Document:

U.S. Geothermal Inc.: Exhibit 1.1 - Filed by newsfilecorp.com

Execution Version 

	 
	FINANCING AGREEMENT 
	between 
	USG NEVADA LLC, 
	a Delaware limited liability company, 
	(Borrower) 
	and 
	ARES CAPITAL CORPORATION, 
	a Maryland corporation, 
	(Lender) 
	Approximately Eight Megawatt Geothermal Power Facility
  
	Washoe County, Nevada 
	  
	November 9, 2011 
	 

TABLE OF CONTENTS 

	ARTICLE 1 DEFINITIONS 	1 
	  	  	  
	       
                 1.1 	Definitions 	1 
	           
             1.2 	Rules of Interpretation. 	1 
	  	  	  
	ARTICLE 2 THE CREDIT FACILITIES 	1 
	  	  	  
	           
             2.1 	Cash Grant Bridge Loan Facility. 	1 
	       
                 2.2 	Interest Provisions; Loan
      Funding; Prepayments. 	2 
	           
             2.3 	Fees. 	5 
	       
                 2.4 	Other Payment Terms. 	5 
	           
             2.5 	Change of Circumstances. 	9 
	       
                 2.6 	Funding Losses 	11 
	           
             2.7 	Alternate Office; Minimization of Costs. 	11 
	       
                 2.8 	Collateral and other Related
      Documents. 	12 
	           
             2.9 	Further Assurances 	12 
	  	  	  
	ARTICLE 3 CONDITIONS PRECEDENT 	13 
	  	  	  
	           
             3.1 	Conditions Precedent to the Financial Closing
      Date. 	13 
	       
                 3.2 	Conditions Precedent to the
      Borrowing of the Additional Loan. 	19 
	           
             3.3 	No Approval of Work. 	22 
	  	  	  
	ARTICLE 4 REPRESENTATIONS AND WARRANTIES 	22 
	  	  	  
	           
             4.1 	Organization 	22 
	       
                 4.2 	Authorization; No Conflict. 	23 
	           
             4.3 	Enforceability 	23 
	       
                 4.4 	Compliance with Law 	23 
	           
             4.5 	ERISA 	24 
	       
                 4.6 	Taxes 	24 
	           
             4.7 	Business, Debt, Contracts, Etc 	24 
	       
                 4.8 	Certain Fees. 	24 
	           
             4.9 	Investment Company. 	25 
	       
                 4.10 	Governmental Regulation. 	25 
	           
             4.11 	Regulation U, Etc 	26 
	       
                 4.12 	Financial Statements. 	26 
	           
             4.13 	Partnerships and Joint Ventures 	26 
	       
                 4.14 	Existing Defaults 	26 
	           
             4.15 	No Default 	26 
	       
                 4.16 	Permits. 	26 
	           
             4.17 	Offices 	27 
	       
                 4.18 	Adverse Change 	27 
	           
             4.19 	Hazardous Substances 	27 
	       
                 4.20 	Litigation 	28 
	           
             4.21 	Title and Liens. 	28 

	           
             4.22 	Utilities 	28 
	               
         4.23 	Roads; Access. 	28 
	           
             4.24 	Project Documents 	29 
	               
         4.25 	Representations and Warranties 	29 
	           
             4.26 	Labor Disputes and Acts of God
    	29 
	               
         4.27 	Disclosure. 	29 
	           
             4.28 	Budgets; Project Schedule;
      Projections. 	30 
	               
         4.29 	Collateral 	30 
	           
             4.31 	Insurance 	30 
	               
         4.32 	Scheduled Commercial Operations 	31 
	           
             4.33 	Separateness 	31 
	               
         4.34 	Patriot Act Compliance 	31 
	           
             4.35 	Solvency 	32 
	               
         4.36 	Cash Grant Compliance. 	32 
	           
             4.37 	Absence of any Undisclosed
      Liabilities 	32 
	  	  	  
	ARTICLE 5 AFFIRMATIVE COVENANTS
      OF BORROWER 	33 
	  	  	  
	           
             5.1 	Use of Proceeds 	33 
	               
         5.2 	Payment 	33 
	           
             5.3 	Notices. 	33 
	               
         5.4 	Financial Statements. 	36 
	           
             5.5 	Reports. 	37 
	               
         5.6 	Term Loan 	37 
	           
             5.7 	Cooperation 	37 
	               
         5.8 	Existence, Conduct of Business, Properties,
      Etc. 	37 
	           
             5.9 	Obligations 	38 
	               
         5.10 	Separateness 	38 
	           
             5.11 	Books, Records, Access 	38 
	               
         5.12 	Energy Regulation. 	39 
	           
             5.13 	Operation of Project and Annual
      Budget 	39 
	               
         5.14 	Preservation of Rights; Further Assurances 	39 
	           
             5.15 	Construction 	39 
	               
         5.16 	Taxes, Other Government Charges and Utility
      Charges. 	40 
	           
             5.17 	Compliance With Laws,
      Instruments, Etc. 	40 
	               
         5.18 	Maintenance of Insurance 	40 
	           
             5.19 	Warranty of Title 	41 
	               
         5.20 	Event of Eminent Domain. 	41 
	           
             5.21 	Indemnification 	41 
	               
         5.22 	Certification of Interests. 	42 
	           
             5.23 	Security 	42 
	               
         5.24 	Cash Grant Application 	42 
	           
             5.25 	Cash Grant Notice of
      Assignment. 	43 
	               
         5.26 	Cash Grant Guidance; Cash Grant Proceeds 	43 
	           
             5.27 	Use of Insurance Proceeds and
      Awards 	43 
	               
         5.28 	Pari Passu 	43 
	           
             5.29 	Insolvent 	43 

ii 

	       
                 5.30 	Construction Loan Agreement and
      Construction Contract 	43 
	           
             5.31 	Consents and Estoppels 	44 
	       
                 5.32 	Deposit Account Control
      Agreement 	44 
	  	  	  
	ARTICLE 6 NEGATIVE COVENANTS OF
      BORROWER 	44 
	  	  	  
	       
                 6.1 	Contingent Liabilities 	44 
	           
             6.2 	Limitations on Liens. 	44 
	       
                 6.3 	Indebtedness 	44 
	           
             6.4 	Sale or Lease of Assets. 	44 
	       
                 6.5 	Changes 	45 
	           
             6.6 	Distributions 	45 
	       
                 6.7 	Investments. 	45 
	           
             6.8 	Transactions With Affiliates 	45 
	       
                 6.9 	Regulations. 	45 
	           
             6.10 	Loan Proceeds; Project Revenues 	45 
	       
                 6.11 	Partnerships 	45 
	           
             6.12 	Dissolution. 	45 
	       
                 6.13 	Additional Project Documents
	46 
	           
             6.14 	Amendments; Change Orders; Completion 	46 
	       
                 6.15 	Compliance With Operative
      Documents. 	47 
	           
             6.16 	Name and Location; Fiscal Year 	47 
	       
                 6.17 	Use of Project Site. 	47 
	           
             6.18 	Assignment. 	47 
	       
                 6.19 	Transfer of Interests. 	47 
	           
             6.20 	Abandonment of Project. 	47 
	       
                 6.21 	Hazardous Substances 	48 
	           
             6.22 	ERISA 	48 
	       
                 6.23 	If Section 4.5(a) is true, then
    	48 
	           
             6.24 	Regulation of Parties 	48 
	       
                 6.25 	Cash Grant Guidance 	48 
	           
             6.26 	Tax Credits 	48 
	       
                 6.27 	Fiscal Year 	48 
	  	  	  
	ARTICLE 7 EVENTS OF DEFAULT;
      REMEDIES 	49 
	  	  	  
	       
                 7.1 	Failure to Make Payments. 	49 
	           
             7.2 	Judgments. 	49 
	       
                 7.3 	Misstatements. 	49 
	           
             7.4 	Bankruptcy; Insolvency. 	49 
	       
                 7.5 	Cross Default. 	51 
	           
             7.6 	ERISA 	51 
	       
                 7.7 	Breach of Project Documents.
	51 
	           
             7.8 	Breach of Terms of Agreement 	53 
	       
                 7.9 	Placed in Service Date. 	53 
	           
             7.10 	Material Adverse Effect 	54 
	       
                 7.11 	Schedule 	54

iii 

	       
                 7.12 	Security. 	54 
	           
             7.13 	Permits; Expiration of Appeals Period. 	54 
	       
                 7.14 	Loss of Project. 	55 
	           
             7.15 	Destruction of the Project. 	55 
	       
                 7.16 	Transfer of Interests. Except
      for Permitted Transfers, a 	55 
	           
             7.17 	Cash Grant Recapture Liabilities. Any 	55 
	       
                 7.18 	Cure by Lender. 	56 
	           
             7.19 	Acceleration. 	56 
	       
                 7.20 	Possession of Project 	56 
	           
             7.21 	Remedies Under Financing Documents 	56 
	  	  	  
	ARTICLE 8 SCOPE OF LIABILITY 	57 
	  	  	  
	ARTICLE 9 INDEPENDENT CONSULTANTS 	58 
	  	  	  
	           
             9.1 	Removal and Fees 	58 
	       
                 9.2 	Duties. 	58 
	           
             9.3 	Independent Consultants’ Certificates. 	58 
	       
                 9.4 	Certification of Dates 	59 
	  	  	  
	ARTICLE 10 MISCELLANEOUS 	59 
	  	  	  
	       
                 10.1 	Notices. 	59 
	           
             10.2 	Additional Security; Right to Set-Off 	61 
	       
                 10.3 	Delay and Waiver. 	61 
	           
             10.4 	Costs, Expenses and Attorneys’ Fees 	61 
	       
                 10.5 	Attorney-In-Fact. 	62 
	           
             10.6 	Entire Agreement 	63 
	       
                 10.7 	Severability. 	63 
	           
             10.8 	Headings. 	63 
	       
                 10.9 	Accounting Terms 	63 
	           
             10.10 	No Partnership, Etc. 	63 
	       
                 10.11 	Limitation on Liability 	64 
	           
             10.12 	APPLICABLE LAW. 	64 
	       
                 10.13 	CONSENT TO JURISDICTION 	64 
	           
             10.14 	WAIVER OF JURY TRIAL 	65 
	       
                 10.15 	Usury 	65 
	           
             10.16 	Successors and Assigns 	65 
	       
                 10.17 	Counterparts 	66 
	           
             10.18 	Patriot Act Compliance 	66 
	       
                 10.19 	Electronic Execution 	66 
	           
             10.20 	Appointment of Agent. 	66 
	       
                 10.21 	Confidentiality 	66

iv 

INDEX OF EXHIBITS 

	Exhibit A 	Definitions and Rules of
      Interpretation 
	 	  
	 	Note 
	Exhibit B 	Form of Note 
	 	  
	 	Legal Opinions 
	Exhibit C 	Schedule of Legal Opinions
  
	 	  
	 	Security Related
      Documents 
	Exhibit D-1 	Form of Cash Grant Security Agreement 
	Exhibit D-2 	Form of Idaho Sponsor Pledge
      Agreement 
	Exhibit D-3 	Form of Member Pledge Agreement 
	Exhibit D-4 	Form of Sponsor Cash Grant
      Shortfall Guaranty 
	Exhibit D-5 	Form of Intercreditor Agreement 
	Exhibit D-6 	Form of Cash Grant Application
      Power of Attorney 
	Exhibit D-7 	Form of Cash Grant Notice of Assignment 
	Exhibit D-8 	Schedule of Security Filings
  
	Exhibit D-9 	Form of Notice of Borrowing 
	 	  
	Exhibit E 	Intentionally Omitted 
	 	  
	 	Closing Certificates 
	Exhibit F-1 	Form of Borrower’s Closing
      Certificate 
	Exhibit F-2 	Form of Independent Accountant’s Certificate
  
	Exhibit F-3 	Form of Independent Engineer’s
      Certificate 
	Exhibit F-4 	Form of Solvency Certificate 
	Exhibit F-5 	Form of Borrower’s Additional
      Loan Borrowing Certificate 
	 	  
	 	Project Description
      Exhibits 
	Exhibit G-1 	Description of Project 
	Exhibit G-2 	Schedule of Applicable Permits
    
	Exhibit G-3 	Project Budget 
	Exhibit G-4 	Project Schedule 
	Exhibit G-5 	Pending Litigation 
	Exhibit G-6 	Hazardous Substances Disclosure
    
	Exhibit G-7 	Schedule of Project Documents 
	 	  
	 	Other 
	Exhibit H 	Insurance Requirements 
	Exhibit I 	Lender/Lending Office 

v 

FINANCING AGREEMENT 

This FINANCING AGREEMENT (this “Agreement”) dated as of
November 9, 2011, is entered into by and between USG NEVADA LLC, a
Delaware limited liability company, as Borrower, and ARES CAPITAL
CORPORATION, a Maryland corporation, as Lender. 

In consideration of the agreements herein and in the other
Financing Documents and in reliance upon the representations and warranties set
forth herein and therein, the parties agree as follows: 

ARTICLE 1 
DEFINITIONS 

1.1 Definitions. Except as otherwise expressly provided,
capitalized terms used in this Agreement and its exhibits shall have the
meanings given in Exhibit A. 

1.2 Rules of Interpretation. Except as otherwise
expressly provided, the rules of interpretation set forth in Exhibit A
shall apply to this Agreement and the other Financing Documents. 

ARTICLE 2 
THE CREDIT FACILITIES 

2.1 Cash Grant Bridge Loan Facility. 

(a) Availability. Subject to the
terms and conditions set forth in this Agreement, Lender agrees to advance to
Borrower cash grant bridge loans in an aggregate principal amount not to exceed
NINE MILLION DOLLARS ($9,000,000) (the “Loan Commitment”), to be
comprised as follows: (a) subject to the satisfaction by Borrower of each of the
requirements set forth in Section 3.1 hereof, a loan in the aggregate
principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000), to
be made pursuant to an initial Borrowing to occur, if at all, on the Financial
Closing Date (the “Initial Loan”), and (b) subject to the satisfaction by
Borrower of each of the requirements set forth in Section 3.2 hereof, a
loan in the aggregate principal amount of One Million Five Hundred Thousand
Dollars ($1,500,000), to be made pursuant to a second Borrowing to occur,
if at all, on the Second Borrowing Date and no later than the Second Borrowing
Deadline (such second Borrowing, the “Additional Loan” and, together with
the Initial Loan, collectively, the “Loans”). 

(b) Interest. Borrower shall pay
interest on the unpaid principal amount of the Loans calculated from the date
thereof until repayment of such Loans at a rate per annum, at all times during
each Interest Period for such Loans, equal to the LIBO Rate for three (3) month
Interest Periods plus the Applicable Margin.

1 

(c) Principal Payment. Borrower
shall repay to Lender, in full on the Maturity Date, the unpaid principal amount
of the Loans together with any and all unpaid interest, fees and costs
hereunder. 

(d) Use of Loan Proceeds. 

(i) Borrower shall use the proceeds of
the Loans solely toward development costs in connection with the Expanded
Project and for other general corporate purposes; provided,
however, that in no event shall the proceeds of the Loans be used to pay
any interest, principal or other financing-related fees under the Construction
Loan Documents other than as permitted by clause (ii) below. 

(ii) Upon the satisfaction of each of
the following conditions (as determined by Lender in its sole discretion),
Borrower may apply up to Two Million Dollars ($2,000,000) of the proceeds of the
Loans towards the payment of interest, principal and other financing-related
fees under the Construction Loan Documents: (A) the Cash Grant Application for
the Project shall have been filed with the United States Treasury Department in
accordance with Section 5.24 of this Agreement, (B) the Project shall not
have been materially damaged by flood, fire or other casualty, (C) there shall
not have occurred at any time following the Financial Closing Date any event,
occurrence, effect or circumstance of whatever nature that has, or could
reasonably be expected to have, a Material Adverse Effect, (D) no Event of
Default or Inchoate Default shall have occurred and be continuing, and (E)
Borrower shall have delivered to Lender a certificate from the Independent
Engineer certifying: (1) that the Project has commenced operations and producing
electrical energy for commercial sale in accordance with Prudent Utility
Practices and applicable laws, (2) that the completion of all work done to date
has been in accordance with the Construction Contract, and (3) otherwise in form
and substance satisfactory to Lender, together with the Independent Engineer’s
report or reports attached thereto. 

(iii) No portion of the proceeds of
any Loan shall be used in any manner that causes or might cause the funding of
the Loans or the application of such proceeds or deposits to violate Regulations
T, U or X of the Federal Reserve Board or to violate the Exchange Act. 

2.2 Interest Provisions; Loan Funding; Prepayments. 

(a) Interest Payment Dates.
Borrower shall pay accrued interest on the unpaid principal amount of each Loan
(i) on each Interest Payment Date, (ii) on the Maturity Date, (iii) upon any
prepayment of any such Loan as and to the extent provided below and (iv) at
maturity (whether by acceleration or otherwise).

(b) Interest Periods. The
initial and each subsequent Interest Period of each Loan shall be three (3)
months or such other longer periods as Lender may approve in its sole and
absolute discretion, except if the Maturity Date occurs prior to the end of the
three (3) month period, in which case the Interest Period will end in accordance
with Section 2.2(b)(C) as noted below; provided,
however, that (A) any Interest Period which would otherwise end on a day
which is not a Banking Day shall be extended to the next succeeding Banking Day
unless such next Banking Day falls in another calendar month, in which case such
Interest Period shall end on the immediately preceding Banking Day; (B) any
Interest Period which begins on the last Banking Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Banking Day of the
calendar month at the end of such Interest Period; and (C) any Interest Period
which would otherwise end after the Maturity Date or otherwise end after a date
upon which any Loan is or may be required to be repaid shall end on the Maturity
Date or such other date upon which such Loan is or may be required to be repaid
in full. 

2 

(c) Interest Account and Interest
Computations. Borrower authorizes Lender to record in an account or accounts
maintained by Lender on its books (i) the interest rates applicable to all Loans
and the effective dates of all changes thereto, (ii) the Interest Period for
each Loan, (iii) the date and amount of each principal and interest payment on
each Loan, and (iv) such other information as Lender may determine is necessary
for the computation of interest payable by Borrower hereunder. Borrower agrees
that all computations by Lender of interest shall be conclusive in the absence
of demonstrable error. All computations of interest on the Loans hereunder shall
be based upon a year of three hundred and sixty (360) days for the actual number
of days elapsed in the period during which such interest accrues. The LIBO Rate
will be adjusted for Regulation D reserve requirements on a statutory basis to
reflect Lender’s actual cost of maintaining such reserve.

(d) Promissory Note. The
obligation of Borrower to repay the Loans and to pay interest thereon at the
rates provided herein, if requested by Lender, shall be evidenced by a
promissory note in the form of Exhibit B (the “Note”). The Note
shall be payable to Lender in the principal amount of the Loan Commitment.
Borrower authorizes Lender to record on the schedule annexed to the Note the
date and amount of each Loan and each payment or prepayment of principal
thereunder, and Borrower agrees that all such notations shall constitute
prima facie evidence of the accuracy of the matters noted;
provided, that neither the failure to make any such notation nor any
error in such notation shall affect the validity of Borrower’s obligations to
repay the full unpaid principal amount of the Loans or the other obligations of
Borrower hereunder or under the Note. Borrower further authorizes Lender to
attach to and make a part of the Note continuations of the schedule attached
thereto as necessary. 

(e) Loan Funding.

(i) Initial Loan. No later than
4:00 p.m., New York time, on the Financial Closing Date, if the conditions
precedent listed in Section 3.1 have been satisfied or waived, Lender
shall cause an amount equal to the Initial Loan in Dollars and in immediately
available funds to be credited in accordance with the Flow of Funds
Memorandum.

(ii) Additional Loan. 

3 

(A) Borrower shall request the
Additional Loan by delivering to Lender an irrevocable Notice of Borrowing
substantially in the form of Exhibit D-9, which specifies or certifies
(as applicable), among other things: (1) Borrower has satisfied all conditions
precedent to the making of such Borrowing under Section 3.2 of this
Agreement, and (2) the date of the requested Borrowing, which date shall be: (x)
a Banking Day, (y) on or before the Second Borrowing Deadline, and (z) at least
three (3) Banking Days after Lender’s receipt of such Notice of Borrowing (the
“Second Borrowing Date”). 

(B) No later than 4:00 p.m., New York
time, on the Second Borrowing Date, if the conditions precedent listed in
Section 3.2 have been satisfied or waived, Lender shall make available
the Additional Loan in Dollars in immediately available funds, and shall apply
such funds pursuant to the terms of this Agreement. 

(iii) Two Borrowings. For the
avoidance of doubt, there shall only be two (2) Borrowings of the Loans
hereunder, which Borrowings shall occur, if at all, (a) on the Financial Closing
Date, and (b) on the Second Borrowing Date. 

(f) Prepayments. 

(i) Terms of all Prepayments.
Upon the prepayment or repayment of any Loan, Borrower shall pay to Lender (A)
all accrued interest to the date of such prepayment or repayment on the amount
prepaid or repaid, (B) all accrued fees to the date of such prepayment or
repayment corresponding to the amount being prepaid or repaid, and (C) if such
prepayment or repayment is the prepayment or repayment of a Loan on a day other
than the otherwise scheduled last day of an Interest Period for such Loan, all
Liquidation Costs incurred by Lender as a result of such prepayment or
repayment. All such prepayments or repayments (excluding repayments under
Section 2.2(f)(iv)(A) which shall be applied according to the order of priority
set forth therein) shall be applied (x) first, until all outstanding Loans have
been repaid in full, to the payment of the Loans and (y) second, to the
prepayment of any other Obligations under the Financing Documents. All
prepayments of Loans shall be applied first to accrued but unpaid interest
remaining on such Loans on a pro rata basis and then to reduce the outstanding
principal amount of such Loan on a pro rata basis.

(ii) Re-Borrowings. Borrower
may not reborrow the principal amount of any Loan which is prepaid or
repaid.

(iii) Optional Prepayments.
Borrower may, at its option, upon three (3) Banking Days’ notice to Lender,
prepay Loans in whole or in part. Any optional prepayment hereunder shall be in
the minimum amount of One Million Dollars ($1,000,000) or any increment of Five
Hundred Thousand Dollars ($500,000) in excess thereof. 

4 

(iv) Mandatory Prepayments.

(A) Borrower shall prepay the Loans
upon receipt with one hundred percent (100%) of the net cash proceeds of (i) any
debt issuances by Borrower except for the Construction Loan and any Approved
Other Project Financing, and (ii) equity issuances by Borrower other than equity
issuances the proceeds of which are applied to pay Project Costs and those
associated with the Sponsor Equity. 

(B) Borrower shall: (i) upon receipt
of the Cash Grant for the Project, or (ii) any payments under the Sponsor Cash
Grant Shortfall Guaranty in respect of any Cash Grant Shortfall, cause one
hundred percent (100%) of the proceeds of the Cash Grant or such payments by
Sponsor and Idaho Sponsor to be paid to Lender toward the repayment of the
Loans. 

Notwithstanding the foregoing, and except for any repayment or
prepayment in full of the Construction Loan pursuant to an Approved Term Loan,
Borrower shall not prepay any obligations under the Construction Loan Agreement
unless Borrower shall simultaneously prepay the Loans hereunder, on a pro rata
basis (in accordance with the respective outstanding principal amounts
thereof).

Upon the unconditional and irrevocable payment in full, in
cash, of all of the Obligations of Borrower hereunder and under each of the
Financing Documents (including without limitation payment in full of the Loans),
any excess Cash Grant Proceeds shall be released as soon as practicable by
Lender to Borrower or the Person legally entitled thereto. 

2.3 Fees.

(a) Other Fees. Borrower shall
pay to Lender any fees (“Other Fees”) on the terms and in the respective
amounts thereof set forth in the Mandate Letter and the Fee Letters.

(b) Commitment Fees. On the last
Banking Day in each calendar quarter commencing on the Financial Closing Date
until the Second Borrowing Date, Borrower shall pay to Lender accruing from the
Financial Closing Date or the first day of such quarter, as the case may be,
Loan commitment fees (the “Commitment Fees”) for such quarter (or portion
thereof) then ending in an aggregate amount equal to the product of (A) 0.50%
times (B) One Million Five Hundred Thousand Dollars ($1,500,000), times (C) a
fraction, the numerator of which is the number of days in such quarter (or
portion thereof) and the denominator of which is 360.

2.4 Other Payment Terms. 

(a) Place and Manner. Borrower
shall make all payments due to Lender to the following account:

5 

U.S. Bank, N.A. 
Minneapolis, MN

ABA#091-000-022 
Swift #USBKUS44 
DDA #1731-0332-1738 
Account
Name: Ares Capital Corp. 
Ref: FFC: ARCC 786127-700 / US Geothermal

(the “Lender Account”) in lawful money of the United
States and in immediately available funds not later than 2:00 p.m., New York
time, on the date on which such payment is due. Any payment made after such time
on any day shall be deemed received on the next Banking Day after such payment
is received. All Cash Grant Proceeds shall be deposited directly into the Lender
Account. 

(b) Date. Subject to Section
2.2, whenever any payment due hereunder shall fall due on a day other than a
Banking Day, such payment shall be made on the next succeeding Banking Day (or,
if resulting in an extension into the next calendar month, the next preceding
Banking Day), and such extension of time shall be included in the computation of
interest or fees, as the case may be. 

(c) Default Interest. Upon the
occurrence and during the continuance of any Event of Default, the principal
amount of all Loans outstanding shall thereafter bear interest until those
amounts are paid in full at a per annum rate equal to the Default Rate. Borrower
will also pay the Default Rate on any amount not paid when due under this
Agreement or any other Financing Document. 

(d) Net of Taxes, Etc. 

(i) Taxes. Any and all payments
to or for the benefit of Lender by or on behalf of Borrower, or on behalf of any
Borrower Affiliate Entity, hereunder or under any other Financing Document shall
be made free and clear of and without withholding, deduction, setoff or
counterclaim for any present or future taxes, levies, imposts, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto (collectively, “Taxes”), unless required
by law. If any such withholding, deduction or setoff is required by law, (x)
Borrower or such Borrower Affiliate Entity shall pay such additional amounts as
may be necessary to yield to Lender, after deduction for or on account of any
Taxes (including deductions applicable to additional sums payable under this
Section 2.4(d)), and all liabilities with respect thereto (excluding (A)
taxes imposed on or measured by the net income or capital of Lender or franchise
taxes imposed in lieu of net income or capital taxes, in each case imposed by
any jurisdiction or any political subdivision or taxing authority thereof or
therein as a result of a connection between Lender and such jurisdiction or
political subdivision, other than a connection resulting solely from executing,
delivering or performing its obligations or receiving a payment under, or
enforcing, this Agreement, the Note or any other Financing Document and (B) any United States
federal withholding taxes that are in effect and that would apply to a payment
hereunder or under any other Financing Document made to Lender as of the date
Lender becomes a party to this Agreement or designates a new Lending Office
except to the extent Lender, or its assignor (if any) was entitled, at the time
of designation of a new Lending Office (or assignment) to receive additional
amounts from Borrower with respect to such Taxes pursuant to this Section
2.4(d) (the “Excluded Taxes”)) (all such Taxes other than Excluded
Taxes being hereinafter referred to as “Indemnified Taxes”), an amount
equal to the sum it would have received hereunder or under such other Financing
Documents had such withholding, deduction or setoff not been required; (y) such
deductions or withholdings shall be made; and (z) Borrower or such Borrower
Affiliate Entity shall pay the full amount deducted or withheld to the relevant
taxation authority or other authority in accordance with applicable law. In
addition, Borrower agrees to timely pay or cause the Borrower Affiliate Entities
to pay any present or future stamp, recording or documentary taxes and any other
excise or property taxes, charges or similar levies (and interest, fines,
penalties and additions related thereto) that arise under applicable law from
any payment made hereunder or under any other Financing Document or from the
execution, delivery, filing or performance or enforcement of, or otherwise with
respect to, this Agreement or any other Financing Document (hereinafter referred
to as “Other Taxes”) to the relevant taxation authority in accordance
with applicable law. 

6 

(ii) Indemnity. Borrower shall
indemnify Lender for the full amount of Taxes and Other Taxes (including any
Indemnified Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 2.4(d)) paid by Lender, or any of its Affiliates, and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally asserted; provided that Borrower shall not be
obligated to indemnify Lender for any penalties, interest or expenses relating
to Indemnified Taxes or Other Taxes arising from the indemnitee’s gross
negligence or willful misconduct, as determined by a final non-appealable
judgment of a court of competent jurisdiction. Lender agrees to use its
commercially reasonable efforts to give notice to Borrower of the assertion of
any claim against Lender relating to any Indemnified Taxes or Other Taxes
reasonably promptly, and in no event later than sixty (60) days after Lender has
actual knowledge of such claim; provided that Lender’s failure to notify
Borrower within such sixty (60) day period of such assertion shall not relieve
Borrower of its obligation under this Section 2.4(d) with respect to
Indemnified Taxes, Other Taxes or liabilities, except to the extent of any
increased liability for such Indemnified Taxes, Other Taxes or liabilities
attributable to such failure. Payments by Borrower pursuant to this
Section 2.4(d)(ii) shall be made within ten (10) days from the
date Lender makes written demand therefor which demand shall be accompanied by a
certificate describing in reasonable detail the basis and calculation thereof
and which shall be conclusive absent manifest error. 

7 

(iii) Refunds. If Lender
determines, in its sole discretion, that it has received a refund of Indemnified
Taxes or Other Taxes as to which Borrower has paid additional amounts pursuant
to this Section 2.4(d), it shall pay over such refund to Borrower (but
only to the extent of additional amounts paid by Borrower under this Section
2.4(d) with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of Lender (including any Taxes
imposed with respect to such refund) as is determined by Lender in good faith
and in its sole discretion, and as will leave Lender in no worse position than
it would be in if the additional amounts giving rise to such refund has never
been paid, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that Borrower,
upon the request of Lender, agrees to repay within ten (10) days of demand
therefor the amount paid over to Borrower (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to Lender in the event
Lender is required to repay such refund to such Governmental Authority. This
Section 2.4(d) shall not be construed to require Lender to make available
its tax returns (or any other information relating to its taxes which it deems
confidential) to Borrower or any other Person. 

(iv) Notice. Within thirty (30)
days after the date of any payment of any Indemnified Taxes or Other Taxes by
Borrower, Borrower shall furnish to Lender at its address referred to in
Section 10.1, the original or a certified copy of a receipt evidencing
payment thereof, or if such receipt is not obtainable, other evidence of such
payment by Borrower reasonably satisfactory to Lender. Borrower shall indemnify
Lender for all losses and expenses sustained by Lender as a result of any
failure by Borrower to so furnish the original or certified copy of such receipt
or such other evidence of payment. 

(v) Survival of Obligations.
The obligations of Borrower under this Section 2.4(d) shall survive any
assignment of rights by Lender as permitted hereunder, and the termination of
this Agreement and the repayment of the Obligations. 

(e) Withholding Exemption
Certificates. Lender agrees that on the date Lender becomes a party to this
Agreement it will deliver to Borrower either (A) if Lender is a “United States
person” as defined in Section 7701(a)(30) of the Code (other than a corporation
established under the laws of the United States or any state thereof or the
District of Columbia or other exempt holders that in each case so certify), two
duly and appropriately completed copies of a United States Internal Revenue
Service Form W-9 or any applicable successor form establishing that Lender is
not subject to United States backup withholding tax or (B) if Lender is not a
“United States person,” as defined in 7701(a)(30) of the Code, (x) two duly and
appropriately completed copies of United States Internal Revenue Service Form
W-8IMY (together with any required attachments), W-8ECI or W-8BEN (claiming
benefit under an applicable treaty) or applicable successor form, as the case
may be and any required supporting documentation (claiming therein a reduction
in or an exemption from United States withholding taxes), or (y) in the case of
a Person claiming the “portfolio interest exemption,” two copies of a statement certifying that it is not
a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code
or a “controlled foreign corporation” receiving interest from a related person
within the meaning of Section 881(c)(3)(C) of the Code, together with two duly
and appropriately completed copies of United States Internal Revenue Service
Form W-8BEN certifying that such Person is not a United States person, and, in
each case, promptly following any reasonable request by Borrower, or upon
expiration or obsolescence of any previously submitted form, any additional or
successor form required by the United States Internal Revenue Service in order
to qualify for reduction of or exemption from United States withholding taxes,
or notify Borrower of its inability to deliver such forms. Borrower shall not be
obligated to pay any additional amounts in respect of United States federal
income tax pursuant to Section 2.4(d) (or make an indemnification payment
pursuant to Section 2.4(d)) to Lender or any Person (including any Person
to which Lender sells, assigns, grants a participation in, or otherwise
transfers, its rights under this Agreement) to the extent the obligation
to pay such additional amounts (or such indemnification) would not have arisen
but for a failure of Lender or such Person to comply with its obligations under
this Section 2.4(f). Notwithstanding the foregoing or anything else to
the contrary in this Agreement, Lender shall not be obligated to deliver any
form, certificate or document which it cannot deliver as a matter of law. 

