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UNDERWRITING AGREEMENT
Dated as of April 28, 2008
U.S. Geothermal Inc.
1505 Tyrell Lane
Boise, Idaho 83706
Chief Executive Officer, President and
Director
Dear Sirs:
Re: Placement of Shares of
Units
We understand that U.S. Geothermal Inc. (the
“ Corporation ”) proposes to issue and sell 4,260,000 Units, each Unit
consisting of one share of common stock par value US $0.001 (the
“ Shares ”) and one-half of one Warrant (as defined below). Each
whole common share purchase warrant (a “
Warrant ”) will
entitle the holder thereof to acquire one share of common stock par
value US$0.001 (the “ Warrant
Shares ”) at any time after the
date of issue until 4:00 p.m. (Vancouver time) on the date that is
24 months following the Closing Date (as defined below) for US$3.00
per Warrant Share.
Based upon the foregoing and subject to the terms
and conditions set out below, Clarus Securities Inc.
(“ Clarus ”), Toll Cross Securities Inc. and Loewen Ondaatje
McCutcheon Limited (collectively, the “ Underwriters ” and,
individually, an “ Underwriter ”) hereby severally
and not jointly offer to purchase from the Corporation, if, as and
when issued by the Corporation, and by its acceptance hereof the
Corporation agrees to sell to the Underwriters, at the Closing Time
(as defined below), the Units at a price (the “
Offering Price ”)
of CAD$2.35 per Unit for an aggregate consideration of
CAD$10,011,000 (the “ Offering ”).
The Underwriters shall have the option, exercisable
at any time until 48 hours prior to the Closing Time, to purchase
an additional 2,122,500 Units (the “ Optioned Units ”) at the
Offering Price, such that the aggregate number of Units to be
purchased by the Underwriters will be, if this option is exercised
in full, 6,382,500 Units for an aggregate purchase price of
CAD$14,998,875.00.
The several obligations of the Underwriters to
purchase the Units shall be allocated to the Underwriters in
accordance with the percentages in Section 13 hereof.
In this Agreement, unless otherwise defined herein,
and in addition to the terms defined elsewhere herein, the
following capitalized terms shall have the following
meanings:
“ Accredited
Investor ” means an
“accredited investor” as that term is defined in Rule
501 of Regulation D and where a subscriber is a Canadian resident,
National Instrument 45-106;
“ Additional
Shares” means the Common Shares
issuable to the Purchasers in the circumstances as provided in
paragraph 6(d) of this Agreement;
“ Broker
Shares ” has the meaning ascribed
thereto in Section 7;
“ Broker
Warrants” has the meaning ascribed
thereto in Section 7;
“ business
day ” means a day that is not a
Saturday, a Sunday or a statutory or civic holiday in Vancouver,
British Columbia or Boise, Idaho;
“ Closing
” means the completion of the issue and sale
by the Corporation and the purchase by the Purchasers of the
Units;
“ Closing
Date ” means April 28, 2008 or such
other date as the Corporation and the Underwriters may
agree;
“ Closing
Time ” means 6:00 a.m. (Vancouver
time) on the Closing Date or such other time on the Closing Date as
the Corporation and the Underwriters may agree;
“ Common
Shares ” means the shares of common
stock par value US $0.001 in the capital of the
Corporation;
“ Corporation’s
Auditors ” means Williams &
Webster, P.S., the auditors of the Corporation;
“ Corporation’s
Counsel ” means the law firms of
Dorsey & Whitney LLP insofar as the laws of the United States
are concerned and Goodmans in so far as the laws of Canada are
concerned, each being counsel to the Corporation;
“ Directed Selling
Efforts ” means directed selling
efforts, as used under Rule 902(c) of Regulation S under the 1933
Act;
“ Disclosure
Documents ” means each document (as
such term is defined in Section 138.1 of the Securities Act (Ontario)) released by
the Corporation since March 31, 2007;
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“ Effectiveness
Date ” means with respect to the
Registration Statement required to be filed in accordance with the
terms of this Agreement and the Subscription Agreement, the day
that is the five months following the Closing Date. For purposes of
clarification, the declaration of a Delay Period (as such term is
defined in Schedule F of the Subscription Agreement) prior to the
effectiveness of the Registration Statement does not modify the
Effectiveness Date;
“ Empire
Project ” means the assets proposed
to be acquired under a purchase and sale agreement dated March 31,
2008 (the “ Empire Acquisition
Agreement ”) between the
Corporation, Michael B. Stewart and Empire Geothermal Power LLC in
connection with a 3.6 megawatt operating geothermal power plant and
approximately 18,000 acres of geothermal energy leases and certain
ground work rights all located north of Reno, Nevada, as further
described in the Disclosure Documents;
“ Environmental
Laws ” has the meaning ascribed
thereto in paragraph 5(s);
“ FINRA” has the meaning ascribed
thereto in Section 3(e);
“ General
Solicitation or General Advertising ” means “general solicitation or general
advertising”, as used under Rule 502(c) under the U.S.
