Authorization, Direction, and Termination Agreement among BNY Western Trust Company, SRT, Inc., and Steamboat Development Corp.

  AUTHORIZATION, DIRECTION AND TERMINATION AGREEMENT This AUTHORIZATION, DIRECTION, AND TERMINATION AGREEMENT (this "Agreement"), is made and entered into by and among BNY WESTERN TRUST COMPANY, a California banking corporation ("Lease Trustee"), not in its individual capacity but solely as successor Lease Trustee under the Lease Trust Agreement (as defined below), SRT, INC., a Nevada corporation ("Resource Trustee"), not in its individual capacity but solely as successor Resource Trustee under the Resource Trust Agreement (as defined below), and STEAMBOAT DEVELOPMENT CORP., a Utah corporation ("Steamboat"); Lease Trustee, Resource Trustee and Steamboat are referred to in this Agreement individually as a "Party" and collectively as the "Parties". RECITALS A. Steamboat, First Interstate Bank of Nevada, N.A., a national banking association ("Original Lease Trustee"), not individually but in its capacity as Trustee under the Construction Trust Agreements and the Lease Trust Agreement, and General Electric Capital Corporation, a Delaware corporation ("GECC") entered into that certain First Amended and Restated Financing Agreement dated as of December 31, 1992 (the "Financing Agreement"), in connection with a sale/leaseback transaction (the "Sale-Leaseback") for the repayment of a Loan from GECC for the construction of the Geothermal Plants. Unless the context otherwise requires or unless otherwise expressly provided herein, capitalized terms used but not defined herein shall have the meanings assigned to them in Appendix A to the Financing Agreement and are hereby incorporated by this reference. B. Pursuant to the Financing Agreement, Lease Trustee acquired for the benefit of GECC the Lease Trust Estate, including the Facilities, the applicable Operative Documents and all other property contributed by GECC under or pursuant to that certain First Amended and Restated Steamboat II and III Lease Trust Agreement (the "Lease Trust Agreement") between GECC and Lease Trustee, dated as of December 31, 1992. C. Pursuant to the Financing Agreement, Edward E. Hale ("Original Resource Trustee") not in his individual capacity but solely as trustee under that certain Resource Trust Agreement (the "Resource Trust Agreement") between Steamboat and Resource Trustee dated as of December 31, 1992, acquired for the benefit of Steamboat the Resource Trust Estate, including the Premises, the Geothermal Leases, the Wellfield Contract and all other property contributed by Steamboat under or pursuant to Resource Trust Agreement. D. Pursuant to the Financing Agreement, Resource Trustee leased the Premises to Lease Trustee pursuant to that certain Headlease Agreement (the "Headlease") dated as of December 31, 1992. E. Pursuant to the Financing Agreement, Lease Trustee leased the Premises and the Facilities to Steamboat pursuant to the terms and conditions of that certain Master Lease and Sublease Agreement (the "Master Lease") dated as of December 31, 1992.  F. Pursuant to the Financing Agreement, the Resource Trustee's right, title, estate and interest in, under and to the Resource Trust Estate were granted by Original Resource Trustee to Lease Trustee, as beneficiary, under that certain Resource Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the "Resource Deed of Trust"), dated December 31, 1992, recorded on December 31, 1992 in Book No. 3644, page 251 as Instrument No. 1634615, records of Washoe County, Nevada, to secure the obligations of Resource Trustee under the Headlease and of Steamboat under the Master Lease. G. Pursuant to that certain Order for Modification of Resource Trust Agreement and to Order Appointing Successor Resource Trustee, dated February 13, 2004, under Washoe County Case No. CV0400372, Resource Trustee agreed to serve as the Resource Trustee under the Resource Trust Agreement, as successor to the Original Resource Trustee, in accordance with that certain Resource Trustee Appointment Acceptance Agreement, dated as of February 12, 2004, between Steamboat and Resource Trustee. H. Pursuant to that certain Purchase Agreement dated as of January 26, 2004 (the "Purchase Agreement") by and between GECC and Ormat Technologies, Inc., a Nevada corporation ("Ormat"), Ormat acquired (i) all of GECC's right, title and interest in and to the Assigned Agreements (as defined under that certain Assignment and Assumption Agreement dated as of February 13, 2004, by and between GECC and Ormat), including, without limitation, the Lease Trust Agreement and the Resource Trust Agreement, and (ii) all of GECC's beneficial right, title and interest in and to the Lease Trust Estate (the "Beneficial Interest"), and Ormat assumed all of the rights and obligations of GECC under the Assigned Agreements. I. Immediately