8 

2.5 Change of Circumstances. 

(a) Inability to Determine
Rates. If, on or before the first day of any Interest Period for any Loan
Lender determines, and promptly provides notice in writing to Borrower, that (i)
the LIBO Rate for such Interest Period cannot be adequately and reasonably
determined due to the unavailability of funds in or other circumstances
affecting the London interbank market, (ii) the rates of interest for such Loans
do not adequately and fairly reflect the cost to Lender of making or maintaining
the Loans as LIBO Rate Loans or (iii) deposits in Dollars in the London
interbank market are not available to Lender (as conclusively certified by
Lender in writing to Borrower) in the ordinary course of business in sufficient
amounts to make and/or maintain the Loans, then, after the giving of any such
notice and until Lender shall otherwise notify Borrower that the circumstances
giving rise to such condition no longer exist (which notice shall be given
promptly after such circumstances cease to exist), Lender’s obligations to
continue LIBO Rate Loans shall be suspended and all Loans made or continued
after the giving of such notice shall be made or continued as ABR Loans. If any
Loan is outstanding at the commencement of any such suspension, it shall be
converted at the end of the then current Interest Period for such Loan into an
ABR Loan unless Lender has notified Borrower in writing that such suspension has
then ended. 

(b) Illegality. If, after the
date of this Agreement, the adoption of any Governmental Rule, any change in any
Governmental Rule or the application or requirements thereof (whether such
change occurs in accordance with the terms of such Governmental Rule as enacted,
as a result of amendment, or otherwise), any change in the interpretation or
administration of any Governmental Rule by any Governmental Authority, or
compliance by Lender or Borrower with any request or directive (whether or not having the force of law) of any Governmental Authority
(a “Change of Law”) shall make it unlawful or impossible for Lender to
make or maintain any Loan, Lender shall immediately notify Borrower of such
Change of Law. Upon receipt of such notice (i) Lender’s obligations to continue
LIBO Rate Loans shall be suspended for so long as such condition shall exist,
and (ii) all of the LIBO Rate Loans shall immediately convert to ABR Loans. Any
conversion of LIBO Rate Loans into ABR Loans prior to the last day of an
Interest Period in accordance with the preceding sentence shall be deemed a
prepayment thereof for purposes of Section 2.6 only.

9 

(c) Increased Costs. If, after
the date of this Agreement, any Change of Law: (i) shall subject Lender to any
tax, duty or other charge with respect to any Obligation or the Loan Commitment,
or shall change the basis of taxation of payments by Borrower to Lender on such
Obligation or with respect to the Loan Commitment (except for Indemnified Taxes
or Other Taxes (to the extent covered by Section 2.4), Excluded Taxes or
changes in the rate of taxation on the overall net income of Lender); or (ii)
shall impose, modify or hold applicable any reserve, special deposit or similar
requirement (without duplication of any reserve requirement included within the
interest rate through the definition of “Reserve Requirement”) against
assets held by, deposits or other liabilities in or for the account of, advances
or loans by, or any other acquisition of funds by Lender for any Loan; or (iii)
shall impose on Lender any other condition directly related to any Obligation or
the Loan Commitment; and the effect of any of the foregoing is to increase the
cost to Lender of making, issuing, creating, renewing, participating in or
maintaining any such Obligation or the Loan Commitment or to reduce any amount
receivable by Lender hereunder or under the Note, then, subject to Section
2.7(c), Borrower shall from time to time, upon demand by Lender, pay to
Lender additional amounts sufficient to reimburse Lender for such increased
costs or to compensate Lender for such reduced amounts. 

(d) Capital Requirements. If
Lender reasonably determines that (i) any Change of Law affects the amount of
capital required or expected to be maintained by Lender or the Lending Office (a
“Capital Adequacy Requirement”) and (ii) the amount of capital maintained
by Lender or such Lending Office which is attributable to or based upon the
Loans, the Loan Commitment or this Agreement must be increased as a result of
such Capital Adequacy Requirement (taking into account Lender’s policies with
respect to capital adequacy), Borrower shall, subject to Section
2.7(c), pay to Lender such amounts as Lender shall reasonably determine
are necessary to compensate Lender for the increased costs to Lender of such
increased capital. 

(e) Notice. Lender will notify
Borrower of any event occurring after the date of this Agreement that will
entitle Lender to compensation pursuant to this 

10 

Section 2.5, as promptly as is reasonable. In the event
Lender seeks compensation under this Section 2.5, it shall promptly
deliver to Borrower a written statement, setting forth in reasonable detail the
basis for calculating the additional amounts owed to Lender under this
Section 2.5, which statement shall be conclusive and binding upon all
parties hereto absent demonstrable error.

2.6 Funding Losses. If Borrower shall (a) repay or
prepay any Loans on any day other than the otherwise scheduled last day of an
Interest Period for such Loans (whether an optional prepayment or a Mandatory
Prepayment), (b) fail to borrow the Additional Loan in accordance with the
Notice of Borrowing delivered to Lender (whether as a result of the failure to
satisfy any applicable conditions or otherwise), or (c) fail to make any
prepayment of any Loan in accordance with any notice of prepayment delivered to
Lender; then Borrower shall, upon demand by Lender, reimburse Lender for all
costs and losses incurred by Lender as a result of such repayment, prepayment or
failure which shall include the amount equal to the excess, if any, of (x) the
portion of the applicable interest attributable to the LIBO Rate which would
have applied to the principal amount so repaid, prepaid or not borrowed for the
period from the date of such repayment or prepayment or failure to borrow to the
last day of the then current Interest Period for the such Loan over (y) the
amount of interest that Lender would be able to obtain by placing an amount
equal to the principal amount so repaid, prepaid or not borrowed, as the case
may be, with a leading bank in the London interbank market for a period
commencing from the date of such repayment, prepayment or failure to borrow, as
applicable, through the end of such Interest Period (“Liquidation Costs”)
but shall not otherwise include any compensation for lost profits. Borrower
understands that such costs and losses may include losses incurred by a Lender
as a result of funding and other contracts entered into by Lender to fund Loans.
If Lender demands payment under this Section 2.6, it shall deliver to
Borrower a certificate setting forth, and reasonably accounting for, the amount
of costs and losses for which demand is made. Notwithstanding the foregoing,
unless an Event of Default shall have occurred and be continuing, and except
with regard to any optional prepayments hereunder or the events described in
clause (b) above, Lender shall use reasonable efforts to minimize any
Liquidation Costs, at Borrower’s request, by applying Mandatory Prepayments
until the last day of an Interest Period (provided that, for purposes of
clarification, Loans shall be deemed to remain outstanding for purposes of the
Financing Documents until such Mandatory Prepayments are applied to Loans).

2.7 Alternate Office; Minimization of Costs. 

(a) To the extent reasonably possible,
Lender shall designate an alternative Lending Office with respect to its Loans
and otherwise take any reasonable actions to reduce any liability of Borrower to
Lender under Sections 2.4(d), 2.5(c) or 2.5(d), or to avoid
the unavailability of any Loans so long as Lender, in its reasonable discretion,
does not determine that such designation is disadvantageous to Lender. 

(b) Lender may designate a Lending
Office other than that set forth on Exhibit I and may assign all of its
interests under the Financing Documents, and the Note, to such Lending Office,
provided that such designation and assignment do not at the time of such
designation and assignment increase the reasonably foreseeable liability of
Borrower under Sections 2.4(d), 2.5(c) or 2.5(d). 

11 

(c) Lender shall use reasonable efforts
to avoid or minimize any additional costs, taxes, expense or obligation which
might otherwise be imposed on Borrower pursuant to Sections 2.4(d),
2.5(c) or 2.5(d) or as a result of Lender being subject to a
Reserve Requirement; provided, however, that such efforts shall
not cause the imposition on Lender of any additional costs or legal or
regulatory burdens unless Borrower shall provide Lender with an indemnification
for such additional costs in form and substance reasonably satisfactory to
Lender.

2.8 Collateral and other Related Documents. The
Obligations shall be secured by, and Borrower shall deliver or cause to be
delivered to Lender on the Financial Closing Date, the following: 

(a) a Security Agreement substantially
in the form of Exhibit D-1, duly executed by Borrower (the “Cash Grant
Security Agreement”), pursuant to which Lender is granted a first priority
security interest in all of Borrower’s right, title and interest in the Cash
Grant Proceeds (as defined therein); 

(b) a Pledge Agreement substantially in
the form of Exhibit D-2, duly executed by Idaho Sponsor (the “Idaho
Sponsor Pledge Agreement”), pursuant to which Lender is granted a first
priority security interest in all of Idaho Sponsor’s ownership interests in
Holdings; 

(c) a Pledge Agreement substantially in
the form of Exhibit D-3, duly executed by Holdings (the “Member Pledge
Agreement”), pursuant to which Lender is granted a first priority security
interest in all of Holdings’ ownership interests in Borrower; 

(d) a Cash Grant Shortfall Guaranty in
substantially the form of Exhibit D-4, duly executed by each of Sponsor
and Idaho Sponsor (the “Sponsor Cash Grant Shortfall Guaranty”),
pursuant to which Sponsor and Idaho Sponsor jointly and severally indemnify
Lender from and against any Cash Grant Shortfall; 

(e) an Intercreditor Agreement in
substantially the form of Exhibit D-5, by and between Lender and
Construction Lender (the “Intercreditor Agreement”), pursuant to which
Lender and Construction Lender have set forth the relative priorities, rights
and security interests of the parties; 

(f) appropriately completed copies,
which have been duly authorized for filing by the appropriate Person, of each
UCC-1 financing statement necessary or desirable to perfect the Liens of Lender
in the Collateral; and 

(g) such other documents, instruments
and agreements as Lender may reasonably request to grant to Lender Liens in the
Collateral. 

2.9 Further Assurances. Borrower shall deliver to Lender
each of the foregoing and such other instruments, agreements, certificates,
opinions and documents (including UCC financing statements) as Lender may
request to perfect and maintain the Liens granted to Lender by the foregoing
prior to the Liens or other interests of any Person other than Lender, including liens of the Construction Lender under the
Construction Loan Agreement. Borrower shall fully cooperate with Lender and
perform all additional acts reasonably requested by Lender to effect the
purposes of the foregoing. 

12 

ARTICLE 3 
CONDITIONS PRECEDENT 

3.1 Conditions Precedent to the Financial Closing Date.
The obligation of Lender to make the Initial Loan on the Financial Closing Date
and to otherwise enter into the transactions contemplated by this Agreement is
subject to the prior satisfaction of each of the following conditions (unless
waived in writing by Lender): 

(a) Resolutions. Delivery to
Lender of a copy of one or more resolutions or other authorizations of each
Borrower Affiliate Entity, in each case, in form and substance reasonably
satisfactory to Lender, certified by the appropriate officer or representative
of each such entity as being in full force and effect on the Financial Closing
Date, authorizing the execution, delivery and performance of this Agreement and
the other Operative Documents and any instruments or agreements required
hereunder or thereunder to which each such entity is a party, and in the case of
Borrower, the Borrowings provided for herein. 

(b) Incumbency. Delivery to
Lender of a certificate reasonably satisfactory in form and substance to Lender
from each Borrower Affiliate Entity, signed by the appropriate authorized
officer(s) or representative(s) of each such entity and dated the Financial
Closing Date, as to the incumbency of the natural persons authorized to execute
and deliver this Agreement and the other Operative Documents and any instruments
or agreements required hereunder or thereunder to which each such entity is a
party.

(c) Formation Documents. Not
less than three (3) Banking Days before the Financial Closing Date, delivery to
Lender of (i) an equity ownership table of Borrower Affiliate Entities, (ii) a
corporate organization chart of Borrower Affiliate Entities, (iii) the Borrower
LLC Agreement, (iv) the Holdings LLC Agreement, (v) a copy of the articles of
incorporation or certificate of incorporation or formation of each of Sponsor
and Idaho Sponsor, each certified by the Secretary of State of the applicable
State of incorporation or formation and (vi) a copy of the operating agreement,
partnership agreement or by-laws of each of Sponsor and Idaho Sponsor, in each
case certified by its secretary. Without limiting the generality of the
foregoing, each of the Borrower LLC Agreement and the Holdings LLC Agreement
shall contain (x) restrictions and protections satisfactory to Lender against
direct or indirect transfers of ownership that would cause the Project not to
qualify for the Cash Grant or result in a Recapture Event, (y) a requirement
that, as a condition to any direct or indirect transfers of ownership within
five (5) years following the Placed in Service Date, an opinion shall have been
delivered to Lender from a nationally recognized tax counsel expert reasonably
satisfactory to Lender to the effect that such transfer will not result in a
Recapture Event, and (z) a provision prohibiting any amendment to such operating
agreement without the approval of Lender and naming Lender as a third-party
beneficiary with respect such provision. 

13 

(d) Good Standing. Delivery to
Lender of (i) certificates issued by the Secretary of State of the jurisdiction
of incorporation or formation of each Borrower Affiliate Entity, certifying that
each such entity, as applicable, is in good standing and is qualified to do
business in, and has paid all franchise taxes or similar taxes due to, such
State, and (ii) a certificate issued by the Secretary of State of the State of
Nevada for Borrower certifying that Borrower is in good standing and is
qualified to do business in the State of Nevada. 

(e) Satisfactory Proceedings.

(i) All corporate, partnership,
limited liability company, partnership and legal proceedings and all instruments
in connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to Lender. 

(ii) All consents, exemptions,
approvals, authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all applicable Legal
Requirements, reasonably required in connection with the execution, delivery or
performance by each Borrower Affiliate Entity of the Financing Documents to
which it is a party (including all federal, state and local regulatory filings,
consents and approvals necessary in connection therewith) shall have been
obtained and be in full force and effect, and Lender shall have been furnished
with copies thereof, certified by a Responsible Officer of Borrower as being
true, complete and correct copies thereof, and all waiting periods related
thereto shall have lapsed or expired without extension or the imposition of any
adverse conditions or restrictions. 

(f) Operative Documents. 

(i) Delivery to Lender of fully
executed Financing Documents and a certified list, and true and correct copies,
of each Project Document and any supplements or amendments thereto, all of which
Financing Documents, Project Documents and supplements and amendments shall be
reasonably satisfactory in form and substance Lender and shall have been duly
authorized, executed and delivered by the parties thereto. 

(ii) Delivery to Lender of all
certificates representing securities pledged under the Idaho Sponsor Pledge
Agreement and the Member Pledge Agreement, accompanied by instruments of
transfer and undated ownership interest powers endorsed in blank. 

(iii) Delivery to Lender of a
certificate of an authorized officer or representative of Borrower, which
certificate shall include certification (A) as to the matters contained in
Section 4.14, and (B) that, except as disclosed in such certificate, all conditions precedent to the performance of
Borrower and, to Borrower’s knowledge, all conditions precedent to the
performance of the other parties under the Project Documents to have been
performed have been satisfied, except for conditions precedent to the
performance of the parties under the O&M Agreement that are not required to
have been satisfied as of the Financial Closing Date.

 14 

(g) Certificate of Borrower.
Lender shall have received a certificate, dated as of the Financial Closing
Date, signed by a Responsible Officer of Borrower, in substantially the form of
Exhibit F-1 (the “Borrower’s Closing Certificate”). 

(h) Legal Opinions. Delivery to
Lender of opinion(s) of counsel specified on Exhibit C and, to the extent
not covered by such opinions, opinions of counsel for Borrower addressing (A)
permitting and environmental matters, and (B) energy regulatory matters, all
such opinions in form and substance, and by such counsel (if not otherwise
specified), as Lender shall reasonably approve. 

(i) Intentionally Omitted.

(j) Insurance. Insurance
complying with Section 5.18 shall be in full force and effect with
respect to the Project and Lender shall have received (i) Exhibit H
describing the type of insurance and insurance limits for the Project, and (ii)
certified copies of all policies evidencing such insurance (or a binder,
commitment or certificates signed by the insurer or a broker authorized to bind
the insurer), in each case in form and substance reasonably satisfactory to
Lender. 

(k) Independent Engineer’s
Certificate. Delivery to Lender of the Independent Engineer’s certificates
with respect to the Project, in substantially the form of Exhibit F-3
(detailing, among other things, (i) that the Placed in Service Date is expected
to occur prior to December 31, 2011, (ii) the on-schedule and on-budget status
of the Project construction, (iii) that there are sufficient funds available to
complete the Project in accordance with the Project Budget, and (iv) that the
completion of all work done to date has been in accordance with the Construction
Contract, and otherwise in form and substance satisfactory to Lender), together
with the Independent Engineer’s report or reports attached thereto. 

(l) Geothermal Consultant’s
Certificate. Delivery to Lender of (i) the Geothermal Report and (ii) a
reliance letter from the Geothermal Consultant permitting Lender to rely on such
Geothermal Report, in each case in form and substance satisfactory to Lender.

(m) Applicable Permits. Delivery
to Lender of Exhibit G-2, the schedule of Applicable Permits required to
construct and operate the Project, in form and substance reasonably satisfactory
to Lender, together with copies of each Applicable Permit listed on Part I of
Exhibit G-2, each in form and substance reasonably satisfactory to
Lender. Borrower shall have duly obtained or been assigned and there shall be in
full force and effect in Borrower’s name and not subject to any appeal or
further proceeding or to any unsatisfied condition that may allow a material
modification or revocation of, the Applicable Permits for the Project set forth
on Part I of Exhibit G-2, constituting all of the Applicable Permits
which are, in Lender’s reasonable opinion in light of the status of the
acquisition, development, construction and operation of the Project as of the
Financial Closing Date, required to have been obtained by the Financial Closing
Date. Part II of Exhibit G-2 shall list all other Applicable Permits
required to construct and operate the Project. The Applicable Permits listed in
Part II of Exhibit G-2 shall, in Lender’s reasonable opinion in light of
the status of the development, construction and operation of the Project as of
the Financial Closing Date, be obtainable not later than required without
substantial difficulty, expense or delay. The Applicable Permits shall not be
subject to any restriction, condition, limitation or other provision that could
reasonably be expected to have a Material Adverse Effect on the construction or
operation of the Project. 

15 

(n) No Change in Tax Laws. No
change shall have occurred, since the date upon which this Agreement was
executed and delivered, in any law or regulation or interpretation thereof that
would subject Lender to any material unreimbursed Indemnified Taxes or Other
Taxes. 

(o) Closing Costs and Fees.
Lender shall have received evidence that Borrower shall have paid all taxes,
fees and other costs payable in connection with the execution, delivery,
recordation and filing of the Financing Documents (including (x) all outstanding
amounts due and owing to Lender under the Mandate Letter, the Fee Letters or any
other fee letter or agreement, and (y) the reasonable and documented,
out-of-pocket fees and expenses of (A) the Independent Consultants and (B)
Lender’s attorneys) shall have paid in full (or shall contemporaneously be paid
with the proceeds of the Initial Loan) or, as approved by Lender, otherwise
provided for. 

(p) Absence of Litigation. No
action, suit, proceeding or investigation shall have been instituted or
threatened, nor shall any order, judgment or decree have been issued or proposed
to be issued by any Governmental Authority that (i) could reasonably be expected
to have a Material Adverse Effect, (ii) seeks to enjoin or otherwise prevent the
consummation of the transactions hereby, or (iii) solely as a result of the
construction, ownership, leasing or operation of the Project, the sale of
electricity therefrom or the entering into of any Operative Document or any
transaction contemplated hereby or thereby, would cause or deem (A) Lender or
any Affiliate (as that term is defined in Section 1262(1) of PUHCA), of any of
them to be subject to regulation under the FPA or PUHCA or under any state laws
and regulations respecting the rates or the financial or organizational
regulation of electric utilities, or (B) any Borrower Affiliate Entity to be
subject to, or not exempt from, regulation under any state laws and regulations
respecting the rates or the financial or organizational regulation of electric
utilities and regulation under PUHCA except as set forth in Section 4.10
of this Agreement. 

(q) Financial Statements. Not
less than three (3) Banking Days before the Financial Closing Date, delivery to
Lender of the most recent annual financial statements (audited if available) and
most recent quarterly financial statements from each Borrower Affiliate Entity (in the case of Borrower, on a
consolidated basis and including a balance sheet), in the case of each Borrower
Affiliate Entity together with a certificate from the appropriate Responsible
Officer thereof, stating that no material adverse change in the assets,
liabilities, operations or financial condition of such entity has occurred from
those set forth in the most recent financial statements or the balance sheet, as
the case may be, provided to Lender.

16 

(r) UCC Reports. Delivery to
Lender of a UCC-11 (or similar) report of a recent date before the Financial
Closing Date for each of the jurisdictions in which the UCC-1 financing
statements will be filed or recorded, showing that upon due filing or
recordation (assuming such filing or recordation occurred on the date of such
respective reports), the security interests created under such Collateral
Documents will be prior to all other financing statements or other security
documents in respect of the Collateral, to the extent such security interest can
be perfected by filing or recording. 

(s) Project Budget. Delivery to
Lender of the budget (“Project Budget”) for all anticipated costs
to be incurred in connection with the construction and start-up of the Project,
including in such budget all construction and non-construction costs, and
including all interest, taxes and other carrying costs, and such other
information as Lender may reasonably require, together with a balanced statement
of uses and anticipated sources of funds necessary to complete the Project,
broken down as to separate construction phases and components, which Project
Budget shall be reasonably satisfactory to Lender. The Project Budget is
attached hereto as Exhibit G-3. 

(t) Project Schedule. Delivery
to Lender of a detailed project schedule of the Project (“Project
Schedule”) demonstrating that the Project will commence operations and
producing electrical energy for commercial sale in accordance with Prudent
Utility Practices and applicable laws no later than December 31, 2011,
which Project Schedule shall be reasonably satisfactory to Lender. The
Project Schedule is attached hereto as Exhibit G-4. 

(u) Material Adverse Change. In
the reasonable judgment of Lender, acting in good faith, there shall not have
occurred at any time following October 1, 2011 any event,
occurrence, effect or circumstance of whatever nature that has, or could
reasonably be expected to have, a Material Adverse Effect. 

(v) QF
Status. Borrower shall have delivered to Lender a copy of a
notice of self-certification filed at FERC demonstrating that Project will be a
qualifying small power production facility within the meaning of PURPA and 18
C.F.R. Sections 292.203 and 292.204 (“QF”) at the time the Project begins
producing electric energy (the “QF Self-Certification”). 

(w) Borrower Certification of
Qualifying Costs. Delivery to Lender of a certificate executed by the
appropriate authorized officer of Borrower, in form and substance satisfactory
to Lender, certifying as to the aggregate amount of Qualifying Costs paid
through the Financial Closing Date with respect to the Project and confirming
that (i) such Qualifying Costs have been determined pursuant to a methodology consistent with the Cash Grant Guidance and applicable law, and
(ii) the amount of the Initial Loan does not exceed ninety percent (90%) of
thirty percent (30%) of such Qualifying Costs incurred and paid with regard to
the Project.

17 

(x) Intentionally Omitted.

(y) Qualifying Costs. The
aggregate principal amount of the Initial Loan shall not exceed ninety percent
(90%) of thirty percent (30%) of the Qualifying Costs incurred (within
the meaning of the Cash Grant Guidance) through the Financial Closing Date, as
certified by Borrower in its certificate delivered pursuant to clause (w) above
and as demonstrated by the Preliminary Cost Segregation Report (as defined in
clause (z) below). 

(z) Preliminary Cost Segregation
Report. Delivery to Lender of a preliminary study of the Cost Segregation
Consultant identifying the cost categories and amount of Qualifying Costs,
providing an itemization of Qualifying Costs paid through a date reasonably
close to the Financial Closing Date, and describing the methodology used in
determining categories and amounts of Qualifying Costs (the “Preliminary
Cost Segregation Report”), prepared in a manner consistent with the
Cash Grant Guidance and applicable law and in form and substance satisfactory to
Lender. The Preliminary Cost Segregation Report shall estimate the Cash Grant
for the Project to be at least Ten Million Dollars ($10,000,000).

(aa) Sponsor Indemnities.
Borrower shall have delivered to Lender the Sponsor Cash Grant Shortfall
Guaranty.

(bb) Power of Attorney. Delivery
to Lender of a power of attorney, in substantially the form of Exhibit
D-6 (the “Cash Grant Application Power of Attorney”), executed by
Borrower which grants Lender the power to act in the place of Borrower with
respect to the Cash Grant Application and any filings or notices related thereto
on and after the occurrence and during the continuance of an Event of Default .

(cc) Ownership; No Disqualified
Persons. Delivery to Lender of a certificate executed and delivered by an
authorized officer of Sponsor, Idaho Sponsor and Holdings certifying that no
direct or indirect equity interest in Borrower is beneficially owned by a
Disqualified Person, together with an ownership diagram of Borrower, showing the
complete direct and indirect ownership of Borrower, and any partnership of other
pass-through entity that directly or indirectly owns any interest in Borrower,
up to direct or indirect owners that are individuals, non-grantor trusts, or
taxable “C” corporations, but not including the owners of a taxable “C”
corporation, and any other backup diligence materials (including, in the case of
any beneficial owner that is an individual, certifications or such other
evidence establishing whether such individual is an “United States Person” as
defined in Section 7701(a)(30) of the Code) requested by Lender, in each case in
form and substance satisfactory to Lender. 

(dd) Representations and
Warranties. Each representation and warranty of each Borrower Affiliate
Entity under the Financing Documents and the Project Documents to which it is a party shall be true and correct as
of the Financial Closing Date (or if such representation and warranty relates
solely as of an earlier date, as of such earlier date).

18 

(ee) Patriot Act Compliance.
Delivery to Lender of all such documentation and information requested by Lender
that is necessary (including the name and address of each Borrower Affiliate
Entity) for Lender to identify each Borrower Affiliate Entity and any of their
controlling owners in accordance with the requirements of the Patriot Act
(including the “know your customer” and similar regulations thereunder). 

(ff) Intentionally Omitted.

(gg) Indebtedness. On the
Financial Closing Date, Borrower shall have no outstanding indebtedness or
preferred stock other than (i) the Initial Loan and other extensions of credit
hereunder; (ii) the Construction Loan as permitted under the Intercreditor
Agreement; and (iii) indebtedness not in excess of Twenty-Five Thousand Dollars
($25,000) in the aggregate. Lender shall have received fully-executed copies of
the Construction Loan Documents in effect as of the Financial Closing Date. 

(hh) Equity Commitment. The
Sponsor shall have funded the Sponsor Equity prior to the Financial Closing
Date. 

(ii) Flow of Funds. Not less
than three (3) Banking Days before the Financial Closing Date, delivery to
Lender of a memorandum setting forth the sources and uses of all proceeds of the
Loans and including Sponsor Equity, including any necessary instructions from
Borrower with respect to the disbursement to and receipt by any Borrower
Affiliate Entity, and Borrower’s proposed use of such proceeds pursuant to and
in accordance with this Agreement and the other Financing Documents, all as
certified by an authorized officer of Borrower. 

(jj) Event of Default. No Event
of Default or Inchoate Default has occurred and is continuing or will result
from the Borrowing on the Financial Closing Date. 

(kk) Interconnection
Arrangements. Lender shall have been satisfied with the Project’s
interconnection arrangements with Interconnector or any other transmission
service provider in order for the Project to achieve the Placed in Service Date
no later than December 31, 2011. 

(ll) Solvency Certificate.
Delivery to Lender of a Solvency Certificate, in substantially the form of
Exhibit F-4, of a Responsible Officer of the Sponsor confirming the
Solvency of each Borrower Affiliate Entity after giving effect to the
transactions contemplated hereunder (the “Solvency Certificate”).

3.2 Conditions Precedent to the Borrowing of the Additional
Loan. The obligation of the Lender to effect or permit the Borrowing of the
Additional Loan is subject to the prior satisfaction of each of the following
conditions (unless waived in writing by Lender): 

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(a) Notice of Borrowing.
Borrower shall have delivered the Notice of Borrowing to Lender in accordance
with the procedures specified in Sections 2.2(e)(ii)(A).

(b) Certificate of Borrower.
Lender shall have received a certificate, dated as of the Second Borrowing Date,
signed by a Responsible Officer of Borrower, in substantially the form of
Exhibit F-5. 

(c) Independent Engineer’s
Certificate. Delivery to Lender of the Independent Engineer’s certificates
with respect to the Project, in substantially the form of Exhibit F-3
(detailing, among other things, (i) that the Placed in Service Date is expected
to occur prior to December 31, 2011, (ii) the on-schedule and on-budget status
of the Project construction, (iii) that there are sufficient funds available to
complete the Project in accordance with the Project Budget, and (iv) that the
completion of all work done to date has been in accordance with the Construction
Contract, and otherwise in form and substance satisfactory to Lender), together
with the Independent Engineer’s report or reports attached thereto. 

(d) Applicable Permits. All
Applicable Permits required for the construction of the Project and operation of
the Project required to have been obtained by the Second Borrowing Date from any
Governmental Authority have been issued and are in full force and effect and not
subject to appeal or to any unsatisfied conditions that may allow material
modification or revocation. With respect to any of the Permits not yet required
and listed in Part II of Exhibit G-2, Lender shall have reasonably
concluded that there is no reason to believe that any such Applicable Permits
will not be obtained by the time required. 

(e) Operative Documents. All of
the Operative Documents to be executed and delivered with respect to the Project
on or prior to the Second Borrowing Date shall be in full force and effect
without change or amendment since the respective dates of their execution and
delivery hereunder except as permitted hereunder. 

(f) Acceptable Work; No Liens.
All work that has been done on the Project has been done in a good and
workmanlike manner and in accordance with the Plans and Specifications, the
Construction Contract, the Power Purchase Agreement, the Interconnection
Agreement, the Lease and Prudent Utility Practices and there has not been filed
with or served upon Borrower or the Project (or any part thereof) notice of any
Lien, claim of Lien or attachment upon or claim affecting the right to receive
payment of any of the moneys payable to any of the Persons named on such request
which has not been released or which will not be released with the payment of
such obligation out of such Loan, other than Permitted Liens. 

(g) Casualty. If at the time of
making any Borrowing, the Project shall have been materially damaged by flood,
fire or other casualty, Borrower shall have complied with the requirements of
Section 5.27 and Lender shall have received assurances sufficient in the
reasonable judgment of Lender and the Independent Consultants to assure restoration and Substantial Completion of
the Project prior to December 31, 2011. 

20 

(h) No Material Adverse Change.
There shall not have occurred at any time following the Financial Closing Date
any event, occurrence, effect or circumstance of whatever nature that has, or
could reasonably be expected to have, a Material Adverse Effect. 

(i) Absence of Litigation. No
action, suit, proceeding or investigation shall have been instituted or
threatened against any Borrower Affiliate Entity or the Project that could
reasonably be expected to have a Material Adverse Effect. 

(j) Cash Grant Bridge Loan. 

(i) The previously incurred and
projected Qualifying Costs shall remain consistent with the Preliminary Cost
Segregation Report, and Borrower shall have delivered to Lender a certificate by
the appropriate authorized officer of Borrower, in form and substance reasonably
satisfactory to Lender: (A) certifying as to the cost categories and aggregate
amount of Qualifying Costs paid through a date reasonably close to the Second
Borrowing Date with respect to the Project, and (B) confirming that (x) such
Qualifying Costs have been determined pursuant to a methodology consistent with
the Cash Grant Guidance and applicable law, and (y) the amount of the Loans
(including the Additional Loan) do not exceed ninety percent (90%) of thirty
percent (30%) of such Qualifying Costs incurred and paid with regard to the
Project. 

(ii) Delivery to Lender of an
Independent Accountant’s certificate with respect to the Project, substantially
in the form of Exhibit F-2, certifying (i) the amount of Qualifying Costs
incurred (within the meaning of the Cash Grant Guidance) through a date
reasonably close to the Second Borrowing Date, (ii) the Project is on schedule
to be placed in service (within the meaning of the Cash Grant Guidance) prior to
the qualification deadline of the Cash Grant (with reasonable margin for delays,
to be determined in consultation with the Independent Engineer and Lender), and
(iii) otherwise in form and substance reasonably satisfactory to Lender and
consistent with the Cash Grant Guidance and applicable law and, to the extent
that the Independent Accountant has relied upon a certificate from the
Independent Engineer and/or a “Report of Management on Eligible Cost Basis”
statement from Borrower, a copy of such certificate and/or report. 

(iii) The aggregate principal amount
of all Loans (including the Additional Loan) shall not exceed ninety percent
(90%) of thirty percent (30%) of the Qualifying Costs previously incurred
(within the meaning of the Cash Grant Guidance) through the Second Borrowing
Date, as described in the certificates delivered pursuant to clauses (i) and
(ii) above. 