Securities Act, including advertisements, articles, notices or
other communications published in any newspaper, magazine or
similar media or broadcast over radio, television, or
telecommunications, including electronic display or the Internet,
or any seminar or meeting whose attendees had been invited by
general solicitation or general advertising;
“ Governmental
Authority ” means any domestic or
foreign government, whether federal, provincial, state,
territorial, local, regional, municipal or other political
jurisdiction, and any agency, authority, instrumentality, court,
tribunal, board, commission, bureau, arbitrator, arbitration
tribunal or other tribunal, or any quasi-governmental or other
entity, insofar as it exercises a legislative, judicial,
regulatory, administrative, expropriation or taxing power or
function of or pertaining to government;
“Hazardous Substances”
has the meaning ascribed thereto in paragraph
5(s);
“ Indemnified
Party ” has the meaning ascribed
thereto in paragraph 11(d);
“ Intellectual
Property ” has the meaning ascribed
thereto in paragraph 5(nn);
“ Material
Subsidiaries ” means the
Subsidiaries whose assets or revenues, calculated on an individual
basis, represent more than 10% of the consolidated assets or
revenues of the Corporation;
“ misrepresentation ”,
“ material fact
” and “ material change ” have the
respective meanings ascribed thereto in the Securities Act (Ontario);
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“ Neal Hot Springs
Project” means the Neal Hot Springs
exploration project located in eastern Oregon as described in the
Disclosure Documents;
“ Offering
Jurisdictions ” means the Provinces
of Canada, any state of the United States of America and such other
jurisdictions where the Underwriters choose to sell Units in
accordance with this Agreement;
“ Offering
Price” means the price of CAD$2.35
per Unit;
“ Optioned
Units ” has the meaning ascribed
thereto in Section 1;
“ Purchasers ” means the
purchasers of the Units under the terms of this Agreement, which
term includes the Underwriters and all Substituted Purchasers as
contemplated by Section 3;
“ Raft River Energy I
LLC ” means Raft River Energy I
LLC, a Delaware limited liability company, the joint venture entity
established to facilitate the financing of Phase 1 of the Raft
River Project;
“ Raft River
Project ” means Phase 1 of
development at Raft River located in Southern Idaho, resulting in
the construction and operation of a 13 megawatt binary cycle
geothermal power plant (Unit 1), as described in the Disclosure
Documents;
“ Registration
Statement” has the meaning ascribed
thereto in the Subscription Agreements;
“ Regulation
D ” means Regulation D adopted by
the SEC under the 1933 Act;
“ SEC
” means the United States Securities and
Exchange Commission;
“ Securities
Laws ” means the applicable
securities laws, regulations, rules, policy statements and
prescribed forms, collectively, of each of the Offering
Jurisdictions;
“ Securities
Regulators ” means the securities
commissions or applicable regulatory authorities in each of the
Offering Jurisdictions;
“ Shares
” shall have the meaning ascribed thereto in
the first paragraph of this Agreement and shall, upon the exercise
by the Underwriters of the right to acquire Optioned Units, include
the Common Shares underlying the Optioned Units;
“ Subscription
Agreements ” means the agreements to be executed by each of the Substituted
Purchasers in respect of the Units to be purchased by them, and
accepted by the Corporation, in the form annexed hereto as Schedule
“C” to this Agreement;
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“ Subsidiary ” means Raft River
Energy I LLC and any entity of which more
than 50 percent of the voting securities are directly or indirectly
owned by the Corporation and the financial statements of which are
consolidated with those of the Corporation;
“ Substituted
Purchasers ” means each of the
Purchasers, other than the Underwriters, whose Subscription
Agreement has been accepted by the Corporation in accordance with
Section 3;
“ this
Agreement ” means the agreement
resulting from the acceptance by the Corporation of the offer made
by the Underwriters herein;
“ to the knowledge
of ” means (unless otherwise
expressly stated), with respect to the Corporation, a statement of
the actual knowledge, after having made reasonable enquiries or
investigations of the executive officers of the Corporation of the
facts or circumstances to which such phrase relates;
“ Underwriters’
Counsel ” means the law firms of
Arnold & Porter LLP insofar as the laws of the United States
are concerned and Borden Ladner Gervais LLP in so far as the laws
of Canada are concerned, each being counsel to the
Underwriters;
“ Underwriters’
Personnel ” has the meaning
ascribed thereto in Section 11(a);
“ Units
” shall have the meaning ascribed thereto in
the first paragraph of this Agreement and, upon the exercise by the
Underwriters of the right to acquire Optioned Units, shall include
the Optioned Units;
“ United
States ” means the United States of
America, its territories and possessions, any state of the United
States, and the District of Columbia;
“ U.S.