after the closing of Ormat's acquisition of the Assigned Agreements and Beneficial Interest from GECC, pursuant to that certain Assignment and Assumption Agreement, dated as of February 13, 2004, by and between Ormat and Steamboat, Ormat assigned all of its right, title and interest in, under and with respect to the Assigned Agreements and Beneficial Interest to Steamboat, and Steamboat assumed all of the obligations of Ormat under the Assigned Agreements and with respect to the Beneficial Interest. J. Steamboat is currently the sole beneficiary of the Lease Trust Estate under the Lease Trust Agreement and the Resource Trust Estate under the Resource Trust Agreement. K. Steamboat desires to, and to cause Lease Trustee to, terminate the Lease Trust Agreement, each of the Terminated Documents (as defined below) and Other Terminated Documents (as defined below) to which Lease Trustee is a party, and any security interests created pursuant to the Lease Trust Agreement, and to cause Lease Trustee to transfer to Steamboat all of Lease Trustee's interests in the Lease Trust Estate under the Lease Trust Agreement. L. Steamboat desires to, and to cause Resource Trustee to, terminate the Resource Trust Agreement, each of the Terminated Documents and Other Terminated Documents to which Resource Trustee is a party, and any security interests created pursuant to the Resource Trust 2  Agreement, and to cause Resource Trustee to transfer to Steamboat all of Resource Trustee's interests in the Resource Trust Estate under the Resource Trust Agreement. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: AGREEMENT 1. INSTRUCTIONS TO LEASE TRUSTEE Pursuant to Section 5.2 of the Lease Trust Agreement, Steamboat, as successor to and assignee of GECC under the Lease Trust Agreement, hereby authorizes and instructs Lease Trustee to execute and deliver this Agreement and, as of the Effective Date, each of the documents listed on Schedule 1 to which Lease Trustee is a party (collectively, the "Transfer and Termination Documents") and such other agreements, documents or instruments as Steamboat may from time to time reasonably request in accordance with Section 6 of this Agreement in order to carry out the intent and purposes of this Agreement. 2. INSTRUCTIONS TO RESOURCE TRUSTEE Pursuant to Section 5.2 of the Resource Trust Agreement, Steamboat hereby authorizes and instructs Resource Trustee to execute and deliver this Agreement and, as of the Effective Date, each of the Transfer and Termination Documents listed on Schedule 1 to which Resource Trustee is a party and such other agreements, documents or instruments as Steamboat may from time to time reasonably request in accordance with Section 6 of this Agreement in order to carry out the intent and purposes of this Agreement. 3. TERMINATION OF LEASE TRUST AGREEMENT 3.1 As of the Effective Date, the Lease Trust Agreement and the trusts created thereby shall terminate, the Lease Trustee shall transfer, convey and assign any property remaining in the Lease Trust Estate to Steamboat, and the Lease Trust Agreement shall be of no further force and effect, except for Sections 5.3 and 7.1 of the Lease Trust Agreement and rights under the Lease Trust Agreement that expressly are intended to survive the termination of the Lease Trust Agreement. 3.2 As of the Effective Date, Steamboat hereby (i) assumes all of the obligations, and the payment of all fees and expenses, of Lease Trustee under or contemplated by the Operative Documents and all other obligations of Lease Trustee incurred by it as trustee under the Lease Trust Agreement, and (ii) confirms its obligation to indemnify Lease Trustee in accordance with Sections 5.3 and 7.1 of the Lease Trust Agreement notwithstanding the termination of the Lease Trust Agreement. 3.3 Steamboat hereby confirms that the requirements of Article 8 of the Lease Trust Agreement have been satisfied and shall not prevent the termination of the Lease Trust Agreement and the trusts created thereby pursuant to this Agreement. Lease Trustee hereby 3  confirms that, to its knowledge, the requirements of Article 8 of the Lease Trust Agreement have been satisfied and shall not prevent the termination of the Lease Trust Agreement and the trusts created thereby pursuant to this Agreement. 3.4 Lease Trustee (whether acting as trustee hereunder or as a lessor or in its individual capacity) makes no representation or warranty to any party hereto as to (i) the validity or enforceability of any of the Terminated Documents (as defined below), the Other Terminated Documents (as defined below), the Transfer and Termination Documents, or any other document delivered in connection therewith, or any compliance with any of the terms and provisions thereof to properly effectuate the transactions described therein, or (ii) the rights and obligations being transferred pursuant to the applicable Transfer and Termination Documents. Notwithstanding the foregoing, Lease Trustee hereby represents that it has been given proper instruction to execute and deliver this Agreement and that this Agreement and each of such other documents that contemplates execution thereof by Lease Trustee has been or will be executed and delivered by its officers who are or will be duly authorized to execute and deliver such documents on its behalf. 