21 

(iv) Delivery to Lender of the final
Cost Segregation Report, prepared in a manner reasonably acceptable to Lender,
dated as of a date reasonably close to the Second Borrowing Date, prepared in a
manner consistent with the Cash Grant Guidance and applicable law and in form
and substance satisfactory to Lender. The final Cost Segregation Report shall
estimate the Cash Grant for the Project to be at least Ten Million Dollars
($10,000,000). 

(k) Representations and
Warranties. Each representation and warranty set forth in Article 4
is true and correct in all material respects as if made on such date (or if such
representation and warranty relates solely as of an earlier date, as of such
earlier date). 

(l) Event of Default. No Event
of Default or Inchoate Default has occurred and is continuing or will result
from the Borrowing of the Additional Loan. 

3.3 No Approval of Work. The making of the Borrowings
hereunder shall not be deemed an approval or acceptance by Lender of any work,
labor, supplies, materials or equipment furnished or supplied with respect to
the Project. 

ARTICLE 4 
REPRESENTATIONS AND WARRANTIES 

Borrower makes the following representations and warranties to
and in favor of Lender as of the Financial Closing Date, as of the date of the
Second Borrowing Date and as of the date of each certificate required under this
Agreement (except that any representation or warranty in this Article 4
which relates expressly to an earlier date, by direct reference or by reference
to a document dated a certain date, shall be deemed made only as of such date).
All such representations and warranties shall survive the Financial Closing Date
and the making of the Borrowings: 

4.1 Organization. 

(a) Borrower (i) is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware, and (ii) is duly qualified, authorized to do business and in
good standing in each other jurisdiction where the character of its properties
or the nature of its activities makes such qualification necessary (including
the State of Nevada). Borrower has all requisite power and authority to own or
hold under lease and operate the property it purports to own or hold under lease
and to carry on its business as now being conducted and as proposed to be
conducted under the Operative Documents, and has the requisite power and
authority to execute, deliver and perform each Operative Document to which it is
a party. The only member of Borrower is Holdings. The only member of Holdings is
the Idaho Sponsor.

(b) Each Borrower Affiliate Entity
(other than Borrower) (i) is duly organized and validly existing and in good
standing under the laws of the State of its formation with all requisite
organizational or other power and authority under the laws of such State to
enter into the Operative Documents to which it is a party and to perform its
obligations thereunder and to consummate the transactions contemplated thereby;
(ii) is duly qualified, authorized to do business and in good standing
in such State, and each other jurisdiction where the character of its properties
or the nature of its activities makes such qualification necessary, unless the
failure to obtain such qualification could not cause a Material Adverse Effect;
and (iii) has the power (A) to carry on its business as now being conducted and
as proposed to be conducted by it hereunder, (B) to execute, deliver and perform
its obligations under each Operative Document to which it is a party, in its
individual capacity, (C) to take all action as may be necessary to consummate
the transactions contemplated thereunder, (D) to grant the liens and security
interest provided for in the Financing Documents to which it is a party, and (E)
has the authority to execute, deliver and perform its obligations under each
Operative Document to which it is a party.

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4.2 Authorization; No Conflict. Each Borrower Affiliate
Entity has duly authorized, executed and delivered each Operative Document to
which such Borrower Affiliate Entity is a party (or such Operative Documents
have been duly and validly assigned to such Borrower Affiliate Entity and such
Borrower Affiliate Entity has duly and validly assumed the obligations
thereunder), and neither such Borrower Affiliate Entity’s execution and delivery
thereof nor its consummation of the transactions contemplated thereby nor its
compliance with the terms thereof (a) conflicts with or constitutes a default
under or results in the violation of the provisions of the Organizational
Documents or any Legal Requirement applicable to or binding on such Borrower
Affiliate Entity or any of its properties or on the Project, except any of the
foregoing that in the case of any Borrower Affiliate Entity other than Borrower
could not reasonably be expected to result in a Material Adverse Effect; (b)
constitutes a default under or results in the violation of the provisions of any
Project Document, any Construction Loan Document or any indenture, mortgage,
deed of trust, or agreement or other instrument to which such Borrower Affiliate
Entity is a party or by which it or any of its properties or assets is or may be
bound or affected, except such conflict, default or violation which could not in
the case of any Borrower Affiliate Entity other than Borrower reasonably be
expected to result in a Material Adverse Effect; or (c) results in or requires
the creation or imposition of (or the obligation to create or impose) any Lien
(other than Permitted Liens) upon any of its property or assets under, or result
in the acceleration of, any obligation. The execution, delivery and performance
by each Borrower Affiliate Entity of each Operative Document to which it is a
party does not require the approval or consent of any holder or trustee of any
Debt or other obligations of such Borrower Affiliate Entity which has not been
obtained. 

4.3 Enforceability. Each Operative Document to which
each Borrower Affiliate Entity is a party is a legal, valid and binding
obligation of such Borrower Affiliate Entity, enforceable against such Borrower
Affiliate Entity in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors’ rights and subject to general
equitable principles. None of the Operative Documents to which a Borrower
Affiliate Entity is a party has been amended or modified since the Financial
Closing Date except in accordance with this Agreement. 

4.4 Compliance with Law. (a) Borrower is in compliance
with and not in default under Borrower’s Organizational Documents; and (b)
Borrower is in compliance with all Legal Requirements applicable to Borrower,
the Project and the Site, except any such noncompliance or such default which could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise have been
delivered to Lender, no notices of violation of any Legal Requirement relating
to the Project or the Site have been issued or received by any Borrower
Affiliate Entity or any Affiliate of them. 

23 

4.5 ERISA. Either (a) there are no ERISA Plans for
Borrower or any member of the Controlled Group or (b)(i) no Reportable Event
exists with respect to any ERISA Plan, (ii) during the five-year period prior to
the date hereof, Borrower and each member of the Controlled Group have fulfilled
their obligations under the minimum funding standards of ERISA and the Code for
each ERISA Plan, (iii) no material liability to the PBGC (other than required
premium payments), the Internal Revenue Service (other than user fees) or an
ERISA Plan exists, or is reasonably expected by Borrower or any member of the
Controlled Group to be, incurred by Borrower, (iv) Borrower does not have any
contingent liability with respect to any post-retirement benefit under any
“welfare plan” (as defined in Section 3(1) of ERISA), other than liability for
continuation coverage under Part 6 of Title I of ERISA, (v) no Multiemployer
Plan is, or is reasonably expected by Borrower or any member of the Controlled
Group to be, in “reorganization” (as defined in Section 4241 of ERISA or Section
418 of the Code) or is “insolvent” (as defined in Section 4245 of ERISA), or has
received notice pursuant to Section 305(b)(3) of ERISA that its funding status
is or will be in “endangered” or “critical” status, and (vi) no Lien under
Section 430(k) of the Code or Section 303(k) of ERISA or requirement to provide
security under Section 401(a)(29) of the Code or Section 307 of ERISA exists or
is reasonably expected by Borrower to be imposed on the assets of Borrower.
Neither the execution nor the delivery of this Agreement nor the consummation of
the transactions contemplated hereby will involve a “prohibited transaction”
within the meaning of Section 406 of ERISA or Section 4975 of the Code which is
not exempt under Section 408 of ERISA or under Section 4975(d) of the Code. 

4.6 Taxes. Each Borrower Affiliate Entity has timely
filed, or has caused to be timely filed, all federal, state and local tax
returns that it is required to file, has timely paid or has caused to be timely
paid all material taxes it is required to pay to the extent due (other than
those taxes that it is contesting in good faith and by appropriate proceedings,
for which adequate, segregated reserves are established in accordance with
GAAP). There are no ongoing or pending audits, examinations or other
administrative or judicial proceedings against any Borrower Affiliate Entity
relating to Taxes. For U.S. federal income tax purposes: (i) Borrower is treated
as a disregarded entity and (ii) Holdings is treated as a disregarded entity.

4.7 Business, Debt, Contracts, Etc. (a) With regard to
the Project, Borrower has not conducted any business other than the business
contemplated by the Operative Documents, has no outstanding Debt or other
material liabilities other than pursuant to or allowed by the Operative
Documents , and is not a party to or bound by any material contract other than
the Operative Documents to which it is a party; and (b) Borrower has no
subsidiaries. 

4.8 Certain Fees. No broker’s or finder’s fee or
commission will be payable with respect to the transactions contemplated by the
Financing Documents. 

24 

4.9 Investment Company. No Borrower Affiliate Entity is
an investment company or a company controlled by an investment company, within
the meaning of the Investment Company Act of 1940, as amended. 

4.10 Governmental Regulation. 

(a) As of the Financial Closing Date,
Borrower is not (i) subject to and, is exempt from, regulation as an
“electric utility company,” a “public utility company,” a “holding company,” a
“subsidiary company” of a holding company or an “associate company” of a holding
company under PUHCA; and (ii) subject to rate, financial, organizational or
other regulation as a “public service company,” an “electric company,” or
similar entity under Nevada law, in connection with (A) Borrower’s ownership,
operation or maintenance of, the Project or (B) Borrower’s execution, delivery
or performance of any of the Operative Documents or its exercise of any of their
rights thereunder. 

(b) No Borrower Affiliate Entity will,
solely as a result of the construction, ownership, leasing or operation of the
Project, the sale or transmission of electricity therefrom or the entering into
any Operative Document or any transaction contemplated hereby or thereby, be
deemed by any Governmental Authority having jurisdiction to be or otherwise
become (i) an “electric utility company,” a “public utility company,” a “holding
company,” a “subsidiary company” of a holding company or an “associate company”
of a holding company under PUHCA, or (ii) subject to rate, financial or
organizational regulation as a “public service company,” an
“electric company,” or similar entity under Nevada law. 

(c) Borrower is not subject to
regulation under any Governmental Rule as to securities, rates or financial or
organizational matters that would preclude the incurrence or repayment of the
principal of and interest on any Loans, or the incurrence by Borrower of any of
the Obligations or the execution, delivery and performance by Borrower of the
Operative Documents to which it is a party. Borrower will not be deemed by any
state Governmental Authority to be subject to financial, organizational or rate
regulation as a “public utility” an “electric utility” a “public service
corporation” or similar entity under any existing state law, rule or regulation.

(d) There is no complaint or
administrative proceeding pending as to the aforementioned orders, and Borrower
is not aware of any facts or circumstances which could reasonably be expected to
give rise to a complaint or administrative proceeding in the future which could
reasonably be expected to have a Material Adverse Effect. 

(e) As of the Financial Closing Date
and other than as set forth in Section 4.10(a) and Section 4.16,
no other filing with, or approval from, any state or federal Governmental
Authority with jurisdiction over the energy sales, the transmission of electric
energy, or the Financing Documents or in connection with any of the transactions
contemplated hereby or by any other Operative Document is required.

25 

(f) Neither Lender, nor any Affiliate
(as that term is defined in Section 1262(1) of PUHCA) of any of them will,
solely as a result of Borrower’s construction, ownership, leasing or operating
of the Project, the sale or transmission of electricity therefrom or the
entering into any Operative Document or any transaction contemplated hereby or
thereby, be subject to, or not exempt from, regulation under the FPA or PUHCA or
under state laws and regulations respecting the rates or the financial or
organizational regulation of electric utilities. 

4.11 Regulation U, Etc. Borrower is not engaged
principally, or as one of its principal activities in the business of extending
credit for the purpose of purchasing or carrying margin stock (as defined or
used in Regulations T, U or X of the Federal Reserve Board), and no part of the
proceeds of the Borrowings or the Project Revenues will be used by Borrower to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or otherwise in
violation of Regulations T, U or X of the Federal Reserve Board. 

4.12 Financial Statements. The financial statements
delivered in respect of each Borrower Affiliate Entity pursuant to Section
3.1(q) and Section 5.4 are true, complete and correct and fairly
present the financial condition of the Person to whom they relate as of the date
thereof. The financial statements of each Borrower Affiliate Entity have been
prepared in accordance with GAAP as properly applied, subject to normal year-end
adjustments and lack of footnotes. No Borrower Affiliate Entity will have any
material liabilities, direct or contingent, except as has been disclosed in such
financial statements or pursuant to the Operative Documents or otherwise
disclosed in writing to Lender prior to the date hereof. 

4.13 Partnerships and Joint Ventures. Borrower is not a
general partner or a limited partner in any general or limited partnership or a
joint venturer in any joint venture or a member in any limited liability
company. 

4.14 Existing Defaults. Borrower is not in default under
any Project Document, any of the Construction Loan Documents or any other
material agreement relating to any obligation of Borrower for or with respect to
borrowed money, and to Borrower’s knowledge, no other party to any Project
Document is in default under any material term thereunder. 

4.15 No Default. No Event of Default or Inchoate Default
has occurred which has not been disclosed to Lender by Borrower in writing, or
has occurred and is continuing. 

4.16 Permits. 

(a) There are no Permits under existing
law as the Project is currently designed that are or will become Applicable
Permits other than the Permits described in Exhibit G-2. Each Applicable
Permit is either (i) in full force and effect and is not subject to any appeals
or further proceedings or to any unsatisfied condition that may allow material
modification or revocation, in the case of those Permits listed in Part I of
Exhibit G-2; or (ii) of a type that is routinely granted on application
and that would not normally be obtained before the applicable stage of
construction, reconstruction or commencement of operation, in each case as contemplated by the
Operative Documents, in the case of those Applicable Permits listed in Part II
of Exhibit G-2. Borrower has no reason to believe that any Permit so
indicated on Part II of Exhibit G-2 will not be obtained before it
becomes an Applicable Permit. Borrower is not in material violation of any
Applicable Permit. 

26 

(b) To Borrower’s knowledge, each of
the other Major Project Participants possesses all licenses, Permits, franchise,
patents, copyrights, trademarks and trade names, or rights thereto necessary to
perform its duties under the Operative Documents to which it is a party, and
such party is not in violation of any valid rights of others with respect to any
of the foregoing which could reasonably be expected to have a Material Adverse
Effect. 

4.17 Offices. The chief executive office or chief place
of business (as such term is used in Article 9 of the Uniform Commercial Code)
of Borrower is located at 1505 Tyrell Lane, Boise ID 83705. Borrower’s
organizational identification number is 770717022. 

4.18 Adverse Change. As of the Financial Closing Date,
there has not occurred at any time since October 1, 2011, and as of each date
this representation is made or deemed made after the Financial Closing Date,
there has not occurred at any time since the Financial Closing Date, any event,
occurrence, effect or circumstance of whatever nature that has, or could
reasonably be expected to have, a Material Adverse Effect 4.19 Hazardous
Substances. 

(a) Except as set forth in Exhibit
G-6, (i) Borrower is not and has not in the past been in violation of (or
received any notice that it is in violation of) any Environmental Law which
violation could result in a material liability to Borrower or could otherwise
result in a Material Adverse Effect; (ii) neither Borrower nor, to the knowledge
of Borrower, any third party has used, released, discharged, generated,
manufactured, produced, stored, or disposed of in, on, under, or about the Site
or any Improvements, or transported thereto or therefrom, any Hazardous
Substances in a manner that could reasonably be expected to subject Lender or
Borrower to liability under any Environmental Law; (iii) to the knowledge of
Borrower, there are no underground tanks containing regulated quantities of
Hazardous Substances, whether operative or temporarily or permanently closed,
located on the Site or any Improvement, (iv) there are no Hazardous Substances
used, stored or present at, on or, to the knowledge of Borrower, near the Site
or any Improvement, and (v) to the knowledge of Borrower, there is or has been
no condition, circumstance, action, activity or event that could form the basis
of any violation of, or liability to Lender or Borrower under, any Environmental
Law.

(b) Except as set forth on Exhibit
G-5 or Exhibit G-6, to the knowledge of Borrower, there is no
proceeding, investigation or inquiry by any Governmental Authority (including
the U.S. Environmental Protection Agency) or any non-governmental third party
with respect to the presence or Release of Hazardous Substances in, on, from or
to the Site or any Improvement. 

27 

(c) Borrower has no knowledge of any
past or existing violations of any Environmental Laws by any Person relating in
any way to the Site or any Improvement, which violations could reasonably be
expected to have a Material Adverse Effect. 

(d) Except as set forth on Exhibit
G-5 or Exhibit G-6, there are no Environmental Laws, including but
not limited to the Surface Mining Control and Reclamation Act, that could be
reasonably expected to have a Material Adverse Effect on the development of the
Project or operation of the Project.

(e) Except as set forth on Exhibit
G-5 or Exhibit G-6, there are no land use restrictions, institutional
controls, engineering controls or other restrictions on the Project imposed
pursuant to any Environmental Laws, that could reasonably be expected to have a
Material Adverse Effect. 

4.20 Litigation. There are no pending or, to Borrower’s
knowledge, threatened actions or proceedings of any kind, including actions or
proceedings of or before any Governmental Authority, to which any Borrower
Affiliate Entity, or the Project is a party or is subject, or by which any of
them or any of their properties or the Project are bound, in each case (a)
except as set forth on Exhibit G-5, or (b) only to the extent the
representation and warranty under this Section 4.20 is made or deemed
made after the Financial Closing Date, that if adversely determined to or
against any Borrower Affiliate Entity or the Project, could reasonably be
expected to have a Material Adverse Effect. 

4.21 Title and Liens. Borrower has good, marketable and
insurable fee title and leasehold interests, as the case may be, to the assets
then owned by Borrower that comprise the Project as of such date, and all of the
assets then existing relating to the Project, in each case free and clear of all
Liens, or other exceptions to title other the liens created under the
Construction Loan Documents and Permitted Liens. Borrower does not own assets
other than the Expanded Project. 

4.22 Utilities. All utility services (a) as of the
Financial Closing Date and during the Construction Period, necessary for the
construction of the Project, and (b) on and after Substantial Completion,
necessary for the operation of the Project, in each case, for its intended
purposes, are available at the Site or will be so available as and when required
upon commercially reasonable terms. 

4.23 Roads; Access. 

All roads, permits, rights of way, easements and other
entitlements and agreements necessary for the construction of the Project and
full utilization of the Project for its intended purposes under the Project
Documents have, as applicable, either been completed or acquired or will be upon
completion of construction. 

28 

4.24 Project Documents. 

(a) The services to be performed, the
materials to be supplied and the real property interests, the Real Property
Documents and other rights granted pursuant to the Project Documents: (i) are
sufficient to enable (x) the Project to be located and constructed on the Site
and (y) the Project to be operated and maintained on the Site, in each case in
accordance with all Legal Requirements, the Annual Operating Budget, and the
Project Schedule; and (ii) provide adequate ingress and egress for any
reasonable purpose in connection with the construction of the Project and the
operation and maintenance of the Project under the Project Documents. 

(b) There are no material services,
materials or rights required for the construction of the Project or the
operation or maintenance of the Project in accordance with the Project Documents
and the Plans and Specifications other than those available under the Project
Documents. 

(c) All agreements relating to the
Project to which Borrower or any of its Affiliates are a party that are in
effect on the Financial Closing Date are listed on Exhibit G-7. Copies of
all Project Documents to which Borrower or any of its Affiliates is a party as
currently in effect have been delivered to Lender by Borrower. Except as has
been previously disclosed in writing to Lender, as of the Financial Closing Date
none of the Project Documents to which Borrower or any of its Affiliates is a
party has been amended, modified or terminated and each such Project Document is
in full force and effect.

4.25 Representations and Warranties. To the best of
Borrower’s knowledge, the representations and warranties of the Major Project
Participants contained in the Operative Documents other than this Agreement are
true and correct in all material respects, as of the time made or deemed made by
such Major Project Participant.

4.26 Labor Disputes and Acts of God. There has not been
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy, or other
casualty or force majeure event (whether or not covered by insurance), which
could reasonably be expected to have a Material Adverse Effect. 

4.27 Disclosure. Neither the information provided by or
on behalf of Borrower and its Affiliates to Lender regarding the Borrower
Affiliate Entities nor the information provided by Borrower and its Affiliates
to Lender regarding the Project that was prepared by or on behalf of the
Borrower Affiliate Entities, taken as a whole, contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading under the circumstances in
which they were made at the time such statements are made. Notwithstanding the
foregoing, no representation or warranty is made as to any forecasts,
projections or other forward-looking statements except that those of such
forecasts, projections or other forward-looking statements that were prepared by
any Borrower Affiliate Entity (or, at any Borrower Affiliate Entity’s
request, by their respective advisors) were prepared in good faith and were
based on assumptions believed by Borrower to be reasonable at the time made. 

29 

4.28 Budgets; Project Schedule; Projections. Borrower
has prepared, or caused to be prepared, the Project Budget and the Project
Schedule and is responsible for developing the assumptions on which the Project
Budget and the Project Schedule are based. The Project Budget and the Project
Schedule (a) are, to Borrower’s knowledge as of the Financial Closing Date,
based on reasonable assumptions as to all legal and factual matters material to
the estimates set forth therein, and set forth an accurate representation of the
expected financial performance of the Project; (b) as of the Financial Closing
Date are consistent with the provisions of the Operative Documents; and (c)
indicate that the estimated Project Costs will not exceed funds available to pay
Project Costs. As of the date hereof, there are no material Project Costs
(including anticipated sales and use taxes) that are not included in the Project
Budget.

4.29 Collateral. The security interests granted to
Lender pursuant to each Collateral Document in the Collateral are, and, with
respect to such subsequently acquired collateral, will be, superior and prior to
the rights of all third Persons now existing or hereafter arising whether by way
of lien, security interests, encumbrance, assignment or otherwise, including
without limitation Construction Lender. The Deposit Account Control Agreement is
effective to create and perfect in favor of Lender a legal, valid, binding and
enforceable security interest in the Blocked Account and proceeds and products
thereof. Except to the extent control of portions of the Collateral is required
for perfection and, in the case of the Cash Grant, the filing of any required
notice of assignment in accordance with FACA, all such action as is necessary
has been taken to establish and perfect Lender’s rights in and to, and first
priority Lien on, the Collateral, including any recording, filing, registration,
giving of notice or other similar action. The Collateral Documents relating to
the Collateral and the financing statements relating thereto have been duly
filed or recorded in each office and in each jurisdiction where required in
order to create, perfect and maintain perfected the first Lien and security
interest described above. Lender has been properly provided control of all
Collateral that requires or allows for perfection of the Lien and security
interest described above by control. 

4.30 Intellectual Property. Borrower owns or has the
right to use all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, which are necessary for the operation of
its business. Borrower has not received notice that (a) any material product,
process, method, substance, part or other material presently contemplated to be
sold by or employed by Borrower in connection with its business, will infringe
in any material manner any patent, trademark, service mark, trade name,
copyright, license or other right owned by any other Person; (b) there is
pending or threatened any claim or litigation against or affecting Borrower
contesting its right to sell or use any such product, process, method,
substance, part or other material; or (c) there is, or there is pending or
proposed, any patent, invention, device, application or principle or any
statute, law, rule, regulation, standard or code which could reasonably be
expected to have a Material Adverse Effect. 

4.31 Insurance. Insurance complying with Section
5.18 hereof is in full force and effect and all premiums then due thereon
have been paid in full (or to the extent this representation is made at the Financial Closing Date, will be
paid concurrently with the Financial Closing Date). 

30 

4.32 Scheduled Commercial Operations. The Project is
scheduled to commence operations and produce electrical energy for commercial
sale in accordance with Prudent Utility Practices and applicable laws no later
than December 31, 2011. 

4.33 Separateness.

(a) The property and assets of
Borrower, on the one hand, and each other Borrower Affiliate Entity and their
upstream Affiliates, on the other, are separately identifiable and are not
commingled with the property or assets of any other Person. 

(b) Borrower maintains with commercial
banking institutions deposit accounts or other accounts separate from those of
each other Borrower Affiliate Entity and any their upstream Affiliates and does
not commingle its funds with any other Borrower Affiliate Entity or any of their
upstream Affiliates. 

(c) Each of the Borrower Affiliate
Entities acts solely in its name and through its duly authorized officers,
managers, general partners, representatives or agents in the conduct of its
businesses, and none of the Borrower Affiliate Entities act through the name or
through the officers, managers, general partners, representatives or agents of
such Borrower Affiliate Entity in the conduct of its business. 

(d) Each of the Borrower Affiliate
Entities conducts in all material respects its business solely in its own name
or through its duly authorized managers, general partners, representatives or
agents, in a manner not misleading to other Persons as to its identity, and
neither the Idaho Sponsor nor the Sponsor conducts its business in the name or
through its managers, general partners, representatives or agents of any other
Borrower Affiliate Entity. 

(e) Each of the Borrower Affiliate
Entities have obtained proper authorization for all of its actions in accordance
with the requirements of its Organizational Documents. 

4.34 Patriot Act Compliance.

(a) Neither Borrower’s borrowing of the
Loans nor its use of the proceeds thereof will violate in any material respect
(i) the United States Trading with the Enemy Act, as amended, (ii) any of the
foreign assets control regulations of the United States Treasury Department (31
C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto, (iii) Executive Order No. 13224, 66 Fed Reg.
49,079 (2001), issued by the President of the United States (Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism) (the “Terrorism Order”) or (iv) the
anti-money laundering provisions of the Patriot Act. No part of the proceeds
from the Loans hereunder will be used, directly or indirectly, for any payments
to any governmental official or employee, political party, official of a
political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in material violation of the
United States Foreign Corrupt Practices Act of 1977, as amended. 

31 

(b) No Borrower Affiliate Entity (i) is
or will become a “blocked person” as described in Section 1 of the Terrorism
Order or (ii) to the best of its knowledge, engages or will engage in any
dealings or transactions, or is otherwise associated, with any such blocked
person. 

(c) Each Borrower Affiliate Entity is
in compliance with the anti-money laundering provisions of the Patriot Act. 

4.35 Solvency. Each Borrower Affiliate Entity is
Solvent. 4.36 Cash Grant Compliance.

(a) Eligibility. Borrower and
the Project meet the standards for applicant and property eligibility set forth
in the Cash Grant Guidance. Borrower estimates that the Cash Grant will be paid
to Borrower on or prior to the Maturity Date. Borrower’s best estimate is that
the Cash Grant will be at least Ten Million Dollars ($10,000,000). Such estimate
(i) is based on reasonable assumptions as to all legal and factual matters
material to such estimates, (ii) is consistent with the provisions of the
Operative Documents in all material respects, (iii) has been calculated in good
faith and with due care and (iv) fairly represents Borrower’s reasonable
expectations as to the amount of the Cash Grant. The factual information
provided and representations made by Borrower to the Independent Accountant, the
Independent Engineer and the Cost Segregation Consultant are true, correct and
complete in all material respects and are based on reasonable assumptions as to
al legal and factual matters material to such information or
representations.

(b) Cash Grant Application. From
and after the filing of the Cash Grant Application for the Project, the factual
information and the representations of Borrower set forth in the Cash Grant
Application are (i) true, correct and complete in all material respects, (ii)
based on reasonable assumptions as to all legal and factual matters material to
the figures set forth therein, (iii) consistent with the provisions of the
Operative Documents in all material respects, (iv) prepared in good faith and
with due care and (v) fairly represent Borrower’s reasonable expectations as to
the matters covered thereby. No federal tax credit pursuant to Code Sections 45
and 48 has been or will be claimed with respect to any asset comprising the
Project. Borrower has and will continue to make every election that is necessary
to claim and apply for the Cash Grant in accordance with the Cash Grant Guidance
and applicable law. 

(c) No Ownership by Disqualified
Persons. Neither Borrower nor any direct or indirect owner of Borrower is a
Disqualified Person. 

4.37 Absence of any Undisclosed Liabilities. There are
no material liabilities of any Borrower Affiliate Entity of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in
any such liabilities, other than those liabilities provided for or disclosed in
the most recently delivered financial statements pursuant to Section
5.4.

32 

ARTICLE 5 
AFFIRMATIVE COVENANTS OF BORROWER

Borrower covenants and agrees that until the Obligations have
been repaid in full in cash (other than unasserted contingent indemnity
obligations) and the Loan Commitment has been terminated, it will, unless Lender
waives compliance in writing: 

5.1 Use of Proceeds. Borrower shall apply the proceeds
of the Loans as permitted under Section 2.1(d)(i) hereof. 

5.2 Payment. Pay all sums due under this Agreement and
the other Financing Documents according to the terms hereof and thereof. 

5.3 Notices. Promptly, upon acquiring notice or giving
notice, as the case may be, or obtaining knowledge thereof, give written notice
to Lender of the following (it being understood that delivery of such notice
shall not be deemed to result in a waiver of any Inchoate Default or Event of
Default arising from any of the matters notified): 

(a) Any litigation pending or, to the
best knowledge of Borrower, threatened against Borrower involving claims against
Borrower or the Project in excess of Two Hundred and Fifty Thousand Dollars
($250,000) in the aggregate or involving any material injunctive, declaratory or
other equitable relief, such notice to include copies of all papers filed in
such litigation and to be given monthly if any such papers have been filed since
the last notice given; 

(b) Any dispute or disputes which may
exist between Borrower and any Governmental Authority and which involve (i)
claims against Borrower which individually exceed Two Hundred and Fifty Thousand
Dollars ($250,000) or in the aggregate in any fiscal year of Borrower exceed Two
Hundred and Fifty Thousand Dollars ($250,000); (ii) injunctive or declaratory
relief; (iii) revocation, material modification or suspension of, or failure to
obtain or renew, or any similar occurrence or circumstance with respect to, any
Applicable Permit, or imposition of additional material conditions with respect
thereto; or (iv) any Liens for taxes due but not paid; 

(c) Any Event of Default or Inchoate
Default; 

(d) Any casualty, damage or loss,
whether or not insured, through fire, theft, other hazard or casualty, or any
act or omission of any Borrower Affiliate Entity, or any of their partners,
officers, directors, employees, contractors, consultants or representatives, or
of any other Person if such casualty, damage or loss affects Borrower or the
Project, in excess of Fifty Thousand Dollars ($50,000) for any one casualty or
loss, or an aggregate of One Hundred Thousand Dollars ($100,000); 

33 

(e) Any cancellation or material change
in the terms, coverages or amounts of any insurance required under Section
5.18; 

(f) Any matter which has or could
reasonably be expected to have a Material Adverse Effect; 

(g) Initiation of any condemnation
proceedings involving the Project or any portion thereof; 

(h) Any intentional withholding of
compensation to any Major Project Participant under the applicable Project
Documents, other than retention provided by the express terms of such Project
Documents; 

(i) Any termination, notice of default
or other material notice given or received under any Project Document, including
without limitation notice of any major unscheduled repair or replacement of
parts and any notice related to the failure or insufficiency of performance
security required thereunder; 

(j) Any event of force majeure or
excusable delay asserted under any Project Document and, to the extent
reasonably requested by Lender and reasonably available to Borrower, copies of
related invoices, statements, supporting documentation, schedules, data or
affidavits delivered under the relevant Project Document; 

(k) Any written notice from FERC or
other Governmental Authority initiating or threatening the commencement of
proceedings against the Project that could materially affect the Project or
impose material incremental expenses on the Project; 

(l) Any (i) fact, circumstance,
condition or occurrence at, on, or arising from, the Site or any Improvement
that results in material noncompliance with any Environmental Law or any Release
of Hazardous Substances on or from the Site or any Improvement that has resulted
or could reasonably be expected to result in personal injury or material
property damage or have a Material Adverse Effect, and (ii) pending or, to
Borrower’s knowledge, threatened, Environmental Claim against Borrower or to
Borrower’s knowledge any of its Affiliates, contractors, lessees or any other
Persons, arising in connection with their occupying or conducting operations on
or at the Project, the Site or any Improvement which could reasonably be
expected to have a Material Adverse Effect; 

(m) Any Additional Project Document or
any actual or proposed amendment, waiver or modification to any existing Project
Document (together with copies of such Additional Project Document or
amendment); 

(n) Any event that could reasonably be
expected to cause the Project not to commence operations and production of
electrical energy for commercial sale or otherwise not to be developed, in each
case, in accordance with the Plans and Specifications, Prudent Utility Practices
and applicable Legal Requirements on or before December 31, 2011, which notice
shall include a written explanation for the delay, what measures are being taken
with respect thereto and the anticipated date by which the Project will commence operations and production of electrical
energy for commercial sale or otherwise not to be developed, in each case, in
accordance with the Plans and Specifications, Prudent Utility Practices and
applicable Legal Requirements and otherwise satisfy the requirements of the
applicable Project Documents and Substantial Completion; 

34 

(o) (i) Any Termination Event with
respect to an ERISA Plan has occurred or will occur which could reasonably be
expected to result in Borrower incurring a liability in excess of Fifty Thousand
Dollars ($50,000), (ii) any condition exists with respect to an ERISA Plan which
presents a material risk of termination of an ERISA Plan (other than a standard
termination under Section 4041(b) of ERISA) or imposition of an excise tax or
other liability with respect to an ERISA Plan which could reasonably be expected
to result in Borrower incurring a liability in excess of Fifty Thousand Dollars
($50,000), (iii) Borrower has engaged in a “prohibited transaction,” as defined
in Section 4975 of the Code or as described in Section 406 of ERISA, that is not
exempt under Section 4975 of the Code and Section 408 of ERISA and which could
reasonably be expected to result in Borrower incurring a liability in excess of
Fifty Thousand Dollars ($50,000), (iv) any condition exists with respect to a
Multiemployer Plan which presents a risk of partial or complete withdrawal (as
described in Section 4203 or 4205 of ERISA) by Borrower or any member of the
Controlled Group from a Multiemployer Plan and which could reasonably be
expected to result in Borrower incurring a liability in excess of Fifty Thousand
Dollars ($50,000), (v) a Multiemployer Plan is in “reorganization” (as defined
in Section 418 of the Code or Section 4241 of ERISA) or is “insolvent” (as
defined in Section 4245 of ERISA) or receives notice pursuant to Section
305(b)(3) of ERISA that its funding status is or will be in “endangered” or
“critical” status, or (vi) there is an action
brought against Borrower or any member of the Controlled Group under Section 502
of ERISA with respect to its failure to comply with Section 515 of ERISA (it
being understood that in each case any such notice shall be provided no later
than ten (10) days after Borrower knows, or has reason to know, of the
occurrence of any such event, and which notice shall be accompanied by a copy of
any notice or filing from the PBGC, the Internal Revenue Service, the Department
of Labor or which may be required by any such agency with respect to any of the
foregoing events); 

(p) Any notices, reports, certificates
or other documents filed with, or received from, the United States Treasury
Department with respect to the Cash Grant for the Project (including the filing
of the Cash Grant Application), which notice shall include a copy of such
notice, report, certificate or other document to or from the United States
Treasury Department (it being understood that in any case any such notice shall
be provided no later than ten (10) days after such notice, report, certificate
or other document to or from the United States Treasury Department is given or
filed); and 

(q) Such other information respecting
the business, condition (financial or otherwise), operations, performance or
properties (including, without limitation, reports, statements, lists of
property, accounts, budgets, forecasts, and other similar information) of
Borrower or any other Borrower Affiliate Entity (solely as it relates to such Borrower Affiliate Entity’s obligations under
any of the Operative Documents) as Lender may from time to time reasonably
request. 

