR AND FORCED LABOR...............................36

   SECTION 5.39    INSURANCE PROCEEDS.........................................36

   SECTION 5.40    NOTARIZATION, CONSULARIZATION AND REGISTRATION OF CFA......36

   SECTION 5.41    MIGA PREMIUM PAYMENTS......................................36

   SECTION 5.42    PPA AMENDMENT..............................................37




                               iii                     CREDIT FACILITY AGREEMENT
================================================================================

================================================================================




   SECTION 5.43    MIGA ARBITRATION...........................................37


ARTICLE 6.         EVENTS OF DEFAULT..........................................37

   SECTION 6.01    PAYMENTS...................................................37

   SECTION 6.02    REPRESENTATIONS, ETC.......................................37

   SECTION 6.03    COVENANTS..................................................37

   SECTION 6.04    DEFAULT UNDER OTHER AGREEMENTS.............................38

   SECTION 6.05    BANKRUPTCY, ETC............................................39

   SECTION 6.06    PROJECT EVENTS.............................................39

   SECTION 6.07    MATERIAL ADVERSE EFFECT....................................40

   SECTION 6.08    PROJECT DOCUMENTS; SECURITY DOCUMENTS......................40

   SECTION 6.09    OWNERSHIP OF THE BORROWER..................................40

   SECTION 6.10    JUDGMENTS..................................................40

   SECTION 6.11    GOVERNMENTAL ACTION........................................41

   SECTION 6.12    PERMITS....................................................41

   SECTION 6.13    TRANSFER OF COLLATERAL; EVENT OF LOSS; DIMINUTION OF
                   PROPERTY RIGHTS............................................41

   SECTION 6.14    COMPLETION BY DATE CERTAIN.................................41

   SECTION 6.15    SPONSOR PROJECT FUNDING AGREEMENT..........................42

   SECTION 6.16    CONTINGENT GUARANTEE AGREEMENT.............................42

   SECTION 6.17    MIGA CONTRACTS.............................................42

   SECTION 6.18    REMEDIES...................................................42


ARTICLE 7.         MISCELLANEOUS..............................................42

   SECTION 7.01    NOTICES....................................................42

   SECTION 7.02    ENGLISH LANGUAGE...........................................45

   SECTION 7.03    INDEMNITIES AND EXPENSES...................................45

   SECTION 7.04    SURVIVAL...................................................46

   SECTION 7.05    GOVERNING LAW; SUBMISSION TO JURISDICTION..................47

   SECTION 7.06    SUCCESSORS AND ASSIGNS.....................................48

   SECTION 7.07    COUNTERPARTS...............................................49

   SECTION 7.08    RIGHT OF SETOFF............................................49

   SECTION 7.09    NO WAIVER; REMEDIES CUMULATIVE.............................49

   SECTION 7.10    SEVERABILITY...............................................50

   SECTION 7.11    CALCULATION................................................50

   SECTION 7.12    HEADINGS DESCRIPTIVE.......................................50




                                 iv                    CREDIT FACILITY AGREEMENT
================================================================================

================================================================================




   SECTION 7.13    AMENDMENT OR WAIVER........................................50

   SECTION 7.14    DISCLAIMER.................................................50

   SECTION 7.15    PAYMENTS SET ASIDE.........................................50

   SECTION 7.16    CONFIDENTIAL INFORMATION...................................51

   SECTION 7.17    NO RECOURSE................................................51

























                                  v                    CREDIT FACILITY AGREEMENT
================================================================================

================================================================================





SCHEDULES, APPENDICES, ANNEXES AND EXHIBITS


                                    SCHEDULES


    SCHEDULE                                     DESCRIPTION
    --------                                     -----------

      2.02                                 Application for Funding
      3.08                                Litigation; Labor Disputes
      3.11                                  Governmental Approvals
      4.04                       Provisions for Alternative Amendment to PPA
     5.01(d)                                Officer's Certificate
      5.03                                    Insurance Policies
      5.43                            Form of Original Amendment to PPA


                                   APPENDICES

    APPENDIX                                                DESCRIPTION
    --------                                                -----------

       A                                                    Definitions



                                     ANNEXES


     ANNEX                                                   DESCRIPTION
     -----                                                   -----------
       A                                                    Business Plan


                                     vi                CREDIT FACILITY AGREEMENT
================================================================================

================================================================================





                            CREDIT FACILITY AGREEMENT


         CREDIT FACILITY AGREEMENT (this "Agreement"), dated as of September 5,
2000 (the "Effective Date"), between ORMAT MOMOTOMBO POWER COMPANY, an exempted
limited liability company incorporated and existing under the laws of the Cayman
Islands, (the "Borrower") and BANK HAPOALIM B.M., a commercial bank organized
and existing under the laws of the State of Israel, as lender ("Lender").
Capitalized terms used herein shall have the meanings set forth in Appendix A,
unless otherwise defined herein.

                                   WITNESSETH:

         WHEREAS, the Borrower has requested the Lender to make a credit
facility (the "Credit") available to it on the terms and subject to the
conditions set forth in this Agreement, for the purpose of financing the Project
in Nicaragua as more fully described in the Agreement of Association in
Participation and in the Business Plan; and

         WHEREAS, the Lender is willing to provide the Credit to the Borrower on
the terms and subject to the conditions set forth in this Agreement, for the
purpose described above;

         NOW, THEREFORE, the parties hereto agree as follows:


ARTICLE 1. DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION

         SECTION 1.01. DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION. For all
purposes of this Agreement, (a) capitalized terms used but not otherwise defined
herein shall have the meanings set forth in Appendix A attached hereto and (b)
the principles of construction set forth in Appendix A shall apply.


ARTICLE 2. AMOUNT AND TERMS OF THE CREDIT

         SECTION 2.01 THE TOTAL COMMITMENT. Subject to the terms and conditions
of this Agreement, the Lender agrees to make available to the Borrower, during
the applicable Availability Period, the Loans not to exceed the Total Commitment
amount of $48,235,000 in two tranches identified as Loan I and Loan II as
follows:

         (a) Loan I. An amount up to $11,435,000 on account of Loan I to finance
up to 70% of the costs of Phase I of the Project; and

         (b) Loan II. An amount up to $36,800,000 on account of Loan II to
finance up to (i) an amount equal to 75% of costs of Phase II of the Project,
plus (ii) an amount equal to 5% of the costs of Phase I of the Project (the
"Additional Amount").

         (c) No Reborrowing. The Loans are not revolving in nature, and any
amounts repaid, prepaid or canceled pursuant to the terms of this Agreement may
not be reborrowed.

         (d) Benefit of Collateral. Any and all amounts due to the Lender with
respect to the Loans under this Agreement and any other Financing Documents are
entitled to the benefit of the Collateral which is held by the Lender pursuant
to the terms of the Security Documents and the Sponsor Project Funding
Agreement.




                                                       CREDIT FACILITY AGREEMENT
================================================================================

================================================================================




         (e) Availability. For the purpose of making Disbursements hereunder:
(i) Loan I will be available during the Loan I Availability Period; and, (ii)
Loan II will be available during the Loan II Availability Period. The Loan I
Availability Period and the Loan II Availability Period shall run consecutively,
but not concurrently, unless otherwise agreed by the Lender.

         SECTION 2.02 PROCEDURES FOR DISBURSEMENT OF THE LOANS.

         (a) Procedure. Subject to the terms specified in this Section 2.02, the
Borrower may submit to the Lender from time to time, but not more frequently
than once per month, a properly executed Application for Funding in the form of
Schedule 2.02 ("Application for Funding") for Disbursements to be made in
accordance with the Business Plan as: (i) reimbursements to the Borrower for
payments previously made to Project contractors, subcontractors, suppliers,
vendors and other Persons; (ii) advances to the Borrower for payment for work
performed or to be performed by Project contractors, subcontractors, suppliers,
vendors and other Persons for amounts payable by the Borrower within thirty (30)
days following the date of Disbursement in each case as budgeted in the Business
Plan; (iii) advances to fund MIGA premium payments in accordance with Section
5.41; (iv) advances to fund the payment of fees under Section 2.05; and (v)
advances to fund payments by the Borrower of Attorney Costs and other expenses
incurred by the Lender pursuant to Section 7.03(b)(i). The Borrower shall use
such Application for Funding to request each Disbursement under (i) Loan I
during the Loan I Availability Period and (ii) Loan II during the Loan II
Availability Period. The Borrower shall submit each such Application for Funding
at least twelve (12) Business Days prior to the date on which a Disbursement is
requested. No Application for Funding shall request a Disbursement (i) in excess
of the then unutilized and uncancelled amount of the Loan I or Loan II
Commitment, respectively, less the amount required to permit the Lender to fund
the Borrower's obligation under Section 5.33 (nor shall the aggregate amount of
the Disbursements exceed the Total Commitment), or (ii) that is less than
$300,000 (except with respect to the last Disbursement in respect of each Loan).
Except in the case of the first Application for Funding submitted under Loan I,
each Application for Funding shall include an implementation report, prepared
and executed by the Borrower's representative in accordance with Section
5.01(f).

         (b) Adherence to Business Plan. All amounts requested under each
Application for Funding shall be consistent with the Business Plan. The Lender
shall not disburse all or any part of the amounts requested in an Application
for Funding (i) for which all conditions precedent for the making of such
Disbursement have not been satisfied or waived pursuant to this Agreement or
(ii) with respect to Disbursements to be made under Loan II, as to which
documentation required to be delivered to the Lender or the Lender's Engineer,
as the case may be, has not been timely delivered by the Borrower. With respect
to Loan II, the making of any Disbursement thereunder shall be contingent on the
Lender's receipt four Business Days prior to the date on which a Disbursement is
requested of a certificate from the Lender's Engineer appointed under Section
5.36(a) hereof to the effect that the costs incurred or to be paid are
reasonable and appropriate for the value of the work performed or to be
performed and that such work is in conformity with the Business Plan.

         (c) Errors in Applications for Funding. If any Application for Funding
shall be disapproved in whole or in part on the basis of errors contained
therein or on the basis of incompleteness of such Application for Funding, the
Lender will cooperate in good faith with the Borrower in the Borrower's efforts
to correct any and all such errors or incompleteness so as to




                                   2                   CREDIT FACILITY AGREEMENT




permit the making of a Disbursement in a timely manner (taking into account the
due date for the payment of Project Costs which are the subject of such
Application for Funding). The Borrower acknowledges that, as a result of any
such disapproval of an Application for Funding, the date on which a Disbursement
is actually approved and/or proceeds actually disbursed may be later than the
date requested in such Application for Funding.

         (d) Fundings under Sponsor Project Funding Agreement. All disbursements
to be made by the Sponsor pursuant to the Sponsor Project Funding Agreement
shall be made in accordance with the terms thereof, and it shall not be
necessary for the Borrower to submit an Application for Funding in connection
therewith. The Borrower shall certify to the Lender in each Application for
Funding that the amounts required to be disbursed to the Borrower in accordance
with the terms of the Sponsor Project Funding Agreement have been made as of the
date of the requested Disbursement.

         (e) Loan Disbursement Account. All Disbursements, irrespective of
whether made as reimbursements or advances shall be made to the Borrower's
current account with the New York Branch of the Lender.


         SECTION 2.03 INTEREST.

         (a) Interest Rate and Payment. Interest shall accrue and be payable in
arrears on each Interest Payment Date on the outstanding balances of Loan I and
Loan II, respectively, at the rate of LIBOR plus 2.5% per annum until the
beginning of the first Interest Period following the completion date of Phase I
with respect to Loan I, and the completion date of Phase II with respect to Loan
II, at which time the interest rate on each such Loan shall be LIBOR plus 2.375%
per annum (the "Interest Rate").

         (b) Capitalized Interest Payment.

            (i) Loan I. On each Interest Payment Date until the first scheduled
Loan I Principal Repayment Date, interest at the Interest Rate due on each such
date with respect to Loan I shall be capitalized by adding such amount to the
outstanding balance of Loan I.

            (ii) Loan II. On each Interest Payment Date until the first
scheduled Loan II Principal Repayment Date, interest at the Interest Rate due on
each such date with respect to Loan II, shall be capitalized by adding such
amount to the outstanding balance of Loan II.

         (c) Additional Interest. With respect to any other interest due to the
Lender, on each Interest Payment Date, the Borrower shall pay to the Lender
interest in respect of each Interest Period, on the daily unpaid principal
amounts of any Loan outstanding during such Interest Period, in arrears, at the
rates per annum equal to the Interest Rates in effect applicable to each such
period (or at such other interest rates as may be specified in this Article 2).

         (d) Overdue Interest. Without prejudice to the remedies available to
the Lender under this Agreement or otherwise, the Borrower shall pay, in
Dollars, interest at the rate of LIBOR Overnight Rate plus 4.50% on any
principal amount of any Loan or any other amount which is due under this
Agreement which is not paid when due (whether by lapse of time, acceleration,
requirement for mandatory prepayment or otherwise), for each day that such
amount remains unpaid until payment in full thereof.





                                       3               CREDIT FACILITY AGREEMENT



         (e) Computation of Interest. Interest shall be computed on the basis of
the actual number of days elapsed in the relevant Interest Period and a year of
360 days.


         SECTION 2.04 REPAYMENT.

         (a) Loan I. The principal of Loan I shall be repaid in 32 consecutive
equal payments, commencing on the Principal Repayment Date occurring on the
earlier of (i) 27 months from the Effective Date or (ii) the last day of the
Interest Period ending not sooner than thirty (30) days following receipt of a
Phase I Completion Certificate, and on each Principal Repayment Date thereafter.

         (b) Loan II. The principal of Loan II shall be repaid in 28 equal
consecutive payments, commencing on the Principal Repayment Date occurring after
the earlier of (i) 63 months from the Effective Date or (ii) the last day of the
Interest Period which ends at least 30 days following receipt of a Phase II
Completion Certificate, but in no event later than 39 months after the Loan II
Closing Date, and on each Principal Repayment Date thereafter.


         SECTION 2.05 FEES.

         (a) Commitment Fee.

            (i) Loan I. The Borrower shall pay to the Lender a commitment fee
(the "Loan I Commitment Fee") which shall be at the rate of 0.25% per annum of
the difference, determined as of the relevant due date, between (A) the Loan I
Commitment and (B) the drawn amount under Loan I. The Loan I Commitment Fee
shall begin to accrue with retroactive effect as of March 15, 2000 and shall be
increased to 0.50% per annum on the Effective Date.

            (ii) Loan II. The Borrower shall pay to the Lender a commitment fee
(the "Loan II Commitment Fee") which shall be at the rate of 0.25% per annum of
the difference, determined as of the relevant due date, between (A) the Loan II
Commitment and (B) the drawn amount under Loan II. The Loan II Commitment Fee
shall begin to accrue with retroactive effect as of March 15, 2000 and shall be
increased to 0.50% per annum on the Loan II Closing Date.

Commitment Fee shall accrue from day to day, beginning on March 15, 2000, and
shall be computed on the basis of the actual number of days elapsed and a year
of 360 days. Commitment Fee shall be due and payable in advance, on March 15,
2000 and every three months thereafter until the first Interest Payment Date and
on every Interest Payment Date thereafter, terminating on the last day of the
Loan II Availability Period or upon such earlier date as the Total Commitment is
reduced to zero or the undisbursed amount thereafter is cancelled or terminated.

         (b) Arrangement Fee. The Borrower shall pay a non-refundable
arrangement fee (the "Arrangement Fee") equal to 0.25% of the Total Commitment
within 30 days of the Effective Date, but in no event later than the first
Disbursement under Loan I.

         (c) Front-End Fee. The Borrower shall pay a non-refundable, front-end
fee (the "Front-End Fee") in the amount of 1.25% of the Total Commitment,
payable in two installments. The first installment shall be due and payable on
the Loan I Closing Date and shall be equal to 1.25%




                                       4               CREDIT FACILITY AGREEMENT



of the Loan I Commitment plus 0.3125% of the Loan II Commitment; the second
installment shall be due and payable on the Loan II Closing Date and shall be
equal to 0.9375% of the Loan II Commitment.


         SECTION 2.06 PAYMENTS.

         (a) Time and Place of Payment. Except as otherwise specifically
provided herein, all payments to be made by the Borrower under this Agreement
shall be made in full in Same Day Funds, without retention, set-off or counter
claim and free and clear of any deductions and charges, not later than 12:00
p.m. (New York time) on the date upon which the relevant payment is due, to the
Lender's account No. 373700001501 with Bank Hapoalim B.M., 1177 Avenue of the
Americas, New York, N.Y., 10036, mentioning "Ormat/Momotombo Project", or to
such other account as the Lender may designate from time to time by written
notice to the Borrower five Business Days prior to the date on which any payment
is made by the Borrower hereunder. The Borrower shall advise the Lender by
facsimile of the payment about to be made by the Borrower.

         (b) Payment on a Business Day. If any date for any payment under this
Agreement shall not be a Business Day then such payment shall be made on the
next succeeding Business Day and interest (or Commitment Fee, as the case may
be) shall continue to accrue for the period from such due date to the next
succeeding Business Day.

         SECTION 2.07 PAYMENT ALLOCATION. Any payment made by the Borrower to
the Lender and any other amount received by the Lender under any of the
Financing Documents (excluding voluntary prepayments received by the Lender
pursuant to Section 2.11) shall be applied as follows: (i) against charges,
fees, costs and expenses due to the Lender; (ii) against interest on interest
which became overdue, if any, with respect to the Loans; (iii) against interest
on principal of the Loans which became overdue, if any; (iv) against interest
due on the Loans; and thereafter, (v) against the principal amount of the Loans
due and payable applied pro-rata to Loan I and Loan II and applied pro-rata to
installments within each such Loan, and any remaining amount shall be paid or
returned to the Borrower unless there is an Event of Default which is
continuing.

         SECTION 2.08 CURRENCY OF PAYMENT. The obligation of the Borrower to pay
all amounts payable under this Agreement shall be in Dollars and shall not be
deemed to have been novated, discharged or satisfied by any tender of (or
recovery under judgment expressed in) any currency other than Dollars, except to
the extent to which such tender (or recovery) shall result in the effective
payment of such aggregate amount in Dollars at the place where such payment is
to be made and, accordingly, the amount (if any) by which any such tender (or
recovery) shall fall short of such aggregate amount shall be and remain due to
the Lender, as a separate obligation, unaffected by judgment having been
obtained (if such is the case) for any other amounts due under or in respect of
this Agreement.

         SECTION 2.09 TAXES.

         (a) Payments Free and Clear of Taxes. Any and all payments by the
Borrower to the Lender under this Agreement and any other Financing Document
shall be made free and clear of




                                       5



and without deduction or withholding for any Taxes. In addition, the Borrower
shall pay all Other Taxes.

         (b) Indemnity. The Borrower agrees to indemnify and hold harmless the
Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed on amounts payable under this Section 2.09) paid by the Lender and
any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Payment under this indemnity shall be
made within 30 days after the date the Lender makes written demand therefor.

         (c) Gross-Up. If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder or under any Financing Document to the Lender, then:

                  (i) the sum payable shall be increased as necessary so that,
         after making all required deductions and withholdings (including
         deductions and withholdings applicable to additional sums payable under
         this Section 2.09), the Lender receives an amount equal to the sum it
         would have received had no such deductions or withholdings been made;

                  (ii) the Borrower shall make such deductions and withholdings;
         and

                  (iii) the Borrower shall pay the full amount deducted or
         withheld to the relevant taxing authority or other authority in
         accordance with Applicable Law.

         (d) Receipts. Within 30 days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish to the Lender the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Lender.

         (e) Mitigation. If the Borrower is required to pay additional amounts
to the Lender pursuant to Section 2.09(c), then the Lender shall endeavor to use
reasonable efforts (consistent with legal and regulatory restrictions) as may be
available to it to mitigate the effect of such circumstances, including booking
the Loans in a different jurisdiction so as to minimize any such additional
payment by the Borrower which may thereafter accrue, if such change in the
judgment of the Lender is not otherwise disadvantageous to the Lender.

         (f) Claims Against Lender. The Lender shall give notice to the Borrower
of the assertion of any claim against the Lender relating to the Lender's Taxes
or Other Taxes as promptly as is practicable after being notified of such
assertion; provided that any failure to notify the Borrower promptly of such
assertion shall not relieve the Borrower of its obligations under this Section
2.09.

         (g) Survival. Without prejudice to the survival of any other agreement
of the Borrower under this Agreement or any other Project Document, the
provisions set forth in this Section 2.09 shall survive the payment of all
amounts due to the Lender under Loan I and Loan II, respectively.

         SECTION 2.10 TERMINATION OF TOTAL COMMITMENT. The Lender may terminate
the Total Commitment upon the occurrence of an Event of Default in accordance
with the provisions of Article 6 hereof. The Borrower may cancel the undisbursed
amount of the Total Commitment





                                       6               CREDIT FACILITY AGREEMENT



with the consent of the Lender upon the Lender's satisfaction that such amounts
are not needed to complete the Project. The Borrower may also cancel the Total
Commitment on account of Loan II either (i) if the Borrower decides not to
commence Phase II and notifies the Lender of its decision and that it does not
plan to commission the Technical Report referred to in Section 4.04, or (ii)
upon delivery to the Lender of a Phase II Completion Certificate in accordance
with Section 5.35 hereof.

         SECTION 2.11 VOLUNTARY PREPAYMENT. Subject to any required Governmental
Approvals having been obtained, the Borrower shall have the right, at any time
on at least 30 but not more than 60 days' prior written notice to the Lender, to
prepay all or a part of the principal amount then outstanding of the Loans,
without premium or penalty; provided that (a) no prepayment of any part of any
Loan shall be made on a day which is not the last day of an Interest Period with
respect thereto, (b) the amount of such prepayment is applied pro rata to Loan I
and Loan II and applied pro rata to outstanding installments of principal within
each Loan, (c) all accrued interest on the principal amount of the Loans to be
prepaid and all other amounts then due to the Lender hereunder are paid at the
same time, and (d) in the case of partial prepayment, such prepayment shall be
in an amount equal to $500,000 or more in integral multiples of $500,000.

         SECTION 2.12 INTENTIONALLY OMITTED.

         SECTION 2.13 FUNDING COSTS. If, as a result of (a) any failure by the
Borrower to pay when due the principal amount of or interest on any Loan (or
portion thereof), (b) any failure by the Borrower to make a borrowing of any
Loan after the Borrower has made a request for disbursement, (c) any failure by
the Borrower to make any prepayment of any Loan after the Borrower has given any
notice required hereunder regarding such prepayment or (d) the making of a
payment or prepayment (including, without limitation, on acceleration) on a day
which is not the last day of an Interest Period with respect thereto, the Lender
shall incur any costs, expenses or losses, then the Borrower shall pay, upon
request by the Lender, the amount which the Lender shall notify the Borrower as
being the aggregate of such costs, expenses and losses. For the purposes of the
preceding sentence, "costs, expenses or losses" shall include, without
limitation, any interest paid or payable to carry any unpaid amount and any
loss, premium, penalty or expense which may be incurred in liquidating or
employing deposits of or borrowings from third parties in order to make,
maintain or fund the Loans or any portion thereof.

         SECTION 2.14 MAINTENANCE AMOUNT.

         (a) Obligation to Pay. On each Interest Payment Date, the Borrower
shall pay in addition to interest on the Loans, the amount which the Lender
shall from time to time notify to the Borrower as the aggregate of the
Maintenance Amount (as defined in subsection (b) below), if any, of the Lender,
accrued and unpaid prior to such Interest Payment Date.

         (b) Definitions. For the purposes of subsection (a) above, the
following terms shall have the following meanings:

            (i) "Maintenance Amount" means the amount, if any, certified in the
Maintenance Amount Certification to be the net incremental costs of the Lender
with respect to the making or maintaining of any Loan which result from (A) any
change in, or introduction of,





                                       7               CREDIT FACILITY AGREEMENT



any Applicable Law and/or (B) any compliance with any request from, guideline or
requirement of, any central bank or other monetary or other comparable authority
or any Governmental Authority (whether or not having the force of law), which in
either case, subsequent to the date of this Agreement, shall:

                  (A) impose, modify or deem applicable any reserve, capital
         adequacy (only to the extent such capital adequacy requirement is
         generally applicable to financial institutions that are subject to the
         same regulatory controls as the Lender), special deposit or similar
         requirements against assets held by, or deposits with or for the
         account of, or Loans by, the Lender;

                  (B) impose a cost on the Lender as a result of its having
         made, funded or maintained any Loan or its commitment to make, fund or
         maintain any Loan, or reduce the rate of return on the overall capital
         of the Lender which it would have been able to achieve if it had not
         made or committed itself to make such Loan;

                  (C) change the basis of taxation on payments received by the
         Lender in respect of its Loans otherwise than by a change in taxation
         of the overall net income of the Lender; or

                  (D) impose on the Lender any other condition regarding the
         making or maintaining of the Loans; and

            (ii) "Maintenance Amount Certification" means a certification
furnished from time to time by the Lender to the Borrower, certifying:

                  (A) the circumstances giving rise to the Maintenance Amount;

                  (B) that such net costs have increased and that such net costs
         are within the definition of Maintenance Amount;

                  (C) that, in the opinion of the Lender it has exercised
         reasonable efforts to minimize or eliminate such increase; and

                  (D) the Maintenance Amount.

         (c) Optional Prepayment. Notwithstanding anything in Section 2.11, and
subject to any Governmental Approvals having been obtained (including from the
Central Bank), the Borrower shall have the right on any Interest Payment Date
for the Loans, upon not less than thirty (30) days' prior written notice to the
Lender (which notice shall be irrevocable and shall bind the Borrower to make
the prepayment specified below) and upon payment of all accrued interest and
Maintenance Amount (if any) on the amount to be prepaid, to prepay all or, as
the case may be, that portion of the Loans with respect to which the Lender
informs the Borrower that Maintenance Amount is then being charged.

         SECTION 2.15 ILLEGALITY.

         (a) Illegality of Total Commitment or Loan. Notwithstanding any other
provision of this Agreement, if, subsequent to the date of this Agreement, the
making, funding or continuance of



                                       8               CREDIT FACILITY AGREEMENT



the Total Commitment or any Loan has been made (i) unlawful by any change made
in any Applicable Law, (ii) impossible by compliance by the Lender with any
request of a Governmental Authority (whether or not having force of law) or
(iii) impracticable as a result of a contingency occurring after the Effective
Date which materially and adversely affects the London interbank dollar market,
the Borrower shall, upon notice by the Lender (but subject to the approval of
the appropriate Governmental Authorities (including the Central Bank), which the
Borrower agrees to take all reasonable steps to obtain as quickly as possible,
if such approval is then required), prepay in full and on the next occurring
Interest Payment Date unless the effect of the Applicable Law, request or
contingency requires earlier or immediate repayment, in which case, on such
earlier date or immediately, as relevant, that portion of the principal amount
of the Loans affected thereby together with all accrued interest and Maintenance
Amount (if any) thereon and all amounts, if any, determined by the Lender to be
payable to it pursuant to Section 2.13 hereof. In addition, the Total Commitment
of the Lender to make Loans similar to those affected by the foregoing shall
terminate immediately.

         (b) Illegality of Interest Rate. Notwithstanding any other provision of
this Agreement, if, subsequent to the date of this Agreement, the making,
funding or continuance by the Lender of a Disbursement or any Loan bearing
interest based on LIBOR has been made (i) unlawful by any change made in any
Applicable Law, (ii) impossible by compliance by the Lender with any request of
a Governmental Authority (whether or not having the force of law), then the
Lender shall promptly give notice thereof to the Borrower and the obligation of
the Lender to make or continue Loans bearing interest based on LIBOR shall be
immediately suspended and during such suspension be converted into an obligation
bearing interest at the rate per annum equal to the Base Rate plus 2.375%;
provided, however, that if the Lender determines that it may lawfully continue
to maintain and fund any outstanding Loans bearing interest based on LIBOR until
the end of the applicable Interest Period then in effect with respect thereto,
upon written notice from the Borrower to the Lender, such outstanding Loans
shall be converted into Loans bearing interest at the rate per annum equal to
the Base Rate plus 2.375% on the last day of the then current Interest Period
applicable to such Loans.