Affiliate ” of any Underwriter
means the U.S. registered broker-dealer affiliate of such
Underwriter;
“ U.S.
Person ” means a U.S. Person as
defined in Rule 902(k) of Regulation S under the 1933
Act;
“ U.S. Securities
Laws ” means the applicable blue
sky or securities legislation in the United States, together with
the 1934 Act and the 1933 Act and the rules and regulations of the
SEC or state securities authority thereunder;
“ Warrants
” has the meaning ascribed thereto in
paragraph 1 of this Agreement and, upon the exercise by the
Underwriters of the right to acquire Optioned Units, shall include
the Warrants underlying the Optioned Units and which shall be
evidenced by the Warrant Certificates;
“ Warrant
Certificates ” means the Warrant
certificates evidencing the Warrants in the form attached hereto as
Schedule “D”;
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“ Warrant
Shares ” has the meaning ascribed
thereto in paragraph 1 of this Agreement;
“ 1933 Act
” means the United States Securities Act of
1933, as amended; and the rules and regulations promulgated
thereunder, including judicial and administrative interpretations
thereof; and
“ 1934
Act” means the United States
Securities and Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder, including judicial and
administrative interpretations thereof.
Any reference in this Agreement to any Section,
Subsection, paragraph or subparagraph shall refer to a Section,
Subsection, paragraph or subparagraph of this Agreement.
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3.
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Substituted Purchasers and Compliance with
Securities Laws
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(a)
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The Underwriters and their U.S. Affiliates will have
the right to arrange for Substituted Purchasers for the Units in
one or more of the Offering Jurisdictions in accordance with the
terms of this Agreement.
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(b)
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The Underwriters and their U.S. Affiliates hereby
severally represent, warrant and covenant with the Corporation that
they are duly qualified and registered to carry on business as
securities dealers in each of the Offering Jurisdictions where the
sale of the Units requires such qualification and/or
registration.
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(c)
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The Underwriters agree that they shall offer the
Units in such manner that, pursuant to the Securities
Laws:
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(i)
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no prospectus or similar document need be delivered
or filed, other than any prescribed reports of the issue and sale
of the Units; and
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(ii)
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the Corporation will not be required to register or
(except for the filings referred to in paragraph 3(c)(i) above) be
subject to continuous disclosure obligations in a jurisdiction in
which it is not presently subject to such obligations.
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(d)
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The Underwriters covenant and agree to hold all
non-public information concerning the Corporation and its
subsidiaries obtained in the strictest of confidence and not to
disclose such information to any other party (except where
disclosure is required by law) and not to use such information for
any purpose other than in connection with this Offering.
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(e)
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The Underwriters will not offer or sell the Units in
any jurisdiction other than the Offering Jurisdictions (unless
subsequently agreed to by the Corporation) in accordance with the
terms of this Agreement.
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(f)
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The Underwriters represent, warrant and covenant
that any offers or sales of Units: (i) will be conducted in such a
manner so as not to require registration thereof or the filing of a
prospectus (except as required by the Subscription Agreements) or
an offering memorandum with respect thereto under the applicable
securities legislation of the 1933 Act; (ii) will be conducted
through an affiliate of each Underwriter duly registered with the
SEC and the Financial Industry Regulatory Authority Inc. (the
“ FINRA ”) and in compliance with U.S. Securities Laws; (iii)
shall not be made (1) by any form of General Solicitation or
General Advertising, or (2) in any manner involving a public
offering within the meaning of Section 4(2) of the 1933 Act; (iv)
at Closing, each U.S. Affiliate who sold any Units together with
its Canadian affiliate will provide a certificate, substantially in
the form of annexed hereto as Schedule “B”, relating to
the manner of the offer and sale of the Units.