35 

5.4 Financial Statements.

(a) Deliver to Lender (or cause to be
delivered to Lender) with sufficient copies for Lender, in form and detail
reasonably satisfactory to Lender: 

(i) As soon as available but no later
than sixty (60) days after the close of the first, second and third quarterly
periods of its fiscal year, quarterly (and year-to-date) (consolidated, if
applicable) financial statements of and prepared by Borrower, Holdings, Idaho
Sponsor, Sponsor (until the obligations of Sponsor under the Financing Documents
shall have been performed in full or otherwise discharged in accordance with the
terms thereof), including a balance sheet, statements of income and statement of
cash flows; and 

(ii) As soon as available but no later
than one hundred and twenty (120) days after the close of each applicable fiscal
year, audited (consolidated, if applicable) financial statements of Borrower,
Holdings, Idaho Sponsor, Sponsor (until the obligations of Sponsor under the
Financing Documents shall have been performed in full or otherwise discharged in
accordance with the terms thereof), including statements of equity, balance
sheets as of the close of such year, and statements of income and cash flows,
all prepared in accordance with GAAP; and certified by an independent certified
public accountant selected by the Person whose financial statements are being
prepared and satisfactory to Lender. Such certificate shall not contain any
material qualification or limitation or otherwise be qualified as to scope of
audit or contain a going-concern qualification. 

(b) Each time the financial statements
of any Borrower Affiliate Entity are delivered under Section 5.4(a)(i) or
(ii), a certificate signed by the natural person who is a financial
officer, managing director, or managing member of the applicable Person shall be
delivered along with such financial statements, certifying that (i) each of the
representations and warranties contained in Sections 4.1, 4.2,
4.3 and 4.4 are true and correct, (ii) such financial statements
present fairly in all material respects the financial condition of the
applicable Borrower Affiliate Entity, as of the date thereof and its results of
operations and cash flows for the period then ended, and such financial
statements have been prepared in conformity with GAAP applied on a consistent
basis subject (in the case of unaudited financial statements) to normal year-end
adjustments and (iii) such financial officer, managing director, or managing
member has made or caused to be made a review of the transactions and financial
condition of the applicable Person during the relevant fiscal period and that
such review has not, to the best knowledge of such financial officer, managing
director, or managing member, disclosed the existence of any event or condition
which constitutes an Event of Default or an Inchoate Default hereunder or under
any Financing Document applicable to such Person, or if any such event or
condition existed or exists, the nature thereof and the corrective actions that
such Person has taken or proposes to take with respect thereto. 

36 

5.5 Reports. 

(a) Until Final Completion, deliver to
Lender monthly progress reports received from Contractor under the Construction
Contract.

(b) Deliver to Lender, on a monthly
basis, a summary operating report for the Project, which shall include (i) a
one-month numerical and narrative assessment of (A) electrical production and
delivery, (B) cash receipts and disbursements and cash balances, including
distributions to Holdings, Idaho Sponsor or Sponsor, and (C) casualty losses of
value in excess of Fifty Thousand Dollars ($50,000).

(c) Provide to Lender promptly upon
reasonable request such reports, statements, lists of property, accounts,
budgets, forecasts and other similar information concerning the Project and, to
the extent reasonably available and reasonable in light of their role in the
Project, such reports and information as are reasonably required by the
Independent Consultants. 

(d) Deliver to Lender promptly after
its receipt thereof each Annual Operating Budget under the O&M Agreement
(the “Annual Operating Budget”). 

(e) Deliver to Lender all such
information (including the name and address of each Borrower Affiliate Entity)
requested by Lender that is necessary for Lender to identify any Borrower
Affiliate Entity in accordance with the requirements of the Patriot Act
(including the “know your customer” and similar regulations thereunder). 

5.6 Term Loan. Keep Lender apprised on a timely basis
regarding any term loan arrangements for the Project or financing arrangements
for Phase II, including any refinancing or take-out financing of the
Construction Loan, and enter into an Approved Term Loan no later than January
26, 2012; and cause any holder of any security interest in Borrower’s assets
(including the Expanded Project) or any other secured creditor of Borrower,
including any successor to Construction Lender’s security interest in Project
assets and any Approved Lender, to enter into an intercreditor agreement in form
and substance substantially similar to the Intercreditor Agreement and otherwise
satisfactory to Lender. Upon the execution of an Approved Term Loan in
accordance with the provisions hereof, Lender shall release its interests under
the Member Pledge Agreement in favor of the Approved Lender of such Approved
Term Loan.

5.7 Cooperation. Perform, upon the reasonable request of
Lender, such reasonable acts as may be necessary or advisable to comply with the
terms of this Agreement and the other Financing Documents 

5.8 Existence, Conduct of Business, Properties, Etc.
Except as otherwise expressly permitted under this Agreement (a) maintain and
preserve its existence as a Delaware limited liability company and all material
rights, privileges and franchises necessary or desirable in the normal conduct
of its business; (b) perform (to the extent not excused by force majeure events
or the non-performance of the other party) all of its contractual obligations
under the Operative Documents and all other agreements and contracts by which it
is bound, maintain all necessary Permits and licenses, including all Applicable
Permits, with respect to its business and the Project; (c) at or before the time that any Permit becomes
an Applicable Permit, obtain such Permit; and (d) engage only in the business
contemplated by the Operative Documents, including the development of Phase II. 

37 

5.9 Obligations. Pay all obligations, howsoever arising,
as and when due and payable, including Taxes and Tax claims, subject to the
provisions of Section 5.16, except (a) such as may be contested in good
faith or as to which a bona fide dispute may exist, provided that
Lender is satisfied in its reasonable discretion that non-payment of such
obligation pending the resolution of such contest or dispute would not
reasonably be expected to result in a Material Adverse Effect, and (b)
Borrower’s trade payables which shall be paid in the ordinary course of
business. 

5.10 Separateness.

(a) Act, and cause Holdings, Idaho
Sponsor and Sponsor to act, solely in its name and through its duly Responsible
Officers, managers or agents in the conduct of its businesses. 

(b) Conduct, and cause Holdings, Idaho
Sponsor and Sponsor to conduct, its business solely in its own name, in a manner
not misleading to other Persons as to its identity. 

(c) Provide, and cause Holdings, Idaho
Sponsor and Sponsor to provide, for the payment of its own operating expenses
and liabilities from its own funds (and not from the funds of any Affiliate,
except in the case where such funds were contributed as equity or as debt by
such Affiliate in a manner permitted under the Financing Documents). 

(d) Obtain, and cause Holdings, Idaho
Sponsor and Sponsor to obtain, proper authorization from member(s), director(s)
and manager(s), as required by its Organizational Documents for all of its
limited liability company actions. 

(e) Comply, and cause Holdings, Idaho
Sponsor and Sponsor to comply, with the terms of its Organizational Documents.

5.11 Books, Records, Access. Maintain adequate books,
accounts and records with respect to itself and the Project and prepare all
financial statements required hereunder in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction thereof, and permit employees or agents of Lender at any reasonable
times and upon reasonable prior notice to inspect all of its properties,
including the Site (subject to compliance with the Lease) to examine or audit
all of its books, accounts and records and make copies and memoranda thereof. In
addition to the visitation rights granted pursuant to this Section 5.11,
permit the Independent Engineer and Geothermal Consultant such access to the
Project as may be reasonably requested by the Independent Engineer or the
Geothermal Consultant in their efforts to fulfill their obligations under this
Agreement. 

38 

5.12 Energy Regulation. Take or cause to be taken all
necessary or appropriate actions so that Borrower will be in compliance with the
requirements of the FPA as amended by PURPA and PUHCA and FERC’s regulations
thereunder. 

5.13 Operation of Project and Annual Budget. 

(a) Keep and operate the Project, or
cause the same to be kept and operated, in good operating condition consistent
with Prudent Utility Practices, all Applicable Permits and all Legal
Requirements and all applicable requirements of the Operative Documents, and
make or cause to be made all repairs (structural and non-structural,
extraordinary or ordinary) necessary to keep and operate the Project in such
condition. Borrower shall from time to time consider such reasonable
recommendations of the Independent Engineer in connection with the operation of
the Project. 

(b) Replace or consent to the
replacement of Operator, to the extent provided under the O&M Agreement, if
Operator is not operating the Project in accordance in all material respects
with the provisions hereof or O&M Agreement. 

5.14 Preservation of Rights; Further Assurances. 

(a) Perform and observe all of its
covenants and obligations contained in each Project Document and preserve,
protect and defend the material rights of Borrower under each and every Project
Document, including, if appropriate, prosecution of suits to enforce any
material right of Borrower thereunder and enforcement of any material claims
with respect thereto. 

(b) From time to time as reasonably
requested by Lender, execute, acknowledge, record, register, deliver and/or file
all such notices, statements, instruments, agreements, certificates, opinions,
and other documents relating to the Loans and other Obligations stating the
interest and charges then due and any known defaults, and take such other steps
as may be necessary or advisable to render fully valid and enforceable under all
applicable laws the rights, Liens (including the creation, perfection, and
maintenance of perfection thereof) and priorities of Lender with respect to all
Collateral and other security from time to time furnished under this Agreement
and the other Financing Documents or intended to be so furnished, in each case
in such form and at such times as shall be reasonably satisfactory to Lender,
and pay all reasonable fees and expenses (including attorneys’ fees) incident to
compliance with this Section. Borrower shall fully cooperate with Lender and
perform all additional acts reasonably requested by Lender to effect the
purposes of the foregoing. 

5.15 Construction. Make or cause to be made all
contracts and do or cause to be done all things necessary for the construction,
improvement and equipping of the Project and the Placed in Service Date to occur
on or before the Placed in Service Deadline, and cause the Project to be
constructed, improved, equipped and to achieve Substantial Completion and Final
Completion substantially in accordance in all material respects with the Plans
and Specifications, the Construction Contract, the Power Purchase Agreement, the
Interconnection Agreement, the Lease and the Project Budget and the Project Schedule and not
exceeding the disbursements as contemplated thereby.

39 

5.16 Taxes, Other Government Charges and Utility
Charges. Pay, or cause to be paid, as and when due and prior to delinquency,
all Taxes, assessments and governmental charges of any kind that may at any time
be lawfully assessed or levied against or with respect to Borrower or the
Project, all utility and other charges incurred in the construction, operation,
maintenance, use, occupancy and upkeep of the Project, and all assessments and
charges lawfully made by any Governmental Authority for public improvements that
may be secured by a Lien on the properties of Borrower or the Project. However,
Borrower may contest in good faith any such Taxes, assessments and other charges
and, in such event, may permit the Taxes, assessments or other charges so
contested to remain unpaid during any period, including appeals, when Borrower
is in good faith contesting the same, so long as (a) reserves reasonably
satisfactory to Lender have been established in an amount sufficient to pay any
such Taxes, assessments or other charges, accrued interest thereon and potential
penalties or other costs relating thereto, or other adequate provision for the
payment thereof shall have been made; (b) enforcement of the contested Tax,
assessment or other charge is effectively stayed for the entire duration of such
contest; and (c) any Tax, assessment or other charge determined to be due,
together with any interest or penalties thereon, is paid when due after
resolution of such contest. 

5.17 Compliance With Laws, Instruments, Etc. At its
expense, within such time as may be required by Legal Requirements (a) comply,
or cause compliance, in all material respects, with all Legal Requirements,
whether or not compliance therewith shall require structural changes in the
Project or any part thereof or require major changes in operational practices or
interfere with the use and enjoyment of the Project or any part thereof except
for such noncompliance which would not reasonably be expected to have a Material
Adverse Effect; and (b) procure, maintain and comply, or cause to be procured,
maintained and complied with, in all material respects, all Permits required for
any use of the Project or any part thereof, then being made or contemplated by
the Operative Documents except for such noncompliance which would not reasonably
be expected to have a Material Adverse Effect, except that Borrower may, at its
expense, contest by appropriate proceedings conducted in good faith the validity
or application of any such Legal Requirements provided that (i) neither Lender,
nor Borrower would be subject to any criminal liability for failure to comply
therewith; and (ii) all proceedings to enforce such Legal Requirements against
Lender, Borrower or the Project or any part of any of them, shall have been duly
and effectively stayed during the entire pendency of such contest. 

5.18 Maintenance of Insurance. Without cost to Lender,
(i) as soon as practicable, and in any case on or before the Placed in Service
Date, maintain or caused to be maintained on its behalf in effect at all times,
insurance for the Project, in an amount not less than its full replacement value
of the Project, in form and substance satisfactory to the Lender, and (ii) at
all times, maintain or cause to be maintained on its behalf in effect the types
of insurance required pursuant to the Insurance Requirements, in the amount and
on the terms and conditions specified therein, in each case with insurance
companies rated “A” or better, with a minimum size rating of “VIII” by Best’s
Insurance Guide and Key Ratings (or an equivalent rating by another nationally
recognized insurance rating agency of similar standing if Best’s Insurance Guide
and Key Ratings shall no longer be published). 

40 

5.19 Warranty of Title. Maintain (a) a legal and valid
interest in and to the leasehold or easement estate (as the case may be) to the
Site pursuant to the Real Property Documents, subject only to Permitted Liens,
and (b) good and valid title to all of its other respective properties and
assets, other than properties and assets disposed of in the ordinary course of
developing and operating the Project or in accordance with Section
6.4.

5.20 Event of Eminent Domain. If an Event of Eminent
Domain shall be threatened or occur with respect to any Collateral, (a) promptly
upon discovery or receipt of notice of any such threat or occurrence provide
written notice of either to Lender; (b) diligently pursue all its rights to
compensation against the relevant Governmental Authority in respect of such
Event of Eminent Domain; and (c) not, without the written consent of Lender,
which consent shall not be unreasonably withheld, compromise or settle any claim
against such Governmental Authority. Borrower consents to the participation of
Lender in any proceedings resulting from an Event of Eminent Domain, and
Borrower shall from time to time deliver to Lender all documents and instruments
reasonably requested by it to permit such participation. 

5.21 Indemnification. 

(a) Without duplication of Borrower’s
obligations under Sections 2.4(d), 2.5(c) or 2.5(d) (and
excluding any items or events specifically excluded from Borrower’s obligations
thereunder), indemnify, defend and hold harmless Lender and in its capacities as
such, its respective officers, directors, shareholders, controlling persons,
employees, agents and servants (collectively, the “Indemnitees”) from and
against and reimburse the Indemnitees for: 

(i) any and all claims, obligations,
liabilities, losses, damages, injuries (to person, property, or natural
resources), penalties, stamp or other similar taxes, actions, suits, judgments,
costs and expenses (including reasonable attorney’s fees of a single counsel,
plus a single local counsel if required, and additional counsel solely to the
extent the Indemnitees have inconsistent or conflicting defenses or the
circumstances giving rise to such indemnification would create an ethical
conflict for such single counsel) of whatever kind or nature, whether or not
well founded, meritorious or unmeritorious, demanded, asserted or claimed
against any such Indemnitee (collectively, “Claims”) in any way relating
to, or arising out of or in connection with this Agreement, the other Operative
Documents, or the Project; 

(ii) any and all Claims arising in
connection with the release or presence of any Hazardous Substances at the
Project, whether foreseeable or unforeseeable, including all costs of removal
and disposal of such Hazardous Substances, all reasonable costs required by
Governmental Authorities or under any Governmental Rule to be incurred in (x)
determining whether the Project is in compliance and (y) causing the Project to
be in compliance, with all applicable Legal Requirements, all reasonable costs
associated with claims for damages to persons or property, and reasonable
attorneys’ and consultants’ fees and court costs; and 

41 

(iii) any and all Claims in any way
relating to, or arising out of or in connection with any claims, suits,
liabilities against any Borrower Affiliate Entity or any of their Affiliates.

(b) The foregoing indemnities shall not
apply with respect to an Indemnitee, to the extent arising solely as a result of
the gross negligence or willful misconduct of such Indemnitee as determined by a
final non-appealable judgment of a court of competent jurisdiction, but shall
continue to apply to other Indemnitees. 

(c) The provisions of this Section
5.21 shall survive foreclosure of the Collateral Documents and satisfaction
or discharge of the Obligations, and shall be in addition to any other rights
and remedies of Lender. 

(d) Any amounts payable by Borrower
pursuant to this Section 5.21 shall be payable on demand and shall bear
interest at the Default Rate. 

(e) Any and all Claims relating to or
arising from any Recapture Event.

5.22 Certification of Interests. Deliver or cause to be
delivered to Lender any and all certificates representing ownership interest in
Borrower within five (5) days after certification of such ownership
interest.

5.23 Security. Cause security or any other amounts
required under any Material Project Document, including, without limitation,
under the Interconnection Agreement and the Power Purchase Agreement, to be and
remain posted and paid at such times, in such amounts and for the benefit of
such Persons as is required by the Material Project Documents. 

5.24 Cash Grant Application. As soon as practicable
following the Placed in Service Date, and in any case by the earlier of: (a)
thirty (30) days after the Placed in Service Date, and (b) the Placed in
Service Deadline, (i) prepare and file, or cause to be filed, a Cash Grant
Application for the Cash Grant for the Project with the United States Treasury
Department in a manner consistent with the Cash Grant Guidance and applicable
law and otherwise true, correct and complete in all material respects; (ii)
provide all supporting documentation required to be filed with such Cash Grant
Application or subsequently thereto in accordance with the Cash Grant Guidance;
(iii) promptly respond to all requests for further information with respect to
such Cash Grant Application; (iv) promptly deliver to Lender an executed copy of
the Cash Grant Application prepared in accordance with this Section 5.24 ,
including all attachments and documentation required to be filed with such
application, which application and accompanying documentation shall satisfy all
relevant requirements of the Cash Grant Guidance and shall have been provided
and approved by Lender (such approval not to be unreasonably withheld or
delayed) prior to its filing; and (v) make other related filings deemed
necessary or advisable with regard to the Cash Grant, in each case, in
consultation with, and in a manner reasonably acceptable to, Lender.
Notwithstanding anything to the contrary set forth herein, prior to such filing
of a Cash Grant Application, Borrower shall have (x) delivered promptly upon the
completion or receipt thereof, as applicable, but in no event later than the
Placed in Service Deadline, a draft of such Cash Grant Application together with
all supporting documents, including the commissioning report, design plans and final
engineering design documents stamped by a licensed professional engineer, and
the related Cost Segregation Report for the Project, and (y) obtained the prior
written consent of Lender for the filing of such Cash Grant Application, such
consent not to be unreasonably withheld, delayed or conditioned. 

42 

5.25 Cash Grant Notice of Assignment. Together with the
filing of the Cash Grant Application pursuant to Section 5.24 above, (a)
prepare and file, or cause to be filed, the Cash Grant Notice of Assignment with
the United States Treasury Department in a manner consistent with the Cash Grant
Guidance, FACA, and any other applicable law and otherwise true, correct and
complete in all material respects; (b) provide all supporting documentation
required to be filed with such Cash Grant Notice of Assignment or subsequently
thereto in accordance with the Cash Grant Guidance; (c) promptly respond to all
requests for further information with respect to such Cash Grant Notice of
Assignment; (d) promptly deliver to Lender an executed copy of the Cash Grant
Notice of Assignment prepared in accordance with this Section 5.25,
including all attachments and documentation required to be filed with such
notice, which notice and accompanying documentation shall satisfy all relevant
requirements of the Cash Grant Guidance and shall have been provided and
approved by Lender (such approval not to be unreasonably withheld) prior to its
filing, and (e) make other related filings deemed necessary or advisable with
regard to the Cash Grant, in each case, in consultation with, and in a manner
reasonably acceptable to, Lender.

5.26 Cash Grant Guidance; Cash Grant Proceeds. (a)
Comply with the Cash Grant Guidance, including all annual filing requirements
and the delivery of all reports, certificates and other such documents as
required thereunder. (b) Cause to be deposited all Cash Grant Proceeds directly
into the Lender Account for immediate application toward repayment of the Loans
pursuant to Section 2.2(f)(iv) hereof. 

5.27 Use of Insurance Proceeds and Awards. In the event
there occurs any damage to or destruction of all or any portion of the Project,
promptly commence and proceed diligently with the work of repair, reconstruction
and restoration of the Project, and apply insurance proceeds and awards paid in
connection with such casualty solely and exclusively to costs incurred in
connection with such repair, reconstruction and restoration.

5.28 Pari Passu. Ensure that, at all times, all
liabilities of Borrower under this Agreement shall be pari passu with all
liabilities of Borrower under the Construction Loan Agreement. 

5.29 Insolvent. If any third party under any material
Project Documents becomes insolvent, enter into a replacement contract for such
Project Document in form and substance reasonably satisfactory to Lender and
with a replacement contractor reasonably satisfactory with Lender within
forty-five (45) days after the occurrence of such insolvency. 

5.30 Construction Loan Agreement and Construction
Contract. Repay the Construction Lender: (a) all amounts owed under the
Construction Loan Agreement on or before the maturity date of the Construction
Loan, as may be amended from time to time in accordance with the Intercreditor
Agreement, and (b) all amounts owed under the Construction Contract as and when
required thereunder. 

43 

5.31 Consents and Estoppels. Borrower shall use
commercially reasonable efforts to obtain: (i) a consent regarding the Pledge
Agreements from the Power Purchaser, and (ii) an estoppel from the
Interconnector, each in form and substance reasonably satisfactory to Lender, by
no later than December 31, 2011. 

5.32 Deposit Account Control Agreement. Promptly upon
receipt, and in any event within twenty (20) days after the Financial Closing
Date, Borrower shall deliver to Lender the executed Deposit Account Control
Agreement, in form and substance satisfactory to Lender. 

ARTICLE 6 
NEGATIVE COVENANTS OF BORROWER 

Borrower covenants and agrees that until the Obligations have
been repaid in full in cash (other than unasserted contingent indemnity
obligations) and the Loan Commitment has been terminated, it will not, without
the prior written consent of Lender: 

6.1 Contingent Liabilities. Except as provided in this
Agreement, become liable as a surety, guarantor, accommodation endorser or
otherwise, for or upon the obligation of any other Person or otherwise create,
incur, assume or suffer to exist any contingent obligation exceeding in the
aggregate One Hundred Thousand Dollars ($100,000); provided,
however, that this Section 6.1 shall not be deemed to prohibit (a)
the acquisition of goods, supplies or merchandise in the normal course of
developing the Expanded Project and operating the Expanded Project on normal
trade credit; (b) the endorsement of negotiable instruments received in the
normal course of developing the Project and operating the Project; (c)
contingent liabilities required under any Applicable Permit or Operative
Document; or (d) contingent obligations under or in respect of performance
bonds, bid bonds, appeal bonds, surety bonds, financial assurances, including
security required under the Power Purchase Agreement, and completion guaranties,
indemnification obligations, obligations to pay insurance premiums, take or pay
obligations and similar obligations in each case incurred in the ordinary course
of business and not in connection with Debt for borrowed money. 

6.2 Limitations on Liens. Create, assume or suffer to
exist any Lien on any of the Collateral other than the Liens under this
Agreement and the other Financing Documents.

6.3 Indebtedness. Incur, create, assume or permit to
exist any Debt except (a) the Loans and the other Obligations; (b) the
Construction Loan as permitted under the Intercreditor Agreement, (c) the
Approved Other Project Financings, (d) up to Two Hundred Thousand Dollars
($200,000) of trade or other similar indebtedness incurred in the ordinary
course of developing the Expanded Project and operating the Expanded Project and
not more than ninety (90) days past due; (e) up to an aggregate of One Hundred
Thousand Dollars ($100,000) of Debt incurred in the ordinary course of
developing and operating the Project associated with purchase money Permitted
Liens; and (f) contingent liabilities, to the extent otherwise constituting
Debt, permitted pursuant to Section 6.1 of this Agreement.

6.4 Sale or Lease of Assets. Sell, lease, assign,
transfer or otherwise dispose of assets, whether now owned or hereafter acquired
except (a) in the ordinary course of developing the Expanded Project and
operating the Project as contemplated by the Operative Documents, (b) obsolete, worn out or replaced personal property
not used or useful in the development of the Expanded Project, and in each case
at fair market value, (c) as permitted under the Construction Loan Agreement as
in effect as of the date hereof, and (c) the liquidation or use of Permitted
Investments.  

44 

6.5 Changes. Change the nature of its business or expand
its business beyond the ownership of the Expanded Project and activities
reasonably related thereto.

6.6 Distributions. Cause all distributions of Borrower,
after the payment of prudent operating costs, debt under the Construction Loan
Agreement or any Approved Other Project Financing, and the funding of prudent
reserves required under the Construction Loan Agreement or any Approved Other
Project Financing, to be deposited into the Blocked Account, to be held for the
benefit of Lender in accordance with the terms and provisions of the Deposit
Account Control Agreement.

6.7 Investments. Make or permit to remain outstanding
any advances or loans or extensions of credit to, or purchase or own any stock,
bonds, notes, debentures or other securities of any Person, except Permitted
Investments. 

6.8 Transactions With Affiliates. Except for the Sponsor
Cash Grant Shortfall Guaranty and for transactions related to Phase II, directly
or indirectly enter into any transaction or series of transactions with or for
the benefit of an Affiliate without the prior written approval of Lender, which
consent (prior to the occurrence and continuation of an Event of Default) may
not be unreasonably withheld. 

6.9 Regulations. Directly or indirectly apply any part
of the proceeds of any Loan or Project Revenues to the purchasing or carrying of
any margin stock within the meaning of Regulations T, U or X of the Federal
Reserve Board, or any regulations, interpretations or rulings thereunder. 

6.10 Loan Proceeds; Project Revenues. Use, pay,
transfer, distribute or dispose of any Loan proceeds in any manner or for any
purposes in any manner or for any purposes, in each case, except as provided for
herein, or apply any Project Revenues in any manner except as permitted under
the Construction Loan Agreement or any Approved Other Project Financing. 

6.11 Partnerships. Execute a binding agreement to become
a general or limited partner in any partnership, or a member in any limited
liability company, or a joint venturer in any joint venture or acquire property,
create and hold stock or other equity interests in any Person or form or acquire
any subsidiaries. 

6.12 Dissolution. Liquidate, wind-up or dissolve, or
sell or lease or otherwise transfer or dispose of all or any substantial part of
its property, assets or business or combine, merge or consolidate with or into
any other entity, or change its legal form, or implement any material
acquisition or purchase of assets in connection with the development of the
Expanded Project from any Person other than pursuant to the Project Documents.

45 

6.13 Additional Project Documents. Enter into or become
a party to any Additional Project Document, except (a) with the prior written
consent of Lender (not to be unreasonably withheld or delayed), and (b) in the
name of Borrower. 

6.14 Amendments; Change Orders; Completion.

(a) Cause, consent to, or permit, any
termination, material amendment, material modification, variance or waiver of
timely compliance with any terms or conditions of (i) the Borrower LLC
Agreement, (ii) the Holdings LLC Agreement, (iii) the Sponsor Cash Grant
Shortfall Guaranty, or (iv) any Material Project Document. This clause (a) shall
not be deemed to govern change orders to the Construction Contract or the
O&M Agreement. Such change orders shall be governed by subsections (b) and
(d) below.

(b) Unless compliance hereof is waived
in writing by Lender, direct or consent to any material change order under the
Construction Contract. For purposes of this Section 6.14(b), change
orders in an aggregate amount less than $250,000 per annum (and that would not
cause the Place in Service Date to occur after the Placed in Service Deadline)
shall not be deemed material. 

(c) Declare “Substantial Completion”
(as defined in the Construction Contract) without the prior written approval of
Lender (acting in consultation with the Independent Engineer), such approval not
to be unreasonably withheld or delayed. 

(d) Unless compliance hereof is waived
in writing by Lender, direct or consent to any change order under the O&M
Agreement if such change order: 

(i) will increase the Annual Operating
Budget for the Project by more than 5% per change order or by more than 20% per
annum in the aggregate; 

(ii) would reasonably be anticipated
to require an amendment or change order under any Construction Contract which
could delay Substantial Completion beyond the Maturity Date; 

(iii) may permit or result in any
material adverse modification or materially impair the enforceability of any
warranty under any Construction Contract, the Water Contract, any subcontract or
the O&M Agreement; 

(iv) is not permitted by or is
otherwise inconsistent with any Material Project Document or would materially
diminish any obligation of any Major Project Participant or materially increase
any obligation of Borrower thereunder; 

(v) may permit the revocation or
material modification of any material Applicable Permit; or 

46 

(vi) would reasonably be expected to
cause the Project not to comply or lessen the Project’s ability to comply with
Legal Requirements in any manner that would reasonably be expected to result in
a Material Adverse Effect. 

(e) Lender shall use its best efforts
to respond to each change order request or request for waiver of compliance with
clause (d) above within ten (10) days after it and the Independent Engineer
receives such request. However, the failure by Lender to respond to any such
change order or request within thirty (30) days after receipt of written notice
thereof shall not be deemed an approval of such change order or request. 

6.15 Compliance With Operative Documents. Do or permit
(to the extent within its control and permitted by the Operative Documents) to
be done any act under the Operative Documents, or omit or refrain (to the extent
within its control and permitted by the Operative Documents) from any act under
the Operative Documents, where such act done or permitted to be done, or such
omission of or refraining from action, would reasonably be expected to have a
Material Adverse Effect. 

6.16 Name and Location; Fiscal Year. 

(a) Change its name or its jurisdiction
of organization without written notice to Lender at least thirty (30) days prior
to such change, or change its fiscal year without the prior written consent of
Lender such consent not to be unreasonably withheld. 

(b) Change the location of its chief
executive office, principal place of business or federal identification number
without written notice to Lender within thirty (30) days after such change.

6.17 Use of Project Site. Subject to the rights retained
by the Lessor pursuant to the Lease, (a) use or permit to be used the Site for
any purpose other than for the construction of the Project and operation and
maintenance of the Project as contemplated by the Operative Documents, and
development, drilling and construction of Phase II, without the prior written
consent of Lender, or (b) locate any portion of the Project on a site other than
the Site, without the prior written consent of Lender, not to be unreasonably
withheld. 

6.18 Assignment. Assign its rights hereunder or under
any of the Operative Documents to any Person except as permitted by Section
6.19, or consent to the assignment by any Major Project Participant of its
obligations under any Material Project Document to which it is a party. 

6.19 Transfer of Interests. Cause, make, suffer, permit
or consent to any creation, sale, assignment or transfer of any ownership
interest or other interest (direct or indirect) in Borrower except for Permitted
Transfers or as otherwise permitted by Lender.