         SECTION 2.16 SUBSTITUTE BASIS OF BORROWING. If, on or before the first
day of any Interest Period relating to the Loans, either (a) the Lender
determines that, for whatever reason, deposits in Dollars for a period equal to
such Interest Period or in the relevant amounts are not being offered to the
Lender in the London interbank market or (b) the Lender gives notice to the
Borrower that the Interest Rate then in effect based on LIBOR for such Interest
Period does not adequately reflect the cost to the Lender of making, funding or
otherwise maintaining the Loans for such Interest Period, the Lender shall
promptly notify the Borrower of such event. Thereafter, the obligations of the
Lender to make or maintain the Loans bearing interest at LIBOR shall be
suspended until the Lender revokes such notice in writing and interest for such
Interest Period with respect to a scheduled Disbursement and for outstanding
Loans for which interest is then scheduled to be determined shall accrue at the
rate per annum equal to the Base Rate plus 2.375%.

         SECTION 2.17 MITIGATION PROVISION. The Lender agrees that (a) as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition arising after the date hereof that would cause it
to be affected under Section 2.13 and (b) as promptly as practicable after it
has made a determination to make a claim for amounts under Sections 2.13, 2.14
or 2.15, as the case may be, with respect to events or conditions arising after




                                       9              CREDIT FACILITY AGREEMENT



the date hereof, it shall notify the Borrower of the same and use commercially
reasonable efforts (consistent with legal and regulatory restrictions and the
Lender's internal policies) to mitigate the effect of such provisions on the
Borrower, including (i) in the case of Sections 2.13, 2.14 or 2.15, efforts to
make, fund, issue or maintain its Loans, as relevant, through another office of
the Lender, and (ii) in the case of Section 2.15, efforts to reemploy amounts
held by the Lender, (A) if as a result thereof the additional moneys which would
otherwise be required to be paid to the Lender pursuant to any of such
provisions of this Agreement would be reduced, or the illegality or other
adverse circumstances which would otherwise require a prepayment of such Loans
pursuant to any of such provisions would cease to exist, and (B) if, as
determined by the Lender in good faith, the making, funding or maintaining of
the Loan through such other office would not otherwise adversely affect the
Lender.

         SECTION 2.18 CERTIFICATE OF LENDER. If the Lender claims reimbursement
under Sections 2.13, 2.14, 2.15 or 2.16, it shall deliver to the Borrower a
certificate setting forth in reasonable detail, including calculations thereof,
the amount payable to the Lender and such certificate shall be conclusive and
binding on the Borrower in the absence of manifest error.

         SECTION 2.19 SURVIVAL. Without prejudice to the survival of any other
agreement of the Borrower under this Agreement and any other Project Document,
the agreements and obligations of the Borrower set forth in Sections 2.13 2.14,
2.15 and 2.16 shall survive the payment of the Loans.


ARTICLE 3. REPRESENTATIONS AND WARRANTIES.

         In order to induce the Lender to enter into this Agreement and each of
the other Financing Documents to which it is a party and in order to induce the
Lender to make the Loans, the Borrower makes the following representations,
warranties and agreements as of the date of this Agreement, which shall survive
the execution and delivery of this Agreement and the making and repayment of the
Loans:

         SECTION 3.01 STATUS. The Borrower (a) is an exempted limited liability
company duly incorporated, validly existing and in good standing under the laws
of the Cayman Islands, (b) is duly qualified to do business under the laws of
each jurisdiction in which the character of the properties owned by it or in
which the transaction of its business as presently conducted or proposed to be
conducted makes such qualification necessary, and (c) has full power and
authority to own the property and assets owned by it and to transact the
business in which it is engaged or proposes to be engaged and to do all things
necessary or appropriate in respect of the Project and to consummate the
transactions contemplated by the Project Documents in effect or required to be
in effect as of each date this representation is made or deemed made.

         SECTION 3.02 POWER AND AUTHORITY. The Borrower has the full power and
authority to execute and deliver, and to perform the terms and provisions of,
each of the Project Documents to which it is party and has taken all proper and
necessary action to authorize the execution, delivery and performance by it of
each of such Project Documents as have been executed and delivered as of each
date this representation and warranty is made. The Borrower, has, or, in the
case of the Project Documents other than this Agreement, by the Loan I Closing
Date will have, duly executed and delivered each of the Project Documents to
which it is a party, and each of such Project Documents constitutes or, in the
case of each such other Project Document when




                                       10             CREDIT FACILITY AGREEMENT



executed and delivered will constitute, the legal, valid and binding obligations
of the Borrower, enforceable in accordance with its respective terms, except as
the enforceability thereof may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, and (b) general equitable
principles, regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law.

         SECTION 3.03 NO VIOLATION. Neither the execution and delivery by the
Borrower of the Project Documents to which it is a party, nor the Borrower's
compliance with or performance of the terms and provisions thereof, or the use
of the proceeds of the Loans as contemplated by this Agreement (a) will
contravene or violate any provision of any Applicable Law to which the Borrower,
any of its assets, the Project or any transaction contemplated by the Project
Documents are subject, (b) will conflict or be inconsistent with or result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except any Permitted Liens) upon any
of the property or assets of the Borrower pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower is a party or by
which it or any of its property or assets is bound or to which it may be
subject, (c) will violate any provision of any other Organization Document of
the Borrower or (d) will require any consent or approval of any Governmental
Authority or any other Person which has not been obtained.

         SECTION 3.04 ORGANIZATION. All of the issued and outstanding shares of
the Borrower are owned by Ormat Holding Corp. except as provided in the Share
Pledge and Sponsor Participation Retention Agreement.

         SECTION 3.05 SUBSIDIARIES. The Borrower has no Subsidiaries and owns no
equity interest in any other Person.

         SECTION 3.06 SINGLE-PURPOSE BORROWER. The Borrower (a) has not incurred
any liabilities other than in connection with its participation in the
transactions contemplated by the Project Documents and (b) has not engaged in
any business other than the Project. The Borrower is not a party to any material
agreement, contract or commitment (other than the ENEL Agreements, the Fiduciary
Account Agreement, the Financing Documents, the Investment Agreement and any
Implementation Agreements).

         SECTION 3.07 FINANCIAL STATEMENTS; FINANCIAL CONDITION: UNDISCLOSED
         LIABILITIES; ETC.

         (a) No Material Adverse Effect. The financial statements of the
Borrower for the Fiscal Year ended December 31, 1999, heretofore furnished to
the Lender, present fairly the financial condition of the Borrower at the date
thereof and the results of the operations of the Borrower for the fiscal period
referred to in such statements. Such financial statements have been prepared in
accordance with GAAP. Since the date of such financial statements, no event,
condition or circumstance (including, without limitation, Force Majeure) has
existed or has occurred which is reasonably likely to have a Material Adverse
Effect.

         (b) No Likelihood of Material Adverse Effect. Except as fully reflected
in the financial statements referred to in Section 3.07(a), there are no
liabilities or obligations with respect to the




                                       11



Borrower (whether absolute, accrued, contingent or otherwise and whether or not
due) for the period to which such financial statements relate which, either
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect. The Borrower does not know of any reasonable basis for the
assertion against the Borrower of any liability or obligation of any nature
whatsoever for such relevant period that is not fully reflected in the financial
statements referred to in Section 3.07(a) which, either individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect.

         SECTION 3.08 LITIGATION; LABOR DISPUTES.

         (a) No Proceedings. Except as disclosed in Schedule 3.08 hereto, there
is no action, suit, investigation or proceeding by or before any court,
arbitrator, administrative agency or other Governmental Authority pending or, to
the best of the Borrower's knowledge, threatened against or affecting the
Borrower or any of its properties, revenues or assets or the Project or the Site
(including Environmental Claims) which has had or is reasonably likely to have a
Material Adverse Effect. The Borrower is not in default with respect to any
order of any court, arbitrator, administrative agency or other Governmental
Authority. There is no injunction, writ, preliminary restraining order or any
order of any nature issued by an arbitrator, court or other Governmental
Authority directing that any of the material transactions provided for in any of
the Project Documents not be consummated as herein or therein provided. To the
best of the Borrower's knowledge, there is no action, suit, investigation or
proceeding by or before any court, arbitrator, administrative agency or other
Governmental Authority pending or threatened against or affecting the Borrower
or any of its properties, revenues or assets, and the Borrower does not have
actual knowledge of any such action, suit, investigation or proceeding pending
or threatened against or affecting any other party to any Project Document or
any of their respective properties, revenues or assets, in each case described
in this sentence which has had or is reasonably likely to have a Material
Adverse Effect.

         (b) No Labor Claims Pending. There are no strikes, slowdowns or work
stoppages by the Borrower's employees ongoing, or, to the knowledge of the
Borrower, threatened which are reasonably likely to have a Material Adverse
Effect. There are no claims pending against the Borrower arising from the
transfer of personnel pursuant to the terms of the ENEL Agreements.

         SECTION 3.09 TRUE AND COMPLETE DISCLOSURE. All factual information
(taken as a whole), which, for the avoidance of doubt (a) shall not include any
information by way of projections, estimates or other expressions of view as to
future circumstances, provided that such projections, estimates or other
expressions of view are expressed in good faith and on the basis of reasonable
assumptions and (b) shall be qualified by any disclaimers with respect to such
factual information provided by the Borrower to the Lender heretofore or
contemporaneously furnished by or on behalf of the Borrower in writing to the
Lender (including without limitation such factual information related to the
Project as is contained in the preliminary business plan dated February 27, 2000
(financial model) previously submitted to the Lender on February 27, 2000 with
respect to the Project and as stated in the Lender's Offer Letter dated March
14, 2000 and in the Business Plan), and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of the Borrower in
writing to the Lender will be, true and accurate in all material respects on the
date as of which such information is stated or certified and not incomplete by
omitting to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect in light of the circumstances and the
time under which or




                                       12              CREDIT FACILITY AGREEMENT



at which such information was provided. There are in existence no documents or
agreements which have not been disclosed to the Lender which are material in the
context of the Project Documents or which have the effect of varying any of the
Project Documents or their meaning.

         SECTION 3.10 TAX RETURNS AND PAYMENTS. Except as disclosed in Schedule
3.11, the Borrower has filed all tax returns required by Applicable Law to be
filed by it and has paid all income taxes payable by it which have become due
pursuant to such tax returns and all other taxes and assessments payable by it
which have become due, other than those not yet delinquent and except for those
contested in good faith and for which adequate reserves have been established.
The Borrower has paid, or has provided adequate reserves for the payment of, all
national, regional or local income taxes applicable for all prior Fiscal Years
and for the current Fiscal Year to the date hereof, except as disclosed under
Schedule 3.11.

         SECTION 3.11 GOVERNMENTAL APPROVALS. All Governmental Approvals
necessary under Applicable Law in connection with (a) the due execution and
delivery of, and performance by the Borrower of its obligations and the exercise
of its rights under, the Project Documents in effect or required to be in effect
as of each date this representation is made or deemed made, (b) the grant by the
Borrower of the Liens created pursuant to the Security Documents and the
validity, enforceability and perfection thereof and the exercise by the Lender
of its rights and remedies thereunder and (c) the construction and operation of
the Project as contemplated by the Project Documents, to be obtained by the
Borrower and to be obtained by any other Person (to the best knowledge of the
Borrower) are set forth in Schedule 3.11 hereto. Except as disclosed in Part C
of Schedule 3.11, each of the Governmental Approvals set forth in Part A and
Part C of Schedule 3.11 hereto and each other Governmental Approval obtained by
the Borrower after the date hereof but on or prior to the date this
representation is made, has been duly obtained or made, is validly issued, is in
full force and effect, is not subject to appeal (it being understood that for
purposes of this Section 3.11, a Governmental Approval shall not be considered
to be subject to appeal if it is being contested or challenged solely by Persons
other than the Governmental Authority which issued the Governmental Approval or
any other Governmental Authority notwithstanding that such contest or challenge
is ongoing) and is free from conditions or requirements compliance with which is
reasonably likely to have a Material Adverse Effect or which the Borrower does
not reasonably expect to be able to satisfy. There is no proceeding pending or,
to the best knowledge of the Borrower, threatened which is reasonably likely to
result in the rescission, termination, material modification, suspension or
determination of invalidity or lack of effectiveness of any such Governmental
Approval. The information set forth in each application and other written
material submitted by the Borrower to the applicable Governmental Authority in
connection with each such Governmental Approval was accurate and complete in all
material respects at that time (provided, that no representation is made
regarding the accuracy and completeness of any projections, estimates or other
expressions of view as to future circumstances, and provided further that any
such information is further qualified by any disclaimers with respect thereto
included therein). The Borrower has no reason to believe that any Governmental
Approval that has not been obtained by the Borrower, but which will be required
in the future, will not be granted to it in due course, on or prior to the date
when required and free from any condition or requirement compliance with which
is reasonably likely to have a Material Adverse Effect or which the Borrower
does not reasonably expect to be able to satisfy. The Project, if constructed
and performed in accordance with the Business Plan, will conform to and comply
in all material respects with all covenants, conditions, restrictions and
reservations in the Governmental Approvals and the Project Documents applicable
thereto and




                                       13              CREDIT FACILITY AGREEMENT



all Applicable Laws. The Borrower has no reason to believe that the Lender will
not be entitled, without undue expense or delay, to the benefit of each
Governmental Approval set forth on Schedule 3.11 hereto upon the exercise of
remedies under the Security Documents. The Lender has received a true and
complete copy of each Governmental Approval heretofore obtained or received by
the Borrower.

         SECTION 3.12 COMPLIANCE WITH STATUTES, ETC.

         (a) Compliance with Applicable Laws. Except as set forth in (b) below,
and in Section 3.13, and in Part C of Schedule 3.11, the Borrower is in
compliance with all Applicable Laws in respect of the conduct of its business
and the ownership of its property (including, without limitation, Applicable
Laws relating to environmental standards and controls and resettlements and
Applicable Laws relating to the maintenance of debt to equity ratios).

         (b) Environmental Compliance. The Borrower's business and the Project
are being carried out in compliance with the Project Remediation Program.

         SECTION 3.13 ENVIRONMENTAL MATTERS. To the best of the Borrower's
knowledge, neither the Site nor the Power Plant (nor any other property with
respect to which the Borrower has retained or assumed liability either
contractually or by operation of the law) has been affected by any Hazardous
Material, other than as described in the Project Remediation Program, in a
manner which does or is reasonably likely to give rise to any material liability
of the Borrower under any Environmental Law or which has had or is reasonably
likely to have a Material Adverse Effect.

         SECTION 3.14 PATENTS, LICENSES, FRANCHISES AND FORMULAS. The Borrower
owns or has the right to use all intellectual property including all the
patents, trademarks, permits, service marks, trade names, copyrights, licenses,
franchises and formulas, or rights with respect thereto, and has obtained
assignments of all leases and other rights of whatever nature, necessary for the
present and proposed conduct of its business and the carrying out of the Project
in the manner contemplated by the Project Documents, without any known conflict
with the rights of others which, or the failure to obtain which, as the case may
be, is reasonably likely to have a Material Adverse Effect.

         SECTION 3.15 SUBMISSION TO LAW AND JURISDICTION. The choice of
governing law for each of the respective Project Documents in effect or required
to be in effect as of the Loan I Closing Date will be recognized in the courts
of Nicaragua, and those courts will recognize and give effect to any judgment in
respect of such Project Document obtained by or against the Borrower in the
courts the jurisdictions of which the Borrower has submitted to.

         SECTION 3.16 STATUS OF THE LOANS. The Loans constitute direct,
unconditional, and general obligations of the Borrower and rank senior as to
priority of payment to any or all Indebtedness of the Borrower except as
permitted under Section 5.15(b). Except as permitted by Section 5.16 of this
Agreement, the Borrower has not secured or agreed to secure any such other
Indebtedness by any Lien upon any of its present or future revenues, assets or
properties or upon any shares of stock of the Borrower.




                                       14              CREDIT FACILITY AGREEMENT



         SECTION 3.17 PROJECT DOCUMENTS; SUFFICIENCY OF PROJECT DOCUMENTS.

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

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

         SECTION 3.18 FEES AND ENFORCEMENT. Other than amounts that have been
paid in full or will have been paid in full by the Loan I Closing Date, no fees
or taxes, including without limitation, stamp, transaction, registration or
similar taxes, are required to be paid for the legality, validity, or
enforceability of this Agreement or any of the other Project Documents in effect
or required to be in effect as of each date this representation is made or
deemed made. This Agreement and each of such Project Documents are each in
proper legal form under the laws of Nicaragua, and under the respective
governing laws selected in such Project Documents, for the enforcement thereof
in such jurisdiction without any further action on the part of the Lender.

         SECTION 3.19 AVAILABILITY AND TRANSFER OF FOREIGN CURRENCY. All
requisite foreign exchange control approvals and other authorizations, if any,
by Nicaragua or any department or agency thereof have been validly obtained and
will be kept current and in full force and effect to assure (a) the ability of
the Borrower to receive any and all payments to the Borrower contemplated by the
Project Documents, (b) the availability of Dollars to enable the Borrower to
perform all of its obligations hereunder and under the other Project Documents,
as the case may be, in accordance with their respective terms, and (c) the
ability of the Borrower to convert into Dollars all sums received in Cordoba
amounts from ENEL, immediately upon receipt thereof, and to use the Dollars as
necessary to perform all of its obligations under the Project Documents, in
accordance with their respective terms. There are no restrictions or
requirements which limit the availability or transfer of foreign exchange, or
the conversion to foreign exchange, for the purpose of the performance by the
Borrower of its obligations under this Agreement or under any of the other
Project Documents.

         SECTION 3.20 BUSINESS PLAN.

         (a) Effectiveness. The Business Plan as in effect on the date hereof is
attached hereto as Annex A. The Business Plan accurately specifies, to the best
of the Borrower's knowledge, all costs and expenses incurred and anticipated to
be incurred prior to the date on which a Phase I Completion Certificate and a
Phase II Completion Certificate will have been issued. In addition, to the best
of the Borrower's knowledge, the amount of all costs and expenses required or



                                       15              CREDIT FACILITY AGREEMENT



expected to be paid or incurred prior to the latest date on which a Phase I
Completion Certificate or a Phase II Completion Certificate, as the case may be,
will have been issued does not exceed the amount reflected in the Business Plan.

         (b) Assumptions. To the best of the Borrower's knowledge, all
projections and budgets furnished to the Lender by or on behalf of the Borrower
and the summaries of significant assumptions related thereto (i) have been
prepared with due care, (ii) fairly present the Borrower's expectations as to
the matters covered thereby as of their date, (iii) are based on reasonable
assumptions as to all factual and legal matters material to the estimates
therein as of their date (including interest rates and costs) and (iv) are in
all material respects consistent with the provisions of the Project Documents.

         SECTION 3.21 TITLES; LIENS. The Borrower has good and valid title to
all of its properties and assets, in each case, free and clear of all Liens
other than Permitted Liens. No mortgage or financing statement or other
instrument or recordation covering all or any part of the property or assets of
the Borrower is on file in any recording office, except such as relate only to
Permitted Liens described in clauses (a) and (b) of Section 5.16 hereof.

         SECTION 3.22 TRANSACTIONS WITH AFFILIATES. The Borrower is not a party
to any contracts or agreements with, or any other commitments to, any Affiliate,
other than in the ordinary course of business on terms at least as favorable to
the Borrower as available on an arm's-length basis from third parties.

         SECTION 3.23 NO ADDITIONAL FEES. Other than as expressly set forth in
the Business Plan, the Borrower has not paid or become obligated to pay any fee
or commission to any agent, broker, finder or intermediary for or on account of
arranging the financing of the transactions contemplated by the Project
Documents.

         SECTION 3.24 REGULATION OF PARTIES. None of the Borrower, its
Affiliates or the Lender is or will be, solely as a result of the participation
by such parties separately or as a group in the transactions contemplated hereby
or by any other Project Document, or as a result of the ownership, use or
operation of the Project, subject to regulation by any Governmental Authority of
the United States as a "public utility", an "electric utility", an "electric
utility holding company", a "public utility holding company", a "holding
company", or an "electrical corporation" or a subsidiary or affiliate of any of
the foregoing under any Applicable Law of the United States (including, without
limitation, PUHCA) or by any Governmental Authority of Nicaragua as a "public
utility" under any Applicable Law of Nicaragua. The Borrower is not a holding
company organized under the laws of the United States or the District of
Columbia. Neither the Borrower nor its Affiliates owns any utility assets
located within any state of the United States or the District of Columbia.


         ARTICLE 4. CONDITIONS PRECEDENT.

         SECTION 4.01 CONDITIONS OF FIRST DISBURSEMENT OF LOAN I. The first
Disbursement of Loan I hereunder shall be subject to the satisfaction in form
and substance of the Lender of the following conditions on or prior to the Loan
I Closing Date:

         (a) Project Documents. (i) Each of the Project Documents shall have
been entered into by the respective parties thereto, shall be unconditional and
fully effective in accordance with



                                       16              CREDIT FACILITY AGREEMENT



their respective terms (except for this Agreement having become unconditional
and fully effective, if that is a condition of effectiveness of any of such
documents) and the Borrower shall deliver to the Lender a certificate signed by
an authorized officer of the Borrower certifying the foregoing, which
certification shall be incorporated into each Application for Funding; and (ii)
the Lender shall have received a copy of the Nicaragua Government Support Letter
and of the ENEL Agreements (which shall be construed, for the purposes of this
Section 4.01(a), as not including the Nicaragua Government Support Letter), in
its escritura publica form, accompanied by a certificate executed by a Financial
Officer of the Borrower certifying that the attached copies are true and correct
copies of the original Nicaragua Government Support Letter and the ENEL
Agreements (as defined for purposes of this Section 4.01(a)).

         (b) Insurance; MIGA Guarantee. Each of the Insurance Contracts and the
MIGA Contracts shall be in full force and effect and in respect of the MIGA
Guarantee, in form and substance satisfactory to the Lender.

         (c) Opinions of Counsel. The Lender shall have received signed legal
opinions, each in form and substance satisfactory to the Lender, of (i) Cayman
Islands counsel to the Borrower, (ii) United States counsel to the Sponsor,
(iii) Israeli counsel to Ormat Industries Ltd., (iv) US and Nicaraguan counsel
to the Lender, and (v) counsel to such other Person as the Lender may reasonably
require.

         (d) Organization Documents; Proceedings.

            (i) The Lender shall have received a certificate, signed by the
Secretary or Assistant Secretary of the Borrower, in form and substance
satisfactory to the Lender, together with copies of Organization Documents of
the Borrower and resolutions of the Borrower's board of directors approving the
financing to be provided pursuant to the terms of this Agreement, certifying
that the documents attached to such certificate are true, correct and complete
copies of such documents.

            (ii) The Lender shall have received a certificate signed by the
Secretary or Assistant Secretary of the Sponsor in form and substance
satisfactory to the Lender, together with copies of the Organization Documents
of the Sponsor and resolutions of the Sponsor's board of directors approving the
documents to which Sponsor is party with respect to the provision of financing
pursuant to the provisions of this Agreement, certifying that the documents
attached to such certificate are true, correct and complete copies of such
Organization Documents and resolutions.

            (iii) The Lender shall have received a letter from the Auditors
confirming the acceptance of their appointment as the Auditors.

            (iv) The Lender shall have received a certificate from each of the
Borrower, the Sponsor, the Shareholder and the Sponsor Parent, in form and
substance satisfactory to the Lender, signed by an authorized officer certifying
the incumbency of the parties executing any Project Document or related document
on behalf of the Borrower, the Sponsor, the Shareholder and the Sponsor Parent,
respectively.

         (e) Auditors. The Lender shall have received a copy of the
authorization to the Auditors referred to in Section 5.02(b).




                                       17              CREDIT FACILITY AGREEMENT



         (f) Security Documents. The Borrower shall have delivered to the Lender
fully executed Security Documents, in full force and effect, with all
registration fees in connection therewith paid in full, and with executed
instruments of transfer delivered by the Borrower if required.

         (g) Consent Letters. The Lender shall have received a letter, in form
and substance satisfactory to the Lender, from CT Corporation System, presently
located 111 Eighth Avenue, New York, New York 10011, indicating the consent of
CT Corporation System to its appointment by the Borrower, the Sponsor, the
Shareholder and the Sponsor Parent as their agent to receive service of process.

         (h) Certificates. The Lender shall have received copies of each
executed Project Document, together with a certificate of a Financial Officer of
the Borrower certifying that the Borrower is not in default in the performance,
observance or fulfillment of any of its material obligations, covenants or
conditions contained therein and, to the best of the Borrower's knowledge, no
other party to any such Project Document is in default in the performance,
observance or fulfillment of any of its material obligations, covenants or
conditions contained therein and the Lender shall have received evidence or
copies of all Governmental Approvals set forth in Schedule 3.11 hereof (other
than those set forth in Parts B and C thereof), certified by a Financial Officer
of the Borrower as being in full force and effect and not subject to appeal,
except as disclosed in Schedule 3.11 hereof. For purposes of this Section
4.01(h), a Governmental Approval shall not be considered to be subject to appeal
if it is being contested or challenged solely by Persons other than the
Governmental Authority who issued the Governmental Approval or any other
Governmental Authority notwithstanding that such contest or challenge is
ongoing.

         (i) Business Plan. The Lender shall have received the Business Plan,
which shall be in form and substance satisfactory to the Lender.

         (j) Financial Statements. The Lender shall have received copies of the
most recent audited financial statements of the Borrower (except that for the
Fiscal Year ending December 31, 1999 financial statements may be submitted
unaudited) and audited financial statements of the Sponsor, and the Lender shall
have received copies of the most recent unaudited financial statements (if
audited financial statements are not otherwise available) of the Borrower and
the Sponsor showing, for each such Person, no material adverse change in the
financial condition of such Person since the date of the last financial
statements provided to the Lender prior to the date of this Agreement, and
certificates dated the Loan I Closing Date signed by a Financial Officer of each
such Person stating that (i) such financial statements are true, complete and
correct and (ii) no material adverse change as to such Person has occurred since
the date of such financial statements.

         (k) Evidence of Authority. The Lender shall have received evidence of
the authority of the Borrower to enter into this Agreement and the names,
specimen signatures and evidences of authority of the Persons signing this
Agreement, and the other documents required by this Agreement as of the date of
execution hereof or who will otherwise act as representatives of the Borrower in
the operation of the Credit.





                                       18              CREDIT FACILITY AGREEMENT



         (l) Accounts. The Borrower shall have established: (i) the Debt Service
Reserve Account with the Lender's New York Branch, fully funded in accordance
with Section 5.33; and (ii) the bank account with the Lender's New York Branch
in accordance with Section 5.28(a).

         (m) Other Instruments, Conditions, Due Diligence, Etc. The delivery of
every other instrument and agreement, and the satisfaction of any other
condition as the Lender may reasonably request, including due diligence reports
satisfactory to the Lender.

         (n) Fees, Costs, Etc. The Fees, and all other fees, costs and expenses
(including any and all Attorney Costs of Lender's outside counsel) due and
payable on or before the Loan I Closing Date shall have been paid.

         (o) MIGA Premium. The Borrower will execute and deliver to the Lender
an irrevocable instruction to the Lender's New York Branch to debit the
Borrower's Account established pursuant to Section 5.28(a) for payment of the
MIGA premium upon the direction of the Lender and the Lender shall deliver to
the Borrower the relevant renewal notice.

         SECTION 4.02 CONDITIONS OF EACH DISBURSEMENT. Each Disbursement
hereunder shall be subject to the satisfaction in form and substance of the
Lender of the following conditions:

         (a) No Default; Representations and Warranties. Immediately before and
after giving effect to such Disbursement:

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

            (ii) all representations and warranties made by the Borrower and
contained herein (other than the representations made pursuant to Section
3.07(b)) or in the other Project Documents shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Disbursement, except
where expressed to be made only as of an earlier date;

            (iii) the following representations and warranties shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Disbursement: (A) except as fully reflected in each financial statement
delivered prior to such Disbursement pursuant to Sections 5.01(a) and 5.01(b),
there shall have been, as of the date of such financial statement, no
liabilities or obligations with respect to the Borrower of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due)
which, either individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect, and (B) the Borrower does not know of any reasonable
basis for the assertion against the Borrower of any liability or obligation of
any nature whatsoever that is not fully reflected in the financial statements
delivered pursuant to Sections 5.01(a) and 5.01(b) which, either individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect.