3.5 Each of Steamboat and Lease Trustee hereby agrees that, by their execution hereof, this Agreement shall be treated as an amendment to the terms of the Lease Trust Agreement and shall govern to the extent any terms contained in this Agreement are inconsistent with the terms of the Lease Trust Agreement. 4. Termination of Resource Trust Agreement 4.1 As of the Effective Date, the Resource Trust Agreement and the trusts created thereby shall terminate, the Resource Trustee shall transfer, convey and assign any property remaining in the Resource Trust Estate to Steamboat, and the Resource Trust Agreement shall be of no further force and effect, except for Sections 5.3 and 7.1 of the Resource Trust Agreement and rights under the Resource Trust Agreement that expressly are intended to survive the termination of the Resource Trust Agreement. 4.2 As of the Effective Date, Steamboat hereby (i) assumes all of the obligations, and the payment of all fees and expenses, of Resource Trustee under or contemplated by the Operative Documents and all other obligations of Resource Trustee incurred by it as trustee under the Resource Trust Agreement, and (ii) confirms its obligation to indemnify Resource Trustee in accordance with Sections 5.3 and 7.1 of the Resource Trust Agreement notwithstanding the termination of the Resource Trust Agreement. 4.3 Steamboat hereby agrees that the requirements of Article 8 of the Resource Trust Agreement have been satisfied and shall not prevent the termination of the Resource Trust Agreement and the trusts created thereby pursuant to this Agreement. Resource Trustee hereby agrees that, to its knowledge, the requirements of Article 8 of the Resource Trust Agreement have been satisfied and shall not prevent the termination of the Resource Trust Agreement and the trusts created thereby pursuant to this Agreement. 4  4.4 Resource Trustee (whether acting as trustee hereunder or as a lessor or in its individual capacity) makes no representation or warranty to any party hereto as to (i) the validity or enforceability of any of the Terminated Documents, the Other Terminated Documents, the Transfer and Termination Documents, or any other document delivered in connection therewith, or any compliance with any of the terms and provisions thereof to properly effectuate the transactions described therein, or (ii) the rights and obligations being transferred pursuant to the applicable Transfer and Termination Documents. Notwithstanding the foregoing, Resource Trustee hereby represents that it has been given proper instruction to execute and deliver this Agreement and that this Agreement and each of such other documents that contemplates execution thereof by Resource Trustee has been or will be executed and delivered by its officers who are or will be duly authorized to execute and deliver such documents on its behalf. 4.5 Each of Steamboat and Resource Trustee hereby agrees that, by their execution hereof, this Agreement shall be treated as an amendment to the terms of the Resource Trust Agreement and shall govern to the extent any terms contained in this Agreement are inconsistent with the terms of the Resource Trust Agreement. 5. TERMINATION OF TERMINATED DOCUMENTS 5.1 Terminated Documents. Each Party hereby acknowledges and agrees that, as of the Effective Date, (a) each Terminated Document listed in Schedule 2 (the "Terminated Documents") to which it is a party (whether by way of assignment, succession, or otherwise) shall be terminated and that none of the Persons party to each such Terminated Document shall have any further rights or obligations pursuant to each such Terminated Document, (b) it and each other Party shall no longer have any Lien in any of the collateral or other property referred to in any of the Terminated Documents, and (c) all such collateral and other property in its or its agents' possession, if any, shall be assigned, transferred, and delivered to the appropriate Person. 