6.20 Abandonment of Project. At any time willfully and
voluntarily abandon and suspend construction or operation of the Project for a
period of more than thirty (30) consecutive days for any reason (other than
force majeure), provided that none of (i) scheduled maintenance of the
Project, (ii) repairs to the Project, whether or not scheduled, or (iii) a
forced or scheduled outage of the Project shall constitute abandonment
so long as Borrower is diligently attempting to end such suspension.

47 

6.21 Hazardous Substances. Release, emit or discharge
into the environment any Hazardous Substances in violation of any Environmental
Laws, Legal Requirements or Applicable Permits or allow any Hazardous Substance
to impact or be present on, in, under or above the Site or Improvements in a
manner that would reasonably be expected to have a Material Adverse Effect.

6.22 ERISA. If Section 4.5(a) is true, then
establish, maintain, contribute to or become obligated to contribute to any
ERISA Plan or suffer or permit any member of the Controlled Group to do so; and
if Section 4.5(a) is not true, then, (a) permit any Termination Event to
occur, which could reasonably be expected to result in Borrower incurring a
liability in excess of Fifty Thousand Dollars ($50,000), (b) engage in a
“prohibited transaction,” as defined in Section 4975 of the Code or as described
in Section 406 of ERISA, that is not exempt under Section 4975 of the Code and
Section 408 of ERISA and which could reasonably be expected to result in
Borrower incurring a liability in excess of Fifty Thousand Dollars ($50,000),
(c) fail to meet the minimum funding requirements of Sections 412 and 430 of the
Code with respect to any ERISA Plan, (d) fail to pay any required contribution
to a Multiemployer Plan, or (e) incur a partial or complete withdrawal (as
described in Section 4203 or 4205 of ERISA) from a Multiemployer Plan and which
could reasonably be expected to result in Borrower incurring a liability in
excess of Fifty Thousand Dollars ($50,000). 

6.24 Regulation of Parties. Take or cause to be taken
any actions that would reasonably be expected to result in (a) the
representations in Sections 4.9 or 4.10 becoming untrue as a
result of such action or omission, or (b) Lender or any Affiliate (as that term
is defined in Section 1262(1) of PUHCA) of any of them, solely as a result of
Borrower’s actions relating to the ownership, leasing or operation of the
Project, the sale of electricity therefrom or the entering into any Operative
Document or any transaction contemplated hereby or thereby becoming subject to
regulation under PUHCA, the FPA or state laws and regulations respecting the
rates or the financial or organizational regulation of electric utilities. 

6.25 Cash Grant Guidance. Take any action that would
cause, or permit any transfer of any direct or indirect ownership interests in
Borrower that would cause, the Cash Grant applicable to the Project to be
subject to a Recapture Event (or other disallowance claim), including issuance,
sale, assignment or transfer of any direct or indirect ownership interest in
Borrower to any Disqualified Person. 

6.26 Tax Credits. Claim, or permit or cause to be
claimed, any federal tax credit under Section 45 or Section 48 of the Code with
respect to any portion of the Project constituting specified energy property for
purposes of the Cash Grant or any property described in the Cash Grant
Application for the Project. 

6.27 Fiscal Year. Change its fiscal year to end on a day
other than December 31. 

48 

ARTICLE 7 
EVENTS OF DEFAULT; REMEDIES 

Events of Default 

The occurrence of any of the following events shall constitute
an event of default (individually, an “Event of Default”, and
collectively, “Events of Default”) hereunder: 

7.1 Failure to Make Payments. 

(a) Borrower shall fail to pay, in
accordance with the terms of this Agreement, (i) any principal on any Loan on
the date that such sum is due; or (ii) any amount in respect of interest on any
Loan within three (3) days after the date that such sum is due; or (iii) any
other cost, charge or other sum due under this Agreement or any other Financing
Document within ten (10) days after the date that such sum is due. 

(b) Either Idaho Sponsor or Sponsor
shall default in the payment of its obligations under the Sponsor Cash Grant
Shortfall Guaranty. 

(c) Any of the other Borrower Affiliate
Entities shall default in the performance of its obligations under any Financing
Document to which it is a party (subject to such cure periods, if any, as shall
be set forth therein). 

7.2 Judgments. A final judgment or judgments shall be
entered against Borrower in the aggregate amount of One Hundred Thousand Dollars
($100,000) or more (other than (a) a judgment which is fully covered by
insurance or satisfied in full or discharged within thirty (30) days after its
entry, or (b) a judgment, the execution of which is effectively stayed within
thirty (30) days after its entry but only for thirty (30) days after the date on
which such stay is terminated or expires) or which would reasonably be expected
to materially impair or inhibit the construction of the Project or Borrower’s
use of the Project for the purpose for which the Project was intended. 

7.3 Misstatements. Any financial statement,
representation, warranty or certificate made or prepared by, under the control
of or on behalf of any Borrower Affiliate Entity and furnished to Lender
pursuant to this Agreement or any other Financing Document shall contain any
statement of fact that is untrue or misleading in any material respect or shall
fail to state a material fact necessary to make the statements therein not
misleading in any material respect as of the date made; provided that no
Event of Default shall occur pursuant hereto, if within fifteen (15) days of the
date on which Borrower receives notice (from any source) that such untrue or
misleading statement has occurred, Borrower shall eliminate or otherwise cure to
the reasonable satisfaction of Lender any such material and adverse effects
relating to such untrue or misleading statement. 

7.4 Bankruptcy; Insolvency. Any of the following events
shall have occurred (each, a “Bankruptcy Event”): 

49 

(a) Any of the Major Project
Participants shall institute a voluntary case seeking liquidation or
reorganization under the Bankruptcy Law (or any successor statute), or shall
consent to the institution of an involuntary case thereunder against it; 

(b) Any of the Major Project
Participants shall file a petition, answer or consent or shall otherwise
institute any similar proceeding under any other applicable federal, state or
other applicable law, or shall consent thereto; 

(c) Any of the Major Project
Participants shall apply for, or by consent or acquiescence there shall be an
appointment of, a receiver, liquidator, sequestrator, trustee or other officer
with similar powers; 

(d) Any of the Major Project
Participants shall make an assignment for the benefit of creditors; or any of
the Major Project Participants shall admit in writing its inability to pay its
debts generally as they become due; or 

(e) If an involuntary case shall be
commenced seeking the liquidation or reorganization of any of the Major Project
Participants under the Bankruptcy Law (or any successor statute) or any similar
proceeding shall be commenced against any of the Major Project Participants
under any other applicable federal, state or other applicable law, and: 

(i) the petition commencing the
involuntary case is not timely controverted; 

(ii) the petition commencing the
involuntary case is not dismissed within sixty (60) days of its filing; 

(iii) an interim trustee is appointed
to take possession of all or a portion of the property, and/or to operate all or
any part of the business of any of the Major Project Participants and such
appointment is not vacated within sixty (60) days; 

(iv) an order for relief shall have
been issued or entered therein; 

(v) a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee or other officer having similar powers of any
of the Major Project Participants or of all or a part of their property, shall
have been entered; or 

(vi) any other similar relief shall be
granted against any of the Major Project Participants under any applicable
federal, state or other law; 

provided, however, that except with regard to a
Bankruptcy Event of a Borrower Affiliate Entity or the Interconnector, a
Bankruptcy Event shall not result in a Event of Default under this Section
7.4 if Borrower obtains a Replacement Obligor for the affected party within
forty-five (45) days of such Bankruptcy Event and, in the reasonable judgment of
Lender, such event has not had, does not have prior to and would not reasonably be
expected to have after so obtaining such Replacement Obligor, a Material Adverse
Effect. 

50 

7.5 Cross Default. There shall occur and be continuing
an event of default under the Construction Loan Agreement or any Construction
Loan Document or under any Approved Other Project Financing, or Borrower or
Holdings shall default for a period beyond any applicable grace period (i) in
the payment of any principal, interest or other amount due under any other
agreement (other than the Financing Documents) involving the borrowing of money
or the advance of credit and the outstanding amount or amounts payable under all
such agreements equals or exceeds One Hundred Thousand Dollars ($100,000) in the
aggregate, or (ii) in the payment of any amount or performance of any obligation
due under any other guaranty or other agreement (other than the Financing
Documents) if in either case, the indebtedness evidenced thereby equals or
exceeds One Hundred Thousand Dollars ($100,000).

7.6 ERISA. With respect to any ERISA Plan, (a) any
Termination Event shall have occurred and, within forty-five (45) days after the
reporting of such Termination Event to Lender by Borrower (or Lender otherwise
obtaining knowledge of such event) and the furnishing of such information as
Lender may reasonably request with respect thereto, Lender shall have notified
Borrower in writing that, on the basis of such Termination Event, an Event of
Default exists hereunder; (b) a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that an ERISA Plan must
be terminated or have a trustee appointed to administer it; (c) the PBGC shall
institute proceedings to terminate any ERISA Plan or against Borrower to enforce
Section 515 of ERISA; (d) Borrower shall have engaged in a transaction which is
prohibited under Section 4975 of the Code or Section 406 of ERISA; (e) Borrower
shall fail to pay when due an amount which it shall have become liable to pay to
the PBGC, any ERISA Plan or a trust established under Title IV of ERISA; or (f)
a complete or partial withdrawal by Borrower or any member of the Controlled
Group from any Multiemployer Plan shall have occurred, or any Multiemployer Plan
shall enter reorganization status, become insolvent, or terminate (or notify
Borrower or any member of the Controlled Group of its intent to terminate) under
Section 4041A of ERISA and, within forty-five (45) days after the reporting of
any such occurrence to Lender by Borrower (or Lender otherwise obtaining
knowledge of such event) and the furnishing of such information as Lender may
reasonably request with respect thereto, Lender shall have notified Borrower in
writing that Lender has made a determination that, on the basis of such
occurrence, an Event of Default exists hereunder; provided that the
occurrence of an event listed in clauses (a) through (d) hereof could reasonably
be expected to result in the imposition on Borrower of liability in excess of
Fifty Thousand Dollar ($50,000) or, with respect to clause (e), the imposition
on Borrower of an annual liability in excess of Fifty Thousand Dollar ($50,000).

7.7 Breach of Project Documents. 

(a) Borrower. Borrower shall be
in breach of any material obligation, or a material default by Borrower shall
have occurred and be continuing, under a Project Document and such breach or
default shall not be remediable or, if remediable, shall continue unremedied for
a period equal to the lesser of the cure period provided under such Project
Document or thirty (30) days, if (i) such breach cannot be cured within such
period, (ii) such breach is susceptible of cure within forty-five (45) days,
(iii) Borrower is proceeding with diligence and in good faith to cure such
breach, (iv) the existence of such breach has not resulted in, and would not
after considering the nature of the cure be reasonably expected to give rise to,
a termination by the counterparty to the Project Document which is subject to
breach or to otherwise have a Material Adverse Effect, and (v) Lender shall have
received an officer’s certificate signed by a Responsible Officer of Borrower to
the effect of clauses (i), (ii), (iii) and (iv) above and stating what action
Borrower is taking to cure such breach, then, so long as no Material Adverse
Effect occurs, such initial cure period specified above shall be extended to
such date not to exceed forty-five (45) days in the aggregate to the extent
necessary for Borrower (acting diligently) to cure such breach. 

51 

(b) Third Party. Construction
Lender or any Approved Lender, as the case may be, shall be in breach of any
material obligation under the Intercreditor Agreement (or subsequent
intercreditor agreement, in the case of an Approved Lender other than
Construction Lender), or a party (other than Borrower) shall be in breach of any
material obligation under, or a material default shall have occurred and be
continuing under, a Project Document (other than the Power Purchase Agreement
and the Lease), and such breach or default shall not be remediable or, if
remediable, shall continue unremedied for a period equal to the lesser of the
cure period provided under such agreement or thirty (30) days after Borrower
receives notice of such breach (unless waived by the appropriate party;
provided, that Borrower, prior to waiving any such material breach or
material default, shall have obtained the written consent of Lender) and such
breach or default has had or would reasonably be expected to have a Material
Adverse Effect; provided that, if (i) such breach cannot be cured within
such period, (ii) such breach is susceptible of cure within forty-five (45)
days, (iii) the breaching party is proceeding with diligence and in good faith
to cure such breach, and (iv) an extension of the time to cure would not
reasonably be expected to exacerbate an existing Material Adverse Effect or
cause any new Material Adverse Effect, then, so long as no Material Adverse
Effect occurs, such thirty (30) day cure period shall be extended to such date
not to exceed forty-five (45) days as shall be necessary for such third party
diligently to cure such breach. Notwithstanding the foregoing, no Event of
Default shall occur as a result of such breach under this clause (b) if (i)
Borrower obtains a Replacement Obligor for the affected third party within sixty
(60) days thereafter and (ii) such breach has not resulted in, and cannot
reasonably be expected to result in, prior to obtaining such Replacement
Obligor, a Material Adverse Effect. For purposes of the foregoing, any cure by
Lender on Borrower’s behalf with respect to a breach or default by Borrower
under a Project Document shall not be considered a remedy under this Agreement
for any such breach or default of such Project Document. 

(c) Termination. (i) The
Interconnection Agreement, the Construction Contract, the Lease or the Water
Contract shall for any reason cease to be valid and binding on the Persons
parties thereto, as the case may be, except upon fulfillment of such party’s
obligations thereunder, or any such Person pursues a right of termination under
the Interconnection Agreement, the Construction Contract, the Lease or the Water
Contract, as the case may be; or (ii) any provision in any other Project
Document shall for any reason cease to be valid and binding on any party thereto
except upon fulfillment of such party’s obligations thereunder (or any party to
a such Project Document pursues a right of termination) and, in the case of clause (ii), the
foregoing would be reasonably be expected to result in a Material Adverse
Effect.

52 

7.8 Breach of Terms of Agreement. 

(a) Borrower shall fail to perform or
observe any of the covenants set forth in Sections 5.1, 5.3(c),
5.8, 5.18, 5.19, 5.21, 5.24, 5.25,
5.26, or Article 6 (other than Section 6.16(b) hereof); 

(b) Borrower shall have failed to
pursue its rights and remedies under any Project Document with an Affiliate of
Borrower upon a breach by the applicable Affiliate of the terms thereof, and
such failure shall continue unremedied for a period of ten (10) Banking Days
after Borrower receives written notice thereof from Lender (provided that
Borrower shall, in the case of any failure by any Affiliate to pay liquidated
damages or warranty payments, seek from such Affiliate recovery of such
liquidated damages or warranty payments from, at a minimum, the date Lender
provides notice hereunder); or 

(c) Borrower or any other Borrower
Affiliate Entity shall fail to perform or observe any other covenant to be
performed or observed by it hereunder or under any Financing Document and not
otherwise specifically provided for elsewhere in this Article 7, and such
failure shall continue unremedied for a period of thirty (30) days after
Borrower becomes aware thereof or receives written notice thereof from Lender;
provided, however, that if such default is of a nature such that
it cannot reasonably be cured within such thirty (30) day period but is
susceptible to cure within a longer period not to exceed forty-five (45) days in
the aggregate, a Event of Default shall not result therefrom so long as (i)
Borrower has, promptly upon discovery thereof, given written notice to Lender of
such default (provided, that if any Event of Default is cured within any
applicable time period specified herein, or waived or temporarily waived by
Lender, the failure alone to give notice of such Event of Default as provided in
this sentence shall cease to be an Event of Default from and after such cure or
waiver), (ii) such Borrower Affiliate Entity as promptly as practicable
commences action reasonably designed to cure such default within such forty-five
(45) day extended cure period and continues diligently to pursue such action and
cures the applicable default within such forty-five (45) day period, and (iii)
Lender in its reasonable discretion shall have determined that such default
would not reasonably be expected to have a Material Adverse Effect. 

7.9 Placed in Service Date. The Placed in Service Date
and Substantial Completion shall not have occurred on or before January 31, 2011
(the “Placed in Service Deadline”); provided,
however, that upon the satisfaction of each of the following conditions
(as determined by Lender in its sole discretion), the “Placed in Service
Deadline” shall be extended to February 28, 2012: (a) the Placed in Service Date
shall not have occurred on or before January 31, 2011, (b) the Project shall not
have been materially damaged by flood, fire or other casualty, (c) there shall
not have occurred at any time following the Financial Closing Date any event,
occurrence, effect or circumstance of whatever nature that has, or could
reasonably be expected to have, a Material Adverse Effect, and (d) Borrower
shall have delivered to Lender a certificate from the Independent Engineer
certifying: (i) that the Placed in Service Date is expected to occur prior to February 28, 2012, (ii) that the Project will commence
operations and producing electrical energy for commercial sale in accordance
with Prudent Utility Practices and applicable laws no later than February 28,
2012, (iii) that there exists funds sufficient for the Borrower to achieve the
Placed in Service Date no later than February 28, 2012 and that the Construction
Contract supports such deadline, (v) that the completion of all work done to
date has been in accordance with the Construction Contract, and (vi) otherwise
in form and substance satisfactory to Lender, together with the Independent
Engineer’s report or reports attached thereto. 

53 

7.10 Material Adverse Effect. Any Borrower Affiliate
Entity shall become subject to any law or regulation that would materially
adversely affect the Project with respect to the generation or sale of
electricity under any applicable state or federal law or regulation and the same
shall continue for a period of thirty (30) days or, if (i) such breach cannot be
cured within such period, (ii) such breach is susceptible of cure within
forty-five (45) days, and (iii) the applicable Borrower Affiliate Entity is
proceeding with diligence and in good faith to cure such breach, then, such
thirty (30) day cure period shall be extended to such date, not to exceed a
total of forty-five (45) days, as shall be necessary to diligently cure such
breach so long as such extension of time to cure has not, and would not
reasonably be expected to, exacerbate an existing Material Adverse Effect or
cause any new Material Adverse Effect. 

7.11 Schedule. At any time prior to Final Completion,
construction work on the Project by Contractor shall cease for a period of more
than thirty (30) days for any reason (which period (i) shall be measured from
the first occurrence of a work stoppage and continuing until work of a
substantial nature is resumed and thereafter diligently continued, and (ii)
shall not include delays caused by any event of force majeure under the
Construction Contract). 

7.12 Security. 

(a) Any of the Collateral Documents,
including the Sponsor Cash Grant Shortfall Guaranty, once executed and
delivered, shall, except as the result solely of the acts or omissions of Lender
(except any such omission in respect of which Borrower is expressly obligated
under the Financing Documents), in any material respect fail to provide Lender
the Liens, remedies, powers or privileges intended to be created thereby or
cease to be in full force and effect, or the validity thereof or the
applicability thereof to the Loans, the Note or any other Obligations purported
to be secured or guaranteed thereby or any part thereof shall be disaffirmed by
or on behalf of Borrower or any other party thereto; or 

(b) There shall occur a default or
event of default (however defined) by the Borrower Affiliate Entities under any
of the Collateral Documents, and such default or event of default shall not have
been cured within thirty (30) days (or such other cure periods as provided
therein) after its occurrence. 

7.13 Permits; Expiration of Appeals Period. 

(a) Borrower shall fail to obtain any
Permit on or before the date that such Permit becomes an Applicable Permit and
such failure would reasonably be expected to have a Material Adverse Effect; or

54 

(b) Any Applicable Permit necessary for
operation of the Project shall be materially modified, revoked or canceled by
the issuing agency or other Governmental Authority having jurisdiction and
within thirty (30) days thereafter Borrower is not able to demonstrate to Lender
that such modification or loss of such Permit would not reasonably be expected
to have a Material Adverse Effect. 

7.14 Loss of Project. 

(a) Any substantial portion of
Borrower’s property is seized or appropriated without fair value being paid
therefor such as to allow replacement of such property and/or prepayment in full
of all Obligations then outstanding and to allow Borrower in Lender’s reasonable
judgment to continue satisfying its obligations hereunder and under the other
Operative Documents (it being expressly understood and agreed that any
determination of fair, market or other value for any of Borrower’s property
determined in accordance with any Project Document shall not be conclusive of
fair value or binding upon Lender for the purposes of making any such
determination in connection with this Financing Agreement or any other Financing
Document); or 

(b) Any Material Project Document shall
cease for any reason to be in full force and effect. 

7.15 Destruction of the Project. All or a material
portion of the assets or operations of the Project is destroyed, or suffers an
actual or constructive loss or material damage. 

7.16 Transfer of Interests. Except for Permitted
Transfers, any direct or indirect transfer of, including the sale,
hypothecation, pledge or grant of a security interest in, any membership
interests, partnership interest, stock or other ownership interest in any
Borrower Affiliate Entity or any other Person who has a direct ownership
interest in Borrower.

7.17 Cash Grant Recapture Liabilities. Any Cash Grant
Recapture Liability shall have been assessed against Borrower or otherwise in
respect of the Project, pursuant to a written demand issued by the United States
Treasury Department, and Borrower fails to pay such Cash Grant Recapture
Liability in full on or prior to the deadline for payment thereof (as set forth
in such notice or demand of the United States Treasury Department, if
applicable), or Borrower has knowledge of any circumstance or event which would
reasonably be expected to result in any Cash Grant Recapture Liability, unless
Borrower has established, to Lender’s reasonable satisfaction, reserves to cover
the reasonably anticipated amount of the Cash Grant Recapture Liability, which
such reserves shall have been funded with equity contributions from Sponsor and
Idaho Sponsor deposited in a segregated account, and which such account shall be
pledged to Lender, and shall be subject to a control agreement in form and
substance reasonably satisfactory to Lender. For the avoidance of doubt,
Borrower shall not be entitled to make distributions for the purpose of funding
the foregoing reserves unless such distributions are otherwise permitted
hereunder.

55 

Remedies 

Upon the occurrence and during the continuation of an Event of
Default, Lender may without further notice of default, presentment or demand for
payment, protest or notice of non-payment or dishonor, or other notices or
demands of any kind, all such notices and demands being waived, exercise any or
all of the following rights and remedies, in any combination or order that
Lender may elect, in addition to such other rights or remedies as Lender may
have hereunder, under the Collateral Documents, or at law or in equity: 

7.18 Cure by Lender. Without any obligation to do so,
make disbursements or loans to or on behalf of Borrower to cure any Event of
Default hereunder and to cure any default and render any performance under any
Project Documents as Lender may consider necessary or appropriate, whether to
preserve and protect the Collateral or Lender’s interests therein or for any
other reason, and all sums so expended, together with interest on such total
amount at the Default Rate (but in no event shall the rate exceed the maximum
lawful rate), shall be repaid by Borrower to Lender on demand and shall be
secured by the Financing Documents. 

7.19 Acceleration. Declare and make all sums of accrued
and outstanding principal and accrued but unpaid interest remaining under this
Agreement together with all unpaid fees, costs (including Liquidation Costs),
charges and other amounts due hereunder or under any other Financing Document,
immediately due and payable, provided that in the event of a Event of Default
with respect to Borrower occurring under Section 7.4, all such amounts
shall become immediately due and payable without further act of Lender or any
other Person. 

7.20 Possession of Project. Subject to the Intercreditor
Agreement, enter into possession of the Project and perform or cause to be
performed any and all work and labor necessary to complete the Project
substantially according to the Construction Contract and the Plans and
Specifications or to operate and maintain the Project, and all sums expended by
Lender in so doing, together with interest on such total amount at the Default
Rate, shall be repaid by Borrower to Lender upon demand and shall be secured by
the Financing Documents. 

7.21 Remedies Under Financing Documents. Exercise any
and all rights and remedies available to it under any of the Financing
Documents, including judicial or non-judicial foreclosure or public or private
sale of any of the Collateral pursuant to the Collateral Documents. 

Liquidation Preference 

From and after any Event of Default and the exercise of
remedies by Lender, all payments made under this Agreement or the other
Financing Documents and all other amounts received by Lender under this
Agreement or the other Financing Documents (including proceeds from any
disposition of Collateral) shall be applied as follows: 

first, to any fees, costs,
charges or expenses payable to Lender hereunder or under the other Financing
Documents; 

second, to any accrued but
unpaid interest then due and owing in respect of the Obligations; 

56 

third, to outstanding principal
then due and owing in respect of the Obligations; and f

ourth, to such other Obligations
as remain outstanding. 

ARTICLE 8 
SCOPE OF LIABILITY 

Notwithstanding any other provision of the Financing Documents
(but subject to the last sentence of, and other limitations and qualifications
contained in, this Article 8), there shall be no recourse against
Holdings, Idaho Sponsor, Sponsor or any of its Affiliates (except Borrower), or
the stockholders or other owners, officers, directors or employees of any of
them (each, a “Non-Recourse Party”), for any liability to Lender arising
in connection with this Agreement (whether in contract, tort, strict liability
or otherwise) except to the extent the same is enforced against Borrower and the
Collateral and the proceeds and products of the Collateral, and Lender shall
look solely to Borrower (but not to any Non-Recourse Party except as provided
herein) and the Collateral and the rents, issues, profits, proceeds and products
of the Collateral in enforcing rights and obligations under and in connection
with the Financing Documents, provided that (a) the foregoing provisions
of this Article 8 shall not constitute a waiver, release or discharge of
any of the indebtedness, or of any of the terms, covenants, conditions, or
provisions of this Agreement, the Note, any Collateral Document or other
Financing Document (but without personal liability to the Non-Recourse Parties
except as in such Collateral Document or other Financing Document to which it is
a party), and the same shall continue until the Loan Commitment has been
terminated and all Obligations have been fully paid, discharged, observed, or
performed; (b) the foregoing provisions of this Article 8 shall not limit
or restrict the right of Lender to name Borrower or any other Person as a
defendant in any action or suit for a judicial foreclosure or for the exercise
of any other remedy under or with respect to this Agreement, the Project, any
Collateral Document or any other Financing Document, or otherwise, or for
injunction or specific performance, so long as no judgment in the nature of a
deficiency judgment shall be enforced against any Non-Recourse Party out of any
property, assets or funds other than the Collateral and the proceeds or products
of the Collateral, and any other property of Borrower; and (c) the foregoing
provisions of this Article 8 shall not affect or diminish or constitute a
waiver, release or discharge of any specific written obligation, covenant, or
agreement made by any of the Non-Recourse Parties in any Collateral Document or
other Financing Document to which it is a party or any security granted by the
Non-Recourse Parties in support of the obligations of such Persons under any
guaranty or as security for the obligations of Borrower, including Idaho
Sponsor’s and Sponsor’s obligations under the Sponsor Cash Grant Shortfall
Guaranty, with respect to which Idaho Sponsor, Sponsor or such other
Non-Recourse Party, as applicable, shall be personally liable to the extent
provided therein. Notwithstanding the foregoing, it is expressly understood and
agreed that nothing contained in this Article 8 shall be deemed to (a)
limit or restrict any right or remedy of Lender (or any assignee or beneficiary
thereof or successor thereto) with respect to, and Borrower and all of the other
Persons described above shall remain fully liable to the extent that such Person
would otherwise be liable for its own actions with respect to, any fraud,
willful misconduct or gross negligence; (b) limit in any respect the
enforceability against the parties thereto of the Collateral Documents, the
Sponsor Cash Grant Shortfall Guaranty, the Fee Letters or any Operative Document
in accordance with their respective terms; or (c) release any legal consultant in
its capacity as such from liability on account of any legal opinion rendered in
connection with the transactions contemplated hereby. 

57 

ARTICLE 9 
INDEPENDENT CONSULTANTS 

9.1 Removal and Fees. Lender, in its reasonable
discretion, may remove from time to time, any one or more of the Independent
Consultants and appoint replacements reasonably acceptable to Borrower. Notice
of any replacement Independent Consultant shall be given by Lender to Borrower
and to the Independent Consultant being replaced. All reasonable fees and
expenses of the Independent Consultants (whether the original Independent
Consultants or replacements) shall be paid by Borrower; provided,
however, that unless an Inchoate Default or Event of Default shall have
occurred and be continuing, Lender shall request that each such Independent
Consultant provide Borrower with its proposed scope of work and proposed budget
therefor, and shall consult with and seek the consent of Borrower (such consent
not to be unreasonably withheld or delayed) with regard to the matters contained
therein. 

9.2 Duties. Each Independent Consultant shall be
contractually obligated to Lender to carry out the activities required of it in
this Agreement and as otherwise requested by Lender and shall be responsible
solely to Lender. Borrower acknowledges that it will not have any cause of
action or claim against any Independent Consultant resulting from any decision
made or not made, any action taken or not taken or any advice given by such
Independent Consultant in the due performance in good faith of its duties to
Lender hereunder. 

9.3 Independent Consultants’ Certificates. 

(a) Until the receipt by Lender of
certificates reasonably satisfactory to Lender from each Independent Consultant
whom Lender consider necessary or appropriate certifying Substantial Completion
and Final Completion, Borrower, upon request, shall provide such documents and
information to the Independent Consultants as any of the Independent Consultants
may consider necessary or advisable in order for the Independent Consultants to
deliver to Lender the following certificates: 

(i) certificates of the Independent
Engineer and Geothermal Consultant delivered on and dated as of the Financial
Closing Date as described in Article 3 and containing the matters set out
therein; 

(ii) certificate of the Independent
Accountant delivered on and dated as of the Second Borrowing Date as described
in Section 3.2(c) and containing the matters set out therein; and 

(iii) such other information and
certification as Lender may reasonably require from time to time. 

(b) Following Substantial Completion,
Borrower shall provide such documents and information to the Independent
Consultants as they may reasonably consider necessary in order for the
Independent Consultants to deliver annually to Lender a certificate setting forth a full report on the status of the
Project and such other information and certification as Lender may reasonably
require from time to time. 

58 

9.4 Certification of Dates. Borrower shall provide the
Independent Consultants with reasonable notice of the expected occurrence of any
such dates or events that would require certificates of Independent Consultants
hereunder. 

ARTICLE 10 
MISCELLANEOUS 

10.1 Notices.

(a) Subject to the remaining clauses of
this Section 10.1, any communications between the parties hereto or
notices provided herein to be given may be given to the following addresses:

	 	If to Lender: 	Ares Capital Corporation 
	 	  	Address: 	245 Park Avenue, 44th Floor 
	 	  	  	New York, NY 10167 
	 	  	Telephone: 	(212) 750-4915 
	 	  	Fax: 	(212) 750-1777 
	 	  	Attention: 	Raymond Wright 
	 	  	  	  
	 	with copies to: 	Latham & Watkins LLP

	 	  	Address: 	600 West Broadway, Suite 1800 
	 	  	  	San Diego, CA 92101 
	 	  	Telephone: 	(619) 236-1234 
	 	  	Fax: 	(619) 696-7419 
	 	  	Attention: 	Kelley M. Gale 
	 	  	  	  
	 	If to Borrower: 	USG Nevada LLC 
	 	  	Address: 	1505 Tyrell Lane 
	 	  	  	Boise, ID 83706 
	 	  	Telephone: 	(208) 424-1027 
	 	  	Fax: 	(208) 424-1030 
	 	  	Attention: 	Jonathan Zurkoff 
	 	  	  	  
	 	with copies to: 	Hawley Troxell 
	 	  	Address: 	877 Main Street, Suite 1000 
	 	  	  	Boise, ID 83702 
	 	  	Telephone: 	(208) 344-6000 
	 	  	Fax: 	(208) 954-5270 
	 	  	Attention: 	Michael M. Stoddard 

59 

The above is Borrower’s address. All notices or other
communications required or permitted to be given hereunder shall, subject to the
remaining clauses of this Section 10.1, be in writing and shall be
considered as properly given (a) if delivered in person, (b) if sent by
overnight delivery service (including Federal Express, ETA, Air Borne and other
similar overnight delivery services), (c) in the event overnight delivery
services are not readily available, if mailed by first class mail, postage
prepaid, registered or certified with return receipt requested or (d) if sent by
prepaid telegram, or by telecopy confirmed by telephone. Notice so given shall
be effective upon receipt by the addressee, except that communication or notice
so transmitted by telecopy or other direct written electronic means shall be
deemed to have been validly and effectively given on the day (if a Banking Day
and, if not, on the next following Banking Day) on which it is transmitted if
transmitted before 4 p.m., recipient’s time, and if transmitted after that time,
on the next following Banking Day; provided, however, that if any
notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. Any party shall have
the right to change its address for notice hereunder to any other location
within the United States by giving of thirty (30) days’ written notice to the
other parties in the manner set forth herein above. In addition, any such notice
or other communication to Lender shall at the request of Lender be provided to
any subagent appointed hereunder as designated by Lender from time to time. 

(b) Notices and other communications to
Lender hereunder may be delivered or furnished by electronic communication
(including e-mail or Intralinks (www.intralinks.com) or another relevant website
(such Intralinks site or such other website being referred to herein as the
“Platform”)) pursuant to procedures approved by Lender. Lender or
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may
be limited to particular notices or communications. Unless Lender otherwise
prescribes, (i) notices and other communications sent to an e-mail address shall
be deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement); provided that
if such notice or other communication is not sent during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been sent at the opening of business on the next Banking Day for the recipient,
and (ii) notices or communications posted on the Platform shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor. 

