NOTE

— TRANSACTIONS WITH RELATED ENTITIES

Transactions between the Company and related entities, other than those disclosed elsewhere in these financial are summarized below:

	Year Ended December 31,
	2016		2015		2014
	(Dollars in thousands)
Property rental fee expense paid to the Parent	$	—	$	303	$	1,821
Corporate financial, administrative, executive services, and research and development services provided to the Parent	$	—	$	148	$	148
Services rendered by an indirect shareholder of the Parent	$	—	$	15	$	51

The current asset due from the Parent at

December

31,

2015

in the amount of

$1,337,000

represented the net obligation resulting from ongoing operations and transactions with the Parent and is payable from available cash flow. Interest was computed on balances greater than

days at LIBOR plus

(but not less than the change in the Israeli Consumer Price Index plus

4%)

compounded quarterly, and was accrued and paid to the Parent annually

The amount of such balance as of

December

31,

2015

$0.

Restructuring with the Parent

February

2015,

the Tel Aviv Stock Exchange (“TASE”) approved the listing of the Company

’s common stock on the TASE. On

February

10,

2015,

the Company's common stock was successfully listed on the TASE. The TASE also confirmed that the Company will be included in the TA-

Index, which is the TASE flagship index that tracks the share prices of the

companies with the highest market capitalization on the exchange. The Company will remain subject to the rules and regulations of the New York Stock Exchange (“NYSE”) and of the U.S. Securities and Exchange Commission (“SEC”). Under the local regime for dual listing, the Company will use the same periodic reports, financial and other relevant disclosure information that The Company submits to the SEC and NYSE.

February

12,

2015,

the Company completed the share exchange transaction with its then-

Parent entity, Ormat Industries Ltd. ("OIL") following which, the Company became a noncontrolled public company and its public float increased from approximately

40%

to approximately

76%

of its total shares outstanding. Under the terms of the share exchange, OIL shareholders received

0.2592

shares in the Company for each share in OIL, or an aggregate of approximately

30.2

million shares, reflecting a net issuance of approximately

3.0

million shares (after deducting the

27.2

million shares that OIL held in the Company). Consequently, the number of total shares of the Company outstanding increased from approximately

45.5

million shares to approximately

48.5

million shares as of the closing of the share exchange.

In exchange, the Company also received

$15.4

million in cash,

$0.6

million in other assets and

$12.1

million in land and buildings and assumed

$0.5

million in liabilities. OIL's principal business purpose was to hold its interest in the Company and the transaction resulted in a transfer of non-material assets from OIL to the Company. Therefore, there was no change in the reporting entity as a result of the transaction and the Company recognized the transfer of net assets at their carrying value as presented in OIL's financial statements. Any activities of OIL will be accounted for prospectively by the Company

Corporate and administrative services agreement with the Parent

Ormat Systems and the Parent had agreements whereby Ormat Systems provided to the Parent, for a monthly fee of $

10,000

(adjusted annually, in part based on changes in the Israeli Consumer Price Index), certain corporate administrative services, including the services of executive officers. In addition, Ormat Systems agreed to provide the Parent with services of certain skilled engineers and other research and development employees at Ormat Systems’ cost plus

10%.

Lease agreements with the Parent

Ormat Systems had a rental agreement with the Parent entered into in

July

2004

for the sublease of office and manufacturing facilities in Yavne, Israel, for a monthly rent of

$52,000,

adjusted annually for changes in the Israeli Consumer Price Index, plus taxes and other costs to maintain the properties. The term of the rental agreement was for a period ending the earlier of: (i)

years from

July

2004;

or (ii) the remaining periods of the underlying lease agreements between the Parent and the Israel Land Administration (which terminate between

2018

and

2047).

Effective

April

2009,

Ormat Systems entered into an additional rental agreement with the Parent for the sublease of additional manufacturing facilities adjacent to the current manufacturing facilities in Yavne, Israel. The term of the additional rent agreement was to expire on the same day as the abovementioned lease agreement entered into in

July

2004.

Pursuant to the additional lease agreement, Ormat Systems paid a monthly rent of

$77,000,

adjusted annually for changes in the Israeli Consumer Price Index, plus tax and other costs to maintain the properties

Registration rights agreement

Prior to the closing of the Company

’s initial public offering in

November

2004,

the Company and the Parent entered into a registration rights agreement pursuant to which the Parent

may

require the Company to register its common stock for sale on Form S-

or Form S-

The Company also agreed to pay all expenses that result from the registration of the Company’s common stock under the registration rights agreement, other than underwriting commissions for such shares and taxes. The Company has also agreed to indemnify the parent, its directors, officers and employees against liability that

may

result from their sale of the Company’s common stock, including Securities Act liabilities.

As of

February

12,

2015,

the above-mentioned agreements are no longer effective as a result of the restructuring transaction described above.