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





                                       19              CREDIT FACILITY AGREEMENT



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

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

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

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

         (c) Consents and Approvals. There shall have been obtained, or there
shall have been made arrangements satisfactory to the Lender for obtaining, in
addition to the Project Documents, all other governmental, corporate,
creditors', shareholders' and other necessary licenses, approvals or consents
for: (i) the financing by the Lender under this Agreement; (ii) the carrying on
of the business of the Borrower as it is presently carried on and is
contemplated to be carried on; (iii) the carrying out of Phase I of the Project
with respect to Loan I and Phase II with respect to Loan II; (iv) the due
execution and delivery of, and performance under, each Project Document which
has been entered into at the time of such Disbursement, the Security, and any
documents in implementation of any thereof; and (v) the remittance to the Lender
of all monies payable pursuant to each Project Document which has been entered
into at the time of such Disbursement, and any documents in implementation of
any thereof. In addition, a true and complete copy of each material license,
approval or consent described in this Section 4.02(c) shall have been delivered
by the Borrower to the Lender.

         (d) No Project Document Default. Each of the Project Documents which
has been entered into or which is required to have been entered into at the time
of such Disbursement shall be in full force and effect and no material breach or
default shall have occurred under any such Project Document. No event of Force
Majeure shall have occurred which has had, or in the reasonable judgment of the
Lender is reasonably likely to have, a Material Adverse Effect.

         (e) ENEL Agreements. The Lender shall have received from the Borrower a
certification, in form and substance satisfactory to the Lender, signed by an
authorized representative of the Borrower and expressed to be effective as of
the date of the relevant Disbursement, stating that the Borrower is in
compliance in all material respects with all provisions of the ENEL Agreements.





                                       20



         (f) No Material Adverse Effect. Since the Loan I Closing Date, no event
or events shall have occurred which has had or is reasonably likely to have a
Material Adverse Effect.

         (g) Insurance; Shareholder's MIGA Guarantee. The Borrower shall have
certified to the Lender that each of the Insurance Contracts required pursuant
to Section 5.03 and the Shareholder's MIGA Guarantee, continue to be in full
force and effect on the date of such Disbursement and that the Insurance
Contracts are in compliance and in full accord with the recommendations of the
Lender's Insurance Consultant.

         (h) Fees and Expenses. The Borrower shall have paid all fees, expenses
and other charges then payable by it under this Agreement.

         (i) Debt Service Reserve Account. The Debt Service Reserve Account
shall have been funded in accordance with Section 5.33.

         (j) Disbursements for Additional Amount. In respect of each
Disbursement made in respect of Additional Amounts, the Senior Loan Debt to
Borrower's Equity ratio shall not exceed 3:1 after giving effect to the
requested Disbursement.

         (k) Sponsor Advances. The Sponsor shall have made advances to the
Borrower either as additional equity or subordinated long term loans on the same
terms and conditions as set forth in Section 2.02 of the Sponsor Project Funding
Agreement in an amount which when added to the Borrower's Equity shall be equal
to, as the case may be, (i) forty-two and eight hundred fifty-seven thousandths
percent (42.857%) of the sum of the requested Disbursement to be made under Loan
I plus any Interest to be capitalized pursuant to Section 2.03 plus all amounts
previously disbursed under Loan I, or (ii) thirty-three and three hundred
thirty-three thousandths percent (33.333%) of the sum of the requested
Disbursement to be made under Loan II (including any Disbursement to be made in
respect of an Additional Amount) plus any Interest to be capitalized pursuant to
Section 2.03 plus all amounts previously disbursed.

         (l) Phase II - Approval of Lender's Engineer. With respect to
Disbursements to be made under Loan II, the Lender shall have received the
approval of the Lender's Engineer as required under Section 2.02(b).

         SECTION 4.03 NO WAIVERS. No course of dealing or waiver by the Lender
in connection with any condition of Disbursement under this Agreement shall
impair any right, power or remedy of the Lender with respect to any other
condition of Disbursement, or be construed to be a waiver thereof; nor shall the
action of the Lender in respect of any Disbursement affect or impair any right,
power or remedy of the Lender in respect of any other Disbursement.

         SECTION 4.04 CONDITIONS FOR FIRST DISBURSEMENT OF LOAN II. The Lender
shall have received at the Borrower's expense each of the following on or prior
to the Loan II Closing Date: (a) a Technical Report from a recognized and
independent engineer or consulting firm acceptable to the Lender confirming
costs, technical and commercial feasibility of the Business Plan; (b) an opinion
of Nicaraguan legal counsel acceptable to the Lender confirming the legal
opinion provided pursuant to Section 4.01(c) and such other opinions related to
any changes in Applicable Law that have occurred since the date thereof, in form
and substance satisfactory to the Lender; (c) payment to the Lender of (i) the
Loan II Commitment Fee and (ii) the final installment of the Front-End Fee; and
(d) in the event that the amendment to the PPA referred to




                                       21              CREDIT FACILITY AGREEMENT



in Section 5.43 is not in full force and effect, an executed amendment to the
PPA incorporating substantially the provisions set forth in Schedule 4.04 shall
be in full force and effect and executed in the form of an escritura publica
prepared by a Nicaraguan notary public.


ARTICLE 5. COVENANTS

         The Borrower covenants and agrees that:

         SECTION 5.01 INFORMATION COVENANTS. The Borrower shall furnish to the
Lender:

         (a) Quarterly Financial Statements of Borrower. As soon as available
but, in any event, within 90 days after the close of each of the first three
quarterly accounting periods in each Fiscal Year,

            (i) complete unaudited financial statements of the Borrower as at
the end of such quarterly period with statements of operations and statement of
cash flows for such quarterly period and for the elapsed portion of the Fiscal
Year ended with the last day of such quarterly period, in each case setting
forth comparative figures for the related periods in the prior Fiscal Year,
subject to normal year-end audit adjustments;

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

            (iii) a statement, in form and detail reasonably satisfactory to the
Lender, of all financial transactions in such Quarter between the Borrower and
any Affiliate of the Borrower, including a certification on behalf of the
Borrower by a Financial Officer of the Borrower that such transactions were in
the ordinary course of business on terms at least as favorable to the Borrower
as available on an arm's-length basis from third parties.

         (b) Annual Financial Statements of Borrower. As soon as available but,
in any event, within 120 days after the close of each Fiscal Year, (i) the
financial statements of the Borrower as at the end of such Fiscal Year with
statements of operations and statement of cash flows for such Fiscal Year, in
each case setting forth comparative figures for the preceding Fiscal Year ending
after December 30, 1999 and (except in the case of financial statements of the
Borrower for the Fiscal Year ended December 31, 1999) certified by the Auditors
(all such statements being in agreement with the Borrower's books of account and
prepared in accordance with GAAP), and (ii) for all fiscal years after December
31, 1999 a report of the Auditors stating that in the course of its regular
audit of the financial statements of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards, the Auditors obtained no
knowledge of any Default or Event of Default which has occurred and is
continuing or, if in the opinion of the Auditors such a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof .

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





                                       22              CREDIT FACILITY AGREEMENT



         (d) Officer's Certificates. Except as required for purposes of the
first Disbursement under Loan I, at the time of the delivery of the financial
statements provided for in Sections 5.01(a) and 5.01(b), a certificate of a
Financial Officer of the Borrower to the effect that, to the best of his
knowledge, no Default or Event of Default has occurred and is continuing or, if
any such Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof and what action the Borrower is taking or proposes
to take in response thereto.

         (e) Notice of Default, Litigation, etc.

            (i) Immediately upon the Borrower obtaining actual knowledge
thereof, notice, by facsimile, of the occurrence of any Default or Event of
Default or any breach or default under any of the other Project Documents by the
Borrower or any other party thereto, specifying the nature thereof and the
action which the Borrower is taking and proposes to take with respect to the
same; and

            (ii) promptly, and in any event within twenty (20) Business Days
after Borrower obtains actual knowledge thereof, notice of:

                  (A) any litigation or governmental proceeding, pending (1)
         against the Borrower, Sponsor or ENEL (x) involving a claim in excess
         of $100,000 with respect to the Borrower and $5,000,000 with respect to
         the Sponsor or ENEL (or the equivalent thereof in other currency) or
         (y) which is reasonably likely to have a Material Adverse Effect or (2)
         with respect to any Project Document;

                  (B) any proposal by any Governmental Authority to acquire
         compulsorily the Borrower, Sponsor, the Shareholder or ENEL, any
         Collateral or a substantial part of the business or assets of any of
         them;

                  (C) any substantial dispute between or among the Borrower, the
         Sponsor, the Shareholder or ENEL and any Governmental Authority or any
         other of the Borrower, Sponsor, the Shareholder or ENEL;

                  (D) any change in the authorized officers or directors
         referred to in Section 4.01(d) above, giving certified specimen
         signatures of any new officer or director so appointed and, if
         requested by the Lender, satisfactory evidence of the authority of such
         new officer or director;

                  (E) any actual or proposed termination, rescission, discharge
         (otherwise than by performance), amendment or waiver or indulgence
         under, any material provision of any Project Document (other than by
         the Lender);

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

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




                                       23              CREDIT FACILITY AGREEMENT



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

                  (I) the occurrence of any event or act which could reasonably
         qualify as the basis for a claim under either of the MIGA Contracts.

         (f) Implementation Reports. Within 21 days of the end of each month,
beginning with the end of the month hereof, a report executed by the Borrower's
chief engineer and attached to each Application for Funding in a form
satisfactory to the Lender, on the implementation and progress of the Project,
including (i) any factors materially and adversely affecting or which are
reasonably likely to materially and adversely affect the carrying out of Phase
II of the Project and (ii) copies of any reports received by the Borrower from
any outside technical consultant identifying any matter that is of material
adverse significance to the rehabilitation or operation of the Power Plant. Upon
reasonable request of the Lender, the Borrower shall provide to the Lender
copies of all reports submitted by the Borrower to ENEL or CNDC under the ENEL
Agreements.

         (g) Fiduciary Account Reports. The Borrower shall provide to the Lender
any and all copies of monthly reports issued by Banco de Credito Centroamericano
("Banco") in accordance with Section 2.2 of the Fiduciary Account Agreement.
Such reports shall be provided no later than the tenth day of each calendar
month. The Borrower shall attach to each copy of such reports a copy of the
notice specified under Section 2.1(c) of such Fiduciary Account Agreement
indicating the amount to be required to be deposited in the account for the
applicable month(s).

         (h) Other Information. Any other information or reports related to the
Borrower, Sponsor, the Shareholder, ENEL or the Project as the Lender may
reasonably request.

         SECTION 5.02 BOOKS, RECORDS AND INSPECTIONS; ACCOUNTING AND AUDIT
MATTERS.

         (a) Maintenance of Books and Records; Inspections. The Borrower will
keep proper books of record and account adequate to reflect truly and fairly the
financial condition and results of operations of the Borrower (including the
progress of the Project) in which full, true and correct entries in conformity
with GAAP shall be made. The Borrower will permit officers and designated
representatives of the Lender to visit and inspect, under guidance of officers
of the Borrower, any of the properties of the Borrower, and to examine and make
copies of the books of record and account of the Borrower and discuss the
affairs, finances and accounts of the Borrower with, and be advised as to the
same by, its officers, all at such reasonable times and intervals and to such
reasonable extent as the Lender may request.

         (b) Consultation with Auditors. The Borrower shall (i) authorize the
Auditors to communicate directly with the representatives of the Lender at
reasonable intervals, but if a Default or Event of Default has occurred or is
continuing, then at any time, regarding the Borrower's accounts and operations
and (ii) furnish to the Lender a copy of such authorization, provided, however,
that the Lender will (i) provide the Borrower with copies of any correspondence
between such representatives and the Auditors; and (ii) provide the Borrower





                                       24              CREDIT FACILITY AGREEMENT



with reasonable notice of any meeting between such representatives and the
Auditors, with a description of the matters to be discussed at such meeting, and
allow the Borrower to attend any such meeting.

         SECTION 5.03 MAINTENANCE OF PROPERTY; INSURANCE.

         (a) Obligation to Maintain Property and Insurances. The Borrower will
(i) keep all property in its business in good working order and condition; (ii)
keep its present and future properties and business insured (with business
interruption coverage in an amount sufficient to cover fixed operating costs
plus Debt Service as set forth in the approved Business Plan for a 24-month
period commencing on the date of loss with financially sound and reputable
insurers satisfactory to the Lender against loss or damage in such manner and to
the same extent as specified in Schedule 5.03 until the expiration of such
policies and continuously immediately thereafter, in each case pursuant to
policies naming the Lender except as otherwise provided in Schedule 5.03 as sole
loss payee thereunder, permitting the Lender to make claims thereunder and
containing cut-through endorsements to reinsurers and provisions requiring that
the Lender shall receive notices of extensions or renewals of insurance policies
and notice of any non-payment of premiums and that such policy may only be
canceled for non-payment of premiums, if cancelable, upon sixty (60) days prior
notice to the Lender. Under no circumstances shall the Lender become liable for
the payment of any premiums or any other amounts due or payable under the
Insurance Contracts. On or prior to the dates required pursuant to this Section
5.03, the Borrower will submit to the Lender certificates of insurance relating
to the insurances specified in Schedule 5.03 (together with copies of such
insurance policies if then available) from the Borrower's insurers and insurance
brokers (including confirmation of premium payments then due), which
certificates shall indicate the properties insured, amounts and risks covered,
names of the beneficiaries, expiration dates, names of the insurers and special
features of the insurance policies. The Borrower shall provide the Lender with
copies of insurance policies relating to the insurances specified in Schedule
5.03 hereto on or prior to the date such policies are required to be delivered
to the Lender such policies to be in form and substance, and issued by
companies, satisfactory to the Lender.

         (b) Compliance with MIGA Contracts. The Borrower shall comply with or
perform and shall procure compliance with or performance of all obligations
specified under the MIGA Contracts as required to be complied with or performed
by the Project Enterprise (as defined in the MIGA Contracts) or by the Guarantee
Holder (as defined in the Shareholder's MIGA Guarantee) and shall not take any
action or fail to take any action which would permit MIGA to terminate any of
the MIGA Contracts.

         (c) Effectiveness of Assignments. In the event that any insurance
whatsoever is purchased, taken or otherwise obtained by the Borrower with
respect to the Project, excluding insurance policies under Section 4.2.1 of the
PPA, otherwise than as required hereunder or if not properly endorsed to the
Lender as the sole loss payee or otherwise made upon the terms required in this
Section 5.03, without limitation to any provision of the Security Documents,
such insurance shall be considered assigned hereunder to the Lender with the
right of the Lender to exercise its rights and remedies under any of the
Financing Documents or under any Applicable Law.





                                       25



         (d) Reinstatement and Renewal of Insurances. Promptly after the
issuance, renewal, expiration or termination of any of the Insurance Contracts
other than the MIGA Guarantee required to be maintained under this Section 5.03,
or upon the reasonable request of the Lender, the Borrower shall cause issuance
of a certificate stating that each of such Insurance Contracts is in full force
and effect.

         SECTION 5.04 MAINTENANCE OF EXISTENCE; PRIVILEGES; ETC. The Borrower
shall at all times (a) preserve and maintain in full force and effect (i) its
existence as an exempted limited liability company and in good standing under
the laws of the Cayman Islands, (ii) its qualification to do business in each
other jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business as conducted or proposed to be
conducted makes such qualification necessary and (iii) all of its powers,
rights, privileges and franchises necessary for the construction, ownership,
maintenance and operation of the Project and the maintenance of its existence,
(b) obtain in a timely manner and maintain in full force and effect (or where
appropriate, renew) all Governmental Approvals (including, without limitation,
those under Environmental Laws) and all other licenses, registrations, waivers,
consents and approvals required at any time or advisable in connection with the
construction, maintenance, ownership or good and orderly operation of the
Project and all licenses, consents and approvals necessary for the conversion to
Dollars of all Cordoba amounts payable under the PPA, the Nicaragua Government
Support Letter for the remission to the United States in Dollars of any amounts
paid or payable to the Lender in connection with any Financing Document or the
transactions contemplated thereby, and (c) preserve and maintain good and
marketable title to its properties and assets (it being understood that the
Borrower's rights with respect to the Site are solely as set forth in the
Agreement of Association in Participation) subject to no Liens other than
Permitted Liens.

         SECTION 5.05 COMPLIANCE WITH STATUTES. The Borrower will comply with
all Applicable Laws in respect of the conduct of its business and the ownership,
operation and use of its property.

         SECTION 5.06 PROJECT IMPLEMENTATION. The Borrower shall (i) carry out
the Project and conduct its business with due diligence and efficiency and in
accordance with sound engineering, financial, and business practices; (ii)
obtain, or cause to be obtained, approval by the competent authority of the
Republic of Nicaragua of the Project Remediation Plan; and (iii) use the
proceeds of all Disbursements only for the purposes set forth in Section 2.02(a)
and strictly in accordance with the Business Plan.

         SECTION 5.07 AUDITORS. In the event that PricewaterhouseCoopers,
Nicaragua should cease to be the Auditors of the Borrower for any reason, the
Borrower shall appoint and maintain as the Auditors another firm of independent
public accountants approved by the Lender.

         SECTION 5.08 TAXES, DUTIES, ETC. The Borrower will pay and discharge
all taxes, duties, fees, assessments and other governmental charges (including,
without limitation, any documentary, stamp, registration, transaction or similar
tax or fee) imposed on it, on its income or profits, on any of its property, or
in connection with the execution, issue, delivery, registration, notarization,
assignment or transfer of any interest in or for the legality, validity or
enforceability of any Project Document (including, without limitation, any such
tax or fee imposed in connection with any assignment or transfer by any Lender
of the Loans or any of its





                                       26              CREDIT FACILITY AGREEMENT



interests therein or herein) prior to the date on which penalties attach
thereto, and all claims, levies or liabilities (including, without limitation,
claims for labor, services, materials and supplies) for sums which have become
due and payable and which have or, if unpaid, might become a Lien upon the
property of Borrower (or any part thereof). The Borrower shall have the right,
however, to contest in good faith the validity or amount of any such tax,
assessment, governmental charge or claim by proper proceedings timely
instituted, and may permit the taxes, assessments, governmental charges or
claims so contested to remain unpaid during the period of such contest if: (a)
the Borrower diligently prosecutes such contest; (b) during the period of such
contest the enforcement of any contested item is effectively stayed; (c) the
Borrower sets aside on its books adequate reserves with respect to the contested
items; and, (d) such contest does not, in the reasonable discretion of the
Lender, involve a material risk of the sale, forfeiture or loss of any of the
Collateral. The Borrower will promptly pay or cause to be paid any valid, final
judgment enforcing any such tax, duty, fee, assessment, other governmental
charge or claim and cause the same to be satisfied of record.

         SECTION 5.09 PERFORMANCE OF OBLIGATIONS. The Borrower will perform all
of its material obligations under the terms of each mortgage, indenture,
security agreement and other debt instrument by which it is bound and will
perform (a) all of its obligations under the terms of the Financing Documents,
the PPA and the Agreement of Association in Participation and (b) such of its
obligations under the terms of the Implementation Agreements, the
non-performance of which is reasonably likely to have a Material Adverse Effect.
The Borrower will obtain and maintain in full force and effect at all times the
registration of this CFA with the appropriate Governmental Authorities.

         SECTION 5.10 AVAILABILITY AND TRANSFER OF FOREIGN EXCHANGE. All
requisite foreign exchange control approvals, licenses, consents and
authorizations, if any, by Nicaragua or any department or agency thereof will be
kept current and in full force and effect to assure (a) the ability of the
Borrower to make any and all payments to the Borrower contemplated by the
Project Documents and (b) and availability of Dollars to enable the Borrower to
perform all of its obligations hereunder and under all other Project Documents
in accordance with their respective terms.

         SECTION 5.11 NAME CHANGES; ETC. The Borrower shall not change its name
without the prior written consent of the Lender which shall not be unreasonably
withheld. The Borrower shall not adopt or change any trade name or its business
name without the prior written consent of the Lender which shall not be
unreasonably withheld. The Borrower shall execute and deliver to the Lender any
additional documents necessary or advisable to reflect any permitted adoption of
or change in its name, trade name or fictitious name.

         SECTION 5.12 CONSOLIDATION, MERGER, SALE OF ASSETS. Without the prior
written consent of the Lender, the Borrower will not: (a) wind up, liquidate or
abandon its affairs or enter into any transaction of merger or consolidation;
(b) convey, sell, lease or otherwise transfer (or agree to do any of the
foregoing at any future date) all or any part of its property or assets, except
in the ordinary course of business and except sales of equipment which is
uneconomic or obsolete or sales of assets that are no longer used by or useful
to the Project and which are promptly replaced (if applicable) by substitutes of
substantially equivalent utility to the replaced assets; or, (c) purchase or
otherwise acquire (in one or a series of related transactions) any part of






                                       27              CREDIT FACILITY AGREEMENT



the property or assets of any Person (other than purchases or other acquisitions
of inventory or materials or capital expenditures, each in the ordinary course
of business).

         SECTION 5.13 DISTRIBUTIONS; RESTRICTED PAYMENTS.

         (a) Distributions. Without the prior written consent of the Lender, the
Borrower will not return any capital or pay any profits to holders of any Share
Capital or authorize or make or incur or assume any obligation to make any other
distribution, payment or delivery of property or cash to the Shareholder or the
Sponsor as such or by way of payment on account of Subordinated Indebtedness, or
otherwise acquire, directly or indirectly, for consideration any ownership
interest in the Borrower now or hereafter outstanding, or set aside any funds
for any of the foregoing purposes, except if there is no Default and if at the
time of declaration and after payment of such dividend, the Borrower meets the
requirements of Section 5.34(b).

         (b) Restricted Payments. Without the prior written consent of the
Lender, the Borrower will not (i) make any payment or delivery of property or
cash to any Person on account of any subordinated debt service or (ii) redeem,
retire, purchase or otherwise acquire, directly or indirectly, for
consideration, any third party subordinated indebtedness, or (iii) set aside any
funds for any of the foregoing purposes, except in accordance with the Sponsor
Project Funding Agreement.

         SECTION 5.14 LEASES. Without the Lender's prior written consent, the
Borrower will not enter into any agreement or arrangements to lease any property
or equipment of any kind as lessee, except with respect to which the aggregate
lease payments do not exceed the equivalent of US$1,000,000 in any Fiscal Year
or $3,000,000 in the aggregate with respect to property other than Capital
Expenditures.

         SECTION 5.15 INDEBTEDNESS. Without the prior written consent of the
Lender, the Borrower will not contract, create, incur, assume or suffer to exist
any Indebtedness, except for the following types of Indebtedness ("Permitted
Indebtedness"):

         (a) The Loans. Indebtedness of the Borrower incurred under the
Financing Documents;

         (b) Working Capital. Indebtedness for working capital in the normal
course of business and pari passu with the Loans, which would not exceed at any
one time outstanding the equivalent of an amount equal to the sum of all
revenues received by the Borrower for the three month period prior to the date
such Indebtedness is incurred.

         SECTION 5.16 LIENS. Without the prior written consent of the Lender,
the Borrower will not, and will not agree to, create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets (real, personal or
mixed, tangible or intangible) of the Borrower, whether now owned or hereafter
acquired, provided that the provisions of this Section 5.16 shall not prevent
the creation, incurrence, assumption or existence of the following Liens (each,
a "Permitted Lien"):

         (a) Liens. Liens for current taxes, assessments and other governmental
charges, the payment of which is not at the time required;

         (b) Liens Hereunder. Liens created pursuant to the Security Documents;
and



                                       28              CREDIT FACILITY AGREEMENT



         (c) Statutory Liens. Mechanics', materialmen's, carrier's and similar
Liens securing obligations incurred in the ordinary course of business which (i)
are not past due or which are the subject of a Good Faith Contest by the
Borrower (unless during the pendency of such contest or as a result thereof the
Liens of the Security Documents could reasonably be expected to be materially
endangered or any material portion of the Site, or the Project could reasonably
be expected to become subject to loss or forfeiture) and (ii) which do not in
the aggregate materially detract from the value of the Site or the Project or
other assets of the Borrower or materially impair the use thereof; provided that
upon the commencement of any proceeding to foreclose or enforce any such
Permitted Lien, the Lender may take such action as it reasonably deems necessary
to protect the Lender's interests in the Site or the Project including, without
limitation, payment of amounts reasonably necessary to release any such Lien,
and in such event the Borrower shall reimburse the Lender upon demand for the
cost thereof together with interest thereon at a rate per annum equal to the
LIBOR Overnight Rate plus 4.50%.

         SECTION 5.17 GUARANTEES. Without the prior written consent of the
Lender, the Borrower will not enter into any Contingent Obligations.

         SECTION 5.18 SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS. Without the
prior written consent of the Lender, the Borrower will not form or have any
Subsidiaries, lend money or credit or make deposits (other than deposits with
the Lender or as provided in Section 5.28 of this Agreement or in relation to
the payment for goods and equipment in the ordinary course of business) with or
advances (except as specifically required by any Implementation Agreement) to
any Person, or purchase or acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to, any other Person,
except that the Borrower may instruct the Lender to make Permitted Investments
for the account of the Borrower up to amounts available in its current accounts
with the Lender's New York Branch; provided, that such Permitted Investments
shall mature no later than the Business Day prior to the day on which the
Borrower needs the proceeds thereof for payment of Debt Service or for any other
permitted use under this Agreement.

         SECTION 5.19 TRANSACTIONS. The Borrower will not enter into any
transaction or series of related transactions with any Person other than in the
ordinary course of business on terms at least as favorable to the Borrower as
available on an arm's-length basis from third parties and as permitted under the
PPA. The Borrower shall remain at all times the "supplier" and the "operator"
for purposes of the ENEL Agreements and will not, except in accordance with
Sections 4.1.10 and 4.1.11 of the PPA, assign, hire, contract with or otherwise
transfer to any Person the rights, duties and responsibilities under the ENEL
Agreements.

         SECTION 5.20 OTHER TRANSACTIONS. Without prior written consent of the
Lender, the Borrower will not 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, or enter into any
management contract or similar arrangement whereby its business or operations
are managed by any other Person, except as permitted under the PPA.

         SECTION 5.21 MODIFICATIONS OF ORGANIZATION DOCUMENTS; ADDITIONAL
AGREEMENTS; ASSIGNMENTS AND MODIFICATIONS OF AGREEMENTS; ETC.



                                       29



         (a) No Modifications. The Borrower will not, without the prior written
consent of the Lender, (i) amend or modify the Organization Documents of the
Borrower, (ii) its filings with the Nicaraguan Foreign Investment Committee in
existence as of the date hereof or (iii) change its Fiscal Year.

         (b) No Amendment or Transfer of Project Documents. Without the prior
written consent of the Lender which shall not be unreasonably withheld or
delayed, the Borrower shall not, directly or indirectly, terminate, cancel or
suspend, or permit or consent to any termination, cancellation or suspension of,
or enter into or consent to or permit the assignment of amend or modify the
terms of the rights or obligations of any party to, any of the Project
Documents. The Borrower shall not, directly or indirectly, amend, modify,
supplement or waive, or permit or consent to the amendment, modification,
supplement or waiver of, any of the provisions of, or give any consent under,
any of the Project Documents without the prior, written consent of the Lender
which shall not be unreasonably withheld or delayed.

         (c) No Assignments of Project Document Rights. Other than the
assignment of the Project Documents to the Lender, the Borrower will not assign
(except with respect to Permitted Liens) any of its rights or obligations under
any Project Document without the prior written consent of the Lender.

         (d) No PPA Termination Without Lender Consent. The Borrower will not
take any action under Section 12.3 of the PPA to require Termination (in terms
of the PPA) without the prior written consent of the Lender, which consent shall
not be unreasonably withheld or delayed.

         (e) No Force Majeure Claims Without Lender Consultation. The Borrower
shall not claim for itself Force Majeure as provided in Clause XI of the PPA
without prior consultation with the Lender.

         SECTION 5.22 NO OTHER BUSINESS. Without the prior written consent of
the Lender, the Borrower will not carry on any business other than in connection
with the completion and operation of the Project and will take no action whether
by acquisition or otherwise which would constitute or result in any material
alteration to the nature of that business or the nature or scope of the Project.

         SECTION 5.23 ABANDONMENT. The Borrower will not abandon or agree to
abandon the Project or place it or agree to place it on a "care and maintenance"
basis provided, however, that (a) nothing in this Section 5.23 shall prevent the
Borrower from making shut-downs necessary for repairs and maintenance at the
Power Plant in accordance with the ENEL Agreements or from placing the Power
Plant or any part thereof on a "maintenance" basis during any Force Majeure (not
within the control of the Borrower, which Force Majeure prevents the Borrower
from rehabilitating, maintaining or operating same); and (b) nothing in this
Section 5.23 shall be deemed to waive or limit in any way the right of the
Lender to declare an Event of Default as provided in Article 6 hereof.