(c) THE PLATFORM IS PROVIDED “AS IS”
AND “AS AVAILABLE”. LENDER DOES NOT WARRANT THE ACCURACY OR COMPLETENESS OF ANY
NOTICES OR COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM, AND LENDER EXPRESSLY
DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN ANY NOTICES OR COMMUNICATIONS. NO
WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS
MADE BY LENDER IN CONNECTION WITH ANY NOTICES OR COMMUNICATIONS OR THE PLATFORM.
IN NO EVENT SHALL LENDER OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES HAVE ANY
LIABILITY TO HOLDINGS, IDAHO SPONSOR, SPONSOR, BORROWER, LENDER OR ANY OTHER
PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT,
CONTRACT OR OTHERWISE) ARISING OUT OF SUCH AGENT OR OTHER PERSON’S TRANSMISSION
OF ANY NOTICES OR COMMUNICATIONS THROUGH THE PLATFORM, EXCEPT TO THE EXTENT THE
LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A
COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH PERSON’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.

60 

10.2 Additional Security; Right to Set-Off. Any deposits
or other sums at any time credited or due from Lender and any Project Revenues,
securities or other property of Borrower in the possession of Lender may at all
times be treated as collateral security for the payment of the Loans and the
Note and all other obligations of Borrower to Lender under this Agreement and
the other Financing Documents, and Borrower hereby pledges to Lender for the
benefit of Lender and grants Lender a security interest and Lien in and to all
such deposits, sums, securities or other property.

10.3 Delay and Waiver. No delay or omission to exercise
any right, power or remedy accruing to Lender upon the occurrence of any Event
of Default or Inchoate Default or any breach or default of Borrower under this
Agreement or any other Financing Document shall impair any such right, power or
remedy of Lender, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring, nor shall any waiver of any single Event of Default,
Inchoate Default or other breach or default be deemed a waiver of any other
Event of Default, Inchoate Default or other breach or default theretofore or
thereafter occurring. Any waiver, indulgence, permit, consent or approval of any
kind or character on the part of Lender of any Event of Default, Inchoate
Default or other breach or default under this Agreement or any other Financing
Document, or any waiver on the part of Lender of any provision or condition of
this Agreement or any other Financing Document, must be in a writing expressly
referencing this Agreement and shall be effective only to the extent in such
writing specifically set forth. All remedies, either under this Agreement or any
other Financing Document or by law or otherwise afforded to Lender, shall be
cumulative and not alternative. 

10.4 Costs, Expenses and Attorneys’ Fees. Borrower will
pay to Lender all reasonable third-party and out-of-pocket costs and expenses in
connection with the preparation, negotiation, closing and costs of administering
this Agreement and the documents contemplated hereby, including the reasonable
fees, expenses and disbursements of Latham & Watkins LLP and other attorneys
retained by Lender in connection with the preparation of such documents and any
amendments hereof or thereof, or the negotiation, closing or administration of
this Agreement, and the reasonable fees, expenses and disbursements of the
Independent Consultants and any other engineering, insurance, environmental and
construction consultants to Lender incurred in connection with this Agreement or
the Loans or the Loan Commitment, and the reasonable and documented travel,
out-of-pocket and the tombstone and lucite costs incurred by Lender and all
reasonable third-party and out-of-pocket costs and expenses in connection with
the preparation and negotiation of any amendments to this Agreement or other
Financing Documents, including the reasonable fees, expenses and disbursements
of counsel to Lender. Borrower will reimburse Lender for all costs and expenses,
including reasonable attorneys’ fees, expended or incurred by Lender in
enforcing this Agreement or the other Financing Documents in connection with an
Event of Default or Inchoate Default, in actions for declaratory relief in any
way related to this Agreement, in collecting any sum which becomes due Lender on
the Note or under the Financing Documents, or in connection with the
participation by Lender or the Independent Engineer in any arbitration
proceedings under the Construction Contract. 

61 

10.5 Attorney-In-Fact. 

(a) For the purpose of allowing Lender
to exercise its rights and remedies provided in Article 7 following the
occurrence and during the continuation of an Event of Default, and subject to
the Intercreditor Agreement, Borrower hereby constitutes and appoints Lender its
true and lawful attorney-in-fact, with full power of substitution, to complete
the Project in the name of Borrower, and hereby empowers such attorney or
attorneys as follows: 

(i) To make such changes and
corrections in the Plans and Specifications as reasonably shall be necessary or
desirable to complete the work on any or all of the Project in substantially the
manner contemplated by the Construction Contract; 

(ii) To employ such contractors,
subcontractors, agents, architects and inspectors as reasonably shall be
required for such purposes; 

(iii) To pay, settle or compromise all
bills and claims which may be or become Liens or security interests against the
Project or the Collateral, or any part thereof, unless a bond or other security
satisfactory to Lender has been provided; 

(iv) To execute applications and
certificates in the name of Borrower which reasonably may be required by the
Financing Documents or any other agreement or instrument executed by or on
behalf of Borrower in connection with the Project; 

(v) To prosecute and defend all
actions or proceedings in connection with the Project or the Collateral or any
part thereof and to take such action and require such performance as such
attorney reasonably deems necessary under any performance and payment bond and
the Financing Documents; and 

(vi) To do any and every act which
Borrower might do on its behalf with respect to the Collateral or any part
thereof or the Project and to exercise any or all of Borrower’s rights and remedies under any
or all of the Project Documents. 

62 

(b) This power of attorney shall be
deemed to be a power coupled with an interest and shall be irrevocable. 

10.6 Entire Agreement. This Agreement, the
Confidentiality Agreement and any agreement, document or instrument attached
hereto or referred to herein (including the Financing Documents and the Fee
Letters) integrate all the terms and conditions mentioned herein or incidental
hereto and supersede all oral negotiations and prior writings in respect to the
subject matter hereof. In the event of any conflict between the terms,
conditions and provisions of this Agreement and any such agreement, document or
instrument, the terms, conditions and provisions of this Agreement shall
prevail. This Agreement and the other Financing Documents may only be amended or
modified by an instrument in writing signed by Borrower (to the extent party
thereto), Lender and any other parties to be charged and in accordance with the
terms of this Agreement. 

10.7 Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby, and
the parties hereto shall enter into good faith negotiations to replace the
invalid, illegal or unenforceable provision. 

10.8 Headings. Paragraph headings and a table of
contents have been inserted in this Agreement as a matter of convenience for
reference only and it is agreed that such paragraph headings are not a part of
this Agreement and shall not be used in the interpretation of any provision of
this Agreement. 

10.9 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP and
practices consistent with those applied in the preparation of the financial
statements submitted by Borrower to Lender, and (unless otherwise indicated) all
financial data submitted pursuant to this Agreement shall be prepared in
accordance with such principles and practices. 

10.10 No Partnership, Etc. Lender and Borrower intend
that the relationship between them shall be solely that of creditor and debtor.
Nothing contained in this Agreement, the Note or in any of the other Financing
Documents shall be deemed or construed to create a partnership,
tenancy-in-common, joint tenancy, joint venture or co-ownership by, between or
among Lender and Borrower or any other Person. Lender shall not be in any way
responsible or liable for the debts, losses, obligations or duties of the
Borrower Affiliate Entities or any other Person with respect to the Project
Documents, the Project or otherwise. All obligations to pay real property or
other taxes, assessments, insurance premiums, and all other fees and charges
arising from any Project Document or the ownership, operation or occupancy of
the Project and to perform all obligations under the Project Documents, the Real
Property Documents and any other agreements and contracts relating to the
Project shall be the sole responsibility of Borrower, as applicable. 

63 

10.11 Limitation on Liability. NO CLAIM SHALL BE MADE BY
ANY PARTY HERETO OR ANY OF ITS AFFILIATES, DIRECTORS, EMPLOYEES, ATTORNEYS OR
AGENTS AGAINST ANY OTHER PARTY HERETO OR ANY OF ITS AFFILIATES, DIRECTORS,
EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES (WHETHER OR NOT THE CLAIM THEREFOR IS BASED ON CONTRACT, TORT,
DUTY IMPOSED BY LAW OR OTHERWISE), IN CONNECTION WITH, ARISING OUT OF OR IN ANY
WAY RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER
OPERATIVE DOCUMENTS OR ANY ACT OR OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH; AND EACH PARTY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY
SUCH CLAIM FOR ANY SUCH SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES,
WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS
FAVOR. 

10.12 APPLICABLE LAW. THIS AGREEMENT, AND ANY INSTRUMENT
OR AGREEMENT REQUIRED HEREUNDER (TO THE EXTENT NOT EXPRESSLY PROVIDED FOR
THEREIN) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF,
EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT
THE PERFECTION OF THE LIEN AND SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.

10.13 CONSENT TO JURISDICTION. SUBJECT TO CLAUSE (E) OF
THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY
ARISING OUT OF OR RELATING HERETO OR ANY OTHER FINANCING DOCUMENTS, OR ANY OF
THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH BORROWER AFFILIATE ENTITY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN
WITH RESPECT TO ACTIONS BY LENDER IN RESPECT OF RIGHTS UNDER ANY FINANCING
DOCUMENT GOVERNED BY LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH
RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEFENSE OF FORUM
NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ANY BORROWER AFFILIATE ENTITY AT ITS ADDRESS IN ACCORDANCE
WITH SECTION 10.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER ANY BORROWER AFFILIATE
ENTITY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT LENDER RETAIN THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST ANY BORROWER AFFILIATE ENTITY IN THE COURTS OF ANY OTHER JURISDICTION IN
CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY FINANCING DOCUMENT OR THE
ENFORCEMENT OF ANY JUDGMENT. 

64 

10.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER
FINANCING DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THIS LOAN TRANSACTION OR LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 10.14 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER FINANCING DOCUMENTS OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT. 

10.15 Usury. Nothing contained in this Agreement or the
Note shall be deemed to require the payment of interest or other charges by
Borrower or any other Person in excess of the amount which the holders of the
Note may lawfully charge under any applicable usury laws. In the event that the
holders of the Note shall collect moneys which are deemed to constitute interest
which would increase the effective interest rate to a rate in excess of that
permitted to be charged by applicable law, all such sums deemed to constitute
interest in excess of the legal rate shall, upon such determination, at the
option of the holder of the Note, be returned to Borrower or credited against
the principal balance of the Note then outstanding. Nothing contained in this
Section 10.15 shall be construed as waiving any usury exemption Lender
has under law, and, to the extent any such exemption applies, this Section
10.15 shall be inapplicable. 

10.16 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Borrower may not assign or otherwise transfer any of
its rights under this Agreement without the prior written consent of Lender.
Lender may assign or otherwise transfer all or any of its rights under this
Agreement to an Affiliate without the consent of Borrower, or to any other
financial institution with Borrower’s consent, not to be unreasonably withheld,
conditioned or delayed. 

65 

10.17 Counterparts. This Agreement may be executed in
one or more duplicate counterparts and by facsimile and when signed by all of
the parties listed below shall constitute a single binding agreement.

10.18 Patriot Act Compliance. Lender hereby notifies
Borrower that, pursuant to the requirements of the Patriot Act, it and Lender
shall be required to obtain, verify and record information that identifies the
Borrower Affiliate Entities, which information includes, without limitation, the
name and addresses and other information that will allow it or Lender to
identify the Borrower Affiliate Entities in accordance with the requirements of
the Patriot Act. Borrower shall promptly deliver information described in the
immediately preceding sentence when requested by Lender in writing pursuant to
the requirements of the Patriot Act. 

10.19 Electronic Execution. This Agreement and
the other Financing Documents may be executed by electronic signature, and the
words “execution,” “signed,” “signature,” and words of like import in any
Financing Document shall be deemed to include electronic signatures or the
keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use
of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act. 

10.20 Appointment of Agent. Borrower hereby irrevocably
designates, appoints and empowers CT Corporation System (the “Process
Agent”), with offices on the date hereof at 111 Eighth Avenue, New York, New
York 10011, as its permitted designee, appointee and agent to receive and
forward, for and on its behalf, service of any and all legal process, writs,
summons, notices and documents which may be served in any action or proceeding
arising out of this Agreement or any other Financing Document. Borrower hereby
agrees to cause the Process Agent to execute and deliver to Lender a letter from
the Process Agent to the effect of the foregoing. If for any reason such Process
Agent shall cease to act as such, Borrower agrees hereby to designate a new
permitted designee, appointee and agent in New York City on terms satisfactory
to Lender. Borrower shall promptly inform the Process Agent of any change to
Borrower’s address for forwarding such items. 

10.21 Confidentiality. Lender agrees to use best efforts
to maintain the confidential nature of, and shall not use or disclose the
financial information or other confidential information related to Borrower,
without first obtaining Borrower’s prior written consent; provided that nothing
in this Section 10.21 shall require Lender to obtain any consent of
Borrower in connection with (and Borrower hereby authorizes Lender to freely
disclose any financial information or confidential information with respect to
Borrower, the Project, any Project Document or any Financing Document without
any consent of Borrower, to the extent otherwise required, in connection with) (a) exercising any of
their respective rights under the Financing Documents, including those
exercisable upon the occurrence of a Event of Default; (b) providing information
about Borrower, the Project, any Project Document or any Financing Document or
the parties thereto to any other Lender or prospective Lender or any Person
acquiring, or potentially acquiring, any interest of Lender under the Financing
Agreement and any such Person’s directors, officers, employees, agents and
consultants in connection with their credit evaluation of Borrower or otherwise
(if, in the case of any such Person potentially acquiring such an interest from
Lender, such Person agrees to be bound by the terms of a confidentiality
agreement substantially similar to this Section 10.21); (c) any situation
in which Lender (i) is required by law or required by any Governmental Authority
or the National Association of Insurance Commissioners or provincial regulatory
body to disclose information or (ii) is requested by bank examiners or bank
regulatory bodies, to disclose information (provided that in each
instance under clauses (i) and (ii) above such Person uses reasonable efforts to
maintain confidentiality of the information disclosed); (d) providing
information to legal counsel to Lender in connection with the transactions
contemplated by any of the Financing Documents (if Lender informs such counsel
of the confidential nature of such information and requires that it be kept
confidential except as permitted herein); (e) providing information to
independent accountants, auditors or other expert consultants retained by Lender
(if Lender informs such auditors or consultants of the confidential nature of
such information and requires that it be kept confidential except as permitted
herein); (f) any information that is in or becomes part of the public domain
otherwise than through a wrongful act of Lender or any employees or agents
thereof or other Persons to whom confidential information is disclosed under
subsections (b), (c), (d) or (e) above; (g) any information that is in the
possession of Lender prior to receipt thereof from Borrower or any other Person
known to Lender to be acting on behalf of Borrower; (h) any information that is
independently developed by Lender; and (i) any information that is disclosed to
Lender by a third party that is not known or reasonably suspected by Lender to
be bound by a confidentiality agreement with, or other contractual, legal or
fiduciary obligation of confidentiality to, Borrower with respect to such
information.

66 

Notwithstanding anything to the contrary set forth in this
Section 10.21, after notice to Borrower or Lender shall be free to
disclose any information regarding the tax structure of the transactions
contemplated in this Agreement to any relevant Governmental Authority requiring
such information. 

[SIGNATURE PAGES FOLLOW] 

67 

IN WITNESS WHEREOF, the parties have caused this
Financing Agreement to be duly executed by their officers thereunto duly
authorized as of the day and year first above written. 

	USG NEVADA LLC, 
	a Delaware limited liability company, 
	as Borrower 
	 
	By: ______________________________
	 
	Name: ____________________________
	 
	Title:
_____________________________

[SIGNATURE PAGE TO FINANCING AGREEMENT] 

	ARES CAPITAL CORPORATION, 
	a Maryland corporation, 
	as Lender 
	 
	By: ___________________________
	 
	Name: _________________________
	 
	Title: __________________________

[SIGNATURE PAGE TO FINANCING AGREEMENT] 

Execution Version 

EXHIBIT A 
to Financing Agreement 

DEFINITIONS 

“ABR” refers, when used in reference to any Loan, to
when such Loan is bearing interest at the Alternate Base Rate plus the
Applicable Margin.

“Additional Loan” shall have the meaning given in
Section 2.1(a) of the Financing Agreement. 

“Additional Project Documents” means any contracts or
agreements related to the construction, testing, maintenance, repair, operation
or use, as applicable, of the Project entered into by Borrower and any other
Person or assigned to Borrower subsequent to the Financial Closing Date and that
either (a) replaces or substitutes for an existing Project Document, (b) has a
term greater than three months or (c) has an aggregate value over its term in
excess of Seventy-Five Thousand Dollars ($75,000); provided,
however, that notwithstanding the foregoing, any contract or agreement
related to the Project between Borrower and any Affiliate of Borrower
(including, without limitation, any management services agreement) shall be
deemed an Additional Project Document hereunder.

“Affiliate” of a specified Person means any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified, or who holds
or beneficially owns ten percent (10%) or more of the equity interest in the
Person specified or ten percent (10%) or more of any class of voting securities
of the Person specified. When used with respect to Borrower, “Affiliate” shall
include each Borrower Affiliate Entity and any of their Affiliates. 

“Agreement” means the Financing Agreement.

“Alternate Base Rate” shall mean, for any day, a rate
per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day, (b) the Federal Funds Rate
in effect on such day plus 0.5%, and (c) the LIBO Rate for one (1) month
Interest Period plus 1.00% . Any change in the Alternate Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective as of the
opening of business on the effective date of such change.

“Annual Operating Budget” shall have the meaning given
in Section 5.5(d) of the Financing Agreement. 

“Applicable Margin” means (a) from the Financial Closing
Date to and including March 31, 2012, 3.50%; and (b) from and after March 31,
2012, 9.0% . 

“Applicable Permit” means, at any time, any Permit,
including any zoning, environmental protection, pollution (including air, water
or noise), sanitation, FERC, import, export, safety, siting or building Permit,
or accreditation in any system for purposes of a renewable portfolio standard or
qualification, in each case that is (a) necessary at any given time in light of
the stage of development, construction or operation of the Project (to the
extent required by Legal Requirements, the Financing Documents or
Material Project Documents) to site, construct, test, operate, maintain, repair,
own or use the Project as contemplated by the Financing Documents and Material
Project Documents, to sell electricity therefrom, and for Borrower to enter into
any Operative Document or to consummate any transaction contemplated thereby, in
each case in accordance with all applicable Legal Requirements, (b) necessary so
that (i) neither Lender, nor any Affiliate of any of them may be deemed by any
Governmental Authority to be subject to regulation under the FPA or PUHCA or
under any state laws or regulations respecting the rates or the financial or
organizational regulation of electric utilities solely as a result of the
construction, ownership or operation of the Project or the sale of electricity
therefrom, or (ii) neither Borrower nor any Borrower Affiliate Entity may be
deemed by any Governmental Authority to be subject to regulation under PUHCA
except as set forth in Section 4.10 of the Financing Agreement, and/or
(c) listed on the Schedule of Applicable Permits attached to the Financing
Agreement as Exhibit G-2. 

“Approved Lender” means any provider of an Approved
Other Project Financing. 

“Approved Other Project Financing” means, collectively,
the Approved Term Loan and any project financing by Borrower of Phase II,
including any construction loan, bridge loan or letter of credit facility
entered into by Borrower in connection with the development, construction or
operation of Phase II, provided, that such financing satisfies each of
the requirements set forth in clauses (a), (b) and (c) of the proviso contained
in the definition of “Approved Term Loan” hereunder 

“Approved Term Loan” means mini-perm, term, refinancing
or other take-out financing of Borrower that is entered into on or after the
Placed in Service Date and whose purpose is to refinance and repay (together
with any equity contribution of Borrower) one hundred percent of the
Construction Loan; provided that (a) the provider of such financing, if
such financing is secured by any assets of Borrower or the Expanded Project or
any assets otherwise previously pledged as collateral to Construction Lender
under the Construction Loan, shall have entered into an Intercreditor Agreement
with Lender substantially similar to the Intercreditor Agreement and otherwise
reasonably satisfactory to Lender; (b) the Collateral hereunder (except for the
Member Pledge Agreement, to the extent released pursuant to Section
5.6 of the Financing Agreement) shall continue to constitute the separate
collateral solely of Lender and shall be free an clear of any Liens of any such
provider of such financing; and (c) Lender shall have approved any application
of Project Revenues pursuant to such financing and the provisions thereof
regarding distributions to Borrower, such that Lender shall be assured that,
after payment of reasonable operating costs, debt service and reasonable
reserves, and customary debt service coverage restrictions on distributions, all
distributions of Borrower shall be deposited into the Blocked Account and shall
comprise Collateral solely in favor of Lender and not subject to the Lien of any
other Person 

“Banking Day” means any day (a) other than a Saturday,
Sunday or other day on which banks are authorized to be closed in New York, New
York, or Washoe County, Nevada; and (b) which is also a day on which dealings in
Dollar deposits are carried out in the London interbank market. 

Exhibit A-2 

“Bankruptcy Event” shall have the meaning given in
Section 7.4 of the Financing Agreement. 

“Bankruptcy Law” means Title 11, United States Code, and
any other state or federal insolvency, reorganization, moratorium or similar law
for the relief of debtors. 

“Blocked Account” means the “Account” as defined in the
Deposit Account Control Agreement. 

“Borrower” means USG Nevada LLC, a Delaware limited
liability company. 

“Borrower Affiliate Entity” means each of Borrower,
Holdings, Idaho Sponsor and Sponsor. 

“Borrower LLC Agreement” means that certain Limited
Liability Company Agreement of Borrower, dated as of March 5, 2008, executed by
Idaho Sponsor, as amended by that certain First Amendment to Limited Liability
Company Agreement, dated as of September 19, 2011, executed by Holdings, and as
further amended by that certain Second Amendment to Limited Liability Company
Agreement, dated as of November 9, 2011, executed by Holdings. 

“Borrower’s Closing Certificate” shall have the meaning
given in Section 3.1(g) of the Financing Agreement.

“Borrower’s Organizational Documents” means the Borrower
LLC Agreement and certificate of formation. 

“Borrowing” means a borrowing by Borrower of any Loan
pursuant to Section 2.1 of the Financing Agreement upon the
satisfaction (or waiver in accordance with the terms of the Financing Agreement)
of each of the applicable conditions precedent listed in Article 3 of the
Financing Agreement. There shall be no more than two (2) Borrowings. 

“Capital Adequacy Requirement” shall have the meaning
given in Section 2.5(d) of the Financing Agreement. 

“Cash Grant” means a United States Treasury Department
cash grant in lieu of the available renewable energy tax credits pursuant to
Sections 45 and 48 of the Internal Revenue Code under the terms of Section 1603
of the American Recovery and Reinvestment Act of 2009 and the Cash Grant
Guidance with respect to the Project. 

“Cash Grant Application” means the complete application
(including any preliminary or supplemental application) for a Cash Grant
described in the Cash Grant Guidance, together with any exhibits, schedules,
attachments, reports or other documents filed with such application, and any
supplemental information and filings and associated required registrations, all
in accordance with Section 5.24 of the Financing Agreement.

“Cash Grant Application Power of Attorney” shall have
the meaning given in Section 3.1(bb) of the Financing Agreement.

Exhibit A-3 

“Cash Grant Guidance” means the United States Treasury
Department’s program guidance publication entitled “Payments for Specified
Energy Property in Lieu of Tax Credits under the American Recovery and
Reinvestment Act of 2009,” dated July 2009, and revised in March 2010 and April
2011, as the same may be amended, and any other guidance, instructions or terms
and conditions published or issued by the United States Treasury Department in
respect of the Cash Grant or any Cash Grant Application. 

“Cash Grant Notice of Assignment” means the
Notice of Assignment substantially in the form of Exhibit D-7 to the
Financing Agreement, duly executed by Borrower and Lender, as described in the
Cash Grant Guidance, for the assignment by Borrower to Lender of all rights to
the proceeds of the Cash Grant, together with any exhibits, schedules,
attachments, reports or other documents filed with such notice, and any
supplemental information and filings and associated required registrations, all
in accordance with Section 5.24 of the Financing Agreement.

“Cash Grant Proceeds” shall have the meaning given in
the Cash Grant Security Agreement.

“Cash Grant Recapture Liabilities” means an amount equal
to (i) the amount of the Cash Grant that is recaptured, disallowed, or
invalidated as a result of a Recapture Event plus (ii) any associated interest
and penalties or other amounts imposed in connection with the recapture or
disallowance of the Cash Grant.

“Cash Grant Security Agreement” shall have the meaning
given in Section 2.8(a) of the Financing Agreement, as amended, restated,
supplemented, modified, replaced or refinanced from time to time. 

“Cash Grant Shortfall” means, collectively (but without
duplication): (a) (X) the positive difference between (i) the aggregate
outstanding amount of the Loans, minus (ii) the aggregate amount of the Cash
Grant applied for by Borrower under the Cash Grant Application,
plus (Y) the positive difference between (i) the
aggregate amount of the Cash Grant applied for by Borrower under the Cash Grant
Application, minus (ii) the Cash Grant received by Borrower and applied to repay
the Loans; and (b) in the event that, as of the Maturity Date, no Cash Grant has
been received, the aggregate outstanding amount of the Loans. 

“Change of Law” shall have the meaning given in
Section 2.5(b) of the Financing Agreement. 

“Claims” shall have the meaning given in Section
5.21(a)(i) of the Financing Agreement. 

“Code” means the Internal Revenue Code of 1986, as
amended. 

“Collateral” means: (a) the Cash Grant and all Cash
Grant Proceeds, (b) the pledge by Holdings of all equity interests in the
Borrower, (c) the pledge by Idaho Sponsor of all equity interests in Holdings,
(d) all amounts credited to or deposited in the Blocked Account, and (e) all
other property which is subject, from time to time, to the security interests or
liens granted in or purported or intended to have been granted by any of the
Collateral Documents. 

Exhibit A-4 

“Collateral Documents” means, collectively, the Cash
Grant Security Agreement, the Pledge Agreements, the Sponsor Cash Grant
Shortfall Guaranty, the Control Agreements, the Consents and any other security
document, financing statement and the like filed or recorded in connection with
the foregoing. 

“Commitment Fees” shall have the meaning given in
Section 2.3(b) of the Financing Agreement. 

“Confidentiality Agreement” means the agreements related
to confidentiality of relationships and information contained in the Mandate
Letter. 

“Consents” means the consents to collateral assignment
or estoppels, as the case may be, entered into in accordance with the Financing
Agreement. 

“Construction Contract” means that certain Engineering,
Procurement and Construction Contract, dated August 27, 2010, between Borrower
and Construction Lender, as amended by (i) Change Order No. 1, dated November
12, 2010, (ii) Change Order No. 2, dated November 12, 2010, (iii) Change Order
No. 3, dated November 18, 2010, (iv) Change Order No. 4, dated December 1, 2010,
(v) Change Order No. 5, dated December 29, 2010, (vi) Change Order No. 6, dated
January 14, 2011, (vii) Change Order No. 7, dated March 11, 2011, (viii) Change
Order No. 8, dated May 23, 2011, (ix) Change Order No. 9, dated June 2, 2011,
(x) Change Order No. 10, dated July 11, 2011, (xi) Change Order No. 11, dated
August 30, 2011, (xii) Change Order No. 12, dated September 16, 2011, (xiii)
Change Order No. 13, dated September 23, 2011, and (xiv) Change Order No. 14,
dated October 27, 2011. 

“Construction Lender” means SAIC Constructors, LLC, an
Oklahoma limited liability company, formerly known as Benham Constructors, LLC,
having an office at 9400 N. Broadway, Suite 300, Oklahoma City, Oklahoma 73114,
together with its successors and assigns. 

“Construction Loan” means the loan in the original
principal amount of $24,553,000 made by the Construction Lender pursuant to the
Construction Loan Agreement.

“Construction Loan Agreement” means that certain Credit
Addendum to Engineering, Procurement and Construction Contract, dated August 27,
2010, as amended by that certain First Amendment to Credit Addendum dated May
20, 2011, between Borrower and Construction Lender, in each case as in effect as
of the date hereof. 

“Construction Loan Documents” means, collectively, the
Construction Loan Agreement and the “Loan Documents,” as defined in the
Construction Loan Agreement as in effect as of the date hereof. 

“Construction Period” means the period from the
Financial Closing Date until but not including Substantial Completion. 

“Contractor” means SAIC Constructors, LLC, an
Oklahoma limited liability company, formerly known as Benham Constructors, LLC,
having an office at 9400 N. Broadway, Suite 300, Oklahoma City, Oklahoma 73114.

Exhibit A-5 

“Control Agreements” means, collectively, the Deposit
Account Control Agreement and any other control agreement executed from time to
time by any Borrower Affiliate Entity in favor of Lender pursuant to any
Financing Document. 

“Controlled Group” means (a) a corporation which is a
member of a controlled group of corporations with Borrower within the meaning of
Section 414(b) of the Code, (b) a trade or business (including a sole
proprietorship, partnership, trust, estate or corporation) which is under common
control with Borrower within the meaning of Section 414(c) of the Code or
Section 4001(b)(1) of ERISA, (c) a member of an affiliated service group with
Borrower within the meaning of Section 414(m) of the Code, or (d) an entity
deemed affiliated with Borrower under Section 414(o) of the Code.

“Cost Segregation Consultant” means Deloitte LLP, a
Delaware limited liability partnership. 

“Cost Segregation Report” means the final study
of the Cost Segregation Consultant identifying the cost categories and expended
amounts of Qualifying Costs for the Project, providing an itemization of
Qualifying Costs and describing the methodology used in determining categories
and amounts of Qualifying Costs, and prepared in a manner reasonably acceptable
to Lender and consistent with the Cash Grant Guidance and applicable law.

“Debt” of any Person at any date means, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, (d) all obligations of such Person under leases
which are or should be, in accordance with GAAP, recorded as capital leases in
respect of which such Person is liable, (e) all obligations of such Person to
purchase securities (or other property) which arise out of or in connection with
the sale of the same or substantially similar securities (or property), (f) all
deferred obligations of such Person to reimburse any bank or other Person in
respect of amounts paid or advanced under a letter of credit or other
instrument, (g) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, (h) all Debt of
others guaranteed directly or indirectly by such person or as to which such
Person has an obligation substantially the economic equivalent of a guaranty and
(i) obligations of such Person in respect of the interest rate hedge agreements,
commodity hedges or currency agreements. 

“Default Rate” means the interest rate per annum equal
to the lesser of (a) 2.0% per annum in excess of the interest rate otherwise
payable hereunder with respect to the applicable Loans (or, in the case of any
fees and other amounts at a rate which is 2.0% per annum in excess of the
interest rate otherwise payable hereunder for then-outstanding ABR Loans) and
(b) the maximum rate of interest permitted under applicable law;
provided, in the event any Loan is a LIBO Rate Loan, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such LIBO Rate Loan shall thereupon become an ABR Loan and shall
thereafter bear interest payable upon demand at a rate which is equal to the
lesser of (i) 2.0% per annum in excess of the interest rate otherwise payable
hereunder for ABR Loans and (ii) the maximum rate of interest permitted under
applicable law.

Exhibit A-6 

“Deposit Account Control Agreement” means that certain
control agreement entered into in connection with the Blocked Account, by and
among Borrower, Lender, and Bank of America, N.A, in form and substance
satisfactory to Lender. 

“Disqualified Person” means (a) any Federal, State, or
local government (or any political subdivision, agency, or instrumentality
thereof); (b) any organization described in Section 501(c) of the Code and
exempt from tax under Section 501(a) of the Code; (c) any entity referred to in
paragraph (4) of Section 54(j) of the Code; (d) any Person described in Section
50(d)(1) of the Code; (e) any Person who is not a “United States person” as
defined in Section 7701(a)(30) of the Code, unless such Person is a foreign
person or entity (other than a foreign partnership or foreign pass-through
entity and the exception under Section 168(h)(2)(B)(i) of the Code applies with
respect to such Person’s distributive share of income from Borrower; and (f) any
partnership or other pass-through entity (including a single-member disregarded
entity) other than a real estate investment trust as defined in Section 856(a)
of the Code or a cooperative organization described in Section 1381(a) of the
Code, any direct or indirect partner (or other direct or indirect holder of an
equity or profits interest) of which is described in clauses (a) through (f),
unless such Person holds its interests in the partnership or other pass-through
entity indirectly through a taxable “C” corporation; provided, if and to the
extent the definition of “Disqualified Person” under Section 1603(g) of the
American Recovery and Reinvestment Act of 2009 or the Cash Grant Guidance is
amended after the Financial Closing Date, the definitions of “Disqualified
Person” shall be interpreted to conform to such amendment.

“Dollars” and “$” means United States dollars or
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts in the United
States of America. 

