TO: FROM: JOHN DIZARD SUBJECT: PROPOSAL FOR PARTICIPATION IN L PROJECT DATE: JANUARY 29, 2013 I have done further investigation of then.. project, currently sponsored b ISS that was introduced to us by the di people. I will be sending the people a separate letter in response to their proposal, but before that, I wanted to share some candid observations with the team. 1. As we all tended to think from the beginning, the project in its current form, with Sias the developer, is not likely to work. The only way it could be made to work would be if the property were to be acquired at a steep discount from its notional book value, in effect from the lender group that has a lien on it, and if it were to be taken over by an experienced and credible developer who could execute a reworked development plan. Intriguingly, it might be possible to meet both conditions. 2. The lender group consists of three firms, led by SOS has already renegotiatedallitwo year $50mm corporate credit facility twice. The facility matures in September. The lenders are currently being paid with equity inS.S does have other assets, but I would hazard a guess that the lenders would be willing to release their lien on the egaproject in return for some cash or credible paper that would be a significant discount to the current book value. Thefillapproject has already been substantially written down. 3. I asked FIRPOMONSIMIalble if he could recommend any prospective geothermal developers who might be interested in making such a distressed geothermal property work out. He referred me to tarns the' of S I, LLC, with whom he has worked in the past. glikiplmaliSIS has an operating geothermal project in the Salton Sea area in California, wilaThis facility, a BMW project, achieved Commercial Operation Date °SS 2012.Salso has operations in a and erevapbut I was particularly impressed that the company had managed to get a new geothermal operation onstream in California. 4. In