         SECTION 5.24 IMPROPER USE. The Borrower will not use, maintain, operate
or occupy, or allow the use, maintenance, operation or occupancy of, any portion
of the Site or the Project for any purpose:



                                       30



         (a) Danger. Which may be dangerous, unless safeguarded as required by
Applicable Law (provided, however, that this clause (a) shall not be deemed to
prohibit the Borrower from carrying out the Project in accordance with the terms
of the PPA and the Drilling Contracts in a reasonable and prudent manner);

         (b) Violation of Applicable Law. Which violates any Applicable Law in
any material respect;

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

         (d) Effect on Insurance Coverage. Which may make void, voidable, or
cancelable or increase the premium of, any insurance (including, but not limited
to, the MIGA Contracts) then in force with respect to the Site or the Project or
any part thereof unless, in the case of an increase in premium, the Borrower
gives proof of payment of such increase; or

         (e) Other Purposes. Otherwise than for the intended purpose thereof in
the rehabilitation, maintenance and operation of the Power Plant.

         SECTION 5.25 BUSINESS PLAN EXPENDITURES. From and after the Effective
Date the Borrower may accelerate expenditures in any Fiscal Year in excess of
the projected annual costs set forth in the Business Plan provided such
expenditures are conducive to the earlier completion of the Project; the
Borrower shall not delay any such expenditures without the concurrence of the
Lender's Engineer.

         SECTION 5.26 ISSUANCE OR TRANSFER OF SHARES. The Borrower will not
issue any additional Share Capital or permit or consent to the transfer (by
sale, assignment or otherwise) of any Share Capital in the Borrower, except as
permitted under the Share Pledge and Sponsor Participation Retention Agreement.

         SECTION 5.27 AMENDMENT OF BUSINESS PLAN. Other than as provided in
Section 5.25, the Borrower will not, directly or indirectly, amend, modify,
allocate, re-allocate or supplement or permit or consent to the amendment,
modification, allocation, re-allocation or supplement of, any of the provisions
of the Business Plan, except with the prior written approval of the Lender.

         SECTION 5.28 BANK ACCOUNTS. The Borrower shall (a) establish and
maintain at all times bank accounts with the Lender's New York Branch, opening
such accounts with such documents as the Lender may require; and (b) maintain
all its other bank accounts with the Lender, except that the Borrower may
maintain bank accounts with balances not exceeding $1,000,000, plus, for a
period of 5 Business Days from the receipt thereof by the Borrower, an amount
equal to the payments from ENEL, or its equivalent in Cordobas or combination
thereof with Banco de Credito Centroamericano S.A. or such other Nicaraguan
financial institutions that are approved in advance by the Lender; provided,
however, that it shall not be a Default or Event of Default if the balances in
the accounts permitted hereunder exceed such permitted amounts solely as a
result of the Borrower's inability to exchange or transfer local currency, as a
result of disruption in or closure of the foreign exchange market, if and for so
long as such inability to convert or transfer continues and if there is not
otherwise an Event of Default.




                                       31              CREDIT FACILITY AGREEMENT



         SECTION 5.29 PRESS RELEASES; ADVERTISING. Neither the Borrower, the
Lender nor any Affiliate of the Borrower shall issue or consent to the issuance
of any press release or other announcement or advertisement that refers to the
provision of financing by the Lender for the Project without the prior written
consent of the Borrower, which consent shall not be unreasonably withheld or
delayed; except that no consent shall be required where (a) the issuance of such
press release, announcement or advertisement is required by Applicable Law or
(b) such press release, announcement or advertisement discloses only the names
of the parties involved in the provision of financing for the Project, together
with a general description of the Project, without disclosing any of the terms
of such financing.

         SECTION 5.30 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS. The Borrower
shall execute and deliver, from time to time as reasonably requested by the
Lender at the Borrower's expense, such other documents as shall be necessary or
advisable or that the Lender may reasonably request in connection with the
rights and remedies granted or provided for by the Project Documents, as
applicable, and to consummate the transactions contemplated therein. The
Borrower shall, at its own expense, take all reasonable actions that have been
or shall be requested by the Lender or that the Borrower knows are necessary to
establish, maintain, protect, perfect and continue the perfection of the first
priority security interests of the Lender created by the Security Documents and
shall furnish timely notice of the necessity of any such action, together with
such instruments, in execution form, and such other information as may be
required to enable the Lender to effect any such action. Without limiting the
generality of the foregoing, the Borrower shall (a) execute or cause to be
executed and shall file or cause to be filed such financing statements,
continuation statements, fixture filings and mortgages or deeds of trust in all
places necessary or advisable (in the opinion of counsel for the Lender) to
establish, maintain and perfect such security interests and in all other places
that the Lender shall reasonably request and (b) do everything necessary in the
reasonable judgment of the Lender to (i) create and perfect the Security with
respect to future assets covered by the Security Documents, (ii) maintain the
Security in full force and effect at all times and (iii) preserve and protect
the Collateral and protect and enforce its rights and title and the rights and
title of the Lender to the Collateral.

         SECTION 5.31 EMPLOYEES AND EMPLOYEE PLANS. The Borrower shall not
adopt, establish, maintain, sponsor, administer, contribute to, participate in,
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, the PPA and the Agreement of Association in Participation.

         SECTION 5.32 ACCOUNTING CHANGES. The Borrower shall not make any
significant change in accounting treatment or reporting, except as permitted by
GAAP.

         SECTION 5.33 DEBT SERVICE RESERVE ACCOUNT. The Borrower will establish
no later than the Loan I Closing Date a separate Debt Service Reserve Account,
maintained with the Lender's New York Branch, funded in Dollars with respect to
each of Loan I and Loan II, on the earlier of (x) the date of the Phase I
Completion Certificate or the Phase II Completion Certificate or (y) the last
day of the Loan I Availability Period or Loan II Availability Period, as the
case may be. The Lender will fund this obligation by drawing on the respective
Loan commitments and by crediting the DSRA with the amount required and adding
such amount to the outstanding balance of the respective Loan I or Loan II, and
with a balance sufficient at all






                                       32              CREDIT FACILITY AGREEMENT



times to cover Indebtedness For Borrowed Money in respect of Loan I and Loan II
falling due on the first and second Principal Repayment Dates of each respective
Loan, and in each case thereafter on the two next successive Principal Repayment
Dates. Notwithstanding the above, in the event the Borrower does not have
sufficient funds in bank accounts other than the DSRA, the Borrower may utilize
balances in the DSRA to make payments as required under Section 2.03 and Section
2.04 of this Agreement on any Principal Repayment Date provided the remaining
balance is not less than the amounts required for the next Principal Repayment
Date. In such a case, the Borrower must deposit funds to the DSRA within 180
days in an amount sufficient to comply with the requirements of this Section
5.33.

         SECTION 5.34 FINANCIAL RATIOS. The Borrower shall maintain at all times
the following financial ratios:

         (a) Leverage. A Senior Loan Debt to Borrower's Equity ratio not to
exceed 7:3 prior to the Loan II Closing Date and 3:1 thereafter; and

         (b) Coverage. A DSCR at a minimum level of 1.25:1, determined on and
reported to Lender on a quarterly basis.

            (i) Prior to the Loan II Closing Date

                  (A) During the first four quarters commencing on the Loan I
         Closing Date the ratio shall be calculated as projected EBITDA during
         the succeeding four quarters divided by the Debt Service for the
         successive four quarters beginning on the first Principal Repayment
         Date, on the basis of the amount outstanding under Loan I on the date
         of calculation.

                  (B) From a date which is one year after the Loan I Closing
         Date the ratio shall be calculated as EBITDA during the previous four
         quarters divided by the Debt Service for the successive four quarters
         beginning on the first Principal Repayment Date, on the basis of the
         amount outstanding under Loan I on the date of calculation.

            (ii) After the Loan II Closing Date:

                  (A) The ratio shall be calculated as EBITDA during the
         previous four quarters divided by the Debt Service for the succeeding
         four quarters in respect of Loan I and for the successive four quarters
         beginning on the first Principal Repayment Date applicable to Loan II
         and, in the event the Borrower declares a dividend, such dividend is
         permitted to be distributed under the terms of this Agreement and the
         Borrower distributes such dividend from Net Cashflow, the Borrower
         shall have reserved or set aside the payment of an amount from Net
         Cashflow as is necessary to maintain the DSCR at a minimum level of
         1.25:1 after such dividend is distributed.

         SECTION 5.35 COMPLETION CERTIFICATE. At the conclusion of each of Phase
I and Phase II, as determined by the Borrower, which determination in the case
of Phase II shall not be made prior to the completion of all geothermal wells
for which drilling has begun unless the Lender's Engineer confirms that no
Material Adverse Effect will result if such drilling is not completed, the
Borrower shall submit to the Lender a Phase I or II Completion Certificate, as
appropriate, certifying to the Lender that Phase I or Phase II, respectively,
has been completed.






                                       33              CREDIT FACILITY AGREEMENT



         SECTION 5.36 LENDER'S EXPERTS AND CONSULTANTS.

         (a) Lender's Engineer. The Lender may appoint an independent engineer
or engineering firm to act as the Lender's engineer (the "Lender's Engineer") to
observe and report on the drilling and construction works related to Phase II of
the Project, to approve each Application for Funding from the Loan II Commitment
as appropriate for the value of the work performed or to be performed, and in
general to report to the Lender on the progress of the Project;

         (b) Insurance Consultant. The Lender may appoint an independent
Insurance Consultant to advise the Lender regarding the adequacy of all
insurance coverage related to the Project and to make recommendations in respect
thereto; and

         (c) Borrower to Reimburse for Costs. All fees, disbursements and all
other related costs of the Lender's Engineer and Insurance Consultant shall be
reimbursed or paid by the Borrower no later than 30 days from the date of the
Borrower's receipt of the relevant invoice.

         SECTION 5.37 REGULATORY STATUS. The Borrower shall remain continuously
exempt from all regulation under PUHCA as a result of being a "foreign utility
company" under Section 33 of PUHCA or otherwise.

         SECTION 5.38 CHILD LABOR AND FORCED LABOR. The Borrower shall refrain
from employing Harmful Child Labor and/or using Forced Labor as defined in the
MIGA Guarantee.

         SECTION 5.39 INSURANCE PROCEEDS. The Borrower shall, in accordance with
Section 4.2.2.2 of the PPA, apply all insurance proceeds received under the
All-Risks property insurance to repair and rebuild the Project. In the event
that ENEL fails to present a claim under such All-Risks property insurance to
the insurers, the Borrower shall present such claim. In the case of business
interruption, insurance proceeds shall be paid to or received by the Lender and
held by it to be applied as if received from the Borrower as payment for amounts
due on the next Principal Repayment Date and, provided no Event of Default has
occurred and is continuing, any remaining amount shall be paid to the Borrower.

         SECTION 5.40 NOTARIZATION, CONSULARIZATION AND REGISTRATION OF CFA

         Within thirty (30) calendar days of the date hereof, this Agreement
shall be translated into Spanish by an official translator, notarized and
consularized as well as delivered for registration with each of the following:

                  (i) Ministerio de Hacienda y Credito Publico, Direccion
         General de Ingresos, for purposes of the Ley de Impuestos sobre la
         Renta of Nicaragua; and

                  (ii) Banco Central de Nicaragua, for purposes of the Ley
         Monetaria of Nicaragua.

         SECTION 5.41 MIGA PREMIUM PAYMENTS

         The Borrower will maintain with the Lender's New York Branch a balance
in Dollars equal to the premium in respect of the MIGA Guarantee, as notified to
the Borrower by either





                                       34              CREDIT FACILITY AGREEMENT



MIGA or the Lender, falling due for the next six-month coverage period not less
than two weeks prior to the due date.

         SECTION 5.42 PPA AMENDMENT.

         The Borrower shall use its reasonable efforts to ensure that an
amendment to the PPA substantially in the form attached as Schedule 5.43 has
been executed and is in full force and effect within 120 days of the date
hereof. Failure to receive such executed amendment shall not constitute a
Default or an Event of Default, but, the provision of Section 4.04(d) shall
apply.

         SECTION 5.43 MIGA ARBITRATION. The Borrower shall cooperate with the
Lender and take such actions as the Lender may request to enable the Lender to
obtain an Award (as such term is defined in the MIGA Guarantee) for purposes of
satisfying the provision of Section 17.2 of the MIGA Guarantee, provided that if
the Borrowers shall also elect to pursue an Award, the Lender shall consult with
the Borrower regarding such actions.


ARTICLE 6. EVENTS OF DEFAULT.

         Each of the following events or conditions set forth in Sections 6.01
through 6.17 (inclusive) shall be an event of default ("Event of Default")
hereunder:

         SECTION 6.01 PAYMENTS. The Borrower shall default in the payment when
due of any principal of any Loan or any interest on any Loan or any other
amounts owing to the Lender hereunder and such default shall continue unremedied
for five (5) or more Business Days.

         SECTION 6.02 REPRESENTATIONS, ETC. Any representation or warranty
confirmed or made in any Project Document by the Borrower or any obligor which
is an Affiliate of the Borrower, or in any writing provided by any of them in
connection with the execution and delivery of, or in connection with any
Application for Funding under this Agreement shall be found to have been
incorrect in any material respect when made or deemed to be made and shall
continue to be incorrect for a period of thirty (30) days after notice thereof
shall have been given to the Borrower by the Lender.

         SECTION 6.03 COVENANTS.

         (a) This Agreement. The Borrower shall fail to perform or observe any
covenant, term or agreement contained in 5.03 (Maintenance of Property;
Insurance), 5.21 (Modifications of Organization Documents; Additional
Agreements; Assignments and Modifications of Agreements; Etc.), 5.22 (No Other
Business), 5.28 (Bank Accounts), and 5.33 (Debt Service Reserve Account) hereof.

         (b) Other Agreements. The Borrower, the Sponsor, Ormat Industries Ltd.
or any other Affiliate of the Borrower shall fail to perform or observe any
other covenant, term or agreement contained in this Agreement or any other
Project Document to which it is a party and such failure shall not be remediable
or, if remediable, shall continue unremedied for a period of 30 days after the
earlier of (i) the date on which such failure shall have first become known to
the Borrower, the Sponsor, Ormat Industries Ltd. or other Affiliate of the
Borrower, as the case may be, and (ii) the date on which written notice thereof
shall have been received by the Borrower, the Sponsor, Ormat Industries Ltd. or
other Affiliate of the Borrower, as the case may be, from the Lender;




                                       35              CREDIT FACILITY AGREEMENT



provided that if (A) such failure cannot be cured within such 30-day period, (B)
such failure, in the reasonable judgment of the Lender, is susceptible of cure,
(C) the Borrower, the Sponsor, Ormat Industries Ltd. or other Affiliate of the
Borrower, as the case may be, is proceeding with diligence and in good faith to
cure such failure, (D) the existence of such failure in the reasonable judgment
of the Lender has not had and is not reasonably likely to have a Material
Adverse Effect and (E) the Lender shall have received an officer's certificate
signed by a Financial Officer of the Borrower, the Sponsor, Ormat Industries
Ltd. or other Affiliate of the Borrower, as the case may be, to the effect of
clauses (A), (B) and (C) above and stating what action the Borrower is taking to
cure such failure, then, such 30-day cure period shall be extended by up to an
additional 60 days as shall be necessary for the Borrower, the Sponsor, Ormat
Industries Ltd. or other Affiliate of the Borrower, as the case may be,
diligently to cure such failure.

         SECTION 6.04 DEFAULT UNDER OTHER AGREEMENTS.

         (a) Borrower. Any Indebtedness For Borrowed Money of the Borrower shall
be declared or for any reason any Person is entitled to declare it to be due and
payable, or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof taking into account any
applicable grace period.

         (b) ENEL Indebtedness. ENEL shall (i) default in any payment of any
Indebtedness For Borrowed Money in an aggregate principal amount exceeding $5
million beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness For Borrowed Money was created or (ii)
default in the observance or performance of any material condition or provision
of any agreement or condition relating to any Indebtedness For Borrowed Money in
an aggregate principal amount exceeding $10 million or contained in any
instrument or agreement evidencing, securing or relating thereto, the effect of
which default is to cause any such Indebtedness For Borrowed Money to become due
prior to its stated maturity.

         (c) The Sponsor. The Sponsor (i) defaults in any payment of any
Indebtedness For Borrowed Money in an aggregate principal amount exceeding $5
million beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness For Borrowed Money was created or (ii)
defaults in the observance of performance of any material condition or provision
of any agreement or condition relating to any Indebtedness For Borrowed Money in
an aggregate principal amount exceeding $10 million or contained in any
instrument or agreement evidencing, securing or relating thereto, the effect of
which default is to cause any such Indebtedness For Borrowed Money to become due
prior to its stated maturity.

         (d) ENEL Project Obligations. A default shall have occurred in the
performance of any material obligation by (i) ENEL or Nicaragua under any of the
Project Documents to which such Person is a party and such default shall
continue unremedied beyond the period of grace, if any, extended to such Person
with respect to such default, as specified in the Project Document under which
such obligation was created or (ii) any other party (other than the Persons
referred to in clause (i) of this Section 6.04(d)) under any of the Project
Documents and the existence of such default in the reasonable judgment of the
Lender has had or is reasonably likely to have a Material Adverse Effect and
such default has not been cured within 60 days.






                                       36              CREDIT FACILITY AGREEMENT



         SECTION 6.05 BANKRUPTCY, ETC. There shall have been entered against the
Borrower, Ormat Holding Corp., the Sponsor or ENEL a decree or order by a court
adjudging the Borrower or such other Person bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Borrower or such Person under any Applicable
Law; or appointing a receiver, liquidator, assignee, trustee, sequestrator,
special manager or administrator (or other similar official) of the Borrower or
such Person or of any substantial part of its property or other assets, or
ordering the winding up or liquidation of its affairs and the Borrower or such
other Person (w) fails to obtain the dismissal or stay on appeal of any such
proceeding or arrangement within forty-five (45) days of the commencement
thereof against it or (x) any other procedure for the relief of financially
distressed debtors is instituted against it and is not dismissed within
forty-five (45) days of such commencement; or the institution by the Borrower or
such other Person of proceedings to be adjudicated bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it; or the filing by it of a petition or answer or consent seeking
reorganization or debt relief under any Applicable Law; or the consent by it to
the filing of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, special manager or administrator (or other
similar official) of the Borrower or any such other Person or of any substantial
part of its property; or the making by it of an assignment or an arrangement for
the benefit of creditors; or the admission by it in writing of its inability to
pay its debts generally as they become due; or any other event shall have
occurred which under any Applicable Law would have an effect analogous to any of
those events listed above in this subsection with respect to the Borrower or
Ormat Holding Corp., the Sponsor or ENEL; or any corporate action is taken by
the Borrower or Ormat Holding Corp., the Sponsor or ENEL for the purpose of
effecting any of the foregoing; provided that any reorganization or
reconstruction of a company while solvent with the prior consent of the Lender,
such consent not to be unreasonably withheld or delayed, shall not be held to
constitute any event mentioned in this paragraph; and provided, further, that
(a) in connection with any other Person, no Event of Default shall be declared
under this Section 6.05 if (y) such Person has fully complied and continues to
fully comply with all of its obligations under all Project Documents to which
such Person is a party and (z) in the reasonable judgment of the Lender, such
Event of Default has not had and is not reasonably likely to have a Material
Adverse Effect.

         SECTION 6.06 PROJECT EVENTS.

         (a) Eviction. The Borrower shall cease to have the right to access and
use the Site; or

         (b) PPA Termination. Any event shall have occurred which entitles (i)
the Borrower to give a notice under Section 12.3 of the PPA, or (ii) ENEL to
give a notice under Section 12.2 of the PPA; or

         (c) Disposition of Interest. The Borrower shall (except as permitted by
Section 6.13 hereof) sell or otherwise dispose of any of its interest in the
Project.

         SECTION 6.07 MATERIAL ADVERSE EFFECT. One or more events, conditions or
circumstances shall exist or shall have occurred which, in the reasonable
judgment of the Lender, is reasonably likely to have a Material Adverse Effect.

         SECTION 6.08 PROJECT DOCUMENTS; SECURITY DOCUMENTS.





                                       37              CREDIT FACILITY AGREEMENT



         (a) Failure of Project Document. This Agreement or any of the other
Financing Documents or any of the Project Documents, or any material provision
hereof or thereof (i) is or becomes invalid, illegal or unenforceable or any
party thereto (other than the Lender) shall so assert, unless a Good Faith
Contest is instituted and the assertion is withdrawn within 30 days thereof and
prior to the next date of Disbursement, or (ii) ceases to be in full force and
effect, or shall cease to give the Lender the Collateral, rights, powers and
privileges purported to be created thereby, therein or hereby or any party
thereto (other than any Lender) shall so assert subject to the last clause of
this Section 6.08 (a)(i).

         (b) Failure of Security Document. Except as permitted by Section 5.16
hereof, the Collateral or any component part thereof for any reason fails to
constitute a valid and perfected first priority Lien or ceases to be in full
force and effect or the Borrower or the grantor or pledgor thereof shall so
assert provided, however, that if and for so long as the Sponsor Project Funding
Agreement and the Contingent Guarantee Agreement remain in full force and
effect, the cancellation, invalidity or termination of the coverage for
Expropriation as provided in Addendum A, Paragraphs 1 and 3 of the MIGA
Guarantee shall not be an Event of Default under this Section 6.08(b).

         SECTION 6.09 OWNERSHIP OF THE BORROWER. The Sponsor shall cease to
maintain Control of the Borrower or shall cease to own, directly or indirectly,
all of the ownership interests in the Borrower free and clear of all Liens other
than as permitted by the Share Pledge and Sponsor Participation Retention
Agreement (it being understood that, for purposes of this Section 6.09, if the
Sponsor owns ownership interests in the Borrower indirectly, the percentage of
its ownership in the Borrower shall be the product of the percentage ownership
it has in any intermediate subsidiary or other entity and the percentage
ownership which the subsidiary or other entity owning ownership interests in the
Borrower directly has in the Borrower).

         SECTION 6.10 JUDGMENTS. One or more judgments or decrees shall be
entered (a) against the Borrower involving in the aggregate a liability (not
paid or fully covered by insurance) of $1 million or more; or (b) prior to the
date on which the Sponsor shall cease to be an obligor, against the Sponsor or
involving in the aggregate a liability (not paid or fully covered by insurance)
of $1 million or more with respect to the Sponsor which liability in the
reasonable judgment of the Lender has had or is likely to have a Material
Adverse Effect; and in any such case all such judgments or decrees shall not
have been vacated, discharged, or stayed or bonded pending appeal within 60 days
after the entry thereof.

         SECTION 6.11 GOVERNMENTAL ACTION. Any government or Governmental
Authority shall have condemned, nationalized, seized, or otherwise expropriated
all or any substantial part of the property or other assets of the Borrower or
shall have assumed custody or control of such property or other assets or of the
business or operations of the Borrower or shall have taken any action for the
dissolution or disestablishment of the Borrower or any action that would prevent
the Borrower or its officers from carrying on its business or operations or a
substantial part thereof.

         SECTION 6.12 PERMITS. The Borrower, ENEL, or any of their respective
Affiliates shall fail to obtain, renew, maintain or comply in all material
respects with any Governmental Approval set forth in Schedule 3.11, except as
noted thereon, or any license, approval or






                                       38              CREDIT FACILITY AGREEMENT



consent referred to in Section 4.02(c); or any such Governmental Approval or
license, approval or consent shall be rescinded, terminated, suspended, modified
or withheld or shall be determined to be invalid or shall cease to be in full
force and effect; or any proceeding shall be commenced by or before any
Governmental Authority for the purpose of rescinding, terminating, suspending,
modifying or withholding any such Governmental Approval or license, approval or
consent and such proceeding is not dismissed within 60 days; and such failure,
rescission, determination of invalidity, termination, suspension, modification,
withholding, cessation or commencement is reasonably likely to have a Material
Adverse Effect.

         SECTION 6.13 TRANSFER OF COLLATERAL; EVENT OF LOSS; DIMINUTION OF
         PROPERTY RIGHTS.

         (a) Transfer; Event of Loss. Title to or any right in all or any part
of the Collateral, covered by the Security Documents (other than as permitted
pursuant to this Agreement, including Section 5.12 hereof) shall become vested
in any party other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of law or otherwise, or (iv)
there shall have occurred an Event of Loss with respect to which adequate
compensation has not been paid, or it is reasonably unlikely that adequate
compensation will be paid.

         (b) Diminution. Except as permitted pursuant to any Financing Document
or this Agreement, the Borrower hereafter grants or permits any easement or
dedication, files any plat, declaration or restriction or enters any lease or
sub-lease concerning the Site, the Collateral or the Power Plant and the effect
thereof is determined by the Lender, in its reasonable discretion, to have a
Material and Adverse Effect.

         SECTION 6.14 COMPLETION BY DATE CERTAIN. A determination by the Lender,
in each case in its reasonable judgment, that the Project is not reasonably
likely to be completed either within the financial budget or on time as
established under the Business Plan; provided that no Event of Default shall be
declared as a result of any such determination if all of the following
conditions are met: (i) within 30 days after notice by the Lender to the
Borrower of such determination, the Borrower submits to the Lender a plan, in
form and substance acceptable to the Lender, specifying the plan of action the
Borrower intends to take to remedy the condition described herein and (ii) the
Borrower proceeds diligently in implementing such plan to the Lender's
reasonable satisfaction and provides reports periodically as the Lender may
request of the status of such implementation and from time to time amends such
plan with the Lender's consent (which shall not be unreasonably withheld) so
that such plan remains likely to achieve its aims.

         SECTION 6.15 SPONSOR PROJECT FUNDING AGREEMENT. The failure of the
Sponsor to make or cause to be made any subordinated loan or equity contribution
or the failure of the Sponsor to pay any amount required to be paid by it under,
or otherwise to comply with any of the terms of, the Sponsor Project Funding
Agreement.

         SECTION 6.16 CONTINGENT GUARANTEE AGREEMENT. The failure of Ormat
Industries Ltd. to pay any amount required to be paid by it under or otherwise
to comply with any of the terms of the Contingent Guarantee Agreement.





                                       39              CREDIT FACILITY AGREEMENT



         SECTION 6.17 MIGA CONTRACTS. Any of the MIGA Contracts shall not be
valid, binding and in full force and effect.

         SECTION 6.18 REMEDIES. Notwithstanding anything herein or in any
Financing Document or elsewhere to the contrary, upon the occurrence of an Event
of Default, and at any time thereafter, if such Event of Default is continuing,
the Lender, by written notice to the Borrower and the Sponsor, may declare
immediately due and payable (i) all or any portion of the principal amounts of
the Loans then outstanding, including accrued interest thereon to the date of
payment, and (ii) all other amounts owing under this Agreement. Except as
expressly provided in this Article 6, presentment, demand, protest, promptness,
dishonor and all other notices of any kind are hereby expressly waived. The
aforementioned right to accelerate is in addition to and not a substitute for
any other rights and remedies, in law or in equity, available to the Lender
under this Agreement and other Applicable Laws, including, without limitation or
prejudice to the Lender's other rights and remedies, the following:

         (a) Suspension. The Lender's right to refuse, and the Lender not to be
obligated, to make any Disbursements or make any payments from any account,
including (but not limited to) the Debt Service Reserve Account;

         (b) Enforcement of Rights. Exercise any and all rights and remedies
available to it under any of the Project Documents.


ARTICLE 7. MISCELLANEOUS

         SECTION 7.01 NOTICES.

         (a) Procedure. All notices, requests and other communications shall be
in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Borrower by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified below, and (ii) shall be followed promptly by
the mailing or delivery of a hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified for notices below; or,
as directed to the Borrower or the Lender, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Borrower and the Lender.

         (b) Effectiveness. All such notices, requests and communications shall,
when faxed, be effective when transmitted in legible form by facsimile machine,
or if mailed, upon the seventh day after the date deposited into the national
mail, or if delivered, upon delivery; except that notices pursuant to Article 2
shall not be effective until actually received by the Lender, and notices,
requests and communications received on a day which is not a Business Day, shall
be deemed received on the next following Business Day.

         (c) Lender's Right to Rely. Any agreement of the Lender to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Borrower. The Lender shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Borrower to
give such notice and the Lender shall not have any liability to any other Person
on account of any action taken or not taken by the Lender in reliance upon such
telephonic or facsimile notice. The obligation of the Borrower to repay the
Loans shall not be




                                       40              CREDIT FACILITY AGREEMENT



affected in any way or to any extent by any failure by the Lender to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Lender of a confirmation which is at variance with the terms understood by the
Lender to be contained in the telephonic or facsimile notice.