“Endangered Species Laws” means the federal Endangered
Species Act of 1973 (16 U.S.C. Section 1531 et seq.) and any similar
state law. 

“Environmental Claim” means any and all obligations,
liabilities, losses, administrative, regulatory or judicial actions, suits,
demands, decrees, claims, liens, judgments, warning notices, notices of
noncompliance or violation, investigations, proceedings, removal or remedial
actions or orders, or damages (foreseeable and unforeseeable, including
consequential and punitive damages), penalties, fees, out of pocket costs,
expenses, disbursements, attorneys’ or consultants’ fees, relating in any way to
any Environmental Law or any Permit issued under any such Environmental Law
(hereafter “Claims”), including (a) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Releases of
Hazardous Substances or arising from alleged injury or threat of injury to
healthy, safety or environment.

“Environmental Law” means any of:

(a) the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section
9601 et seq.) (“CERCLA”);

Exhibit A-7 

(b) the Federal Water Pollution Control
Act (33 U.S.C. Section 1251 et seq.) (“Clean Water Act” or
“CWA”); 

(c) the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.) (“RCRA”); 

(d) the Atomic Energy Act of 1954 (42
U.S.C. Section 2011 et seq.) (“AEA”); 

(e) the Clean Air Act (42 U.S.C.
Section 7401 et seq.) (“CAA”); 

(f) the Emergency Planning and
Community Right to Know Act (42 U.S.C. Section 11001 et seq.)
(“EPCRA”); 

(g) the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. Section 136 et seq.) (“FIFRA”); 

(g) the Oil Pollution Act of 1990 (P.L.
101-380, 104 Stat. 486); 

(h) the Safe Drinking Water Act (42
U.S.C. Sections 300f et seq.) (“SDWA”); 

(i) the Toxic Substances Control Act
(15 U.S.C. Section 2601 et seq.) (“TSCA”); 

(j) the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.) (“HMTA”); 

(k) the Occupational Safety and Health
Act (29 U.S.C. Section 651 et seq.) (“OSHA”); 

(p) the Endangered Species Laws; 

(q) all other Federal, state or local
Legal Requirements now or hereafter in effect that relate to protection of
pollution, protection or cleanup of the environment, including without
limitation any Legal Requirement that relates to (i) any Release or (ii) the
use, treatment, storage, disposal, handling, manufacturing, transportation or
shipment of Hazardous Substances or otherwise govern Hazardous Substances; and

(r) the regulations adopted pursuant to
all such foregoing laws. 

“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended. 

“ERISA Plan” means any employee benefit plan (a)
maintained by Borrower or any member of the Controlled Group or to which any of
them is making, or has an obligation to make, contributions, or has made, or has
been obligated to make, contributions as of the date hereof or at any time
within the six (6) year period preceding the date hereof or (b) covered by Title
IV of ERISA or to which Section 412 of the Code applies. 

Exhibit A-8 

“Event of Default” and “Events of Default” have
the meanings given in Article 7 of the Financing Agreement. 

“Event of Eminent Domain” means any compulsory transfer
or taking by condemnation, eminent domain or exercise of a similar power, or
transfer under threat of such compulsory transfer or taking, of any part of the
Project, by any agency, department, authority, commission, board,
instrumentality or political subdivision of the State in which the Project is
located, the United States or another Governmental Authority having
jurisdiction. 

“Exchange Act” means the Securities Exchange Act of
1934, as amended. 

“Excluded Taxes” shall have the meaning set forth in
Section 2.4(d)(i) of the Financing Agreement. 

“Expanded Project” means collectively the Project and
Phase II. 

“FACA” means the Federal Assignment of Claims Act of
1940 (31 U.S.C. Section 3727 et seq.; 41 U.S.C. Section 15 et
seq.). 

“FDIC” means the Federal Deposit Insurance Corporation
and its successors. 

“Federal Funds Rate” means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the per annum rates on overnight Federal funds transactions
with member banks of the Federal Reserve System arranged by federal funds
brokers as published by the Federal Reserve Bank of New York for such day (or,
if such rate is not so published for any day, the average of the rates quoted by
three federal funds brokers to Lender on such day on such transactions). 

“Federal Reserve Board” means the Board of Governors of
the Federal Reserve System. 

“Fee Letters” means, collectively, the Underwriting Fee
Letter Agreement and the Upfront Fee Letter Agreement. 

“FERC” means the Federal Energy Regulatory Commission
and its successors. 

“Final Completion” means, with respect to the Project,
that “Final Completion” under the Construction Contract and final acceptance of
such work (including acceptance by Borrower in consultation with the Independent
Engineer and completion of all Punch List Items) shall have occurred and that
completion of all such work shall have been in accordance with the Plans and
Specifications and the requirements of all Applicable Permits, all as certified
by the Independent Engineer to Lender (which certification shall be satisfactory
to Lender in its reasonable discretion). 

“Financial Closing” means the satisfaction (or
waiver in accordance with the terms of the Financing Agreement) of each of the
conditions precedent listed in Section 3.1 of the Financing Agreement.

Exhibit A-9 

“Financial Closing Date” means the date upon
which Financial Closing occurs. 

“Financing Agreement” means that certain Financing
Agreement dated as of November 9, 2011, between Borrower and Lender.

“Financing Documents” means, collectively, the Financing
Agreement, the Note, the Collateral Documents, the Intercreditor Agreement (and
any subsequent intercreditor agreement entered into in conjunction with an
Approved Other Project Financing), the Mandate Letter, the Cash Grant Notice of
Assignment, the Fee Letters, and any other loan or security agreements or letter
agreements or similar documents, agreements or instruments (including the Cash
Grant Application Power of Attorney ) entered into in connection with any of the
foregoing or with the transactions contemplated by the Financing Documents. 

“Flow of Funds Memorandum” means the memorandum
delivered to Lender pursuant to Section 3.1(ii). 

“FPA” means the Federal Power Act, as amended, and all
rules and regulations adopted thereunder. 

“GAAP” means generally accepted accounting principles in
the United States of America consistently applied. 

“Geothermal Consultant” means GeothermEx. 

“Governmental Authority” means any national, state or
local government (whether domestic or foreign), any political subdivision
thereof or any other governmental, quasi-governmental, judicial, public or
statutory instrumentality, authority, body, agency, bureau or entity (including
any zoning authority, FERC, the Securities and Exchange Commission, the FDIC,
the Comptroller of the Currency or the Federal Reserve Board, any central bank
or any comparable authority), or any arbitrator with authority to bind a party
at law. 

“Governmental Rule” means, with respect to any Person,
any statute, law, rule, regulation, ordinance, rule of common law, order or
binding interpretation, code, treaty, judgment, decree, directive, guidelines,
policy or similar form of decision of any Governmental Authority in each case
applicable to or binding upon such Person or any of its properties or to which
such Person or any of its property is subject. 

“Hazardous Substances” means any substance or material
that is prohibited, regulated or defined as “hazardous” or any other term of
similar import under any Environmental Law, including without limitation,
chemicals, pollutants, contaminants, wastes, acid mine runoff, toxic substances,
oil, petroleum, petroleum derivatives or other hydrocarbons, petroleum products,
asbestos, or PCBs.

“Holdings” means Nevada USG Holdings, LLC, a
Delaware limited liability company. 

Exhibit A-10 

“Holdings LLC Agreement” means that certain Limited
Liability Company Agreement of Holdings, dated as of September 19, 2011, and
amended by that certain First Amendment, dated as of November 9, 2011, executed
by Idaho Sponsor.

“Idaho Sponsor” means U.S. Geothermal Inc., an Idaho
corporation. 

“Idaho Sponsor Pledge Agreement” shall have the meaning
given in Section 2.8(b) of the Financing Agreement, as amended,
restated, supplemented, modified, replaced or refinanced from time to time. 

“Improvements” means all the buildings, structures,
facilities and improvements of every nature whatsoever now or hereafter situated
on the Site. 

“Inchoate Default” means any occurrence, circumstance or
event, or any combination thereof, which, with the lapse of time, the giving of
notice or both, would constitute an Event of Default. 

“Indemnified Taxes” shall have the meaning given in
Section 2.4(d)(i) of the Financing Agreement. 

“Indemnitees” shall have the meaning given in Section
5.21(a) of the Financing Agreement. 

“Independent Accountant” means Martinelli Mick or its
successor appointed pursuant to Section 9.1 of the Financing Agreement.

“Independent Consultants” means, collectively, the
Independent Engineer, the Independent Accountant and the Geothermal Consultant,
or their successors appointed pursuant to Section 9.1 of the Financing
Agreement. 

“Independent Engineer” means Luminate, or its
successors appointed pursuant to Section 9.1 of the Financing Agreement.

“Initial Loan” shall have the meaning given in
Section 2.1(a) of the Financing Agreement. 

“Insurance Requirements” means the provisions set forth
on Exhibit H of the Financing Agreement. 

“Interconnection Agreement” means that certain Small
Generator Interconnection Agreement (Service Agreement No. #10-01277), dated as
of December 28, 2010, by and between Interconnector and Borrower. 

“Interconnector” means Sierra Pacific Power Company
d/b/a NV Energy. 

“Intercreditor Agreement” shall have the meaning given
in Section 2.8(f) of the Financing Agreement. 

Exhibit A-11 

“Interest Payment Date” shall mean, for any Loan, the
last day of the Interest Period applicable to such Loan. 

“Interest Period” means with respect to any Loan, the
time period set forth in Section 2.2(b) of the Financing Agreement, which
commences on the first day of such Loan and ends on the last day of such time
period. 

“Lease” means that certain Geothermal Lease dated
October 14, 1987, by and between Borrower and Lessor, as amended by that certain
First Amendment to Geothermal Lease dated March 15, 2008 and that certain Second
Amendment to Geothermal Lease.

“Legal Requirements” means, as to any Person, the
articles of incorporation, bylaws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation, any requirement under a
Permit, and any determination of any Governmental Authority in each case
applicable to or binding upon such Person or any of its properties or to which
such Person or any of its property is subject. 

“Lender” means Ares Capital Corporation, a Maryland
corporation, and its successors and assigns. 

“Lender Account” shall have the meaning given in
Section 2.4(a) of the Financing Agreement. 

“Lending Office” means the office designated as such
beneath the name of Lender on Exhibit I of the Financing Agreement or
such other office of Lender as Lender may specify in writing from time to time
to Borrower. 

“Lessor” means the The Kosmos Company. 

“LIBO Rate” means, for any Loan, a rate per annum
(rounded upwards if necessary, to the nearest 1/100 of 1%) determined by Lender
equal to the rate appearing on Page 3750 of the Telerate Service (or any
successor or substitute page of the Telerate Service providing rate quotations
comparable to those currently provided on such Page 3750, as determined by
Lender) at which deposits in Dollars (in the approximate amount and having
approximately the same maturity as the Loan to be made) are offered to Lender in
the London Interbank Market at approximately 11:00 a.m. (London time), two
Banking Days prior to the first day of the Interest Period for such Loan. 

“Lien” on any asset means any mortgage, deed of trust,
lien, pledge, charge, security interest, restrictive covenant or easement or
encumbrance of any kind in respect of such asset, whether or not filed, recorded
or otherwise perfected or effective under applicable law, or any preference,
priority or preferential arrangement of any kind or nature whatsoever including
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset. 

“Liquidation Costs” shall have the meaning given in
Section 2.6 of the Financing Agreement. 

Exhibit A-12 

“Loan” and “Loans” shall have the meaning given
in Section 2.1(a) of the Financing Agreement. 

“Loan Commitment” shall have the meaning given in
Section 2.1(a) of the Financing Agreement. 

“Major Project Participants” means (a) Borrower, (b)
each other Borrower Affiliate Entity, (c) Operator, (d) Power Purchaser, (e)
Contractor, (f) Construction Lender, (g) Approved Lender, (h) Interconnector,
(i) each other Person party to the Water Contract, and (j) Lessor. 

“Mandate Letter” means that certain Mandate Agreement,
by and between Sponsor and Lender. 

“Mandatory Prepayment” means a prepayment of Obligations
required pursuant to the Financing Agreement. 

“Material Adverse Effect” means (a) a material and
adverse change in the business, property, results of operation or condition
(financial or otherwise) of any Borrower Affiliate Entity, (b) a material and
adverse effect on the Project, or any Borrower Affiliate Entity’s ability to
perform its respective obligations under the Financing Documents or any Material
Project Document to which it is a party, (c) a material and adverse change in
the ability of Lender to enforce any of the obligations under the Financing
Documents, (d) a material and adverse effect on the value, validity or priority
of Lender’s security interests in and Liens on the Collateral, or (e) a material
and adverse effect upon Borrower’s ability to apply for or receive the Cash
Grant or the Cash Grant Proceeds, as the case may be. 

“Material Project Documents” means the Borrower LLC
Agreement, the Holdings LLC Agreement, the Construction Contract, the Power
Purchase Agreement, the Interconnection Agreement, the O&M Agreement, the
Lease, the Water Contract and to the extent material to the Project, any other
individual Real Property Document, and each Additional Project Document that is
reasonably deemed material to the Project by Lender (in consultation with the
Independent Engineer).

“Maturity” or “maturity” means with respect to
any Loan, Borrowing, interest, fee or other amount payable by Borrower under the
Financing Agreement or the other Financing Documents, the date such Loan,
Borrowing, interest, fee or other amount becomes due, whether upon the stated
maturity or due date, upon acceleration or otherwise. 

“Maturity Date” means the earliest to occur of (a) three
(3) Banking Days after the receipt by Borrower of any Cash Grant Proceeds, (b)
one-hundred and twenty (120) days after the Placed in Service Date, and (c) June
30, 2012.

“Member Pledge Agreement” shall have the meaning given
in Section 2.8(c) of the Financing Agreement, as amended, restated,
supplemented, modified, replaced or refinanced from time to time. 

“Moody’s” means Moody’s Investors Service, Inc. 

Exhibit A-13 

“Multiemployer Plan” means any ERISA Plan that is a
“multiemployer plan” (as defined in Section 3(37) of ERISA). 

“Non-Recourse Party” shall have the meaning given in
Article 8 of the Financing Agreement.

“Note” shall have the meanings given in Section
2.2(d) of the Financing Agreement. 

“O&M Agreement” means that certain Management
Services Agreement, dated as of September 30, 2010, between Borrower and U.S.
Geothermal Services, LLC. 

“Obligations” means, collectively, (a) all Debt, loans,
advances, debts, liabilities (including any indemnification or other obligations
that survive the termination of the Financing Agreement and other Financing
Documents) and all other obligations, howsoever arising (including guaranty
obligations), owed by Borrower to Lender of every kind and description (whether
or not evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, pursuant to the terms of the Financing Agreement,
the Collateral Documents or any of the other Financing Documents or any other
agreement, document or instrument evidencing, securing or relating to such
indebtedness, liabilities and obligations, including all interest, fees
(including Other Fees and the Commitment Fees), charges, expenses, attorneys’
fees and accountants fees chargeable to Borrower or payable by Borrower
thereunder, (b) any and all sums advanced by Lender in order to preserve the
Collateral or preserve its security interest in the Collateral and (c) in the
event of any proceeding for the collection or enforcement of the obligations
described in clause (a) and (b) above, after an Event of Default shall have
occurred and be continuing, the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the Collateral,
or of any exercise by Lender of their rights under the Collateral Documents,
together with any necessary attorneys’ fees and court costs. 

“Operative Documents” means, collectively, the Financing
Documents and Project Documents. 

“Operator” means USG Services, LLC, or such other
Persons as shall be approved by Lender to operate the Project in accordance with
Section 5.13 of the Financing Agreement. 

“Organizational Documents” means, as to any Person, the
articles of incorporation, bylaws, operating agreement, partnership agreement,
or other organizational or governing documents of such Person, including, in the
case of Borrower, the Borrower LLC Agreement, and in the case of Holdings, the
Holdings LLC Agreement. 

“Other Fees” shall have the meaning given in Section
2.3 of the Financing Agreement. 

“Other Taxes” shall have the meaning given in Section
2.4(d)(i) of the Financing Agreement. 

Exhibit A-14 

“Patriot Act” means the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001)
amending the Bank Secrecy Act, 31 U.S.C. Section 5311 et seq., and all rules and
regulations adopted thereunder. 

“PBGC” means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under Title IV of ERISA.

“Permit” means any action, approval, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from a Governmental Authority. 

“Permitted Investments” means an investment in any of
the following: 

(a) direct obligations of the United States of America or any
of its agencies; 

(b) obligations guaranteed by the
United States of America or any of its agencies; 

(c) interest-bearing demand or time
deposit accounts (which may be represented by money market, time or certificates
of deposit) of any lender or any domestic or foreign bank whose outstanding
long-term debt is rated at least AA- by S&P or the equivalent thereof by
Moody’s or other nationally recognized rating agencies of similar standing
having capital and surplus in excess of Five Hundred Million Dollars
($500,000,000) having a maturity not exceeding 90 days from the date of
acquisition; 

(d) money market mutual funds which are
register under the Investment Company Act of 1940 and rated AAAm by S&P and
Aaa by Moody’s. Such fund must have capital in excess of Five Hundred Million
Dollars ($500,000,000) and at no point in time will this investment constitute
more than five percent (5%) of fund capital; 

(e) bankers’ acceptances drawn on and
accepted by any domestic or foreign commercial banks whose outstanding long-term
debt is rated “AA-” or higher by S&P or “Aa3” or higher by Moody’s (or the
equivalent thereof by other nationally recognized rating agencies of similar
standing); 

(f) direct obligations of, obligations
guaranteed by, and any other obligations issued by, any state of the United
States, or any political subdivision, agency, authority or instrumentality
thereof, which are rated at “AA-” or higher by S&P or “Aa3” or higher by
Moody’s (or the equivalent thereof by other nationally recognized rating
agencies of similar standing); 

(g) commercial paper, not including
liquidity notes or other extendable securities, issued by any corporation which
is rated “A 1” or higher by S&P or “P 1” or higher by Moody’s (or the
equivalent thereof by other nationally recognized rating agencies of similar
standing) having a maturity not exceeding 90 days from the date of acquisition;
and 

Exhibit A-15 

(h) repurchase agreements with any
domestic or foreign bank whose outstanding long-term debt is rated at least AA-
by S&P or the equivalent thereof by Moody’s or other nationally recognized
rating agencies of similar standing having capital and surplus in excess of Five
Hundred Million Dollars ($500,000,000) having a maturity not exceeding 90 days
from the date of acquisition relating to securities referred to in clauses (a),
(b) and (g) above.

“Permitted Liens” means (a) the rights and interests of
Lender as provided in the Collateral Documents; (b) Liens imposed by any
Governmental Authority for taxes to the extent such taxes are permitted to
remain unpaid under Section 5.16 of the Financing Agreement; (c)
materialmen’s, mechanics’, workers’, repairmen’s, employees’ or other like Liens
arising in the ordinary course of business or, prior to Final Completion, in
connection with the construction of the Project, for amounts being contested in
good faith and by appropriate proceedings so long as (i) such proceedings shall
not involve any danger of the sale, forfeiture or loss of any part of the
Project or the Site, title thereto or any interest therein and shall not
interfere with the use or disposition of the Project or the Site, or (ii) a bond
or other security acceptable to Lender in its reasonable discretion has been
posted or provided in such manner and amount as to assure Lender that any
amounts determined to be due will be promptly paid in full when such contest is
determined (it being understood that it shall be reasonable for Lender to
require that such bond or security be in such form and amount as may be
necessary to cause any such lien to be removed of record); (d) Liens incurred in
the ordinary course of business in connection with worker’s compensation,
unemployment insurance, social security and other Governmental Rules and that do
not in the aggregate materially impair the use of the property or assets of
Borrower or the value of such property or assets for the purposes of such
business; (e) Liens arising out of judgments or awards that do not otherwise
constitute an Event of Default so long as an appeal or proceeding for review is
being prosecuted in good faith and for the payment of which adequate reserves in
accordance with GAAP, bonds or other security acceptable to Lender in its
reasonable discretion have been provided or are fully covered by insurance; (f)
minor defects, easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, licenses, restrictions on the use of property
or minor imperfections in title which do not materially impair the property
affected thereby for the purpose for which title was acquired or interfere with
the operation of the Project as contemplated by the Operative Documents; (g)
Liens, deposits or pledges to secure statutory obligations or performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, or for purposes of like general nature in the ordinary course of its
business; (h) Liens on assets (real or personal) of Borrower which assets
collectively have a fair market value of less than Twenty-Five Thousand Dollars
($25,000) in the aggregate; (i) involuntary Liens (including a lien of an
attachment, judgment or execution) securing a charge or obligation, on
Borrower’s property, either real or personal, whether now or hereafter owned, in
the aggregate sum of less than Twenty-Five Thousand Dollars ($25,000); (j) Liens
of trade vendors created in connection with Debt allowed under Section
6.3(b) of the Financing Agreement; (k) the terms and conditions of the
Lease, (l) the rights and interests of Construction Lender under the
Construction Loan Agreement as in effect as of the date hereof, (m) the Liens in
favor of an Approved Lender, and (n) any other Liens permitted in writing by
Lender. 

“Permitted Transfer” means any sale, transfer or
assignment of ownership interests (direct or indirect) in Holdings on or after
(x) the Placed in Service Date and (y) the submission by Borrower of the Cash Grant Application in
accordance with the terms of the Financing Agreement, so long as, after giving
effect to such transaction, (a) Sponsor and Idaho Sponsor will continue to own,
beneficially and of record, directly or indirectly, greater than fifty percent
(50%) of the economic ownership of and membership interest of Holdings and (b)
Sponsor and Idaho Sponsor continue to have, directly or indirectly, the ability
to control the fundamental management decisions of Holdings (including the right
to elect a majority of the members of the board of directors (or similar
governing body, if any) of Holdings, the manager of Holdings or such other
direct or indirect controlling body of Holdings); provided,
however, that no such sale, assignment or transfer described above shall
be permitted unless (i) no Event of Default shall have occurred and be
continuing or shall occur as a result of any such sale, assignment or transfer;
(ii) all permits and other certificates, licenses, appraisals or requirements of
any Governmental Authority with respect to such sale, assignment or transfer
have been obtained and are in full force and effect, and such sale, assignment
or transfer complies with all the terms, conditions and requirements thereof;
(iii) such sale, assignment or transfer complies with the terms and conditions
of the Project Documents; (iv) such sale, assignment or transfer complies with
all applicable laws, rules, regulations, ordinances, codes, orders, decrees or
judgments of any Governmental Authority having jurisdiction with respect
thereto, including all federal and state securities laws; (v) the addition of
such Person as a direct or indirect owner of Holdings shall not cause (x) the
Project to lose its authorization to sell energy, capacity and ancillary
services, or (y) Holdings, Borrower or any direct or indirect owner of Borrower
to be a Disqualified Person or otherwise cause a Material Adverse Effect; (vi)
such Person acquiring such interest shall have delivered to Lender such
documents, agreements, instruments and other items with respect to itself as a
pledgor of the ownership interests in Holdings as are substantially similar to
those set forth in Sections 2.8(b) and (h)-(i), and Sections
3.1(a)-(d), (h), (r), (cc) and (ee) of the
Financing Agreement and otherwise reasonably acceptable to Lender; and (vii)
Sponsor reaffirms, pursuant to such documentation as shall be in form and
substance reasonably satisfactory to Lender, Sponsor’s continuing obligations
under the Sponsor Cash Grant Shortfall Guaranty.  

Exhibit A-16 

“Person” means any natural person, corporation, limited
liability company, partnership, firm, association, Governmental Authority or any
other entity whether acting in an individual, fiduciary or other capacity. 

“Phase II” means that certain expansion of the Project
from approximately eight (8) megawatts to approximately sixteen (16) megawatts
and commonly known as “Phase II.” 

“Placed in Service Date” means the date on which the
Project shall be “placed in service” under and in accordance with the Cash Grant
Guidance, which Placed in Service Date shall occur no later than the Placed in
Service Deadline. 

“Placed in Service Deadline” shall have the meaning
given in Section 7.9 of the Financing Agreement. 

“Plans and Specifications” means the plans and
specifications for the construction and design of the Project, including any
document describing the scope of work performed by Contractor under the
Construction Contract or any other contract or subcontract for the construction
of the Project and any feeder lines and interconnections, all work drawings, engineering and construction schedules, project schedules,
project monitoring systems, specifications status lists, material and
procurement ledgers, drawings and drawing lists, manpower allocation documents,
management and project procedures documents, project design criteria, and any
other document referred to in the Construction Contract or any of the documents
referred to in this definition, as the same may be amended to the extent
permitted by the Financing Agreement.

Exhibit A-17 

“Platform” shall have the meaning given in Section
10.1(b) of the Financing Agreement. 

“Pledge Agreements” means, collectively, the Idaho
Sponsor Pledge Agreement and the Member Pledge Agreement.

“Power Purchase Agreement” means that certain Amended
and Restated Long-Term Portfolio Energy Credit and Renewable Power Purchase
Agreement, dated May 31, 2011, by and between Power Purchaser and Borrower. 

“Power Purchaser” means Sierra Pacific Power Company.

“Preliminary Cost Segregation Report” shall have the
meaning given in Section 3.1(z) of the Financing Agreement. 

“Prime Rate” shall mean the rate which Lender
announces, from time to time, as its prime lending rate, the Prime Rate to
change when and as such prime lending rate changes. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged by Lender to any customer of Lender. Borrower
acknowledges that Lender may, from time to time, make commercial loans or
other loans at rates of interest at, above or below the Prime Rate. 

“Process Agent” means CT Corporation System.

“Project” means the repowering of an existing three (3)
megawatt geothermal power facility located on the Site, increasing the output
thereof to approximately eight (8) megawatts, as more particularly described on
Exhibit G-1, including the development, construction, maintenance and
operation of the expanded geothermal facility, all improvements or structures
erected on the Site, all alterations thereto or replacements thereof, all
fixtures, attachments, appliances, equipment, machinery and other articles
attached thereto or used in connection therewith and all parts which may from
time to time be incorporated or installed in or attached thereto, all contracts
and agreements for the purchase or sale of commodities or other personal
property related thereto, all real or personal property owned or leased related
thereto, and all other real and tangible and intangible personal property leased
or owned by Borrower and placed upon or used in connection with the generation
of electricity upon the Site. The “Project” shall not be deemed to include Phase
II. 

“Project Budget” shall have the meaning given in
Section 3.1(s) of the Financing Agreement. 

Exhibit A-18 

“Project Costs” means (a) the cost of designing,
engineering, equipping, procuring, constructing, starting up and testing the
Project; (b) the cost to Borrower of constructing or procuring the construction
of the collection system and interconnection of the Project to the relevant
electrical substation therefor; (c) the cost of acquiring any lease and any
other necessary interest in the Site; (d) real and personal property taxes, ad
valorem taxes, sales, use and excise taxes and insurance (including title
insurance) premiums payable with respect to the Project during the Construction
Period; (e) interest payable under this Agreement and financing-related fees
(including Other Fees and the Commitment Fees) and costs during the Construction
Period; (f) initial working capital requirements of the Project; (g) the costs
of acquiring Permits for the Project during the Construction Period; (h) all
general and administrative costs of Borrower attributable to the Project during
the Construction Period; (i) the cost of establishing a spare parts inventory
for the Project; (j) the cost of establishing the letters of credit or payment
and performance bonds required under any Project Documents; and (k) other fees,
costs and expenses relating to the development, construction and closing of the
financing for the Project, including financial, legal and consulting fees, costs
and expenses, all as described in the Project Budget. 

“Project Documents” means the Construction Contract, the
Construction Loan Agreement, the O&M Agreement, the Power Purchase
Agreement, the Water Contract, the Interconnection Agreement, the Real Property
Documents, the Borrower LLC Agreement, the Holdings LLC Agreement, the
Additional Project Documents and any other agreement relating to the
development, construction or operation of the Project. 

“Project Revenues” means all income and receipts derived
from the ownership or operation of the Expanded Project including payments and
liquidated damages paid to Borrower under the Power Purchase Agreement, the
Construction Contract, the O&M Agreement, and any other contract or
agreement of Borrower, proceeds of any business interruption or other insurance,
other income derived from the sale or use of electric energy transmitted or
distributed by the Expanded Project (including, if applicable, any transmission
credits under the Interconnection Agreement, renewable energy credits, capacity
attributes, etc.), and any receipts derived from the sale of any property
pertaining to the Expanded Project or incidental to the operation of the
Expanded Project, all as determined in conformity with cash accounting
principles, the investment income on amounts in the Accounts, the proceeds of
any condemnation awards relating to the Project and proceeds from the sale of
any Collateral. Project Revenues shall not include any amounts that are subject
to rebate, return, recapture or refund.

“Project Schedule” shall have the meaning given in
Section 3.1(t) of the Financing Agreement. 

“Prudent Utility Practices” means those practices,
methods, equipment, specifications and standards of safety and performance, of
which there may be more than one, and as the same may change from time to time,
as are commonly used by solar photovoltaic electric generation facilities of a
type and size similar to the Project as good, safe and prudent engineering
practices in connection with the design, construction, operation, maintenance,
repair and use of electrical and other equipment, facilities and improvements of
such solar photovoltaic electrical generation facility, with commensurate standards of
safety, performance, dependability, efficiency and economy.

Exhibit A-19 

“PUHCA” means the Public Utility Holding Company Act of
2005, and all rules and regulations adopted by FERC thereunder. 

“Punch List Items” means the “Punchlist
Items” under and as defined in the Construction Contract 

“PURPA” means the Public Utility Regulatory Policies
Act, and all rules and regulations adopted by FERC thereunder. 

“QF” shall have the meaning set forth in Section
3.1(v) of the Financing Agreement.

“QF Self-Certification” shall have the meaning set forth
in Section 3.1(v) of the Financing Agreement.

“Qualifying Costs” means actual, documented Project
Costs expended by Borrower in respect of “specified energy property” within the
meaning of Section 1603(d) of the American Recovery and Reinvestment Act of 2009
and the Cash Grant Guidance and that are properly includable in the tax basis of
such property in accordance with the Cash Grant Guidance and applicable law.

“Real Property” means all real property held by
Borrower, which Borrower owns in fee or in which it holds a leasehold interest
as a tenant, an easement right as an easement holder or a license right as a
licensee or otherwise occupies. 

“Real Property Documents” means any documents,
agreements or instruments pursuant to which Borrower has rights in Real
Property. 

“Recapture Event” mean a determination by United States
Treasury Department that all or any portion of the Cash Grant shall be
recaptured, disallowed or invalidated as a result of (i) any disposal of
specified energy property for which Borrower received a Cash Grant, (ii) any
transfer of any direct or indirect equity interest in Borrower to any
Disqualified Person, (iii) any misstatements, misrepresentations or inaccuracies
in any Cash Grant Application, (iv) a determination, following the receipt of
the Cash Grant, that Borrower or the Project does not qualify for Cash Grants,
or (v) for any other reason, including impermissible cessation of energy
production from the Project.

“Regulation D” means Regulation D of the Board of
Governors of the Federal Reserve System (or any successor). 

“Regulatory Change” means any change after the date of
the Financing Agreement in federal, state, local or foreign laws, regulations,
Legal Requirements or requirements under Applicable Permits, or the adoption or
making after such date of any interpretations, directives or requests of or
under any federal, state, local or foreign laws, regulations, Legal Requirements
or requirements under Applicable Permits (whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof. 

Exhibit A-20 

“Release” means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, pumping, pouring, emitting, escaping,
emptying, seeping, placing and the like, into or upon any land or water or air,
or otherwise entering into the environment. 

“Replacement Obligor” means, with respect to any Person
party to a Project Document, any Person satisfactory to Lender who, pursuant to
any definitive agreement or definitive guaranty satisfactory to Lender, assumes
the obligation of providing the services and/or products on terms and conditions
no less favorable to Borrower than those which such Person being replaced is
obligated to provide pursuant to the applicable Project Document. 

“Reportable Event” means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived by the PBGC. 

“Reserve Requirement” means the maximum rate (expressed
as a percentage) at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the Interest Period
therefor under Regulation D by Lender. Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves required to
be maintained by Lender, by reason of any Regulatory Change against (i) any
category of liabilities which includes deposits by reference to which the LIBO
Rate or Loans is to be determined, (ii) any category of liabilities or
extensions of credit or other assets which include Loans or (iii) any category
of liabilities or extensions of credit which are considered irrevocable
commitments to lend, unless such Loans are exempt from this foregoing list. 

“Responsible Officer” means, as to any Person, its
president, chief executive officer, any vice president, treasurer, or secretary,
any managing general partner (or any of the preceding with regard to such
managing general partner) or, authorized representative. 

“S&P” means Standard & Poor’s Corporation. 

“Second Borrowing Date” shall have the meaning given in
Section 2.2(e)(ii)(A) of the Financing Agreement. 