5.2 Other Terminated Documents. Each Party hereby agrees that, as of the Effective Date, (a) any and all other financing (including lease financing) and security contracts, agreements, and documents entered into in connection with the Sale-Leaseback, including all amendments and modifications thereto, to which it is a party (whether by way of assignment, succession, or otherwise) (collectively, the "Other Terminated Documents") shall be terminated and that none of the Persons party to each such Other Terminated Document shall have any further rights or obligations pursuant to each such Other Terminated Document, (b) it and each other Party shall no longer have any Lien in any of the collateral or other property referred to in any of the Other Terminated Documents, and (c) all such collateral and other property in its or its agents' possession, if any, shall be assigned, transferred, and delivered to the appropriate Person. 5.3 Termination of Security Instruments. Without limiting the generality of the foregoing, Lease Trustee hereby acknowledges that the Resource Deed of Trust shall be reconveyed upon Steamboat's delivery of the Request for Full Reconveyance to the Trustee under the Resource Deed of Trust and that Steamboat may file such termination statements and other instruments as are necessary to terminate the UCC filings listed in Schedule 3. 5  6. FURTHER ASSURANCES Upon the reasonable request of a Party at any time after the Closing Date, each Party shall exercise commercially reasonable efforts to execute and deliver, without representation, warranty or recourse, such further instruments of assignment, transfer, conveyance, termination, endorsement, direction or authorization and other documents, whether supplemental, confirmatory, or otherwise, as the requesting Party may reasonably request in order to carry out the intent and purposes of this Agreement and each of the Transfer and Termination Documents. 7. MISCELLANEOUS 7.1 Notices. All notifications, notices, demands, requests, and other communications herein provided for or made pursuant hereto shall be in writing and shall be sent by (i) reputable overnight delivery service and the giving of such communication shall be deemed complete on the immediately succeeding business day after the same is deposited with such delivery service, (ii) by legible fax with the original copy thereof to follow promptly by reputable overnight delivery service and the giving of such communication shall be complete on the business day on which the original copy is received, or (iii) by certified mail, with return receipt requested, and the giving of such communication shall be deemed complete on the business day on which it is received, in each case to the address for each Party set forth below. Any Party may change the address at which it wishes to receive notices by written notice given in accordance herewith to all other Parties at their addresses set forth below. If to Lease Trustee: BNY Western Trust Company 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attn: Lisa Stroud, Assistant Vice President Fax: 213 ###-###-#### With a copy to: Smith Larsen and Wixom 1935 Village Center Circle Las Vegas, NV 89134 Attn: Michael Wixom Fax: 702 ###-###-#### If to Resource Trustee: SRT, Inc. 179 South La Verne Street Fallon, NV 89406 Attention: Steven D. King, President Fax: 775 ###-###-#### 6  If to Steamboat: Steamboat Development Corp. 980 Greg Street Sparks, NV 89341 Attention: President Fax: 775 ###-###-#### With a copy to: Perkins Coie LLP 10885 N.E. Fourth Street Suite 700 Bellevue, WA 98004-5579 Attention: Bruce E. Dick Fax: 425 ###-###-#### 8.2 Entire Agreement. This Agreement, together with the Transfer and Termination Documents, constitutes, on and as of the date hereof, the entire agreement of the Parties with respect to the subject matter hereof, and all prior or contemporaneous understandings or agreements, whether written or oral, among the Parties with respect to the subject matter hereof are hereby superseded in their entirety. Nothing in this Agreement, expressed or implied, is intended to confer upon any Person other than the Parties any rights, remedies, obligations, or liabilities under or by reason of this Agreement. 8.3 Amendments and Waivers. No amendment, modification, termination, or waiver of any provision of this Agreement, or consent to any departure by any Party therefrom, shall in any event be effective without the written concurrence of each of the Parties. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. 8.4 Severability. If any provision of this Agreement shall be held by any court of competent jurisdiction to be invalid, illegal or unenforceable under applicable law, then such provision shall be deemed reformed or omitted to the extent determined by such court (i.e., with the objective of preserving the intent of such provision to the extent permitted by applicable law). In any event, the remaining provisions of this Agreement shall remain valid and enforceable. 8.5 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. 