         (d) Addresses.

         Addresses:

         If to the Borrower:

         ORMAT MOMOTOMBO POWER COMPANY
         c/o Maples and Calder, Attorneys in Law
         Ugland House
         P.O.B. 309, George Town
         Grand Cayman
         Cayman Islands, British West Indies
         Attn: President
         Tel: 1-345-949-8066
         Fax: 1-345-949-8080
         and with a copy to:

         c/o Ormat International, Inc.
         980 Greg Street
         Sparks, Nevada 89431-6039
         Attn: President
         Tel: (775) 356-9029
         Fax: (775) 356-9039

         If to the Lender:

         BANK HAPOALIM B.M.
         Foreign Trade Operations Center, Export Unit
         40 Hamasger Street
         Tel-Aviv 67131, Israel
         Attn: I. Gottlieb
         Tel: 011-972-3-714-6613/6616
         Fax: 011-972-3-714-6619
         Telex: 342342 or 341453

         Copy to:

         BANK HAPOALIM B.M.
         Head Office/Corporate Banking Division
         Trade Finance Department
         41-45 Rothschild Boulevard
         P.O. Box 27
         Tel-Aviv 61000, Israel




                                       41              CREDIT FACILITY AGREEMENT



         Attn:  E. Arnon
         Tel:  011-972-3-567-3628/3622
         Fax:  011-972-3-567-6572/4548
         Telex:  341453 or 342342

         SECTION 7.02 ENGLISH LANGUAGE. All documents to be furnished or
communications to be given or made under this Agreement, or any other Financing
Document shall be in the English language or, if in another language, shall be
accompanied by a translation into English certified by a representative of the
Borrower, which translation shall be the governing version among the Borrower
and the Lender.

         SECTION 7.03 INDEMNITIES AND EXPENSES.

         (a) Indemnity Obligation. Subject to Section 7.03(b), whether or not
the transactions contemplated hereby are consummated, the Borrower shall
indemnify and hold the Lender and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, claims, suits, costs, charges, expenses and
disbursements (including, without limitation, Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans) be imposed on, incurred by or asserted against any such
Indemnified Person in any way relating to or arising out of this Agreement or
any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, any investigation, litigation or
proceeding (including any bankruptcy, insolvency proceeding or appellate
proceeding) related to or arising out of this Agreement, or any other Project
Documents or the Loans or the use of the proceeds thereof or any Environmental
Claim relating to the Borrower or the Project or arising out of the use of the
Power Plant or Site or any actual or alleged presence of Hazardous Materials on,
under or at the Power Plant or Site, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely from
the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all amounts due under this
Agreement. The Lender and each other Indemnified Person shall (1) use its
reasonable efforts to, upon its becoming aware of any event which may result in
the Borrower being required to perform any of its obligations under this Section
7.03(a), promptly notify the Borrower (provided that failure to so notify shall
not mitigate the obligations of the Borrower hereunder), (2) upon request from
the Borrower consult the Borrower regarding any step (including any step which
may mitigate the effect of such event) it proposes to take in respect of such
event, and (3) obtain the prior written consent of the Borrower before entering
into any settlement or compromise in relation to any such claims, actions or
suits.

         (b) Expenses. The Borrower shall: (i) subject to the last sentence of
this Section 7.03(b) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Lender as soon as practicable but, in any
event, within 30 days after demand for all reasonable costs and expenses
incurred by the Lender, in connection with the development, preparation,
negotiation, delivery, printing, registration, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this




                                       42              CREDIT FACILITY AGREEMENT



Agreement, any Financing Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including reasonable travel expenses, communication costs,
fees and expenses of outside professional or technical advisers or consultants,
and including Attorney Costs incurred by the Lender, with respect thereto; and
(ii) pay or reimburse the Lender as soon as practicable but, in any event,
within 30 days after demand for all reasonable costs and expenses (including
Attorney Costs) incurred by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or
any other Financing Document during the existence of an Event of Default or
after acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any bankruptcy or insolvency
proceeding or appellate proceeding). In addition, the Borrower shall, whether or
not the transactions contemplated hereby are consummated, pay or reimburse the
Lender on the each of the Loan I Closing Date and Loan II Closing Date for all
accrued and unpaid reasonable costs, fees and expenses to the extent then due
and payable on such date of payment (including Attorney Costs, Commitment Fees
and any amounts arising from any indemnities) incurred by the Lender, prior to
such date in connection with the development, preparation, negotiation,
delivery, printing, administration, enforcement and execution of, and any
amendment, supplement, waiver or modification to (in each case whether or not
consummated), this Agreement, any Financing Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, provided that Attorney Costs shall
include such costs to the extent invoiced prior to or on such date of payment.

         (c) Maximum Amount Permitted under Applicable Law. To the extent that
the undertaking in the preceding paragraphs of this Section 7.03 may be
unenforceable because it is violative of any law or public policy, the Borrower
will contribute the maximum portion that it is permitted to pay and satisfy
under Applicable Law to the payment and satisfaction of such undertakings.

         (d) Late Payment. All sums paid and costs incurred by the Lender in
respect to any matter indemnified hereunder shall bear interest at the LIBOR
Overnight Rate plus 4.50% from the date so paid until reimbursed by the
Borrower, and all such sums and costs shall be added to the debt and be secured
by the Security Documents and shall be immediately due and payable on demand.

         (e) Judgment Currency. If any arbitration award, judgment or order is
given or made for the payment of any amount due under this Agreement or any
other Project Document and such arbitration award, judgment or order is
expressed in a currency other than Dollars, the Borrower shall, subject to this
Section 7.03(e), indemnify the Lender against and hold it harmless from all loss
and damage incurred by the Lender as a result of any variation in rates of
exchange between the date of such arbitration award, judgment or order and the
date of payment (or, in the case of partial payments, the date of each partial
payment) thereof. This indemnity shall constitute an obligation separate and
independent from the other obligations contained in this Agreement or any other
Project Document, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by the Lender from time to
time, and shall continue in full force and effect notwithstanding any
arbitration award, judgment or order for a liquidated sum in respect of an
amount due under this Agreement or any other Project Document.





                                       43              CREDIT FACILITY AGREEMENT



         SECTION 7.04 SURVIVAL. All indemnities set forth herein and the
obligations of the Borrower to pay additional costs as set forth in Article 2
hereof shall survive the execution and delivery of this Agreement and the making
and repayment of the Loans.

         SECTION 7.05 GOVERNING LAW; SUBMISSION TO JURISDICTION.

         (a) Governing Law. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
UNITED STATES OF AMERICA WITHOUT REFERENCE TO THE CONFLICTS OF LAWS PROVISIONS
THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

         (b) Submission to Jurisdiction. Any legal action or proceeding against
the Borrower with respect to this Agreement, or any Financing Document may be
brought in the courts of the State of New York in the County of New York or of
the United States for the Southern District of New York and, by execution and
delivery of this Agreement, the Borrower hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. The Borrower agrees that a judgment, after exhaustion
of all available appeals, in any such action or proceeding shall be conclusive
and binding upon the Borrower, and may be enforced in any other jurisdiction,
including without limitation Nicaragua, by a suit upon such judgment, a
certified copy of which shall be conclusive evidence of the judgment. The
Borrower hereby irrevocably designates, appoints and empowers CT Corporation
System, on the date hereof, with offices at 111 Eighth Avenue, New York, New
York 10011, as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and in respect of its property, service of
any and all legal process, summons, notices and documents which may be served in
any such action or proceeding. If for any reason such designee, appointee and
agent shall cease to be available to act as such, the Borrower agrees to
designate a new designee, appointee and agent in New York City on the terms and
for the purposes of this provision satisfactory to the Lender. The Borrower
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Borrower, at
its address set forth in Section 7.01 hereof, such service to become effective
30 days after such mailing. Nothing herein shall affect the right of the Lender
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in Nicaragua or in any
other jurisdiction.

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

         (d) Waiver of Jury Trial. WITH REGARD TO THIS AGREEMENT, EACH OF THE
BORROWER AND THE LENDER HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY, SUCH WAIVER
ACKNOWLEDGED HEREBY AS BEING A VOLUNTARY, KNOWING AND INTELLIGENT WAIVER BY EACH
PARTY HERETO.



                                       44              CREDIT FACILITY AGREEMENT



         SECTION 7.06 SUCCESSORS AND ASSIGNS.

         (a) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto except that the Borrower may not assign or otherwise transfer all or any
part of its rights or obligations under this Agreement without obtaining the
prior written consent of the Lender. For the avoidance of doubt, any merger,
reincorporation, corporate restructuring or other business combination involving
any shareholder of any Lender (and any other transaction related to such
shareholder which is undertaken in connection with any such transactions) shall
not be construed as an assignment or transfer requiring any consent under this
Section 7.06(a).

         (b) Disposition of Indebtedness. Subject to the following restrictions,
the Lender may at any time sell, assign, transfer, negotiate, or otherwise
dispose of, in whole or in part, its rights and obligations under this Agreement
or the Loans and such sale, assignment, negotiation or disposition shall be
evidenced by an assignment and acceptance agreement, in form and substance
acceptable to the Lender and to the Borrower, appropriately completed and
executed by the assigning Lender and the assignee. Such executed assignment and
acceptance agreement shall be delivered to the Lender and the Borrower
immediately after execution and shall not be effective until all conditions set
forth therein and in this Section 7.06 shall have been satisfied.

            (i) The Lender may assign its rights and obligations under this
Agreement and/or the Loans only to a Person approved by the Borrower (which
approval in each case shall not be unreasonably withheld) in its sole
discretion; provided, that no Borrower approval shall be required in the event
of such an assignment by a Lender to an Affiliate of the Lender.

            (ii) The exercise of such right by the Lender is subject in all
cases to the conditions that immediately thereafter the Lender shall have given
written notice of any such transfer to the Borrower, and the transferee shall
(a) not have, or shall have effectively waived, any right pursuant to Section
2.09 or 2.14 to claim from the Borrower any additional amounts above and beyond
those which could have been claimed by the transferor had it continued to own
its Loans hereunder and (b) not have any right pursuant to Section 2.09 or 2.14
not possessed by the transferor had it continued to own its Loans hereunder.

         (c) Succession. From and after the date that the Lender has received an
executed assignment and acceptance agreement (in accordance with the terms of
Section 7.06(b) and the conditions set forth in such assignment and acceptance
agreement have been satisfied, (i) the assignee Lender thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such assignment and acceptance agreement, shall have
the rights and obligations of a Lender hereunder and under the other Financing
Documents and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Financing Documents have been assigned
by it pursuant to such assignment and acceptance agreement, relinquish its
rights and be released from its obligations under the Financing Documents.

         (d) Deemed Amendment. Immediately upon the satisfaction of all other
conditions in this Section 7.06 and in such assignment and acceptance agreement,
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the assignee Lender and the
resulting adjustment of the Total Commitment arising therefrom.




                                       45              CREDIT FACILITY AGREEMENT



The Total Commitment allocated to each assignee Lender shall reduce such Total
Commitment of the assigning Lender pro tanto.

         (e) Disposition Acknowledged Upon Notice. The Borrower may treat the
Lender as the owner of the Loans until written notice of transfer or assignment
shall have been received by it.

         (f) Participations. Notwithstanding anything to the contrary contained
in this Section 7.06, each Lender may grant participations, in whole or in part,
in its rights and obligations under this Agreement and the Loans without notice
to the Borrower and without restriction; provided that (i) the Lender's
obligations under this Agreement shall remain unchanged, (ii) the Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and obligations
under this Agreement, and the Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans of the Lender.

         SECTION 7.07 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

         SECTION 7.08 RIGHT OF SETOFF. In addition to any rights now or
hereafter granted under Applicable Law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, the
Lender is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special) including,
without limitation, the accounts established under Sections 5.28(a) and 5.33,
and any other Indebtedness at any time held or owing by the Lender (including
without limitation by branches and agencies of the Lender, wherever located), to
or for the credit or the account of the Borrower against and on account of the
Loans and any other Indebtedness of the Borrower to the Lender, under this
Agreement, or any of the other Financing Documents, including, without
limitation, all claims of any nature or description arising out of or connected
with this Agreement, or any other Financing Document, irrespective of whether or
not the Lender shall have made any demand hereunder and although said
liabilities or claims, or any of them, shall be contingent or unmatured.

         SECTION 7.09 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Lender in exercising any right, power or privilege hereunder or any
other Financing Document and no course of dealing between the Borrower and the
Lender shall impair any such right, power or privilege or operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or any other Financing Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein, or in any other
Financing Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Lender would otherwise have. No notice to
or demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Lender to any other or further action in any
circumstances without notice or demand.





                                       46              CREDIT FACILITY AGREEMENT



         SECTION 7.10 SEVERABILITY. Any provision of this Agreement and any
other Financing Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability but that shall not invalidate the remaining
provisions of this Agreement or any other Financing Document or affect such
provision in any other jurisdiction.

         SECTION 7.11 CALCULATION. Except as otherwise provided, all accounts,
financial determinations and calculations to be made under, or for the purposes
of, this Agreement shall be determined in accordance with GAAP, applied on a
consistent basis and, except as otherwise required to conform to the definitions
contained in Appendix A of this Agreement or any other provisions of this
Agreement, shall be calculated from the then most recently issued quarterly
financial statements which the Borrower is obligated to furnish to the Lender
from time to time, as provided hereunder; provided, however, that (a) if the
relevant quarterly financial statements should be in respect of the last quarter
of a Fiscal Year then such calculations shall be made from the audited financial
statements for the relevant Fiscal Year, and (b) if there should occur any
material adverse change in the financial condition or results of operations of
the Borrower after the end of the period covered by the relevant financial
statements, then such material adverse change shall also be taken into account
in calculating the relevant figures.

         SECTION 7.12 HEADINGS DESCRIPTIVE. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.

         SECTION 7.13 AMENDMENT OR WAIVER. Neither this Agreement nor any terms
hereof may be changed, waived, discharged or terminated unless, such change,
waiver, discharge or termination is in a writing signed by the Lender and the
Borrower.

         SECTION 7.14 DISCLAIMER. The Lender shall not be responsible in any way
for the performance of the Project Documents, and no claim with respect to the
performance of the Project Documents will affect the obligations of the Borrower
under this Agreement or any other Financing Document.

         SECTION 7.15 PAYMENTS SET ASIDE. To the extent that the Borrower makes
a payment to the Lender or the Lender exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party, in connection with any
bankruptcy or insolvency proceeding or otherwise, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred.

         SECTION 7.16 CONFIDENTIAL INFORMATION. The Lender agrees that it (a)
shall hold all non-public information obtained by it pursuant to the
requirements of the Financing Documents, which have been identified in writing
as non-public information by the Sponsor, in accordance with its customary
procedures for handling confidential information of such nature and in
accordance with reasonable internal practices, and (b) may make disclosure
reasonably required by a potential assignee of the Lender or by a potential
participant in the Loans made or to be made by the Lender or of the Collateral
in connection with the contemplated assignment or participation if such
potential assignee or participant executes an agreement to keep such





                                       47              CREDIT FACILITY AGREEMENT



disclosure confidential substantially in accordance with the terms of this
clause; provided, however, no confidentiality obligation shall apply to any
information that (x) is generally available to the public, (y) was already known
to the Lender on a non-confidential basis on the date of receipt, or (z) is
subsequently disclosed to the Lender on a non-confidential basis by a third
party not having a confidential relationship with the Sponsor with respect to
such information. Notwithstanding the foregoing, the Lender shall be free to
disclose any such information or data to its attorneys, outside engineers,
experts and auditors and shall be free to disclose any such information
otherwise (a) to the extent required by Applicable Law or by any Governmental
Authority, except as provided in the last sentence of this Section 7.16, it is
expressly understood that all obligations and liabilities of the Borrower under
this Agreement, and the other Project Documents to which the Borrower is a party
and any other related document, agreement or instrument executed by the Borrower
are solely obligations of the Borrower, provided, that such limitation of
liability shall not apply to any other party hereto if and to the extent that
such party commits fraud or misappropriation of earnings, revenues, profits or
proceeds from the Borrower or the Project. Notwithstanding anything herein to
the contrary, nothing herein shall limit, or be construed or deemed to limit,
the liability of any other party under any Project Document to which such is a
party in its individual capacity.

         SECTION 7.17 NO RECOURSE. Except as provided in the last 2 sentences of
this Section 7.17 neither the Sponsor nor any Affiliate of the Sponsor (other
than the Borrower), nor its or their respective officers, directors,
stockholders, controlling persons or employees (each, a "Non-Recourse Party"),
shall have any personal liability for any amounts payable by the Borrower
hereunder or under any other Project Document or for the performance of any
covenant, agreement or obligation of the Borrower, or for the breach of any
representation, warranty or covenant of the Borrower under this Agreement or any
other Project Document, agreement, undertaking, certificate or other document
delivered by or on behalf of the Borrower in connection with this Agreement, and
therefore no judgment or recourse shall be sought or enforced against any
Non-Recourse Party for the payment or performance of the obligations of the
Borrower under any Project Document or any other such agreement, undertaking,
certificate or document executed by the Borrower. Except as provided in the last
sentence of this Section 7.17, it is expressly understood that all obligations
and liabilities of the Borrower under this Agreement and the other Project
Documents to which the Borrower is a party and any other related document,
agreement or instrument executed by the Borrower are solely obligations of the
Borrower, provided, that such limitation of liability shall not apply to a
Non-Recourse Party if and to the extent that such Non-Recourse Party commits
fraud causing material damage or loss to the Borrower, the Project or the Lender
or misappropriates earnings, revenues, profits or proceeds from the Borrower or
the Project. Notwithstanding anything herein to the contrary, nothing herein
shall limit, or be construed or deemed to limit, the liability of any
Non-Recourse Party under any Project Document to which such Non-Recourse party
is a party in its individual capacity.




                                       48              CREDIT FACILITY AGREEMENT



         IN WITNESS WHEREOF, the parties hereto, acting through their duly
authorized representatives, have caused this Agreement to be signed in their
respective names as of the date set forth below.

                                           ORMAT MOMOTOMBO POWER COMPANY,
                                           as Borrower

                                           By: /s/ Connie Stechman
                                               ---------------------------------
                                               Name:  Connie Stechman
                                               Title: Assistant Secretary

                                           BANK HAPOALIM B.M.,
                                           as Lender

                                           By: /s/ Ehud Arnon
                                               ---------------------------------
                                               Name:  Ehud Arnon
                                               Title: Head of Foreign Trade






                                  SCHEDULE 2.02
                         FORM OF APPLICATION FOR FUNDING

                             APPLICATION FOR FUNDING

                                                           Date
                                                                ----------------

Bank Hapoalim B.M.
Head Office/Corporate Banking Division
Trade Finance Department
41-45 Rothschild Boulevard
P.O. Box 27
Tel-Aviv 61000, Israel

Attention: E. Arnon

Subject: Momotombo Field and Power Plant Rehabilitation (Nicaragua)
         Loan [I][II](1)
         Application for Funding No.
                                     -----------------
         Requested Date of Disbursement
                                        ----------------

     In accordance with the Credit Facility Agreement dated as of _________,
2000 (the "Agreement"), between Ormat Momotombo Power Company (the "Borrower")
and Bank Hapoalim B.M. (the "Lender"), we hereby request the Lender to make a
Disbursement on or before ________________________, 20___(2) under the
referenced Loan thereby established, in the amount of US$ ______________, of
which the amount of US$ _____________ is to be credited to our current account
no. ___________ with the Lender's New York Branch, and the amount of US
$ _______________ is to be credited to our DSRA No. _______________ with the
Lender's New York Branch. The Borrower hereby requests such amount for the
purposes specified in Section 2.02(a) of the Agreement.

     Attached to this Application for Funding is an itemized statement of
payments (the "Itemized Statement of Payments") with respect to the amounts
requested hereunder. [We enclose therewith the most recent version of the
monthly implementation reports, required under Section 5.01(f) of the Agreement,
detailing the implementation and progress of the Project.]

     We hereby certify that:

----------
(1) Insert designation for applicable Loan: Loan I for Application for Funding
under Phase I; Loan II for Application for Funding under Phase II.

(2) Insert date which is twelve Business Days after the date of this Application
for Funding.


                                       50



     1. All payments specified in the attached Itemized Statement of Payments
have been made or will be made pursuant to the Business Plan, and we have agreed
to pay, or we have paid, as the case may be, the exact amounts set forth in the
attached Itemized Statement of Payments for the items specified therein.

     2. We have or will have received from the Sponsor, not later than two days
prior to the date of the Disbursement requested hereunder, an advance in the
amount of US$ _______________, which, when added to Borrower's Equity, is
sufficient to comply with the terms of Section 5.34(b) of the Agreement.

     3. As of the date hereof, the Senior Loan Debt is equal to US$
_____________, the Borrower's Equity is equal to US$ _____________, and the
Senior Loan Debt to Borrower's Equity ratio does not exceed [7:3] [3:1].(3)
After giving effect to the Disbursement requested hereunder: (a) the Senior Loan
Debt shall be equal to US$ ____________; (b) the Borrower's Equity, including
all amounts advanced pursuant to paragraph 2 above, shall be equal to US$
_________________; and, (c) the Senior Loan Debt to Borrower's Equity ratio does
not exceed [7:3] [3:1].(4)

     4. The DSCR at the end of the calendar quarter ended _______ ___, ______
(which date is not more than 180 days prior to the date hereof) was not less
than 1.25:1, as provided in and determined in accordance with Section 5.34(b) of
the Agreement.

     5. As of the date of the Disbursement to be made pursuant to this
Application for Funding:

     (a) Except as provided in the next sentence, each and every one of the
representations and warranties made by us in the Agreement (other than the
representations made pursuant to Section 3.07(b) therein) and under each Project
Document to which we are a party are true and shall remain so on the date of the
requested Disbursement. The following representations and warranties are and
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on the date originally
made under the Agreement: (i) except as fully reflected in each financial
statement delivered prior to the Disbursement pursuant to Sections 5.01(a) and
5.01(b) of the Agreement, there have not been, as of the date of each such
financial statement, any liabilities or obligations with respect to the Borrower
of any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect, and (ii) the Borrower does
not know of any reasonable basis for the assertion against the Borrower of any
liability or obligation of any nature whatsoever that is not fully reflected in
the financial statements delivered pursuant to Sections 5.01 (a) and 5.01 (b) of
the Agreement which, either individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect.

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

----------
(3) The ratio of 7:3 must be valid in respect of a Disbursements under Loan I,
and the ratio of 3:1 must be valid in respect of a Disbursement under Loan II.

(4) The ratio of 7:3 must be valid in respect of a Disbursements under Loan I,
and the ratio of 3:1 must be valid in respect of a Disbursement under Loan II.


                                       51



     (c) The Security and Security Documents remain in full force and effect and
continue to constitute, in each and every case, a first priority security
interest and charge over the Collateral.

     (d) Each of the Project Documents which has been entered into or which is
required to have been entered into at the time of Disbursement continues to
remain in full force and effect and no material breach or default has occurred
under any such Project Document. No event of Force Majeure under any Project
Documents has occurred which has a Material Adverse Effect.

     (e) No event or events has occurred which have or are reasonably likely to
have a Material Adverse Effect.

     (f) The Insurance Contracts and the Insurance Assignments thereof continue
to remain in full force and effect and all premiums and other amounts due to
date under each of the Insurance Contracts and the Shareholder's MIGA Guarantee
have been paid.

     (g) We are in compliance in all material respects with all provisions of
the ENEL Agreements.

     6. [For purposes of Loan II, we have furnished the Lender's Engineer with
copies of this Application for Funding, the Itemized Statement of Payments
attached hereto and all other documents submitted herewith.] [Pursuant to
Section 2.02(a) of the Agreement, this first Application for Funding under Loan
I does not include an implementation report, as such would be otherwise required
under Section 5.01(f) of said Agreement.]

     7. All of the other conditions precedent set forth in Article 4 of the
Agreement have been satisfied with respect to the requested Disbursement or
shall have been satisfied by the date such Disbursement is made.

     Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned thereto in the Agreement.

                                        Very Truly Yours,

                                        ORMAT MOMOTOMBO POWER COMPANY


                                        BY:
                                            ------------------------------------
                                            Name:
                                            Title:

Enclosures:

a.   Itemized Statement of Payments

b.   Evidence of Funding Pursuant to Sponsor
     Project Funding Agreement


                                       52



[c.  Implementation Reports pursuant to
     Section 5.01(f)]

Copies (without enclosures) to:

Bank Hapoalim B.M.                Ormat International, Inc.
Foreign Trade Operations Center   980 Greg Street
Export Unit                       Sparks, Nevada 89431-039
40 Hamasger Street                USA
Tel-Aviv 67131                    Attention: President
Israel
Attention: I. Gottlieb

cc: (Loan II only) Lender's Engineer


                                       53



                                                      EXHIBIT 1 TO SCHEDULE 2.02

                         ITEMIZED STATEMENT OF PAYMENTS

Page      of                                          Date:             , 20
     ----    -----                                          ------------     ---

           Momotombo Field and Power Plant Rehabilitation (Nicaragua)

                         Itemized Statement of Payments
Attachment to Application for Funding No. ____, dated as of _____________, 20___
         Covering Period from _______________ to _______________, 20___.

                                          Amount Paid  Amount to be
 Item           Brief         Amount of    Prior to      Paid After
No.(5)  Description of Items   Payment   Disbursement  Disbursements  Remarks
------  --------------------  ---------  ------------  -------------  -------

                                 US$          US$           US$

Totals                           US$          US$           US$

------------------------------------------------------------
Amount of Borrower's Equity to Date                      US$
------------------------------------------------------------
Amount of Borrower's Equity to be advanced pursuant to
requested Disbursement(6)                                US$
------------------------------------------------------------
Borrower's Equity after requested Disbursement           US$
------------------------------------------------------------
Senior Loan Debt to Borrower's Equity after giving         :
effect to requested Disbursement
------------------------------------------------------------
Amount of requested Disbursement                         US$
------------------------------------------------------------

----------
(5)  Number each item according to the Business Plan, starting with 1.

(6) Amount of Disbursement and Borrower's Equity shall be equal to Total Amounts
Paid.

                                                       CREDIT FACILITY AGREEMENT



                                  SCHEDULE 3.08

                           LITIGATION; LABOR DISPUTES

                                      NONE


                                       56              CREDIT FACILITY AGREEMENT



                                  SCHEDULE 3.11

                             GOVERNMENTAL APPROVALS

PART A - Pursuant to Section 3.11:

     1.   Registration of the Borrower with the Public Registry.

     2.   Registration of the Borrower as a "comerciante" with the Public
          Registry.
     3.   Registration with the Registro Unico de los Contribuyentes o Numero
          RUC.

     4.   Registration with the "Departamento de Rentas" in order to be able to
          collect the value added tax (IGV).

PART B - Pursuant to Section 5.40 within 30 days of the Loan I Closing Date,
     registration of the CFA with each of the following entities:

     1.   Banco Central de Nicaragua to assure payment of principal and interest
          in Dollars.

     2.   Ministerio de Hacienda y Credito Publico, Direccion General de
          Ingresos, for exemption from payment of withholding taxes as interest
          payments.

PART C -

     1.   Registration with the municipality where the Momotombo Geothermal
          Field is located.

          This Governmental Approval shall not be available on the Loan I
          Closing Date. Upon having obtained such Governmental Approval, the
          exceptions set forth in Sections 3.10 and 3.11 shall cease to apply on
          such date and thereafter.

     2.   Approval of the "Proyecto de Impacto Ambiental" under PPA Section 14.2
          from Ministerio de Ambiente y Recursos Naturales ("MARENA").

          Application for this Governmental Approval has been made to MARENA,
          and the Borrower expects to receive approval thereof in due course,
          whereupon the exceptions set forth in Section 3.11 shall cease to
          apply on such date and thereafter.


                                       57              CREDIT FACILITY AGREEMENT



                                  SCHEDULE 4.04

                   PROVISIONS FOR ALTERNATIVE AMENDMENT TO PPA
                [IN SPANISH, EXECUTED IN ESCRITURA PUBLICA FORM]

1.   CLAUSE XII. CAUSES FOR EARLY TERMINATION OF THE CONTRACT:

12.2 Early termination of the Contract by ENEL, Section 12.2.3:

The first part of this section - 12.2.3) (i) - establishes that a cause for
early termination of the contract will be a declaration of THE SUPPLIER's
bankruptcy or its bankruptcy petition, always and whenever such petition or
bankruptcy declaration is not dismissed by a competent tribunal in the matter
within a period no greater than sixty (60) calendar days, established as a way
to cure this event. In addition, the second part of this same section - 12.2.3)
(ii) - establishes also that it is a cause for early termination based on the
fact there will have been preceded a suspension of payments petition before a
competent tribunal, for suspension of payments or creditors meeting
[proceedings].