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(g)
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The Underwriters shall notify the Corporation with
respect to the identity of all Purchasers and, subject to the
foregoing, the Corporation shall use all commercially reasonable
efforts to secure compliance, prior to the Closing Time, with all
applicable regulatory requirements of the Offering Jurisdictions
whose Securities Laws are applicable to the sale of
Units.
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(h)
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The Underwriters agree that if they offer to sell or
sell any of the Units in jurisdictions other than Canada or the
United States, such offers or sales shall be effected in accordance
and compliance with the applicable laws of such jurisdictions and
shall be effected in such manner so as not to require registration
of the Units, or the filing of a prospectus, registration statement
or any other notice or document with respect to the distribution of
the Units, under the laws of any jurisdiction outside the Offering
Jurisdictions.
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(i)
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The Underwriters represent, warrant and covenant
that, during the period in which the Units are offered for sale,
neither the Underwriters, nor any of their affiliates, nor any
person acting on their behalf has taken or will take, directly or
indirectly, any action that would constitute a violation of
Regulation M of the SEC under the 1934 Act.
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4.
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Notice of Material Change
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During the period of distribution of the Units,
which shall be the period from the date hereof to the Closing Time,
the Corporation shall promptly notify the Underwriters in writing
of:
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(a)
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any material change (actual, anticipated,
contemplated or threatened, whether financial or otherwise) in the
business, affairs, operations, assets, liabilities or obligations
(contingent or otherwise), financial condition or capital of the
Corporation; and
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(b)
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any material fact that arises or is discovered and
which was not previously disclosed in the Disclosure
Documents;
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which material change or new material fact is, or
may be, of such a nature as:
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(i)
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to render any Disclosure Document misleading or
untrue;
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(ii)
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would result in any Disclosure Document not being in
compliance with any Securities Laws;
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(iii)
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would reasonably be expected to have a significant
effect on the market price or value of the Common Shares;
or
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(iv)
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would be material to a prospective
Purchaser.
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The Corporation shall in good faith discuss with the
Underwriters any change in circumstances (actual, proposed or
prospective) which is of such a nature that there is reasonable
doubt whether notice need be given to the Underwriters pursuant to
this Section 4.
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5.
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Representations and Warranties of the
Corporation
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The Corporation represents and warrants to each of
the Underwriters and acknowledges that each of the Underwriters is
relying upon such representations and warranties in connection with
its execution and delivery of this Agreement that:
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(a)
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the Corporation and each Subsidiary was duly
incorporated and is validly existing under the laws of the
jurisdiction of incorporation and has all requisite power and
authority and is duly qualified to carry on its business as now
conducted and to own, lease and operate its property and
assets;
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(b)
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all necessary corporate action has been taken by the
Corporation to authorize the execution and delivery of and the
performance of its obligations under this Agreement;
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(c)
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this Agreement and the Subscription Agreements have
been and, as at the Closing Time, the Warrant Certificates and
certificates evidencing the Broker Warrants will be, duly
authorized, executed and delivered by the Corporation and (assuming
due execution and delivery by the other parties thereto) is, or
will be, a legal, valid and binding obligation of the Corporation
enforceable against the Corporation in accordance with its terms,
except as that enforcement may be limited by bankruptcy, insolvency
and other laws affecting the rights of creditors generally and
except that equitable remedies may be granted only in the
discretion of a court of competent jurisdiction;
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(d)
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the authorized and issued capital of the Corporation
consists of 100 million Common Shares of which 55,339,253 Common
Shares have been
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validly issued as at the date hereof, are
outstanding as fully paid and non-assessable shares and were not
issued in violation of any pre-emptive rights or other contractual
rights to issue securities issued by the Corporation or of any
applicable law;
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(e)
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no person has any agreement or option or any right
or privilege (whether by law, pre-emptive or contractual) capable
of becoming an agreement, including convertible securities,
warrants or convertible obligations of any nature, for the
purchase, subscription, allotment or issuance of any un-issued
shares or other securities of the Corporation, except
for:
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(i)
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the Shares, the Warrant Shares, the Additional
Shares and the Broker Shares issuable pursuant to this Agreement
and the Subscription Agreements;
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(ii)
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2,899,878 Common Shares issuable by the Corporation