8.6 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEVADA, APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE. 8.7 Headings. Section and title headings in this Agreement are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text. 7  8.8 Counterparts; Facsimile Transmission. This Agreement may be executed in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission will be deemed the same as delivery of an original. At the request of any party, the parties will confirm facsimile transmission by signing a duplicate original document. 8.9 Effective Date. The terminations, transfers and other transactions contemplated under this Agreement shall be deemed effective (the "Effective Date") as of the date designated by Steamboat by written notice to Lease Trustee and Resource Trustee within three (3) business days after the last date of a Party's execution of this Agreement as set forth below. The Termination and Transfer Documents shall be dated as of the Effective Date. [Signature page follows.] 8  IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the last date of a Parties signature below. BNY WESTERN TRUST COMPANY By: /s/ Lisa Stroud ---------------------------------------- Name: Lisa Stroud -------------------------------------- Title: Assistant Vice President -------------------------------------- Dated: October 12, 2004 -------------------------------------- SRT, INC. By: /s/ Steven D. King ---------------------------------------- Name: Steven D. King -------------------------------------- Title: President -------------------------------------- Dated: September 30, 2004 -------------------------------------- STEAMBOAT DEVELOPMENT CORP. By: /s/ Connie Stechman ---------------------------------------- Name: Connie Stechman -------------------------------------- Title: Assistant Secretary -------------------------------------- Dated: September 16, 2004 -------------------------------------- 9  Schedule 1 Transfer and Termination Documents 1. Bill of Sale and Assignment, dated as of the Effective Date, between Lease Trustee and Steamboat for the transfer, assignment and conveyance of Lease Trust Estate. 2. Request for Full Reconveyance of Resource Deed of Trust by Lease Trustee. 3. Quitclaim Deed dated as of the Effective Date, by Lease Trustee in favor of Steamboat for the transfer, assignment and conveyance of Lease Trust Estate. 4. Termination of Master Lease, dated as of the Effective Date, between Steamboat and Lease Trustee. 5. Termination of Headlease, dated as of the Effective Date, between Resource Trustee and Lease Trustee. 6. Assignment of Sublease, dated as of the Effective Date, between Resource Trustee and Steamboat. 7. Bill of Sale and Assignment, dated as of the Effective Date, between Resource Trustee and Steamboat for the transfer, assignment and conveyance of Resource Trust Estate. 8. Quitclaim Deed, dated as of the Effective Date, by Resource Trustee in favor of Steamboat for the transfer, assignment and conveyance of Resource Trust Estate.  Schedule 2 Terminated Documents 1. Financing Agreement 2. Escrow Agreement 3. Headlease 4. Master Lease 5. Resource Deed of Trust 6. UCC Financing Statements listed in Schedule 3 hereto  Schedule 3 UCC Financing Statements DEBTOR NAME JURISDICTION FILE NUMBER FILE DATE SECURED PARTY* - ----------- ------------ ------------ ---------- -------------- Steamboat Development Utah ###-###-#### 10-28-1991 General Electric Capital Corp Corporation Steamboat Development Utah ###-###-#### 10-28-1991 General Electric Capital Corp Corporation Steamboat Development Utah ###-###-#### 3-4-1998 General Electric Capital Corp Corporation BNY Western Trust Company Steamboat Development Utah ###-###-#### 3-4-1998 General Electric Capital Corp Corporation Steamboat Development Utah 171780200130 10-22-2001 General Electric Capital Corp Corporation Steamboat Development Utah ###-###-#### 10-22-2001 General Electric Capital Corp Corporation Steamboat Development Utah ###-###-#### 1-25-2002 BNY Western Trust Company Corp General Electric Capital Corporation Steamboat Development Utah ###-###-#### 1-25-2002 BNY Western Trust Company Corp General Electric Capital Corporation Steamboat Development Utah ###-###-#### 12-31-2002 BNY Western Trust Company Corp General Electric Capital Corporation Steamboat Development Utah 211061200318 3-3-2003 General Electric Capital Corp Corporation Steamboat Development Utah ###-###-#### 3-3-2003 General Electric Capital Corp Corporation Steamboat Development Washoe 1634616 12-31-1992 First Interstate Bank of Nevada Corp County, Nevada General Electric Capital Corporation __________________________ * General Electric Capital Corporation's interest as secured party has been assigned to Steamboat Development Corp.  Steamboat Development Washoe 1634617 12-31-1992 First Interstate Bank of Nevada Corp County, Nevada General Electric Capital Corporation Steamboat Development Nevada UTL ###-###-#### 10-28-1991 General Electric Capital Corporation Corp Steamboat Development Nevada UTL ###-###-#### 12-31-1992 General Electric Capital Corporation Corp First Interstate Bank of Nevada