In order, to allow OMPC to have the same cure period of sixty (60) days utilized
for the first part of this clause may be applied as a cure for the second part
of this clause for early termination under the contract. Therefore, we consider
that this section should be amended as follows:

"12.2.3) (ii) ... that there have been submitted a petition before the competent
tribunal for suspension of payments or creditors meeting and that such petition
or declaration for bankruptcy not have been dismissed by a competent tribunal
in the matter within a period no greater than sixty (60) calendar days."

2.   CLAUSE XII. CAUSES FOR EARLY TERMINATION OF THE CONTRACT:

12.7 Notice of Early Termination:

This clause does not allow Bank Hapoalim B.M. the opportunity to cure any cause
for early termination that OMPC may incur.

The following text is added to the first paragraph of clause 12.7 in order to
provide Bank Hapoalim with the right to cure any cause for early termination:

"Nothwithstanding the foregoing, ENEL will provide to creditors notified under
Clause 12.6 a period of sixty (60) calendar days, beginning on the date the
Notice to Financiers established under Clause 12.6 has been received, to cure
any cause for early termination established under Clause 12.2 of the Contract
prior to the taking of any action under Clause 12.7."


                                       58              CREDIT FACILITY AGREEMENT



                                SCHEDULE 5.01(D)

                          FORM OF OFFICER'S CERTIFICATE

                          ORMAT MOMOTOMBO POWER COMPANY
                             OFFICER'S CERTIFICATE

     THIS CERTIFICATE is delivered pursuant to Section 5.01(d) of the Credit
Facility Agreement, dated as of September 5, 2000 (as amended, modified or
supplemented from time to time, the "Credit Facility Agreement") between Ormat
Momotombo Power Company (the "Company") and Bank Hapoalim B.M. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Credit Facility Agreement.

     The undersigned HEREBY CERTIFIES that, for the period between
_______________________, _____________ and ______________________, ________,
(s)he has been [title] of the Company and as such is authorized to execute and
deliver this Certificate on behalf of the Company and the undersigned HEREBY
FURTHER CERTIFIES, in the name and on behalf of the Company, that:

     1. Attached hereto are copies of the most recent [audited]/[unaudited]
financial statements(7) for the [fiscal year ended]/[period ended] ____________;
and

     2. Such financial statements are true, complete and correct and no material
adverse change has occurred since the date of such financial statement.

     3. No Default or Event of Default exists under the Credit Facility
Agreement and the representations and warranties of the Company under the Credit
Facility Agreement are true and correct as of date hereof.

     IN WITNESS HEREOF, the undersigned has executed this certificate
this ______ day of ______________________.

                                        ORMAT MOMOTOMBO POWER COMPANY


                                        By:
                                            ------------------------------------
                                        Name:
                                        Title: Chief Financial Officer

----------
(7) In the case of unaudited financial statements, subject to customary year end
adjustments.


                                       59              CREDIT FACILITY AGREEMENT



                                  SCHEDULE 5.03

                               INSURANCE POLICIES

---------------------------------------------------------------
           COVERAGES              NAMED INSURED(S)   LOSS PAYEE
---------------------------------------------------------------
 All Risks, Property Damage and         ENEL          Borrower
           Machinery
---------------------------------------------------------------
     Business Interruption            Borrower         Lender
                                       Lender
---------------------------------------------------------------
       General Liability                ENEL          Borrower
                                       Lender
---------------------------------------------------------------
Employee Compensation; Personal         ENEL          Borrower
           Accident
---------------------------------------------------------------


                                       60              CREDIT FACILITY AGREEMENT




                                  SCHEDULE 5.43

                        FORM OF ORIGINAL AMENDMENT TO PPA

                [ORIGINAL TO BE PROVIDED AS AN ESCRITURA PUBLICA]

ESCRITURA NUMERO (________).- MODIFICACION A CONTRATO.- En la ciudad de Managua
a las ____________ y _____ de la ___ del dia ________________ del ano dos mil.-
Ante Mi__________________, Abogado y Notario Publico de la Republica de
Nicaragua, con domicilio en esta ciudad y debidamente autorizado para cartular
por la EXCELENTISIMA CORTE SUPREMA DE JUSTICIA, durante un quinquenio que vence
el dia _________________________________, comparecen los Senores
________________, y el Senor ______________________. Doy fe de conocer
personalmente a los comparecientes y de que a mi juicio tienen la capacidad
civil legal necesaria para obligarse y contratar y en especial para ejecutar
este acto, en el que comparecen en su propio nombre y representation. Hablan los
comparecientes en forma conjunta y dicen: PRIMERA (ANTECEDENTES): Que con fecha
treinta de Abril de mil novecientos noventa y nueve, mediante escritura publica
numero treinta y ocho, otorgada en esta ciudad ante los oficios del Notario
VIRGILIO GUARDIAN CASTELLON, se celebro un contrato de Suministro y Compra de
Energia del Campo Geotermico Momotombo con la Empresa Nicaraguense de Energia,
(ENEL), (P.P.A.-02-97), Contrato cuyo objeto es establecer los terminos,
estipulaciones, y demas condiciones bajo los cuales se norman los
procedimientos, obligaciones y derechos de ORMAT INTERNATIONAL INC (EL
PROVEEDOR) y ENEL en el suministro y compra de energia corregida producto de la
conversion de energia geotermica en energia electrica por la Planta, su sistema
de coleccion y su correspondiente campo de vapor denominado


                                       61              CREDIT FACILITY AGREEMENT



campo Momotombo, que el PROVEEDOR se obliga a proveer a ENEL y este se obliga a
pagar, todo de conformidad con los terminos y las condiciones establecidas en el
contrato P.P.A. -02-97, y el al contrato de Asociacion en Participacion suscrito
por la Partes. Que conforme con las voces del contrato y especificamente con la
clausula diez y ocho (XVIII) de la escritura que lo contiene dicho contrato, el
Contrato se puede ceder a una sociedad o corporation debidamente inscrita y
autorizada para operar en Nicaragua. Segun la clausula anterior, dicho Contrato
fue cedido a ORMAT MOMOTOMBO POWER COMPANY a las dos de la tarde del dia once de
mayo de mil novecientos noventa y nueve, mediante ESCRITURA PUBLICA NUMERO TRES
(3).- CESION DEL CONTRATO DE SUMINISTRO Y COMPRA DE ENERGIA DEL CAMPO GEOTERMICO
MOMOTOMBO ENTRE LA EMPRESA NICARAGUENSE DE ELECTRICIDAD (ENEL) Y ORMAT
INTERNATIONAL INC. PPA-02-07.- Dicha cesion fue debidamente notificada a ENEL, a
las tres y quince de la tarde del trece de Mayo de mil novecientos noventa y
nueve, mediante cedula notarial otorgada por el Licenciado CESAR AROSTEGUI
CENTENO y aceptada por el Ingeniero EDGAR QUINTANA ROMERO, en representacion de
ENEL, a las dos de la tarde del dia dos de junio de mil novecientos noventa y
nueve, mediante ESCRITURA PUBLICA NUMERO CUARENTA Y SEIS (46) ACEPTACION DE
CESION DEL CONTRATO DE SUMINISTRO Y COMPRA DE ENERGIA DEL CAMPO GEOTERMICO
MOMOTOMBO ENTRE LA EMPRESA NICARAGUENSE DE ENERGIA (ENEL) Y ORMAT INTERNATIONAL
INC. PPA-02-07 ante los oficios del Doctor VIRGILIO GURDIAN CASTELLON. Siguen
hablando los comparecientes y dicen SEGUNDA (MODIFICACIONES): Que de conformidad
con la clausula cuatro punto tres punto tres (4.3.3) del CONTRATO DE SUMINISTRO
Y COMPRA DE ENERGIA DEL CAMPO GEOTERMICO MOMOTOMBO ENTRE LA


                                       62              CREDIT FACILITY AGREEMENT



EMPRESA NICARAGUENSE DE ENERGIA (ENEL) Y ORMAT INTERNATIONAL INC. PPA-02-07 que
establece literalmente que "ENEL acepta colaborar con EL PROVEEDOR y a proveer
cualquier ayuda y/o informacion razonable que le fuera solicitada por EL
PROVEEDOR para los prestamistas, en relacion con las negociaciones y
consentimientos referidos con el otorgamiento de los documentos de
financiamiento por EL PROVEEDOR. Entre otros, ENEL se compromete a que las
provisiones del Contrato y sus Anexos sean clarificadas y las Partes convienen
que podran efectuar modificaciones al Contrato, de mutuo acuerdo, en caso fuera
un requerimiento razonable de los prestamistas del EL PROVEEDOR" el prestamista
de ORMAT MOMOTOMBO POWER COMPANY, el Hapoalim Bank, ha solicitado que se
modifiquen las siguientes clausulas: Clausula once punto cuatro (11.4)
OBLIGACIONES PREVIAS DE PAGO NO CONDONADAS; Clausula doce punto dos punto tres
ii (12.2.3 ii) CLAUSULA DE TERMINACION ANTICIPADA DEL CONTRATO; Clausula doce
punto siete (12.7) CLAUSULA: AVISO DE TERMINACION ANTICIPADA y la Clausula diez
y ocho (18) CLAUSULA DE CESION, las que por este instrumento se modifican para
que desde este momento en adelante se lean de la siguiente manera: once punto
cuatro (11.4) OBLIGACIONES PREVIAS DE PAGO NO CONDONADAS.- Ninguna obligacion de
pago que se origine segun este contrato con anterioridad a la fecha de un suceso
de Fuerza Mayor o Caso Fortuito sera condonada a causa de tal suceso de Fuerza
Mayor o Caso Fortuito. No obstante lo anterior, si la Fuerza Mayor o Caso
Fortuito afecta la planta de tal forma que EL PROVEEDOR no pueda suministrar la
Energia, ENEL no estara obligada a continuar realizando los pagos por Energia
corregida durante los periodos en que se mantengan una situacion de fuerza Mayor
o Caso Fortuito. Si la fuerza Mayor o Caso Fortuito LE IMPIDEN A ENEL TOMAR LA
ENERGIA EN EL PUNTO DE ENTREGA, PERO no afectan el campo Momotombo de tal forma
que EL


                                       63              CREDIT FACILITY AGREEMENT



PROVEEDOR pueda suministrar Energia, ENEL estara obligado a pagar por los costos
fijos incurridos durante el periodo que dure el evento, lo que se estipulan en
un 50% del precio de la Energia. Clausula doce punto dos, punto tres, (12.2.3 I)
CLAUSULAS DE TERMINACION ANTICIPADA DEL CONTRATO. La quiebra declarada de EL
PROVEEDOR o su peticion de quiebra, siempre y cuando dicha peticion o
declaracion de quiebra no sea levantada por el tribunal competente al caso en un
periodo no mayor de sesenta (60) dias calendario; (ii) que se haya presentado
una peticion ante el tribunal competente de suspencion de pago o concurso de sus
acreedores; SIEMPRE Y CUANDO DICHA PETICION NO SEA LEVANTADA POR EL TRIBUNAL
COMPETENTE AL CASO DE UN PERIODO NO MAYOR DE SESENTA (60) DIAS CALENDARIO (iii)
La liquidacion o disolucion anticipada, a no ser que esta fuera voluntaria con
el proposito de fusion o modificacion o transformacion de EL PROVEEDOR y esta
sea aceptada de previo por ENEL; (iv) si los bienes de EL PROVEEDOR resultaran
embargados y el embargo no es levantado en un periodo no mayor de treinta (30)
dias calendario siempre y cuando el embargo afecte la capacidad de EL PROVEEDOR
de cumplir con sus obligaciones establecida en este Contrato; (v) si el
PROVEEDOR transfiera este Contrato o su participacion en el Contrato de
Asociacion Compartida sin acatar las disposiciones de la Clausula XVIII.
Clausula doce punto siete (12.7) CLAUSULA AVISO DE TERMINACION ANTICIPADA: Ante
la ocurrencia de un caso de incumplimiento de cualquiera de la Partes, la Parte
que no incurra en incumplimiento puede, a opcion de ella, tomar cualquiera de
las medidas siguientes o ambas (i) terminar el Contrato entregando un Aviso de
Terminacion por escrito a la Parte que incurra en incumplimiento, o, (ii)
proceder mediante los procesos apropiados ya sean judiciales, administrativos o
de otra naturaleza, conforme a la Ley para proteger y hacer valer sus derechos,
para recobrar cualquier dano a los que pueda tener derecho y para hacer cumplir
sus obligaciones a la parte que incurra


                                       64              CREDIT FACILITY AGREEMENT


en incumplimiento, incluyendo el cumplimiento especifico de las obligaciones
aqui definidas de la Parte que incumpla. NO OBSTANTE LO ANTERIOR, ENEL OTORGARA
A LOS ACREEDORES NOTIFICADOS CONFORME LO ESTABLECIDO EN LA CLAUSULA DOCE PUNTO
SEIS (12.6), PARA SUBSANAR CUALQUIERA DE LAS CAUSAS DE DETERMINACIONES
ANTICIPADAS ESTABLECIDAS EN LA CLAUSULA DOCE PUNTO DOS (12.2) DEL CONTRATO
PREVIO A TOMAR CUALQUIERA DE LAS ACCIONES ESTABLECIDAS EN ESTA CLAUSULA DOCE
PUNTO SIETE (12.7). Todo aviso de terminacion que una parte envie a la otra,
debe especificar el caso de incumplimiento de EL PROVEEDOR o de ENEL, segun sea
el caso, y que motivo el envio del Aviso de Terminacion. Si la causa que motiva
el envio de un Aviso de Terminacion Anticipada del Contrato ha sido subsanada o
esta en via de serlo, de previo al recibo de dicho aviso, el hecho de subsanar
elimina la causa de la terminacion anticipada del Contrato, sin perjuicio de los
derechos y obligaciones que correspondan, de conformidad a los terminos de este
Contrato, por haberse producido la causa que fue subsanada con anterioridad al
recibo del Aviso de Terminacion Anticipada. Clausula diez y ocho (18) CLAUSULA
DE CESION.- En general, salvo las excepciones citadas en este Contrato, es
entendido entre las Partes que ninguna de ellas podra vender, ceder, o de
cualquier otra manera transferir cualquier parte o todo este Contrato, o ninguno
de sus respectivos derechos, o delegar cualquier parte o todas sus respectivas
obligaciones derivadas del Contrato, en ningun momento, sin la previa
autorizacion de la otra parte. Se reconoce y acepta que EL PROVEEDOR tendra el
derecho de ceder este Contrato sin la autorizacion de ENEL, a una sociedad o
corporacion de propiedad exclusiva de EL PROVEEDOR, debidamente inscrita y
autorizada para operar en Nicaragua, en cuyo caso EL PROVEEDOR y el cesionario
seran solidariamente responsables de las obligaciones de este Contrato. EL
PROVEEDOR debera presentar a ENEL la documentacion que compruebe lo anterior, de
previo a la cesion y en cualquier tiempo de la vigencia de este Contrato, asi
como el


                                       65              CREDIT FACILITY AGREEMENT



documento en que conste la cesion, una vez formalizada la misma. EL PROVEEDOR
podra ceder en Garantia los derechos otorgados a su favor en este Contrato a
cualquier institucion financiera sin previa autorizacion o consentimiento de
ENEL. El otorgamiento de un Derecho de Garantia de conformidad con esta seccion,
no se considerara que en el se realizo una cesion o traspaso de este Contrato,
ni ningun sujeto o parte garantizada, como tal, sera considerado como cesionario
de este Contrato. No obstante, la existencia de alguna Clausula o estipulacion
en contrario en este Contrato, cualquier venta de este Contrato, que tenga lugar
por la ejecucion judicial de cualquier Derecho de Garantia, o la dacion en pago
de este Contrato por incumplimiento de cualquier Derecho de Garantia, sera
considerada como una venta, traspaso o cesion, siempre y cuando el nuevo
cesionario tenga capacidad financiera y tecnica para asumir las obligaciones
contraidas en el mismo. Esta provision no es aplicable a un cesionario para
proposito de financiamiento. ENEL tendra derecho de dar por rescindido
anticipadamente este Contrato si considera que el nuevo cesionario no tiene la
capacidad tecnica y/o financiera para asumir las obligaciones que correspondan
al PROVEEDOR de conformidad con este Contrato. ENEL podra realizar cesiones
total o parcialmente de este Contrato sin autorizacion de EL PROVEEDOR, cuando
estas sean como resultado de la ley, de su reorganizacion interna o por mandato
gubernamental o privatizacion, o que este relacionado con la venta o fusion de
una parte sustancial de sus propiedades y que no afecten la capacidad de ENEL o
de su cesionario o sucesor de cumplir con TODAS las obligaciones de este
Contrato. Salvo las excepciones antes citadas es entendido entre las partes que
ni EL PROVEEDOR ni ENEL cederan sus derechos ni delegaran sus obligaciones sin
el consentimiento escrito de la otra parte. Cualquier cesion o delegacion
realizada sin dicho consentimiento sera nula e inexistente. El consentimiento
para la cesion no sera negado irrazonablemente. Al ocurrir la cesion aprobada el
cedente queda


                                       66              CREDIT FACILITY AGREEMENT



exonerado de sus obligaciones bajo este Contrato siempre y cuando el cesionario
acepte y asuma por escrito todas las obligaciones contraidas en el mismo. Para
constancia de lo acordado, se firma y expide el presente documento, en dos
tantos de un mismo tenor, en la ciudad de Managua, Republica de Nicaragua, a los
veintiseis dias del mes de Marzo de mil novecientos noventa y nueve. TERCERA
(ACEPTACION) Las partes aceptan mutuamente las modificaciones a las clausulas
del contrato aqui tomadas las cuales formaran parte integra del Contrato P.P.A.
02-97. Dicha modificaciones no excluyen ni libra de las obligaciones adquiridas
con anterioridad a estas modificaciones. Asi se expresaron los comparecientes,
bien instruidos por mi, el Notario, acerca del valor, alcance y trascendencia
legales de este acto, de su objeto, el de las clausulas generales que aseguran
su validez y de las especiales que contiene y envuelven renuncias y
estipulaciones implicitas y explicitas. - Y leida que fue por mi, el Notario,
integramente la presente escritura a los comparecientes, la encuentran conforme,
aprueban, ratifican y firman junto conmigo, el Notario, que doy fe de todo lo
relacionado.-


                                       67              CREDIT FACILITY AGREEMENT



                                   APPENDIX A

                                  [DEFINITIONS]


                                       68              CREDIT FACILITY AGREEMENT












                                   APPENDIX A

                   Definitions and Principles of Construction

     1. Defined Terms. The following terms shall have the following meanings,
except to the extent otherwise defined in this Agreement:

          "Additional Amount" shall have the meaning specified in Section
2.01(b) of this Agreement.

          "Affiliate" shall mean, any Person, with respect to any other Person,
who exercises Control or as to which some other Person exercises Control with
respect to such Person or any other Person directly or indirectly Controlling,
Controlled by, or under common Control with that Person.

          "Agreement of Association in Participation" shall mean that certain
Agreement of Association in Participation between the Sponsor and ENEL, dated
March 26, 1999, as assigned to the Borrower pursuant to the Assignment and
Consent to Assignment of the Agreement of Association in Participation dated May
12, 1999.

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

          "Application for Funding" means a written application to the Lender in
the form of Schedule 2.02 of this Agreement.

          "Arrangement Fee" shall have the meaning specified in Section 2.05(b)
of this Agreement.

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

          "Auditors" shall mean PricewaterhouseCoopers, Nicaragua or such other
firm of independent public accountants as the Borrower may, with the consent of
the Lender, which consent shall not be unreasonably withheld, from time to time
appoint as auditors of the Borrower.

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

                                                                      APPENDIX A



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

          "Borrower's Equity" shall mean the cumulative amount of: (i)
shareholder's payments on account of share subscriptions, share premiums and any
other capital payments actually made or "paid in" in full to the Borrower by the
shareholders of the Borrower; (ii) retained earnings; and (ii) all Subordinated
Indebtedness.

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

          "Business Plan" shall mean the plan for the execution of the Project,
including financial projections, forecasts and budgets, prepared by or on behalf
of the Borrower included as Annex A to this Agreement, as amended from time to
time pursuant to Section 5.27 of this Agreement.

          "Capital Expenditures" shall mean for any period, all the additions to
the Site or to the Power Plant, equipment and other capital expenditures of the
Borrower that are (or would be) capitalized and set forth in a consolidated
statement of cash flow of the Borrower for such period in accordance with GAAP.

          "Cayman Islands" shall mean the Cayman Islands, British West Indies.

          "Central Bank" shall mean Banco Central de Nicaragua or any
Governmental Authority of Nicaragua which succeeds to the functions thereof.

          "CFA" shall mean this Agreement.

          "CNDC" shall mean the Centro Nacional de Despacho de Carga of
Nicaragua.

          "Collateral" shall mean all the issued and outstanding shares of the
Borrower, the Insurance Assignment, the Fiduciary Account Agreement Assignment,
the Security Agreement, the Security Assignment Agreement, the Sponsor Project
Funding Agreement and the Contingent Guarantee Agreement.

          "Commitment" shall mean collectively the Loan I Commitment and the
Loan II Commitment.

          "Commitment Fee" shall mean the Loan I Commitment Fee or the Loan II
Commitment Fee, as specified in Sections 2.05(a)(i) and 2.05(a)(ii) of this
Agreement, or, collectively, the Loan I Commitment Fee and the Loan II
Commitment Fee, as the context may require.

          "Contingent Guarantee Agreement" or "CGA" shall mean that certain
contingent guarantee agreement between the Lender and Ormat Industries Ltd. and
dated as of the date hereof.


                                       2                              APPENDIX A



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

          "Control" shall mean the possession, directly or indirectly of the
power to direct, or cause the direction of the affairs, management and policies
of a Person, whether through ownership of voting securities or partnership or
other ownership interests, by contract or otherwise. "Controlling" and
"Controlled" shall have corresponding meanings.

          "Cordoba" and the letter "C$" shall mean lawful money of Nicaragua.

          "Cost Overruns" shall mean any increase in the costs as itemized in
the Business Plan as of the date hereof.

          "Credit" shall mean the aggregate principal amount of Loan I and Loan
II as provided for pursuant to this Agreement.

          "Debt Service" shall mean, in relation to any period, the aggregate
amount of principal, interest and fees in respect of the Senior Loan Debt
falling due during such period.

          "Debt Service Coverage Ratio" or "DSCR" shall mean the ratio of EBITDA
to Debt Service.

          "Debt Service Reserve Account" or "DSRA" shall mean the Borrower's
account established with the Lender to receive deposits of funds from the
Borrower as required by Section 5.33 of this Agreement.


                                       3                              APPENDIX A



          "Default" shall mean any event, act or condition which, with notice,
lapse of time, or both or the fulfillment of any other requirement provided for
in Article 6 of this Agreement, would constitute an Event of Default.

          "Disbursement" shall mean the disbursements on account of and under
the Loans made by the Lender pursuant to Section 2.02 of this Agreement.

          "Dollars", the sign "$" and the sign "US$" shall each mean the lawful
money of the United States.

          "Drilling Contracts" shall mean (i) that certain International Day
Work Drilling Contract between Ormat Momotombo Power Company-Managua Branch, a
branch of Borrower, and Perforaciones Intergrales Termicas, S.A., dated February
10, 2000, and (ii) that certain International Day Work Drilling Contract between
Ormat Momotombo Power Company-Managua Branch, a branch of the Borrower, and
Perforadora Internacionales Termica, S.A., dated May 4, 2000.

          "EBITDA" shall mean (i) for any financial year, net income less
interest income and profits of an extraordinary nature, plus the sum of
interest, expenses, taxes depreciation, charges of an extraordinary nature,
amortization and all other non-cash charges, as evidenced by the audited
financial statements of the Borrower for such financial year, and (ii) for any
other period, net income less interest income and profits of an extraordinary
nature plus the sum of interest expenses, taxes, depreciation, charges of an
extraordinary nature, amortization and all the other non-cash charges,
calculated on the same basis as the audited financial accounts and certified as
such by the Borrower.

          "Effective Date" shall have the meaning specified in preamble of this
Agreement.

          "ENEL" shall mean Empresa Nicaraguense de Electricidad.

          "ENEL Agreements" shall mean the Agreement of Association in
Participation, the PPA, the ENEL Agreement Assignments and the Nicaragua
Government Support Letter.

          "ENEL Agreement Assignments" shall mean the Assignment and Consent to
Assignment of the Agreement of Association in Participation, among the Borrower,
the Sponsor and ENEL (dated May 12, 1999), and the Assignment and Consent to
Assignment of the PPA (among the same parties and executed on the same date).

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


                                       4                              APPENDIX A



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

          "Event of Default" shall have the meaning specified in Article 6 of
this Agreement.

          "Event of Loss" shall mean any of the following events: (i) loss of
all or substantially all of the Power Plant or of the Site or the respective use
thereof due to destruction, damage beyond economical repair or rendition of the
Power Plant or of the Site, as the case may be, permanently unfit for normal use
for any reason whatsoever (other than if it is merely not economically feasible
to maintain, use or operate), (ii) anything which results in an insurance
settlement with respect to the Power Plant or the Site on the basis, with
respect to each thereof, of a total loss or constructive total loss and (iii)
the condemnation or taking or requisition of title or use, for an indefinite
period or a period in excess of four (4) months, by any Governmental Authority
which constitutes the taking of all or substantially all of the Power Plant or
of the Site, as the case may be.

          "Fees" shall mean all amounts payable pursuant to or referred to in
Sections 2.05 of this Agreement.

          "Fiduciary Account Agreement" shall mean that certain Fiduciary
Account Agreement by and between ENEL, Borrower and Banco de Credito
Centroamericano S.A., dated as of May 12, 1999.

          "Fiduciary Account Agreement Assignment" shall mean that certain
assignment of all rights, title and interests in and to the Fiduciary Account
Agreement, entered into by the Borrower as assignor in favor of the Lender as
assignee, dated as of even date herewith.

          "Financial Officer" shall mean, (i) with respect to any Person (other
than the Borrower), the President, any Vice President, any Assistant Vice
President, the Treasurer, any Assistant Treasurer or a Director of such Person,
and (ii) with respect to the Borrower, any officer of the Borrower or any
financial representative of the Borrower duly appointed by or on behalf of the
Borrower.

          "Financing Documents" shall mean this Agreement, the Sponsor Project
Funding Agreement, the Contingent Guarantee Agreement, the MIGA Letter Agreement
and the Security Documents.

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

          "Force Majeure" shall have the meaning specified in the ENEL
Agreements.

          "Front-End Fee" shall have the meaning specified in Section 2.05(c) of
this Agreement.


                                       5                              APPENDIX A



          "GAAP" shall mean generally accepted accounting principles in the U.S.
consistently applied.

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

          "Governmental Approval" shall mean any action, order, authorization,
consent, approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority
including, without limitation, any agreements, undertakings, consents and
approvals executed or to be issued by Nicaragua (including, without limitation,
the Department of Environment and Natural Resources) and any agency thereof.

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

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

          "Implementation Agreements" shall mean the Drilling Contracts and any
other agreements which the Borrower may enter into from time to time to
implement the activities of Phase I and Phase II in accordance with the Business
Plan.

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


                                       6                              APPENDIX A



such property); (f) all obligations with respect to capital leases; (g) all net
obligations with respect to swap contracts or hedging arrangements; (h) all
indebtedness referred to in clauses (a) through (g) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including accounts
and contracts rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; and (i) all
Guaranty Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (g) above.

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

          "Indemnified Liabilities" shall have the meaning specified in Section
7.03 (a) of this Agreement.

          "Indemnified Person" shall have the meaning specified in Section 7.03
(a) of this Agreement.

          "Insurance Assignment" shall mean that certain assignment of
insurances between the Borrower, as assignor, and the Lender as assignee, dated
as of even date herewith.

          "Insurance Contracts" shall mean the insurance contracts and policies
required pursuant to Sections 5.03(a) and 5.03(b) of this Agreement and any
additional insurance contracts or policies required under any of the Financing
Documents.

          "Interest Payment Date" shall mean the last day of each Interest
Period.