pursuant to stock options held by directors, officers and
employees, and 295,454 Common Shares issuable pursuant to
outstanding warrants; and
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(iii)
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the 290,000 common shares issuable to The Kosmos
Company pursuant to a letter Agreement dated March 18, 2008 (the
“ Kosmos Agreement
”);
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(f)
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the Shares, the Additional Shares, the Warrants, the
Warrant Shares, the Broker Warrants and the Broker Shares to be
issued by the Corporation and/or sold pursuant to this Agreement
and the Subscription Agreements will be duly authorized for that
issuance and sale by all necessary action on the part of the
Corporation and, when issued and delivered by the Corporation
against payment of the applicable consideration, the Shares, the
Additional Shares, the Warrants, the Warrant Shares, the Broker
Warrants and the Broker Shares pursuant to this Agreement and the
Subscription Agreements, will have been validly issued, will be
outstanding as fully paid and non-assessable and will not have been
issued in violation of or subject to any pre-emptive rights or
other contractual rights to purchase securities issued by the
Corporation or in violation of any applicable law;
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(g)
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each of the Corporation and each
Subsidiary:
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(i)
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has complied with, and has conducted and is
conducting its business in compliance in all material respects with
all applicable laws, statutes, ordinances, regulations and rules in
each jurisdiction in which it conducts business;
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(ii)
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is duly licensed, registered or qualified in all
jurisdictions to enable its business to be carried on in all
material respects as now conducted and its property and assets
owned, leased and operated,
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and all such licences, registrations and
qualifications are valid and subsisting and no such licence,
registration or qualification contains any term, provision,
condition or limitation which has or is likely to have any material
adverse effect on its business as now conducted; and
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(iii)
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is not in default in filing any government returns,
or payment of any licence or registration or qualification fee
owing to any Governmental Authority under the laws of each
jurisdiction in which it conducts business which has or is likely
to have any material adverse effect on its business as now
conducted;
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(h)
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the only Material Subsidiaries are U.S. Geothermal
Inc., an Idaho corporation, Raft River Energy 1 LLC and USG Nevada
LLC and the Corporation has not entered into any agreement of any
nature to acquire any additional Material Subsidiary;
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(i)
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except as disclosed in the Disclosure Documents, the
Corporation is the beneficial and registered owner of all of the
issued and outstanding shares of each of its Subsidiaries, in each
case free and clear of all mortgages, liens, charges, pledges,
hypothecs, security interests, encumbrances, claims or other
demands whatsoever, and all those shares have been validly issued,
are issued and outstanding as fully paid and non-assessable shares
and were not issued in violation of any pre-emptive rights or other
contractual rights to issue securities issued by the Subsidiary or
of any applicable law;
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(j)
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no person has any agreement or option or any right
or privilege (whether by law, pre-emptive or contractual) capable
of becoming an agreement, including convertible securities,
warrants or convertible obligations of any nature, for the
purchase, subscription, allotment or issuance of any un-issued
shares or other securities of any Subsidiary;
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(k)
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the consolidated financial statements of the
Corporation for the years ended March 31, 2007 and 2006, including
the notes thereto, and for the 9-month period ending December 31,
2007, including notes thereto, have been prepared in accordance
with United States generally accepted accounting principles
consistently applied throughout the periods indicated and present
fairly in all material respects the assets, liabilities (whether
accrued, absolute, contingent or otherwise) and financial condition
of the Corporation on a consolidated basis as at the respective
dates indicated and the sales, earnings and results of operations
of the Corporation on a consolidated basis throughout the periods
indicated;
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(l)
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the execution, delivery and performance of this
Agreement and the Subscription Agreements by the Corporation and
the completion of the
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transactions provided for in this Agreement will not
(whether after the passage of time or notice or both) result in,
any material respect:
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(i)
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the breach or violation of any of the provisions of,
or constitute a default under, or a conflict with or cause the
acceleration of, any obligation of the Corporation
under:
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(A)
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any indenture, agreement or other instrument to
which the Corporation or any Subsidiary is a party or by which it
or its properties are bound or affected;
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(B)
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any provision of the articles, by-laws or
resolutions of the board of directors (or any committee thereof) or
shareholders of, the Corporation or any Subsidiary;
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(C)
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any judgment, decree, order or award of any
Governmental Authority having jurisdiction over the
Corporation;
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(D)
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any licence, permit, approval, consent or
authorization issued to, held by or for the benefit of the
Corporation or necessary to the operation of its business as now
conducted; or
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(E)
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any applicable law or statute, or any ordinance,