          "Interest Period" shall mean a three month period commencing on the
Effective Date and, in the case of each subsequent, successive Interest Period,
the three month period commencing on the last day of the immediately preceding
Interest Period but shall also include such lesser period of no less than 15
days commencing on the date of any Disbursement and ending on the next Interest
Payment Date. However, if any Disbursement takes place less than 15 days prior
to the next Interest Payment Date, the respective Interest Period shall end on
the following Interest Payment Date, provided, however, that: (i) any such three
month period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day, unless such Business Day
falls in another month, in which case such three month period shall end on the
immediately preceding Business Day; and (ii) any such three month period which
begins on the last Business Day of a month (or on a day for which there is no
numerically corresponding day in the month in which such three month period
ends) shall end on the last Business Day of a month.


                                       7                              APPENDIX A



          "Interest Rate" shall have the meaning specified in Section 2.03(a) of
this Agreement.

          "Investment Agreement" shall mean that certain foreign investment
agreement between the Borrower and the Ministerio de Fomento, Industria y
Comercio of Nicaragua, dated August 11, 2000.

          "Legal Opinions" shall mean the legal opinions to be provided under
Section 4.01(c) of this Agreement.

          "Lender" shall mean Bank Hapoalim B.M. and its successors and/or
assigns.

          "Lender's Engineer" shall have the meaning set forth in Section
5.36(a) of this Agreement.

          "Lender's Insurance Consultant" shall have the meaning set forth in
Section 5.36(b).

          "Lending Office" shall mean the head office of the Lender or such
other office as the Lender may from time to time notify the Borrower.

          "LIBOR" shall mean, for any Interest Period the rate of interest per
annum equal to (i) the rate (rounded upwards, if necessary, to the nearest
1/8th of one percent) which is the offered rate at or about 11:00 a.m. London
time two (2) Business Days prior to the commencement of such Interest Period for
Dollar deposits for a period equal to such Interest Period which appears on the
page "FRBD" on the Reuters Monitor Money Rates Service (or such other page or
service as may replace it) and, in the absence of any such replacement page or
service, such other page of such other service as the Lender and the Borrower
may agree; or (ii) if no such rate appears on such Reuters page or the Lender
determines that no rate for a period of comparable duration to the relevant
Interest Period appears on such Reuters page or the Lender determines that no
such Reuters page or service is available at the relevant time, the arithmetic
mean (rounded upwards, if necessary, to the nearest 1/8th of one percent) of the
rates per annum as supplied to the Lender at its request, quoted by three
reference banks selected by the Lender to leading banks in the London interbank
market in the ordinary course of business, at or about 11:00 a.m. London time
two (2) Business Days prior to the commencement of such Interest Period for the
offering of Dollar deposits to the Lender in an amount comparable to the amount
upon which interest is accruing, and for a period comparable to such Interest
Period for delivery on the first day of that Interest Period.

          "LIBOR Overnight Rate" shall mean, as of any date, the rate per annum,
equal to (i) the rate (rounded the upwards if necessary, to 1/8th of one
percent) which is the offered rate at or about 11:00 a.m. London time on such
date for Dollar deposits two (2) Business Days prior to the commencement of such
Interest Period for Dollar deposits for a period equal to one day which appears
on the page "RMEY" on the Reuters Monitor Money Rates Service (or such other
page or service as may replace it) and, in the absence of any such replacement
page or service, such other page of such other service as the Lender and the
Borrower may agree; or (ii) if no such rate appears on such Reuters page or the
Lender determines that no rate for a period of one day appears on such Reuters
page or the Lender determines that no such Reuters page or service


                                        8                             APPENDIX A



is available at the relevant time, the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/8th of one percent) of the rates per annum as
supplied to the Lender at its request, quoted by three reference banks selected
by the Lender to leading banks in the London interbank market in the ordinary
course of business, at or about 11:00 a.m. London time on such date for Dollar
deposits two (2) Business Days prior to the commencement of such day for the
offering of Dollar deposits to the Lender in an amount comparable to the amount
upon which interest is accruing, and for a period equal to one day.

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

          "Loan" or "Loans" shall mean, individually Loan I or Loan II, as the
context may require, and collectively, Loan I and Loan II.

          "Loan I" shall have the meaning specified in Section 2.01 of this
Agreement.

          "Loan I Availability Period" shall mean the period from the Effective
Date until the last day of the 24th consecutive month to occur after the
Effective Date.

          "Loan I Closing Date" shall mean the date on which the Lender has
notified the Borrower that all conditions precedent for the effectiveness of
Loan I have been satisfied.

          "Loan I Commitment" shall mean 70% of the Phase I Cost, but in no
event greater than $11,435,000.

          "Loan I Commitment Fee" shall have the meaning specified in Section
2.05(a)(i) of this Agreement.

          "Loan II" shall have the meaning specified in Section 2.01 of this
Agreement.

          "Loan II Availability Period" shall mean the period from the Loan II
Closing Date (but not earlier than the occurrence of the earliest of (a) the
acceptance by the Lender of a Phase I Completion Certificate, (b) full
disbursement of Loan I, or (c) cancellation of the undisbursed balance of Loan
I) through the earliest date of the last day of the 60th consecutive month after
the Effective Date or acceptance by the Lender of the Phase II Completion
Certificate.

          "Loan II Closing Date" shall mean the date on which the Lender has
notified the Borrower that all conditions precedent for the effectiveness of
Loan II have been satisfied.

          "Loan II Commitment" shall mean the Total Commitment less the Loan I
Commitment, but in no event greater than $36,800,000.


                                       9                             APPENDIX  A



          "Loan II Commitment Fee" shall have the meaning specified in Section
2.05(a)(ii) of this Agreement.

          "Maintenance Amount" shall have the meaning specified in Section
2.14(b)(i) of this Agreement.

          "Maintenance Amount Certification" shall have the meaning specified in
Section 2.14(b)(ii) of this Agreement.

          "Material Adverse Effect" shall mean a material adverse effect on (i)
the ability of the Borrower, the Sponsor or ENEL to observe and perform in a
timely manner its material obligations under any Project Document to which such
Person is a party, (ii) the assets, operations, business, condition (financial
or otherwise), of the Borrower, which has an effect on the Borrower's ability to
perform its material obligations under the Project Documents or (iii) the rights
or remedies of the Lender under this Agreement or under any of the other
Financing Documents or on any security interest granted pursuant thereto and the
validity thereof or (iv) the validity or enforceability of any of the Project
Documents; or (v) the implementation or operation of the Project or the
consummation of the transactions contemplated by the Project Documents.

          "MIGA" shall mean the Multilateral Investment Guarantee Agency.

          "MIGA Contracts" shall mean, collectively, the MIGA Guarantee and the
Shareholder's MIGA Guarantee.

          "MIGA Guarantee" shall mean the contract of guarantee to be executed
prior to the Loan I Closing Date by the Lender and MIGA with respect to the
Loans made under this Agreement and identified as MIGA Guarantee No. A726.

          "MIGA Letter Agreement" shall mean that certain letter agreement
regarding certain matters pertaining to payments under MIGA Contracts of
Guarantee Nos. A726 and A693, between the Shareholder and the Lender, dated as
of even date herewith.

          "Net Cash Flow" shall mean EBITDA less Capital Expenditures.

          "Nicaragua" shall mean the Republic of Nicaragua.

          "Nicaragua Government Support Letter" shall mean that certain support
letter issued by the Government of Nicaragua relating to the Momotombo
Geothermal Project.

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


                                       10                             APPENDIX A



          "Ormat" shall mean Ormat International, Inc. a Delaware. U.S.A.
corporation.

          "Ormat Holding Corp." shall mean Ormat Holding Corp., a company
incorporated in the Cayman Islands and a wholly owned subsidiary of the Sponsor.

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

          "Permitted Indebtedness" shall have the meaning specified in Section
5.15 of this Agreement.

          "Permitted Investments" means each of the following Dollar-denominated
investments:

          (i) direct obligations of the United States of America;

          (ii) obligations fully guaranteed by the United States of America;

          (iii) certificates of deposit issued by, or bankers' acceptances of,
     or time deposits or a deposit account with the Lender's New York Branch;

          (iv) money market mutual funds whose investments other than cash
     holdings are restricted to the types of investments referred to in clauses
     (i) and (ii) above.

          "Permitted Lien" shall have the meaning provided in Section 5.16 of
this Agreement.

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

          "Phase I" shall mean all of the Borrower's activities associated with
the upgrading and rehabilitation of the existing Power Plant, work-overs
(rehabilitation) of existing wells, the drilling of at least three new
geothermal wells at the Site, construction of associated connecting, gathering,
and other facilities, and environmental remediation in accordance with the
Project Remediation Program, all as budgeted by the Borrower in the Business
Plan.

          "Phase I Completion Certificate" shall mean the certificate submitted
by the Borrower to the Lender upon the completion of Phase I referred to as such
in Section 5.35 of this Agreement.

          "Phase I Cost" shall mean $16,523,000.


                                       11                             APPENDIX A



          "Phase II" shall mean all of the Borrower's activities associated with
the drilling of up to 16 geothermal wells and the construction of connecting,
gathering and other facilities, as budgeted by the Borrower in the Business
Plan.

          "Phase II Completion Certificate" shall mean the certificate submitted
by the Borrower and approved by the Lender's Engineer upon the completion of
Phase II referred to as such in Section 5.35 of this Agreement.

          "Phase II Cost" shall mean $47,791,000.

          "Power Plant" shall mean the geothermal power plant located on the
Site.

          "PPA" shall mean that certain Agreement for the Supply and Purchase of
Energy of the Momotombo Geothermal Field between Sponsor and ENEL, dated March
26, 1999, and cataloged as PPA-02-97, as assigned to the Borrower pursuant to
the Assignment and Consent to Assignment of the PPA dated May 12, 1999.

          "Principal Repayment Date" shall mean the last day of the Interest
Period as specified in Section 2.04(a) of this Agreement under Loan I and
Section 2.04(b) of this Agreement under Loan II.

          "Project" shall mean Phase I and Phase II, the Power Plant and the
Site.

          "Project Costs" shall mean all costs of the Borrower up to amounts
reflected in the Business Plan to complete the Project in accordance with the
Project Documents.

          "Project Documents" shall mean each of the Financing Documents, the
ENEL Agreements and the Fiduciary Account Agreement.

          "Project Remediation Program" shall mean the program for remediation
of environmental conditions at the Site, submitted to ENEL in accordance with
Section 14.2 of the PPA.

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

          "Quarter" shall mean a calendar quarter of a Fiscal Year.

          "Same Day Funds" means Dollar funds settled through the New York
Clearing House Interbank Payments System or such other funds for payment in
Dollars as the Lender shall specify to the Borrower as being customary at the
time for the settlement of international transactions in New York City of the
type contemplated by this Agreement.

          "Secured Obligations" shall mean all amounts owing to the Lender
pursuant to the terms of any Financing Document, including without limitation
(A) the principal of and interest on the Loans and all other obligations and
liabilities (including, without limitation, indemnities, Commitment Fee, other
Fees incurred under, arising out of or in connection with such Loans, this
Agreement or any other Financing Document; and (B) in the event of any
proceeding for


                                       12                             APPENDIX A



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

          "Security" shall mean (i) the Security Documents, (ii) the power or
powers of attorney provided for in any of the Security Documents, (iii) the
benefits or assignment of benefits under the Insurance Contracts and the ENEL
Agreements pursuant thereto or any other Project Document, together with (iv)
all rights, powers and remedies of the Lender under the Security Documents as
well as such other security, liens, rights, powers and remedies as may be
created or granted by the Borrower, Sponsor Parent or Ormat Holding Corp. in
favor of the Lender; together with the rights, benefits and remedies of the
Lender inherent thereto or provided for herein or therein.

          "Security Agreement" shall mean that certain security agreement
executed by and among the Borrower and the Lender, dated as of even herewith.

          "Security Assignment Agreement" shall mean that certain assignment of
all rights, title and interests in and to the ENEL Agreements, entered into by
the Borrower as assignor in favor of the Lender as assignee, dated as of even
date herewith.

          "Security Documents" shall mean the Security Agreement, Insurance
Assignment, Share Pledge and Sponsor Participation Retention Agreement, the
Security Assignment Agreement and Fiduciary Accounts Agreement Assignment.

          "Senior Loan Debt" shall mean the Loans to the Borrower.

          "Share Capital" shall mean all of the shares of all classes of stock
of the Borrower, all of which shall be registered shares and not bearer shares.

          "Share Pledge" shall mean that certain pledge granted by Ormat Holding
Corp. in favor of the Lender pursuant to the Share Pledge and Sponsor
Participation Retention Agreement with respect to the Share Capital.

          "Share Pledge and Sponsor Participation Retention Agreement" shall
mean that certain agreement by that name, dated as of even date herewith, among
the Sponsor, the Shareholder, the Borrower and the Lender.

          "Shareholder" shall mean Ormat Holding Corp.

          "Shareholder's MIGA Guarantee" shall mean that certain contract of
guarantee No. A693 entered into between Shareholder and MIGA, dated as of April
12, 2000.

          "Site" shall mean the Momotombo Geothermal Field located at the base
of the Momotombo Volcano, approximately eighty (80) kilometers from Managua,
Nicaragua.


                                       13                             APPENDIX A



          "Sponsor" shall mean Ormat.

          "Sponsor Parent" shall mean Ormat Industries Ltd., an Israeli limited
liability company.

          "Sponsor Project Funding Agreement" or "SPF Agreement" shall mean that
certain Agreement by that name dated as of even date herewith among the Sponsor,
the Borrower and the Lender.

          "Subordinated Indebtedness" shall mean all Indebtedness owed by the
Borrower pursuant to the Sponsor Project Funding Agreement.

          "Subsidiary" shall mean, as to any Person, (i) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or one
or more Affiliate of such Person, (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Affiliate of
such Person has more than a 50% equity interest at the time; and (iii) any
corporation, partnership, association, joint venture or other entity which is
Controlled, directly or indirectly, by such Person or which is a Subsidiary of
another Subsidiary of such Person.

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

          "Technical Report" shall mean a report from a recognized geothermal
engineering or consulting firm acceptable to the Lender and the Borrower
addressing engineering, commercial and technical issues of the Project.

          "Total Commitment" shall mean, collectively, the Loan I Commitment and
the Loan II Commitment.

          "Total Disbursements" shall mean, at any time, the aggregate principal
amount of all Disbursements outstanding at such time.

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

     2. Principles of Construction. All references to "this Agreement" in this
Appendix A shall be construed as a reference to the Credit Facility Agreement
between Ormat Momotombo Power Company, as borrower, and Bank Hapoalim B.M., as
lender, dated as of September 5, 2000.


                                       14                             APPENDIX A



          (a) The meanings set forth for defined terms in this Appendix A or in
any Financing Document shall be equally applicable to both the singular and
plural forms of the terms defined.

          (b) All references in any Financing Document to clauses, sections,
articles, schedules, annexes and exhibits are to clauses, sections, articles,
schedules and exhibits in or to such Financing Document unless otherwise
specified therein. The words "hereof," "herein" and "hereunder" and words of
similar import when used in a Financing Document shall refer to such Financing
Document as a whole and not to any particular provision of such Financing
Document.

          (c) All accounting terms not specifically defined in a Financing
Document shall be construed in accordance with United States generally accepted
accounting principles in conformity with those used in the preparation of the
financial statements referred to in Section 5.01 of this Agreement.

          (d) References in any Financing Document to any statute, decree or
regulation shall be construed as a reference to such statute, law, decree or
regulation as re-enacted, redesignated, amended or extended from time to time
and references in any Financing Document to any document or agreement shall be
deemed to include references to such document or agreement as amended, varied,
supplemented or replaced from time to time.

          (e) References to any representation by any Person or by any officer
thereof being to the best of such Person's knowledge shall be deemed to be to
the best of such Person's knowledge after due inquiry.

          (f) If any amount to be determined or measured pursuant to any of the
Financing Documents relates to a transaction in a currency other than Dollars,
such determination shall be made by converting such currency by reference to the
buying spot market rate of exchange on the date of such transaction.

          (g) References to any Person or Persons shall be construed as a
reference to any successors or assigns of such Person or Persons.

          (h) The headings of the articles, sections and subsections in any
Financing Document are included for convenience only and shall not in any way
affect the meaning or construction of any provision of such Financing Document.

          (i) References in any Financing Document or this Appendix A to any
Financing Document shall be construed as a reference to such Financing Document,
together with all schedules, exhibits and annexes thereto.

          (j) Any reference in this Agreement to a "month" or a period of one or
more "months" means a period beginning in one calendar month and ending in the
following calendar month on the day numerically corresponding to the day of the
calendar month in which such period started, provided that if such period
started on the last day in a calendar month, or if there is no such numerically
corresponding day, such period shall end on the last day in the following
calendar month (and "month" shall be construed accordingly).


                                       15                             APPENDIX A




                                     ANNEX A

                                  BUSINESS PLAN


                                       69              CREDIT FACILITY AGREEMENT





                                                  ORMAT Momotombo Power Company
--------------------------------------------------------------------------------

PROJECT SOURCES AND USES OF FUNDS
(US Dollars 000s except as otherwise noted)



Year                                                     1999       2000      2001       2002       2003       2004
----                                                   --------  ---------  --------  ---------  ---------  ---------

   Operating Months of the Project                            6         12        12         12         12         12
   Operating Months in Max Capacity                           0          0         0          0          0          0

   SOURCES:
 1 Total Revenues                                      $  1,960  $   5,003  $  7,624  $   8,685  $  12,306  $  16,254
 2 Pre Closing Equity                                  $  1,271  $   1,441  $      0  $       0  $       0  $       0
 3 Equity 1                                            $      0  $     169  $  1,771  $   2,554  $       0  $       0
 4 Construction Loan 1 Proceeds                        $      0  $   6,724  $  4,133  $     578  $       0  $       0
 5 Equity 2                                            $      0  $       0  $      0  $       0  $   1,963  $   3,079
 6 Construction Loan 2 Proceeds                        $      0  $       0  $      0  $   5,513  $  10,622  $   9,237

 7 Total Sources                                       $  3,231  $  13,338  $ 13,529  $  17,330  $  24,891  $  28,570
                                                       --------  ---------  --------  ---------  ---------  ---------
   USE:
 8 Project Taking Over and Field & Plant Analysis         ($671)     ($415) $      0  $       0  $       0  $       0
 9 Phase 1 Management                                  $      0      ($594)    ($648)     ($378) $       0  $       0
10 Phase 1 Activities                                  $      0    ($5,545)  ($3,896)     ($558) $       0  $       0
11 Phase 2 Management                                  $      0  $       0  $      0      ($270)     ($648)     ($648)
12 Phase 2 Activities                                  $      0  $       0  $      0    ($4,149)  ($10,207)   ($9,096)
13 LEGAL AND CONSULTING FOR CLOSING                    $      0      ($675) $      0  $       0  $       0  $       0
14 LEGAL AND CONSULTING FOR PHASE II                   $      0  $       0  $      0      ($265) $       0  $       0
15 PRE CLOSING COMMITMENT FEE - LOAN 1                 $      0       ($14) $      0  $       0  $       0  $       0
16 Arrangement Fee - Loan 1                            $      0       ($29) $      0  $       0  $       0  $       0
17 Front End Fee - Loan 1                              $      0      ($143) $      0  $       0  $       0  $       0
18 UNDISBURSED COMMITMENT FEE - LOAN 1                 $      0       ($22)     ($13)       ($1) $       0  $       0
19 Interest During Construction - Loan 1               $      0      ($167)    ($823)     ($610) $       0  $       0
20 Political Risk Insurance During Construction Loan   $      0      ($198)    ($198) $       0  $       0  $       0
21 PRE CLOSING COMMITMENT FEE - LOAN 2                 $      0       ($93)     ($93)      ($47) $       0  $       0
22 Arrangement Fee - Loan 2                            $      0       ($92) $      0  $       0  $       0  $       0
23 Front End Fee - Loan 2                              $      0      ($115) $      0      ($345) $       0  $       0
24 UNDISBURSED COMMITMENT FEE - LOAN 2                 $      0  $       0  $      0       ($89)     ($133)      ($85)
25 Interest During Construction - Loan 2               $      0  $       0  $      0       ($87)     ($981)   ($1,873)
26 Political Risk Insurance During Construction Loan:  $      0      ($233)    ($233)     ($615)     ($615)     ($615)
27 Initial Working Capital                                ($600) $       0  $      0  $       0  $       0  $       0
28 Reserve Fund                                        $      0  $       0  $      0    ($1,231) $       0  $       0
29 Net Change in Working Capital Requirements             ($186)     ($259)    ($125)     ($131)     ($365)     ($281)
30 Disbursement from Reserves                          $      0  $       0  $      0  $      16  $      66  $      66
31 Operating Expenses                                     ($909)   ($1,846)  ($1,882)   ($1,920)   ($1,958)   ($3,400)
32 Political Risk Insurance Premiums for Equity           ($293)     ($314)    ($342)     ($352)     ($389)     ($426)
33 Political Risk Insurance Premiums for Debt          $      0  $       0  $      0      ($216)     ($232)     ($198)

34 Total Uses Before PR Pem(1) for Debt and Taxes       ($2,658)  ($10,753)  ($8,254)  ($11,248)  ($15,464)  ($16,555)

35 EBITDA                                              $    572  $   2,585  $  5,274  $   6,082  $   9,428  $  12,015

36 Interest Paid on Senior Term Loan 1                 $      0  $       0  $      0      ($262)     ($968)     ($837)
37 Principal Repayment of Senior Loan 1                $      0  $       0  $      0      ($357)   ($1,429)   ($1,429)
38 Interest Paid on Senior Term Loan 2                 $      0  $       0  $      0  $       0  $       0  $       0
39 Principal Repayment of Senior Loan 2                $      0  $       0  $      0  $       0  $       0  $       0
                                                       --------  ---------  --------  ---------  ---------  ---------
40 Total Debt Service                                  $      0  $       0  $      0      ($620)   ($2,397)   ($2,266)

41 Nicaraguan Income Taxes Paid                            ($74) $       0  $      0  $       0  $       0  $       0
42 Local Tax on Revenue                                    ($19)      ($48)     ($73)      ($83)     ($118)     ($156)
                                                       --------  ---------  --------  ---------  ---------  ---------
43 Total Uses                                           ($2,751) $ (10,801)  ($8,328)  ($11,951)  ($17,979)  ($18,977)
                                                       --------  ---------  --------  ---------  ---------  ---------
44 Cash Available for Distribution                     $    480  $   2,537  $  5,201  $   5,379  $   6,912  $   9,593
                                                       --------  ---------  --------  ---------  ---------  ---------
45 DSCR - End of the Year                                    NA         NA        NA       2.54       4.16       2.80

46 DSRA                                                $      0  $       0  $      0  $   1,215  $   1,149  $   1,084


Year                                                      2005       2006       2007       2008       2009       2010
----                                                   ---------  ---------  ---------  ---------  ---------  ---------

   Operating Months of the Project                            12         12         12         12         12         12
   Operating Months in Max Capacity                            4         12         12         12         12         12

   SOURCES:
 1 Total Revenues                                      $  21,172  $  23,291  $  23,729  $  24,243  $  24,635  $  25,084
 2 Pre Closing Equity                                  $       0
 3 Equity 1                                            $       0
 4 Construction Loan 1 Proceeds                        $       0
 5 Equity 2                                            $   4,282
 6 Construction Loan 2 Proceeds                        $  11,428

 7 Total Sources                                       $  36,882  $  23,291  $  23,729  $  24,243  $  24,635  $  25,084
                                                       ---------  ---------  ---------  ---------  ---------  ---------
   USE:
 8 Project Taking Over and Field & Plant Analysis      $       0
 9 Phase 1 Management                                  $       0
10 Phase 1 Activities                                  $       0
11 Phase 2 Management                                      ($378)
12 Phase 2 Activities                                    ($9,442)
13 LEGAL AND CONSULTING FOR CLOSING                    $       0
14 LEGAL AND CONSULTING FOR PHASE II                   $       0
15 PRE CLOSING COMMITMENT FEE - LOAN 1                 $       0
16 Arrangement Fee - Loan 1                            $       0
17 Front End Fee - Loan 1                              $       0
18 UNDISBURSED COMMITMENT FEE - LOAN 1                 $       0
19 Interest During Construction - Loan 1               $       0
20 Political Risk Insurance During Construction Loan   $       0
21 PRE CLOSING COMMITMENT FEE - LOAN 2                 $       0
22 Arrangement Fee - Loan 2                            $       0
23 Front End Fee - Loan 2                              $       0
24 UNDISBURSED COMMITMENT FEE - LOAN 2                      ($21)
25 Interest During Construction - Loan 2                 ($1,582)
26 Political Risk Insurance During Construction Loan:  $       0
27 Initial Working Capital                             $       0
28 Reserve Fund                                          ($4,288)
29 Net Change in Working Capital Requirements              ($452)      ($34)      ($35)      ($36)      ($36)      ($37)
30 Disbursement from Reserves                          $     126  $     307  $     307  $     307  $     307  $     997
31 Operating Expenses                                    ($4,883)   ($4,981)   ($5,081)   ($5,182)   ($5,286)   ($5,392)
32 Political Risk Insurance Premiums for Equity            ($443)     ($414)     ($422)     ($464)     ($499)     ($520)
33 Political Risk Insurance Premiums for Debt              ($842)     ($866)     ($721)     ($585)     ($456)     ($331)

34 Total Uses Before PR Pem(1) for Debt and Taxes       ($22,206)   ($5,987)   ($5,952)   ($5,959)   ($5,970)   ($5,283)

35 EBITDA                                              $  14,677  $  17,303  $  17,777  $  18,283  $  18,664  $  19,801

36 Interest Paid on Senior Term Loan 1                     ($705)     ($574)     ($443)     ($312)     ($180)      ($49)
37 Principal Repayment of Senior Loan 1                  ($1,429)   ($1,429)   ($1,429)   ($1,429)   ($1,429)   ($1,072)
38 Interest Paid on Senior Term Loan 2                     ($845)   ($3,077)   ($2,594)   ($2,112)   ($1,629)   ($1,146)
39 Principal Repayment of Senior Loan 2                  ($1,314)   ($5,257)   ($5,257)   ($5,257)   ($5,257)   ($5,257)
                                                       ---------  ---------  ---------  ---------  ---------  ---------
40 Total Debt Service                                    ($4,294)  ($10,338)   ($9,724)   ($9,110)   ($8,496)   ($7,525)

41 Nicaraguan Income Taxes Paid                        $       0    ($2,681)   ($3,711)   ($4,091)   ($4,441)   ($4,801)
42 Local Tax on Revenue                                    ($203)     ($222)     ($226)     ($231)     ($235)     ($240)
                                                       ---------  ---------  ---------  ---------  ---------  ---------
43 Total Uses                                           ($26,702)  ($19,227)  ($19,613)  ($19,391)  ($19,142)  ($17,848)
                                                       ---------  ---------  ---------  ---------  ---------  ---------
44 Cash Available for Distribution                     $  10,180  $   4,064  $   4,117  $   4,852  $   5,492  $   7,236
                                                       ---------  ---------  ---------  ---------  ---------  ---------
45 DSCR - End of the Year                                   1.42       1.78       1.95       2.15       2.48       3.34

46 DSRA                                                $   5,245  $   4,939  $   4,632  $   4,325  $   4,018  $   3,021


Year                                                      2011       2012       2013        2014       Total
----                                                   ---------  ---------  ----------  ---------  ----------

   Operating Months of the Project                            12         12          12         6
   Operating Months in Max Capacity                           12         12          12        11

   SOURCES:
 1 Total Revenues                                      $  25,535  $  26,020  $   26,371  $ 13,316   $  285,227
 2 Pre Closing Equity                                                                               $    2,712
 3 Equity 1                                                                                         $    4,495
 4 Construction Loan 1 Proceeds                                                                     $   11,435
 5 Equity 2                                                                                         $    9,325
 6 Construction Loan 2 Proceeds                                                                     $   36,800