rule, regulation, policy, order or ruling made thereunder;
or
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(ii)
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the creation or imposition of any mortgage, lien,
charge, pledge, hypothec, security interest, encumbrance, claim or
other demand whatsoever on any of the property or assets of the
Corporation;
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(m)
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each of the contracts which is material to the
Corporation is described in the Disclosure Documents and none of
the Corporation, any of its Subsidiaries or, to the knowledge of
the Corporation, any other party, is, in any material respect, in
default or alleged to be in default in the performance of any term
or obligation to be performed by it under any material contract to
which the Corporation or any Subsidiary is a party or by which the
Corporation or any Subsidiary is bound or affected, and no event,
condition or occurrence exists that, after notice or lapse of time
or both, would constitute such a default which in any way
materially adversely affects or may materially adversely affect the
business, operations, assets, liabilities, capital, prospects,
condition (financial or otherwise) or results of operations of the
Corporation and its Subsidiaries on a consolidated
basis;
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(n)
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no legal or governmental proceedings are pending to
which the Corporation and/or any Subsidiary is a party or to which
the property of the Corporation and/or any Subsidiary is subject
that would result individually or in the aggregate in a material
adverse change in the
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operation, business or condition of the Corporation
and its Subsidiaries on a consolidated basis, and no such
proceedings have been threatened against or, to the knowledge of
the Corporation, are contemplated with respect to the Corporation
and/or any Subsidiary or with respect to any of their respective
properties which would be material to the Corporation and its
subsidiaries on a consolidated basis;
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(o)
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except as provided herein, there is no person, firm
or corporation which has been engaged by the Corporation to act for
the Corporation and which is entitled to any brokerage or
finder’s fee in connection with this Agreement or the
transactions contemplated hereunder;
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(p)
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the Corporation and each Subsidiary has paid or made
adequate provision for the payment of all taxes (or payments in
lieu of taxes) levied on its property or income which are due and
payable, including interest and penalties, or has accrued such
amounts in its financial statements for the payment of such taxes
except for charges, fees or dues which are not material in amount
or which are not delinquent or if delinquent are being contested,
and there is no material action, suit, proceeding, investigation,
audit or claim no pending, or to its knowledge, threatened by any
governmental authority regarding any taxes;
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(q)
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the Corporation and each Subsidiary is in material
compliance with all applicable material laws, regulations and
statutes (including all environmental laws and regulations) in the
jurisdictions in which it carries on business and for the purposes
described in the Disclosure Documents; the Corporation has not
received a notice of material non-compliance, nor knows of, nor has
reasonable grounds to know of, any facts that could give rise to a
notice of non-compliance with any such laws, regulations and
statutes, and is not aware of any pending change or contemplated
change to any applicable law or regulation or governmental position
that would materially adversely affect the business of the
Corporation or the business or legal environment under which the
Corporation operates;
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(r)
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to its knowledge the Corporation, and except as
previously disclosed, in writing, to the Underwriters, each
Subsidiary and the Empire Project has not caused or permitted the
release, in any manner whatsoever, of any pollutants, contaminants,
chemicals or industrial toxic or hazardous waste or substances
(collectively, the “ Hazardous
Substances ”) on or from any of its
properties or assets nor has it received any notice that it is
potentially responsible for a material, on a consolidated basis,
clean-up site or corrective action under any applicable laws,
statutes, ordinances, by-laws, regulations, or any orders,
directions or decisions rendered by any government, ministry,
department or administrative regulatory agency relating to the
protection of the environment (the “ Environmental Laws ”),
occupational health and safety or otherwise relating to dealing
with Hazardous Substances;
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(s)
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the Corporation and each Subsidiary holds all
material licences, registrations, qualifications, permits and
consents necessary or appropriate for carrying on its business as
currently carried on and for the purposes described in the
Disclosure Documents, and all such licences, registrations,
qualifications, permits and consents are valid and subsisting and
in good standing in all material respects except where the failure
to hold or the lack of good standing in respect to such licences,
registrations, qualifications, permits and consents would not
materially adversely affect the assets, business, results of
operations, or condition of the Corporation and its Subsidiaries on
a consolidated basis;
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(t)
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the Corporation has, or, in the case of the Empire
Project, will acquire on the closing under the purchase and sale
agreement relating to the Empire Project (the “
Empire Closing ”), all the leases, easements, rights of way, access
rights, including but not limited to any mineral and geothermal
rights in respect of lands related to the Raft River Project,
Empire Project and the Neal Hot Springs Project, and rights and
allocation to water, that are necessary to conduct its business as
currently conducted and, except for the proposed replacement power
plant at the Empire Project, proposed to be conducted as described
in the Disclosure Documents, except where the failure to hold such
leases easements, rights of way, access rights, and rights and
allocation to water would not materially adversely affect the
assets, business, results of operations or condition of the
Corporation and its Subsidiaries on a consolidated
basis.
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(u)
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all licenses, permits, authorizations and other
approvals required under applicable law in connection with the
leases, easements, rights of way and access rights are in full
force and effect and are sufficient to permit the Corporation and
each Subsidiary to conduct its business as currently conducted and,
except for the proposed replacement power plant at the Empire
Project, proposed to be conducted as described in the Disclosure
Documents;
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(v)
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no event exists which, but for the passing of time
or the giving of notice, or both, would constitute a default by any
party to any of the leases, easements, rights of way or access
rights and no party to any lease, easement, right of way or access
right is claiming any such default or taking any action purportedly
based upon any such default, except where the failure of such
licenses, permits, authorizations and other approvals to be in full
force and effect would not materially adversely affect the assets,
business, results of operations or condition of the Corporation and
its Subsidiaries on a consolidated basis;
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(w)
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the Corporation has not received any, nor to the
Corporation’s knowledge are there any pending or threatened,
notices of violation or alleged violation of any applicable laws
affecting the Raft River Project, the Empire Project and the Neal
Hot Springs Project or any of the assets
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previously acquired under the Empire Acquisition
Agreement (the “ First Empire
Assets ”);
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(x)
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the Corporation has, or, in the case of the Empire
Project, will have, on the Empire Closing, such rights of entry and
exit to and from the Raft River Project, Empire Project and the
Neal Hot Springs Project as are reasonably necessary to carry on
its business and operate (or, in the case of the Empire Project, as
the Corporation proposes to operate) at the Raft River Project, the
Empire Project and the Neal Hot Springs Project and in connection
with the First Empire Assets;
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(y)
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there are no material restrictions imposed by any
applicable law or by agreement which conflict with the proposed
acquisition, development, construction, maintenance and operation
of the Raft River Project, the Empire Project or the Neal Hot
Springs Project and in connection with the first Empire
Assets;
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(z)
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to the Corporation’s knowledge, the Raft River
Project and the Empire Project are now zoned and otherwise
regulated and serviced so as to permit the use of the sites for
their intended uses and in accordance with applicable
law;
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(aa)
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neither the Corporation nor any Subsidiary has
received written notice of any claims for construction liens or
other liens, charges, encumbrances, security interests or adverse
claims with respect to work or services performed or materials
supplied to, on or in connection with the Raft River Project, the
Empire Project (including the First Empire Assets) and the Neal Hot
Springs Project other than liens or encumbrances imposed in the
ordinary course of business or liens that will be removed at the
time of the Empire Closing;
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(bb)
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there are no outstanding judgments, writs of
execution, seizures, injunctions or directives against the
Corporation or any Subsidiary nor any work orders or directives or
notices of deficiency capable of resulting in work orders or
directives with respect to the Raft River Project, the Empire
Project (including the First Empire Assets) and the Neal Hot
Springs Project;
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(cc)
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to the Corporation's knowledge, the services to be
performed, the materials to be supplied and the real property
interests, leases, easements, rights of way, access rights and
other rights relating to the Raft River Project and the Empire
Project (including the First Empire Assets):
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(i)
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comprise all of the property interests necessary to
secure any right material to the acquisition, leasing, development,
construction, installation, completion, operation and maintenance
of the Raft
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River Project and the Empire Project (including the
First empire Assets), as applicable;
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(ii)
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are sufficient to enable the Raft River Project and
the Empire Project (including the First Empire Assets), as
applicable, to be located, constructed and operated on the Raft
River Project and the Empire Project (including the First Empire
Assets), as applicable; and
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(iii)
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the easements provide adequate ingress and egress
from the Raft River Project, and the Em
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