 7 Total Sources                                       $  25,535  $  26,020  $   26,371  $ 13,316   $  349,994
                                                       ---------  ---------  ----------  --------
   USE:
 8 Project Taking Over and Field & Plant Analysis                                                      ($1,086)
 9 Phase 1 Management                                                                                  ($1,620)
10 Phase 1 Activities                                                                                  ($9,999)
11 Phase 2 Management                                                                                  ($1,944)
12 Phase 2 Activities                                                                                 ($32,894)
13 LEGAL AND CONSULTING FOR CLOSING                                                                      ($675)
14 LEGAL AND CONSULTING FOR PHASE II                                                                     ($265)
15 PRE CLOSING COMMITMENT FEE - LOAN 1                                                                    ($14)
16 Arrangement Fee - Loan 1                                                                               ($29)
17 Front End Fee - Loan 1                                                                                ($143)
18 UNDISBURSED COMMITMENT FEE - LOAN 1                                                                    ($35)
19 Interest During Construction - Loan 1                                                               ($1,601)
20 Political Risk Insurance During Construction Loan                                                     ($395)
21 PRE CLOSING COMMITMENT FEE - LOAN 2                                                                   ($233)
22 Arrangement Fee - Loan 2                                                                               ($92)
23 Front End Fee - Loan 2                                                                                ($460)
24 UNDISBURSED COMMITMENT FEE - LOAN 2                                                                   ($328)
25 Interest During Construction - Loan 2                                                               ($4,523)
26 Political Risk Insurance During Construction Loan:                                                  ($2,311)
27 Initial Working Capital                                                                               ($600)
28 Reserve Fund                                                                                        ($5,519)
29 Net Change in Working Capital Requirements               ($38)      ($25)       ($41) $  2,080   $        0
30 Disbursement from Reserves                          $     241  $   2,779  $        0  $    600   $    6,119
31 Operating Expenses                                    ($5,500)   ($5,610)    ($5,722)  ($2,904)    ($62,455)
32 Political Risk Insurance Premiums for Equity            ($528)     ($494)      ($404)     ($91)     ($6,395)
33 Political Risk Insurance Premiums for Debt              ($156)     ($109)        ($0)      ($0)     ($4,712)

34 Total Uses Before PR Pem(1) for Debt and Taxes        ($5,980)   ($3,458)    ($6,166)    ($315)   ($132,210)

35 EBITDA                                              $  19,555  $  22,562  $   20,204  $ 13,001   $  217,783

36 Interest Paid on Senior Term Loan 1                 $       0  $       0  $        0  $      0      ($4,331)
37 Principal Repayment of Senior Loan 1                $       0  $       0  $        0  $      0     ($11,435)
38 Interest Paid on Senior Term Loan 2                     ($664)     ($181)        ($0)      ($0)    ($12,247)
39 Principal Repayment of Senior Loan 2                  ($5,257)   ($3,943) $        0  $      0     ($36,800)
                                                       ---------  ---------  ----------  --------
40 Total Debt Service                                    ($5,921)   ($4,124)        ($0)      ($0)    ($64,813)

41 Nicaraguan Income Taxes Paid                          ($4,976)   ($5,272)    ($5,428)  ($2,448)    ($37,921)
42 Local Tax on Revenue                                    ($245)     ($250)      ($254)    ($126)     ($2,730)
                                                       ---------  ---------  ----------  --------
43 Total Uses                                           ($17,121)  ($13,104)   ($11,849)  ($2,889)   ($237,674)
                                                       ---------  ---------  ----------  --------
44 Cash Available for Distribution                     $   8,414  $  12,915  $   14,522  $ 10,427   $  112,320
                                                       ---------  ---------  ----------  --------
45 DSCR - End of the Year                                   4.74         NA          NA        NA

46 DSRA                                                $   2,779  $       0  $        0  $      0           ?


--------------------------------------------------------------------------------



                                                  ORMAT Momotombo Power Company
--------------------------------------------------------------------------------

Sources and Uses of Funds
($000' except when otherwise noted)



                                                                                    1999
                                                           --------------------------------------------------------
                                                             Q1       Q2         Q3           Q4           Total
                                                           ------   ------   ----------   ----------   ------------

   Sources:

   Pre Closing Equity                                      $0,000   $0,000   $  901,950   $  369,050   $  1,271,000

   Equity 1                                                $0,000   $0,000   $    0,000   $    0,000   $      0,000
   Loan 1 Proceeds                                         $0,000   $0,000   $    0,000   $    0,000   $      0,000

   Equity 2                                                $0,000   $0,000   $    0,000   $    0,000   $      0,000
   Loan 2 Proceeds                                         $0,000   $0,000   $    0,000   $    0,000   $      0,000

   Total Sources                                           $0,000   $0,000   $  901,950   $  369,050   $  1,271,000
                                                           ------   ------   ----------   ----------   ------------
   Uses

 1 Project Taking Over and Field & Plant Analysis          $0,000   $0,000    ($301,950)   ($369,050)     ($671,000)
   Rehabilitation Costs
 2 Phase 1 Management                                      $0,000   $0,000   $    0,000   $    0,000   $      0,000
 3 Phase 1 Activities                                      $0,000   $0,000   $    0,000   $    0,000   $      0,000
 4 Phase 2 Management                                      $0,000   $0,000   $    0,000   $    0,000   $      0,000
 5 Phase 2 Activities                                      $0,000   $0,000   $    0,000   $    0,000   $      0,000
   Total Rehabilitation Cost                               $0,000   $0,000   $    0,000   $    0,000   $      0,000

 6 Legal and Consulting for Closing                        $0,000   $0,000   $    0,000   $    0,000   $      0,000
 7 Legal and Consulting for Phase II                       $0,000   $0,000   $    0,000   $    0,000   $      0,000
 8 Pre Closing Commitment Fee - Loan 1                     $0,000   $0,000   $    0,000   $    0,000   $      0,000
 9 Arrangement Fee - Loan 1                                $0,000   $0,000   $    0,000   $    0,000   $      0,000
10 Front End Fee - Loan 1                                  $0,000   $0,000   $    0,000   $    0,000   $      0,000
11 Undisbursed Commitment Fee - Loan 1                     $0,000   $0,000   $    0,000   $    0,000   $      0,000
12 Interest During Construction - Loan 1                   $0,000   $0,000   $    0,000   $    0,000   $      0,000
13 Political Risk Insurance During Construction - Loan 1   $0,000   $0,000   $    0,000   $    0,000   $      0,000
14 Pre Closing Commitment Fee - Loan 2                     $0,000   $0,000   $    0,000   $    0,000   $      0,000
15 Arrangement Fee - Loan 2                                $0,000   $0,000   $    0,000   $    0,000   $      0,000
16 Front End Fee - Loan 2                                  $0,000   $0,000   $    0,000   $    0,000   $      0,000
17 Undisbursed Commitment Fee - Loan 2                     $0,000   $0,000   $    0,000   $    0,000   $      0,000
18 Interest During Construction - Loan 2                   $0,000   $0,000   $    0,000   $    0,000   $      0,000
19 Political Risk Insurance During Construction - Loan 2   $0,000   $0,000   $    0,000   $    0,000   $      0,000
20 Initial Working Capital                                 $0,000   $0,000    ($600,000)  $    0,000      ($600,000)
21 Debt Reserve Fund for Loan 1                            $0,000   $0,000   $    0,000   $    0,000   $      0,000
22 Debt Reserve Fund for Loan 2                            $0,000   $0,000   $    0,000   $    0,000   $      0,000
   Total Uses                                              $0,000   $0,000    ($901,950)   ($369,050)   ($1,271,000)

                                                           OK       OK       OK           OK           OK


                                                                                             2000
                                                           ------------------------------------------------------------------------
                                                                Q1             Q2             Q3             Q4            Total
                                                           ------------   ------------   ------------   ------------   ------------

   Sources:

   Pre Closing Equity                                      $  1,095,441   $  1,655,840    ($1,312,910)  $      0,000   $  1,441,370

   Equity 1                                                $      0,000   $      0,000      ($433,538)  $    602,899   $    169,360
   Loan 1 Proceeds                                         $      0,000   $      0,000   $  5,317,274   $  1,406,763   $  6,724,038

   Equity 2                                                $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
   Loan 2 Proceeds                                         $      0,000   $      0,000   $      0,000   $      0,000   $      0,000

   Total Sources                                           $  1,095,441   $  1,655,840   $  3,570,826   $  2,009,662   $  8,334,768
                                                           ------------   ------------   ------------   ------------   ------------
   Uses

 1 Project Taking Over and Field & Plant Analysis             ($_______)     ($228,250)  $      0,000   $      0,000      ($415,000)
   Rehabilitation Costs
 2 Phase 1 Management                                         ($108,000)     ($162,000)     ($162,000)   ($  162,000)     ($594,600)
 3 Phase 1 Activities                                         ($773,125)   ($1,019,688)   ($2,280,888)   ($1,471,188)   ($5,544,688)
 4 Phase 2 Management                                      $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
 5 Phase 2 Activities                                      $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
   Total Rehabilitation Cost                                  ($881,125)   ($1,181,688)   ($2,442,888)   ($1,633,188)   ($6,138,688)

 6 Legal and Consulting for Closing                        $      0,000   $      0,000      ($675,000)  $      0,000      ($675,000)
 7 Legal and Consulting for Phase II                       $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
 8 Pre Closing Commitment Fee - Loan 1                          ($7,246)       ($7,246)  $      0,000   $      0,000       ($14,492)
 9 Arrangement Fee - Loan 1                                $      0,000   $      0,000       ($28,588)  $      0,000       ($28,588)
10 Front End Fee - Loan 1                                  $      0,000   $      0,000      ($142,038)  $      0,000      ($142,038)
11 Undisbursed Commitment Fee - Loan 1                     $      0,000   $      0,000       ($14,492)       ($7,583)      ($22,075)
12 Interest During Construction - Loan 1                   $      0,000   $      0,000       ($36,832)     ($130,235)     ($167,037)
13 Political Risk Insurance During Construction - Loan 1   $      0,000       ($98,850)  $      0,000       ($98,850)     ($1_7,699)
14 Pre Closing Commitment Fee - Loan 2                         ($23,319)      ($23,319)      ($23,319)      ($23,319)      ($_3,278)
15 Arrangement Fee - Loan 2                                $      0,000   $      0,000       ($92,000)  $      0,000       ($92,000)
16 Front End Fee - Loan 2                                  $      0,000   $      0,000      ($115,000)  $      0,000      ($115,000)
17 Undisbursed Commitment Fee - Loan 2                     $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
18 Interest During Construction - Loan 2                   $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
19 Political Risk Insurance During Construction - Loan 2   $      0,000      ($116,487)  $      0,000      ($116,487)     ($232,974)
20 Initial Working Capital                                 $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
21 Debt Reserve Fund for Loan 1                            $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
22 Debt Reserve Fund for Loan 2                            $      0,000   $      0,000   $      0,000   $      0,000   $      0,000
   Total Uses                                               ($1,098,441)   ($1,655,640)   ($3,570,826)   ($2,009,662)   ($8,334,768)
                                                           ------------   ------------   ------------   ------------   ------------
                                                           OK             OK             OK             OK             OK


                                                                                            2001
                                                           ----------------------------------------------------------------------
                                                                Q1              Q2            Q3            Q4           Total
                                                           ------------   ------------   ------------   ----------   ------------

   Sources:

   Pre Closing Equity                                      $      0,000   $      0,000   $      0,000   $    0,000   $      0,000

   Equity 1                                                $    338,284   $    791,910   $    376,246   $  264,872   $  1,771,312
   Loan 1 Proceeds                                         $    789,328   $  1,847,790   $    877,907   $  618,035   $  4,133,060

   Equity 2                                                $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
   Loan 2 Proceeds                                         $      0,000   $      0,000   $      0,000   $    0,000   $      0,000

   Total Sources                                           $  1,127,612   $  2,639,700   $  1,254,154   $  882,907   $  5,904,372
                                                           ------------   ------------   ------------   ----------   ------------

   Uses

 1 Project Taking Over and Field & Plant Analysis          $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
   Rehabilitation Costs
 2 Phase 1 Management                                         ($162,000)     ($162,000)     ($162,000)   ($162,000)     ($648,000)
 3 Phase 1 Activities                                         ($771,188)   ($2,046,938)     ($839,063)   ($239,063)   ($3,896,250)
 4 Phase 2 Management                                      $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
 5 Phase 2 Activities                                      $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
   Total Rehabilitation Cost                                  ($933,188)   ($2,208,938)   ($1,001,063)   ($401,063)   ($4,544,250)

 6 Legal and Consulting for Closing                        $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
 7 Legal and Consulting for Phase II                       $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
 8 Pre Closing Commitment Fee - Loan 1                     $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
 9 Arrangement Fee - Loan 1                                $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
10 Front End Fee - Loan 1                                  $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
11 Undisbursed Commitment Fee - Loan 1                          ($5,293)       ($4,238)       ($1,918)     ($1,327)      ($12,821)
12 Interest During Construction - Loan 1                      ($165,812)     ($187,819)     ($227,869)   ($241,881)     ($823,350)
13 Political Risk Insurance During Construction - Loan 1   $      0,000       ($98,850)  $      0,000     ($98,850)     ($197,690)
14 Pre Closing Commitment Fee - Loan 2                         ($23,319)      ($23,319)      ($23,319)    ($23,319)      ($______)
15 Arrangement Fee - Loan 2                                $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
16 Front End Fee - Loan 2                                  $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
17 Undisbursed Commitment Fee - Loan 2                     $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
18 Interest During Construction - Loan 2                   $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
19 Political Risk Insurance During Construction - Loan 2   $      0,000      ($116,487)  $      0,000    ($116,487)     ($232,974)
20 Initial Working Capital                                 $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
21 Debt Reserve Fund for Loan 1                            $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
22 Debt Reserve Fund for Loan 2                            $      0,000   $      0,000   $      0,000   $    0,000   $      0,000
   Total Uses                                               ($1,127,612)   ($2,639,700)   ($1,254,154)   ($882,007)   ($5,984,372)
                                                           ------------   ------------   ------------   ----------   ------------
                                                           OK             OK             OK             OK           OK


                                                                                         2002
                                                           ---------------------------------------------------------------------
                                                                Q1          Q2            Q3              Q4            Total
                                                           ----------   ----------   ------------   -------------   ------------


   Sources:

   Pre Closing Equity                                      $    0,000   $    0,000   $      0,000   $       0,000   $      0,000

   Equity 1                                                $  204,371   $  896,166   $  1,453,776   $       0,000   $  2,554,313
   Loan 1 Proceeds                                         $  476,866   $  101,036   $      0,000   $       0,000   $    577,902

   Equity 2                                                $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
   Loan 2 Proceeds                                         $    0,000   $    0,000   $  2,235,369   $   3,277,548   $  5,512,917

   Total Sources                                           $  681,237   $  997,202   $  3,689,146   $   3,277,548   $  8,545,133
                                                           ----------   ----------   ------------   -------------   ------------

   Uses

 1 Project Taking Over and Field & Plant Analysis          $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
   Rehabilitation Costs
 2 Phase 1 Management                                       ($162,000)   ($162,000)      ($54,000)  $       0,000      ($378,000)
 3 Phase 1 Activities                                       ($239,063)   ($239,063)      ($79,088)  $       0,000      ($557,613)
 4 Phase 2 Management                                      $    0,000   $    0,000      ($108,000)      ($162,000)     ($270,000)
 5 Phase 2 Activities                                      $    0,000   $    0,000    ($1,459,656)    ($2,889,338)   ($4,148,896)
   Total Rehabilitation Cost                                ($401,063)   ($401,063)   ($1,701,248)    ($2,851,338)   ($5,354,708)

 6 Legal and Consulting for Closing                        $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
 7 Legal and Consulting for Phase II                       $    0,000   $    0,000      ($265,000)  $       0,000      ($265,000)
 8 Pre Closing Commitment Fee - Loan 1                     $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
 9 Arrangement Fee - Loan 1                                $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
10 Front End Fee - Loan 1                                  $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
11 Undisbursed Commitment Fee - Loan 1                        ($_____)  $    0,000   $      0,000   $       0,000        ($_,539)
12 Interest During Construction - Loan 1                    ($256,316)   ($265,294)      ($89,693)  $       0,000      ($610,303)
13 Political Risk Insurance During Construction - Loan 1   $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
14 Pre Closing Commitment Fee - Loan 2                       ($23,310)    ($2_,319)  $      0,000   $       0,000       ($46,639)
15 Arrangement Fee - Loan 2                                $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
16 Front End Fee - Loan 2                                  $    0,000   $    0,000      ($345,000)  $       0,000      ($345,000)
17 Undisbursed Commitment Fee - Loan 2                     $    0,000   $    0,000       ($46,639)       ($42,_00)      ($89,239)
18 Interest During Construction - Loan 2                   $    0,000   $    0,000       ($11,172)       ($76,084)      ($87,257)
19 Political Risk Insurance During Construction - Loan 2   $    0,000    ($3_7,52_)  $      0,000       ($307,526)     ($615,051)
20 Initial Working Capital                                 $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
21 Debt Reserve Fund for Loan 1                            $    0,000   $    0,000    ($1,231,396)  $       0,000    ($1,231,398)
22 Debt Reserve Fund for Loan 2                            $    0,000   $    0,000   $      0,000   $       0,000   $      0,000
   Total Uses                                               ($681,237)   ($997,282)   ($3,688,140)    ($3,277,___)   ($_________)
                                                           ----------   ----------   ------------   -------------   ------------
                                                           OK           OK           OK             OK              OK


--------------------------------------------------------------------------------



                                                                                           2003
                                                          ---------------------------------------------------------------------
                                                               Q1            Q2            Q3            Q4           Total
                                                          ------------  ------------  ------------  ------------  -------------

Sources:

   Pre Closing Equity                                     $      0,000  $      0,000  $      0,000  $      0,000  $       0,000

   Equity 1                                               $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
   Loan 1 Proceeds                                        $      0,000  $      0,000  $      0,000  $      0,000  $       0,000

   Equity 2                                               $      0,000  $    292,692  $    790,230  $    880,222  $   1,963,145
   Loan 2 Proceeds                                        $  2,908,811  $  2,701,627  $  2,370,689  $  2,640,667  $  10,621,795

   Total Sources                                          $  2,908,811  $  2,994,319  $  3,160,919  $  3,520,890  $  12,584,939
                                                          ------------  ------------  ------------  ------------  -------------

Uses

 1 Project Taking Over and Field & Plant Analysis         $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
   Rehabilitation Costs
 2 Phase 1 Management                                     $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 3 Phase 1 Activities                                     $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 4 Phase 2 Management                                        ($162,000)    ($162,000)    ($162,000)    ($162,000)     ($648,000)
 5 Phase 2 Activities                                      ($2,556,004)  ($2,272,671)  ($2,689,336)  ($2,689,336)  ($10,207,350)
   Total Rehabilitation Cost                               ($2,718,004)  ($2,434,671)  ($2,851,338)  ($2,851,338)  ($10,855,350)

 6 Legal and Consulting for Closing                       $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 7 Legal and Consulting for Phase II                      $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 8 Pre Closing Commitment Fee - Loan 1                    $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 9 Arrangement Fee - Loan 1                               $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
10 Front End Fee - Loan 1                                 $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
11 Undisbursed Commitment Fee - Loan 1                    $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
12 Interest During Construction - Loan 1                  $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
13 Political Risk Insurance During Construction - Loan 1  $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
14 Pre Closing Commitment Fee - Loan 2                    $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
15 Arrangement Fee - Loan 2                               $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
16 Front End Fee - Loan 2                                 $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
17 Undisbursed Commitment Fee - Loan 2                        ($38,414)     ($34,784)     ($31,572)     ($28,550)     ($133,320)
18 Interest During Construction - Loan 2                     ($___,3__)    ($217,339)    ($276,010)    ($333,477)     ($___,___)
19 Political Risk Insurance During Construction - Loan 2  $      0,000     ($307,526) $      0,000     ($307,526)     ($615,051)
20 Initial Working Capital                                $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
21 Debt Reserve Fund for Loan 1                           $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
22 Debt Reserve Fund for Loan 2                           $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
   Total Uses                                              ($_,___,___)  ($_,___,___)  ($_,___,___)  ($_,___,___)  ($__,___,___)
                                                          ------------  ------------  ------------  ------------  -------------
                                                          OK            OK            OK            OK            OK


                                                                                           2004
                                                          ---------------------------------------------------------------------
                                                               Q1            Q2            Q3            Q4           Total
                                                          ------------  ------------  ------------  ------------  -------------

   Sources:

   Pre Closing Equity                                     $      0,000  $      0,000  $      0,000  $      0,000  $       0,000

   Equity 1                                               $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
   Loan 1 Proceeds                                        $      0,000  $      0,000  $      0,000  $      0,000  $       0,000

   Equity 2                                               $    847,811  $    564,927  $    642,213  $  1,024,112  $   3,079,063
   Loan 2 Proceeds                                        $  2,543,434  $  1,694,780  $  1,926,638  $  3,072,337  $   9,237,188

   Total Sources                                          $  3,391,245  $  2,259,707  $  2,568,851  $  4,096,449  $  12,316,251
                                                          ------------  ------------  ------------  ------------  -------------

   Uses

 1 Project Taking Over and Field & Plant Analysis         $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
   Rehabilitation Costs
 2 Phase 1 Management                                     $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 3 Phase 1 Activities                                     $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 4 Phase 2 Management                                        ($162,000)    ($162,000)    ($162,000)    ($162,000)     ($648,000)
 5 Phase 2 Activities                                      ($2,806,454)  ($1,316,013)  ($1,901,346)  ($_,___,___)   ($_,___,___)
   Total Rehabilitation Cost                               ($2,970,454)  ($1,480,013)  ($2,063,345)  ($3,230,013)   ($9,743,825)

 6 Legal and Consulting for Closing                       $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 7 Legal and Consulting for Phase II                      $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 8 Pre Closing Commitment Fee - Loan 1                    $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
 9 Arrangement Fee - Loan 1                               $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
10 Front End Fee - Loan 1                                 $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
11 Undisbursed Commitment Fee - Loan 1                    $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
12 Interest During Construction - Loan 1                  $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
13 Political Risk Insurance During Construction - Loan 1  $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
14 Pre Closing Commitment Fee - Loan 2                    $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
15 Arrangement Fee - Loan 2                               $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
16 Front End Fee - Loan 2                                 $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
17 Undisbursed Commitment Fee - Loan 2                        ($26,184)     ($21,885)     ($20,436)     ($17,205)      ($84,712)
18 Interest During Construction - Loan 2                     ($395,607)    ($450,284)    ($__6,__7)    ($___,___)   ($_,___,663)
19 Political Risk Insurance During Construction - Loan 2  $      0,000     ($307,526) $      0,000     ($307,526)    ($____,___)
20 Initial Working Capital                                $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
21 Debt Reserve Fund for Loan 1                           $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
22 Debt Reserve Fund for Loan 2                           $      0,000  $      0,000  $      0,000  $      0,000  $       0,000
   Total Uses                                              ($3,391,245)  ($2,2__,7__)  ($2,568,851)  ($4,098,___)  ($12,316,251)
                                                          ------------  ------------  ------------  ------------  -------------
                                                          OK            OK            OK            OK            OK


                                                                                        2005
                                                          ------------------------------------------------  -------------
                                                               Q1            Q2            Q3         Q4        Total
                                                          ------------  ------------  ------------  ------  -------------

   Sources:

   Pre Closing Equity                                     $      0,000  $      0,000  $      0,000  $0,000  $       0,000

   Equity 1                                               $      0,000  $      0,000  $      0,000  $0,000  $       0,000
   Loan 1 Proceeds                                        $      0,000  $      0,000  $      0,000  $0,000  $       0,000

   Equity 2                                               $  1,265,095  $  1,174,721  $  1,842,582  $0,000  $   4,282,398
   Loan 2 Proceeds                                        $  3,795,285  $  3,524,163  $  4,108,651  $0,000  $  11,428,100

   Total Sources                                          $  5,060,380  $  4,698,884  $  5,951,233  $0,000  $  15,710,498
                                                          ------------  ------------  ------------  ------  -------------

   Uses

 1 Project Taking Over and Field & Plant Analysis         $      0,000  $      0,000  $      0,000  $0,000  $       0,000
   Rehabilitation Costs
 2 Phase 1 Management                                     $      0,000  $      0,000  $      0,000  $0,000  $       0,000
 3 Phase 1 Activities                                     $      0,000  $      0,000  $      0,000  $0,000  $       0,000
 4 Phase 2 Management                                        ($162,000)    ($162,000)     ($84,000) $0,000      ($376,000)
 5 Phase 2 Activities                                      ($4,268,013)  ($3,818,013)  ($_,___,0__) $0,000    ($9,___,___)
   Total Rehabilitation Cost                               ($4,430,013)  ($3,980,013)  ($1,410,004) $0,000    ($9,820,029)

 6 Legal and Consulting for Closing                       $      0,000  $      0,000  $      0,000  $0,000  $       0,000
 7 Legal and Consulting for Phase II                      $      0,000  $      0,000  $      0,000  $0,000  $       0,000
 8 Pre Closing Commitment Fee - Loan 1                    $      0,000  $      0,000  $      0,000  $0,000  $       0,000
 9 Arrangement Fee - Loan 1                               $      0,000  $      0,000  $      0,000  $0,000  $       0,000
10 Front End Fee - Loan 1                                 $      0,000  $      0,000  $      0,000  $0,000  $       0,000
11 Undisbursed Commitment Fee - Loan 1                    $      0,000  $      0,000  $      0,000  $0,000  $       0,000
12 Interest During Construction - Loan 1                  $      0,000  $      0,000  $      0,000  $0,000  $       0,000
13 Political Risk Insurance During Construction - Loan 1  $      0,000  $      0,000  $      0,000  $0,000  $       0,000
14 Pre Closing Commitment Fee - Loan 2                    $      0,000  $      0,000  $      0,000  $0,000  $       0,000
15 Arrangement Fee - Loan 2                               $      0,000  $      0,000  $      0,000  $0,000  $       0,000
16 Front End Fee - Loan 2                                 $      0,000  $      0,000  $      0,000  $0,000  $       0,000
17 Undisbursed Commitment Fee - Loan 2                        ($13,289)      ($7,738) $      0,000  $0,000       ($__,_27)
18 Interest During Construction - Loan 2                     ($6__,___)    ($711,134)    ($253,562) $0,000    ($1,___,___)
19 Political Risk Insurance During Construction - Loan 2  $      0,000  $      0,000  $      0,000  $0,000  $       0,000
20 Initial Working Capital                                $      0,000  $      0,000  $      0,000  $0,000  $       0,000
21 Debt Reserve Fund for Loan 1                           $      0,000  $      0,000  $      0,000  $0,000  $       0,000
22 Debt Reserve Fund for Loan 2                           $      0,000  $      0,000   ($4,287,___) $0,000    ($_,___,___)
   Total Uses                                              ($_,___,3__)  ($_,___,___)  ($_,___,___) $0,000   ($__,___,___)
                                                          ------------  ------------  ------------  ------  -------------
                                                          OK            OK            OK            OK      OK


                                                              Total
                                                           Sources/Uses
                                                          -------------

   Sources:

   Pre Closing Equity                                     $   2,712,370

   Equity 1                                               $   4,494,985
   Loan 1 Proceeds                                        $  11,435,000

   Equity 2                                               $   9,324,606
   Loan 2 Proceeds                                        $  36,800,000

   Total Sources                                          $  64,766,961
                                                          -------------

   Uses

 1 Project Taking Over and Field & Plant Analysis           ($1,___,000)
   Rehabilitation Costs
 2 Phase 1 Management                                       ($1,620,000)
 3 Phase 1 Activities                                       ($_,___,___)
 4 Phase 2 Management                                       ($1,944,000)
 5 Phase 2 Activities                                      ($32,___,100)
   Total Rehabilitation Cost                               ($46,___,__)

 6 Legal and Consulting for Closing                           ($675,000)
 7 Legal and Consulting for Phase II                          ($___,000)
 8 Pre Closing Commitment Fee - Loan 1                         ($14,492)
 9 Arrangement Fee - Loan 1                                    ($26,688)
10 Front End Fee - Loan 1                                     ($142,938)
11 Undisbursed Commitment Fee - Loan 1                         ($35,436)
12 Interest During Construction - Loan 1                    ($1,600,___)
13 Political Risk Insurance During Construction - Loan 1      ($___,___)
14 Pre Closing Commitment Fee - Loan 2                        ($233,194)
15 Arrangement Fee - Loan 2                                    ($__,000)
16 Front End Fee - Loan 2                                     ($4__,000)
17 Undisbursed Commitment Fee - Loan 2                        ($___,298)
18 Interest During Construction - Loan 2                    ($4,622,913)
19 Political Risk Insurance During Construction - Loan 2    ($_,311,101)
20 Initial Working Capital                                    ($600,000)
21 Debt Reserve Fund for Loan 1                             ($1,231,396)
22 Debt Reserve Fund for Loan 2                             ($4,287,667)
   Total Uses                                              ($__,___,___)
                                                          -------------
                                                          OK


--------------------------------------------------------------------------------


                                                                      Page No. 1