“Second Borrowing Deadline” shall mean January 15, 2012.

“Site” shall mean the real property situated in the
County of Washoe, State of Nevada, more particularly described in Exhibit
G-1 (the “Land”), together with all and singular tenements,
hereditaments, rights, reversions, remainders, development rights, privileges,
benefits, easements (in gross or appurtenant), rights-of-way, licenses, gores or
strips of land, streets, ways, alleys, passages, sewer rights, water courses,
water rights and powers, riparian rights and powers, and all appurtenances
whatsoever and claims or demands of Borrower at law or in equity in any way
belonging, benefiting, relating or appertaining to the Land, the Project,
Borrower, the airspace over the Land or the Improvements, or which hereinafter
shall in any way belong, relate or be appurtenant thereto, whether now owned or
hereafter acquired by Borrower. 

Exhibit A-21 

“Solvency Certificate” shall have the meaning given in
Section 3.1(ll) of the Financing Agreement.

“Solvent” means, with respect to each Borrower Affiliate
Entity, that as of the date of determination, both (a) (i) the sum of such
Person’s Debt (including contingent liabilities) does not exceed the present
fair saleable value of such Person’s present assets; and (ii) such Person has
not incurred and does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due (whether at maturity or otherwise); and (b) such Person is “solvent”
within the meaning given that term and similar terms under the Bankruptcy Law
and applicable laws relating to fraudulent transfers and conveyances. For
purposes of this definition, the amount of any contingent liability at any time
shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability (irrespective of whether
such contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standard No. 5). 

“Specified Cash Grant Recapture Exposure” shall have the
meaning given in Section 4.7 of the Sponsor Cash Grant Shortfall Guaranty. 

“Sponsor” means U.S. Geothermal Inc., a Delaware
corporation. 

“Sponsor Cash Grant Shortfall Guaranty” shall have the
meaning given in Section 2.8(e) of the Financing Agreement. 

“Sponsor Equity” means an amount equal to Fourteen
Million Dollars ($14,000,000). 

“State” shall mean (a) any state of the United States of
America or (b) the District of Columbia. 

“Substantial Completion” means that “Substantial
Completion” under the Construction Contract has been achieved, and copies of all
certificates required to be issued in respect thereof have been provided to
Lender and are, in each case, in form and substance reasonably satisfactory to
Lender and the Independent Engineer. 

“Taxes” shall have the meaning given in Section
2.4(d)(i) of the Financing Agreement. 

“Term” means the entire period during which there is any
outstanding Obligation. 

“Termination Event” means (i) a Reportable Event with
respect to any ERISA Plan, (ii) the initiation of any action by Borrower, any
member of the Controlled Group or any ERISA Plan fiduciary to terminate an ERISA
Plan (other than a standard termination under Section 4041(b) of ERISA) or the
treatment of an amendment to an ERISA Plan as a termination under Section
4041(e) of ERISA, (iii) the institution of proceedings by the PBGC under Section
4042 of ERISA to terminate an ERISA Plan or to appoint a trustee to administer
any ERISA Plan, (iv) Borrower or any member of the Controlled Group incurs
liability under Section 4062(e) of ERISA with respect to an ERISA Plan or (v)
Borrower or any member of the Controlled Group is in default (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan. 

Exhibit A-22 

“Terrorism Order” shall have the meaning given in
Section 4.33(a) of the Financing Agreement. 

“UCC” means the Uniform Commercial Code of the
jurisdiction the law of which governs the document in which such term is used or
which governs the creation or perfection of the Liens granted thereunder. 

“Underwriting Fee Letter Agreement” means that certain
Underwriting Fee Letter Agreement dated on or about the date hereof, by and
between Sponsor and Lender. 

“Upfront Fee Letter Agreement” means that certain
Upfront Fee Letter Agreement dated on or about the date hereof, by and between
Sponsor and Lender. 

“Water Contract” means that certain Water Lease
Agreement, dated as of August 1, 2010, executed by and between Idaho Sponsor and
Borrower. 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK] 

Exhibit A-23 

RULES OF
INTERPRETATION 

	1. 	
      The singular includes the plural and the plural includes
      the singular.

	 	 
	2. 	
      The word “or” is not exclusive.

	 	 
	3. 	
      A reference to a Governmental Rule includes any amendment
      or modification to such Governmental Rule, and all regulations, rulings
      and other Governmental Rules promulgated under such Governmental
    Rule.

	 	 
	4. 	
      A reference to a Person includes its successors and
      permitted assigns.

	 	 
	5. 	
      Accounting terms have the meanings assigned to them by
      GAAP, as applied by the accounting entity to which they refer.

	 	 
	6. 	
      The words “include,” “includes” and “including” are not
      limiting.

	 	 
	7. 	
      A reference in a document to an Article, Section,
      Exhibit, Schedule, Annex or Appendix is to the Article, Section, Exhibit,
      Schedule, Annex or Appendix of such document unless otherwise indicated.
      Exhibits, Schedules, Annexes or Appendices to any document shall be deemed
      incorporated by reference in such document.

	 	 
	8. 	
      References to any document, instrument or agreement (a)
      shall include all exhibits, schedules and other attachments thereto, (b)
      shall include all documents, instruments or agreements issued or executed
      in replacement thereof, and (c) shall mean such document, instrument or
      agreement, or replacement or predecessor thereto, as amended, modified and
      supplemented from time to time (to the extent permitted under the
      Financing Documents) and in effect at any given time.

	 	 
	9. 	
      The words “hereof,” “herein” and “hereunder” and words of
      similar import when used in any document shall refer to such document as a
      whole and not to any particular provision of such document.

	 	 
	10. 	
      References to “days” shall mean calendar days, unless the
      term “Banking Days” shall be used. References to a time of day shall mean
      such time in New York, New York, unless otherwise specified.

	 	 
	11. 	
      The Financing Documents are the result of negotiations
      between, and have been reviewed by Borrower, Lender and their respective
      counsel. Accordingly, the Financing Documents shall be deemed to be the
      product of all parties thereto, and no ambiguity shall be construed in
      favor of or against Borrower or Lender.

	 	 
	12. 	
      The words “will” and “shall” shall be construed to have
      the same meaning and effect.

Exhibit A-24 

EXHIBIT B 
to Financing Agreement 

FORM OF NOTE 

	$[_________] 	New York, New York 
	  	______________
, 2011 

For value received, the undersigned USG NEVADA LLC, a Delaware
limited liability company (“Borrower”), unconditionally promises to pay
to ARES CAPITAL CORPORATION, a Maryland corporation (the “Lender”), or
order, at its office located at 245 Park Avenue, 44th Floor, New
York, NY 10167, in lawful money of the United States of America and in
immediately available funds, the principal amount of
[___________________] DOLLARS ($[________]), or if
less, the aggregate unpaid and outstanding principal amount of this Note
advanced by the Lender to Borrower and all other amounts owed by Borrower to the
Lender hereunder pursuant to that certain Financing Agreement, dated as of
November 9, 2011 (as amended, amended and restated, modified or supplemented
from time to time, the “Financing Agreement”), by and between
Borrower and the Lender. 

This is the Note referred to in the Financing Agreement and is
entitled to the benefits thereof and is subject to all terms, provisions and
conditions thereof. Capitalized terms used and not defined herein shall have the
meanings set forth in the Financing Agreement. 

This Note is made in connection with and is secured by, among
other instruments, the provisions of the Collateral Documents. Reference is
hereby made to the Financing Agreement and the Collateral Documents for the
provisions, among others, with respect to the custody and application of the
Collateral, the nature and extent of the security provided thereunder, the
rights, duties and obligations of Borrower and the rights of the holder of this
Note. 

The principal amount hereof is payable in accordance with the
Financing Agreement, and such principal amount may be prepaid solely in
accordance with the Financing Agreement. 

Borrower authorizes the Lender to record on the schedule
annexed to this Note, the date and amount of the Loans made by the Lender and
each payment or prepayment of principal thereunder and agrees that all such
notations shall constitute prima facie evidence of the accuracy of the
matters noted. Borrower further authorizes the Lender to attach to and make a
part of this Note continuations of the schedule attached thereto as necessary.
No failure to make any such notations, nor any errors in making any such
notations, shall affect the validity of Borrower’s obligations to repay the full
unpaid principal amount of the Loans or the other obligations of Borrower
hereunder or under the Financing Agreement. 

Borrower further agrees to pay, in lawful money of the United
States of America and in immediately available funds, interest from the date
hereof on the unpaid and outstanding principal amount hereof until such unpaid
and outstanding principal amount shall become due and payable (whether at stated
maturity, by acceleration or otherwise) at the rates of interest and at the
times set forth in the Financing Agreement, and Borrower agrees to pay other
fees and costs as stated in the Financing Agreement at the times
specified in, and otherwise in accordance with, the Financing Agreement. 

If any payment on this Note becomes due and payable on a date
which is not a Banking Day, such payment shall be made on the first succeeding,
or the immediately preceding, Banking Day, in either case in accordance with the
terms of the Financing Agreement. 

Upon the occurrence of any one or more Events of Default, all
amounts then remaining unpaid on this Note may become or be declared to be
immediately due and payable as provided in the Financing Agreement and other
Financing Documents, without notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor, or notices or demands of
any kind, all of which are expressly waived by Borrower. 

Recourse under this Note shall be limited as set forth in
Article 8 of the Financing Agreement. 

Borrower agrees to pay all costs and expenses, including
without limitation reasonable attorneys’ fees, incurred in connection with the
interpretation or enforcement of this Note, at the times specified in, and
otherwise in accordance with, the Financing Agreement. 

Except as permitted by the Financing Agreement, this Note may
not be assigned by the Lender to any other person. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN AND SHALL BE
GOVERNED BY, AND CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE AND WITHOUT REFERENCE TO
CONFLICTS OF LAWS. 

	 	USG NEVADA LLC, 
	 	a Delaware limited liability company, 
	 	as Borrower 
	 	 
	 	           
           By: _____________________________________
	 	 
	 	           
           Name: ___________________________________
	 	 
	 	           
           Title:
  ____________________________________

[SIGNATURE PAGE TO NOTE] 

	Date 	Advance 	Prepayment or 
Repayment 	Outstanding Balance 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

EXHIBIT C 
to Financing Agreement 

SCHEDULE OF OPINIONS 

	1. 	
      New York Legal Opinion (covering enforceability of the
      Financing Documents and creation/perfection of security interests), Nevada
      Legal Opinion (covering regulatory/environmental/permitting opinions) and
      Corporate Legal Opinion (covering due formation, good standing,
      authorization, execution, delivery and no conflicts) of U.S. Geothermal
      Inc. (an Idaho corporation), U.S. Geothermal Inc. (a Delaware
      corporation), Nevada USG Holdings, LLC (a Delaware limited liability
      company) and USG Nevada LLC (a Delaware limited liability company) of
      Hawley Troxell Ennis & Hawley LLP, dated as of November 9, 2011, as
      counsel to the Borrower Affiliate Entities.

	 	 
	2. 	
      New York Legal Opinion (covering enforceability of the
      Intercreditor Agreement), and Corporate Legal Opinion (covering due
      formation, good standing, authorization, execution, delivery and no
      conflicts) of McAfee & Taft, A Professional Corporation, dated as of
      November 9, 2011, as counsel to SAIC Constructors,
LLC.

Exhibit C 

	EXHIBIT D-1 
	to Financing
      Agreement 

FORM OF 
CASH GRANT SECURITY AGREEMENT 

between 

USG NEVADA LLC, 
a Delaware limited liability company

(Grantor) 

and 

ARES CAPITAL CORPORATION, 
a Maryland corporation

(Lender) 

 

	Dated as of November 9, 2011 
	 

TABLE OF CONTENTS 

Page 

	ARTICLE I. DEFINITIONS 	2 
	               
         1.1 	Defined Terms 	2 
	           
             1.2 	Financing Agreement and UCC
      Definitions 	2 
	               
         1.3 	Rules of Interpretation 	2 
	ARTICLE II. PLEDGE AND GRANT OF
      SECURITY INTEREST 	2 
	               
         2.1 	Granting Clause 	2 
	           
             2.2 	Actions under Cash Grant
      Application and Consents 	3 
	               
         2.3 	Destruction of Collateral 	3 
	           
             2.4 	Retention of Certain Rights 	4 
	               
         2.5 	Certain Exclusions 	4 
	ARTICLE III. OBLIGATIONS SECURED
    	4 
	ARTICLE IV. REPRESENTATIONS, WARRANTIES AND
      COVENANTS 	4 
	           
             4.1 	Construction Loan Documents.
	4 
	ARTICLE V. EVENTS OF DEFAULT 	5 
	ARTICLE VI. REMEDIES UPON AN
      EVENT OF DEFAULT 	5 
	               
         6.1 	Remedies Upon Event of Default 	5 
	           
             6.2 	Minimum Notice Period 	7 
	               
         6.3 	Costs and Expenses 	7 
	           
             6.4 	Actions Taken by Lender 	7 
	               
         6.5 	Waiver of Rights and Remedies Under Applicable
      Legal Requirements 	7 
	           
             6.6 	No Impairment of Remedies 	7 
	ARTICLE VII. MISCELLANEOUS 	8 
	           
             7.1 	Remedies Cumulative; Delay Not
      Waiver. 	8 
	               
         7.2 	Attorney-In-Fact 	8 
	           
             7.3 	Perfection; Further Assurances;
      Certain Waivers. 	9 
	               
         7.4 	Continuing Assignment and Security Interest;
      Transfer of Notes 	10 
	           
             7.5 	Termination of Security
      Interest 	11 

Exhibit D-1-ii 

	                   7.6
    	Limitation on Duty of Lender
      with Respect to the Collateral 	11 
	                   7.7
    	Liability 	11 
	                   7.8
    	Amendments; Waivers; Consents
    	11 
	                   7.9
    	Notices 	11 
	                   7.10
    	Reinstatement 	11 
	                   7.11
    	Application of Proceeds 	12 
	                   7.12
    	Lender May Perform 	12 
	                   7.13
    	Expenses; Interest. 	12 
	                   7.14
    	Severability 	12 
	                   7.15
    	Survival of Provisions 	12 
	                   7.16
    	Successions or Assignments. 	12 
	                   7.17
    	Headings Descriptive 	13 
	                   7.18
    	Entire Agreement 	13 
	                   7.19
    	Time 	13 
	                   7.20
    	Counterparts 	13 
	                   7.21
    	APPLICABLE LAW. 	13 
	                   7.22
    	CONSENT TO JURISDICTION 	13 
	                   7.23
    	WAIVER OF JURY TRIAL 	14 
	                   7.24
    	Third Party Rights 	14 

Exhibit D-1-iii 

CASH GRANT SECURITY AGREEMENT 

THIS CASH GRANT SECURITY
AGREEMENT, dated as of November 9, 2011 (as amended, amended and restated,
supplemented or otherwise modified from time to time, this “Agreement”),
is entered into by and between USG NEVADA LLC, a limited liability
company formed and existing under the laws of the State of Delaware
(“Grantor”), and ARES CAPITAL CORPORATION, a corporation formed
and existing under the laws of the State of Maryland (together with its
successors, designees and assigns in such capacity, “Lender”). 

RECITALS 

A. Grantor owns and intends to
develop, construct, install, test, own, operate and use an approximately 8 MW
geothermal power facility located in Washoe County, Nevada (the
“Project”). 

B. Grantor has entered into that
certain Financing Agreement, dated as of the date hereof (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
“Financing Agreement”), by and between Grantor, as Borrower and Lender,
pursuant to which, among other things, Lender has extended commitments to make
loans and other financial accommodations to, and for the benefit of, Grantor.

C. Grantor will apply certain
proceeds and other financial accommodations obtained under the Financing
Agreement in the manner set forth in the Financing Agreement. 

D. Grantor will file a Cash Grant
Application with respect to the Project as and when required pursuant to the
Financing Agreement. 

E. The primary source of
repayment to Lender with respect to the Loans will be the proceeds from Cash
Grant paid by the United States Treasury Department in connection with the
filing of the Cash Grant Application (such proceeds, the “Cash Grant
Proceeds”). 

C. Grantor will derive
substantial benefit from the making of the extensions of credit under the
Financing Agreement.

D. It is a condition precedent to
the effectiveness of the Financing Agreement and the other Financing Documents,
and the making of the advances of credit contemplated thereby, that Grantor
shall have executed this Agreement. 

AGREEMENT 

NOW, THEREFORE, in consideration
of the promises contained herein, and to induce Lender to enter into the
Financing Documents and to make the advances of credit to Borrower contemplated
thereby, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Grantor hereby agrees with Lender as follows:

Exhibit D-1-1 

ARTICLE I. 
DEFINITIONS 

1.1 Defined Terms. The
following terms (whether or not underscored) when used in this Agreement,
including its preamble and recitals, shall have the following
meanings: “Cash Grant Proceeds” has the meaning given in the
recitals to this Agreement. 

“Collateral” has the meaning given in Section
2.1. 

“Financing Agreement” has the meaning given in the
recitals to this Agreement. “Grantor” has the meaning given in the
preamble to this Agreement. 

“Lender” has the meaning given in the preamble to
this Agreement. “Project” has the meaning given in the recitals to
this Agreement. 

 “UCC” means the Uniform
Commercial Code as the same may, from time to time, be in effect in the State of
New York; provided, however, in the event that, by reason of mandatory
provisions of law, any or all of the perfection or priority of the security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York the term “UCC” shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or priority and
for purposes of definitions related to such provisions. 

1.2 Financing Agreement and
UCC Definitions. Unless otherwise defined herein, all capitalized terms used
in this Agreement shall have the meanings provided in Exhibit A to the Financing
Agreement or if not defined therein, the UCC.

1.3 Rules of
Interpretation. Unless otherwise provided herein, the rules of
interpretation set forth in Exhibit A to the Financing Agreement shall apply to
this Agreement, including its preamble and recitals. 

ARTICLE II. 
PLEDGE AND GRANT OF SECURITY INTEREST

2.1 Granting Clause. To
secure the timely payment in full in cash and performance of the Obligations,
Grantor does hereby assign, grant and pledge to, and subject to a continuing
security interest in favor of, Lender, all the estate, right, title and interest
of Grantor in, to and under the following (collectively, the
“Collateral”): 

(a) the Cash Grant, the Cash Grant
Application, and all contracts, agreements and documents relating to the Cash
Grant or the Cash Grant Application, as amended, supplemented, substituted,
renewed or otherwise modified from time to time; 

(b) all income and revenues derived
from the Cash Grant, including the Cash Grant Proceeds, and all money,
instruments, securities, investment property, financial assets, contract rights, documents, deposit accounts, chattel
paper, general intangibles, commercial tort claims and supporting obligations
pertaining to the Cash Grant or the Cash Grant Proceeds, including the right in
the name and on behalf of Grantor to appear in an defend any action or
proceeding brought with respect to the Cash Grant, and to commence any action or
proceeding to protect the interest of Grantor in such Collateral; 

Exhibit D-1-2 

(c) all books, records, writings,
design documents, computer programs, printouts and other computer materials and
records, data bases, software, information and other property relating to, used
or useful in connection with, the Cash Grant Application; and 

(d) the proceeds of all of the
foregoing collateral, whether cash or noncash, including without limitation all
rights of Grantor to receive moneys due and to become due under or pursuant to
such Collateral, all claims for damages arising out of or under the Collateral,
all rights of Grantor to amend, supplement, modify or waive performance with
regard to the Cash Grant or the Cash Grant Application, or to make
determinations, to exercise any election or option or to give or receive any
notice, consent, waiver or approval, together with full power and authority with
respect to the same, to demand, receive, enforce collect or provide receipt for
any of the foregoing rights, to enforce or execute any checks or other
instruments or orders, to file any claims and to take any action which may be
necessary or advisable in connection with any of the foregoing, all proceeds
receivable or received when any or all of the Collateral is sold, collected,
exchanged or otherwise disposed of, whether voluntarily or involuntarily, and
any and all additions and accessions to the Collateral, and all proceeds
thereof, including proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, or of any judgments or
settlements made in lieu thereof for damage to or diminution of the
Collateral.

2.2 Actions under Cash Grant
Application and Consents. Notwithstanding anything to the contrary contained
herein, (i) Grantor shall remain liable under the Cash Grant Application to
perform all obligations thereunder in accordance with the Cash Grant Guidance
and the Financing Agreement, provided that Lender may, at its option (but shall
not be obligated to) remedy any failure of Grantor to so perform such
obligations with regard to the Cash Grant (and no such cure by Lender shall be
construed as an assumption by Lender of any obligation of Grantor with regard to
the Cash Grant, and no such action by Lender shall result in liability of
Lender, except to the extent caused by Lender’s gross negligence or willful
misconduct), and (ii) Lender may exercise any rights or remedies under any
Consent delivered pursuant to the Financing Agreement at any time permitted
under such Consent. Grantor hereby constitutes and appoints Lender and each
successor or assign or designee of Lender, the true and lawful attorney-in-fact
of Grantor, with full power and authority in the place and stead of Grantor and
in the name of Grantor, Lender or otherwise, to enforce all rights, interests
and remedies of Grantor with respect to the Consents. This power of attorney is
a power coupled with an interest and shall be irrevocable. 

2.3 Destruction of
Collateral. No injury to, or loss or destruction of, the Collateral or any
part thereof shall relieve Grantor of any of its obligations hereunder or any of
the Obligations under the Financing Agreement or any other Financing Document to
which it is a party. 

Exhibit D-1-3 

2.4 Retention of Certain
Rights. So long as Lender has not exercised remedies with respect to the
Collateral under this Agreement or any other Financing Document upon the
occurrence and during the continuation of an Event of Default, Grantor reserves
all rights with respect to the Collateral owned by it (except as limited by the
Financing Documents), including all rights to use, apply, modify, dispose of or
otherwise deal with such Collateral (except as limited by the Financing
Documents). 

2.5 Certain Exclusions.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the security interest granted under Section 2.1 attach to any contract,
property rights or agreement to which Grantor is a party or any of its rights or
interests thereunder if and for so long as the grant of such security interest
shall constitute or result in (a) the abandonment, invalidation or
unenforceability of any right, title or interest of Grantor therein or (b) a
breach of termination pursuant to the terms of, or a default under, any such
lease, license, contract property rights or agreement (other than to the extent
that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of
any relevant jurisdiction or any other applicable law or principles of equity),
provided, however, that such security interest shall attach
immediately at such time as the condition causing such abandonment, invalidation
or unenforceability shall be remedied and, to the extent severable, shall attach
immediately to any portion of such contract, property rights or agreement that
does not result in any of the consequences specified in clauses (a) or (b)
above, including, without limitation, any proceeds of such contract, property
rights or agreement.

ARTICLE III. 
OBLIGATIONS SECURED 

Without limiting the generality
of the foregoing, this Agreement and all of the Collateral secure the payment
and performance when due of all Obligations (as such term is defined in the
Financing Agreement) of Grantor to Lender pursuant to the Financing
Documents.

ARTICLE IV. 
REPRESENTATIONS, WARRANTIES AND COVENANTS

To induce Lender to enter into
the Financing Agreement and the other Financing Documents and to induce Lender
to make its extension of credit to the Borrower under the Financing Agreement,
Grantor hereby represents, warrants and covenants to Lender, as of the date
hereof and the other applicable dates (if any) specified in the applicable
Financing Documents, that: 4.1 Construction Loan Documents. The grant of
the security interest contemplated hereby is permitted under the Construction
Loan Documents and the Construction Loan Documents shall not apply to prevent
the attachment of the security interest granted hereunder.

4.2 Extensions. Grantor
shall not grant any extension of time of payment of any receivable under the
Cash Grant; compromise or settle any receivable for less than the full amount
thereof; release, wholly or partially, any Person liable for the payment
thereof; or amend, supplement or modify the same in any manner that could
adversely affect the value thereof.

Exhibit D-1-4 

4.3. Eligibility. Borrower and the Project meet the
standards for applicant and property eligibility set forth in the Cash Grant
Guidance. Borrower estimates that the Cash Grant will be paid to Borrower on or
prior to the Maturity Date. Borrower’s best estimate is that the Cash Grant will
be at least ten million Dollars ($10,000,000). Such estimate (i) is based on
reasonable assumptions as to all legal and factual matters material to such
estimates, (ii) is consistent with the provisions of the Operative Documents in
all material respects, (iii) has been calculated in good faith and with due care
and (iv) fairly represents Borrower’s reasonable expectations as to the amount
of the Cash Grant.

4.4. Cash Grant Application. From and after the filing
of the Cash Grant Application for the Project, the factual information and the
representations of Borrower set forth in the Cash Grant Application are (i)
true, correct and complete in all material respects, (ii) based on reasonable
assumptions as to all legal and factual matters material to the figures set
forth therein, (iii) consistent with the provisions of the Operative Documents
in all material respects, (iv) prepared in good faith and with due care and (v)
fairly represent Borrower’s reasonable expectations as to the matters covered
thereby. Other than with respect to the Cash Grant Application and the matters
covered thereunder, no federal tax credit pursuant to Code Sections 45 and 48
has been or will be claimed with respect to any asset comprising the Project.
Borrower has and will continue to make every election that is necessary to claim
and apply for the Cash Grant in accordance with the Cash Grant Guidance and
applicable law. 

4.5 No Ownership by Disqualified Persons. Neither
Borrower nor any direct or indirect owner of Borrower is a Disqualified Person.

ARTICLE V. 
EVENTS OF DEFAULT 

     The occurrence of an Event of
Default under, and as defined in, the Financing Agreement shall constitute an
Event of Default hereunder. 

ARTICLE VI. 
REMEDIES UPON AN EVENT OF DEFAULT

     6.1 Remedies Upon Event of
Default. Upon the occurrence and during the continuation of an Event of
Default, Lender shall have the right, but not the obligation, to do any of the
following: 

(a) declare any amounts payable by
Grantor under the Financing Agreement to be due and payable immediately and
thereupon the same shall become immediately due and payable without presentment,
demand, notice of dishonor, protest or further notice of any kind, all of which
are expressly waived by Grantor, anything contained herein to the contrary
notwithstanding (provided that, if such Event of Default occurs under Section
7.4 of the Financing Agreement with respect to Grantor, all such amounts
shall become automatically due and payable); 

(b) proceed to protect and enforce the
rights vested in it by this Agreement and under the UCC; 

Exhibit D-1-5 

(c) cause
all revenues hereby pledged as security and all other moneys and other property
pledged hereunder to be paid and/or delivered directly to it, and demand, sue
for, collect and receive any such moneys and property; 

(d) cause any action at law or suit in
equity or other proceeding to be instituted and prosecuted to collect or enforce
any obligation or right hereunder or included in the Collateral, including
specific enforcement of any covenant or agreement contained herein, or to
foreclose or enforce the security interest in all or any part of the Collateral
granted herein, or to enforce any other legal or equitable right vested in it by
this Agreement or by applicable Legal Requirements; 

(e) foreclose or enforce any other
agreement or other instrument by or under or pursuant to which the Obligations
are issued or secured; 

(f)
incur reasonable expenses, including reasonable attorneys’ fees, reasonable
consultants’ fees, and other costs appropriate to the exercise of any right or
power under this Agreement; 

(g) perform any obligation of Grantor hereunder or
under any other Financing Document, make payments, submit certificates,
purchase, contest or compromise any encumbrance, charge, or lien, pay taxes and
expenses and insure, process and preserve the Collateral without, however, any
obligation to do so; 

(h) make any reasonable compromise or settlement deemed
desirable with respect to any of the Collateral and may extend the time of
payment, arrange for payment installments, or otherwise modify the terms of, any
Collateral; 

(i) enter into any extension,
reorganization, deposit, merger, consolidation or other agreement pertaining to,
or deposit, surrender, accept, hold or apply other property in exchange for, the
Collateral or any part thereof; 

(j) transfer the Collateral or any part
thereof to the name of Lender or to the name of Lender’s nominee; 

(k) take possession of and endorse in
the name of Grantor or in the name of Lender, for the account of Grantor, any
bills of exchange, checks, drafts, money orders, notes or any other chattel
paper, documents or instruments constituting all or any part of the Collateral
or received as interest or other payment on or on account of the Collateral or
any part thereof; 

(l) take possession of the Collateral
and of any and all books of account and records of Grantor relating to any part
of the Collateral, and, if applicable, secure the appointment of a receiver, and
arrange for and conduct a sale of the Collateral at public or private sale as
Lender may elect, and Lender shall incur no liability as a result of such sale
conducted in a commercially reasonable manner and in accordance with applicable
Legal Requirements; 

Exhibit D-1-6 

(m) appoint another Person (who may be
an employee, officer or other representative of Lender) to do any of the
foregoing, or take any other action permitted hereunder, as agent for or
representative of, and on behalf of, Lender; 

(n) execute (in the name, place and
stead of Grantor) endorsements, assignments and other instruments of conveyance
or transfer with respect to all or any of the Collateral; 

(o) take any other action which Lender
deems necessary or desirable to protect or realize upon its security interest in
the Collateral or any part thereof, and Grantor hereby irrevocably appoints
Lender as Grantor’s attorney-in-fact (as set forth in Section 7.2) to
take any such action, including the execution and delivery of any and all
documents or instruments related to the Collateral or any part thereof in
Grantor’s name, and said appointment shall create in Lender a power coupled with
an interest which shall be irrevocable; (p) exercise any other or additional
rights or remedies granted to Lender under any other provision of this Agreement
or any Financing Document, or exercisable by a secured party under the UCC or
under any other applicable Legal Requirement; or 

(q) exercise any rights or remedies
granted to Lender under any power of attorney or Consent delivered under the
Financing Agreement. 

6.2 Minimum Notice Period.
If, pursuant to applicable Legal Requirements, prior notice of any action
described in Section 6.1 is required to be given to Grantor, Grantor
hereby acknowledges that the minimum time required by such applicable Legal
Requirements, or, if no minimum time is specified, ten (10) Banking Days, shall
be deemed a reasonable notice period. 

6.3 Costs and Expenses.
All reasonable costs and expenses (including reasonable attorneys’ fees and
expenses) incurred by Lender in connection with any actions taken under
Article V, together with interest thereon (to the extent permitted by
law) computed at a rate per annum equal to the Default Rate from the date on
which such costs or expenses are payable to the date of payment thereof, shall
be added to the indebtedness secured by this Agreement and shall be paid by
Grantor to Lender within five (5) Banking Days after demand. 

6.4 Actions Taken by
Lender. Any action or proceeding to enforce this Agreement may be taken by
Lender either in Grantor’s name or in Lender’s name, as Lender may deem
necessary. 

6.5 Waiver of Rights and
Remedies Under Applicable Legal Requirements. In exercising its right to
take possession of the Collateral upon the occurrence and during the
continuation of an Event of Default hereunder, Lender, personally or by its
agents or attorneys, and subject to the rights of any tenant under any lease or
sublease of the Collateral, to the fullest extent permitted by Legal
Requirements, may enter upon any land owned or leased by Grantor without being
guilty of trespass or any wrongdoing, and without liability to Grantor
for damages thereby occasioned. 

6.6 No Impairment of
Remedies. If, in the exercise of any of its rights and remedies under this
Agreement, Lender shall forfeit any of its rights or remedies, whether because
of any applicable Legal Requirements pertaining to “election of
remedies” or otherwise, Grantor hereby consents to such action by Lender and, to
the extent permitted by applicable Legal Requirements, waives any claim based
upon such action, even if such action by Lender shall result in a full or
partial loss of any rights of subrogation, indemnification or reimbursement
which Grantor might otherwise have had but for such action by Lender or the
terms herein. Any election of remedies which results in the denial or impairment
of the right of Lender to seek a deficiency judgment against Grantor shall not,
to the extent permitted by applicable Legal Requirements, impair Grantor’s
obligation hereunder. 

Exhibit D-1-7 

ARTICLE VII. 
MISCELLANEOUS 

7.1 Remedies Cumulative; Delay Not Waiver. 

7.1.1 Remedies Cumulative.
No right, power or remedy herein conferred upon or reserved to Lender hereunder
is intended to be exclusive of any other right, power or remedy, and every such
right, power and remedy shall, to the extent permitted by applicable Legal
Requirements, be cumulative and in addition to every other right, power and
remedy given hereunder or under any other Financing Document now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy. Resort to any
or all security now or hereafter held by Lender, may be taken concurrently or
successively and in one or several consolidated or independent judicial actions
or lawfully taken nonjudicial proceedings, or both.

7.1.2 Delay Not Waiver;
Separate Causes of Action. No delay or omission to exercise any right, power
or remedy accruing to Lender upon the occurrence of any Event of Default shall
impair any such right, power or remedy of Lender, nor shall it be construed to
be a waiver of any such Event of Default, or an acquiescence therein, or of or
in any other breach or default thereafter occurring, nor shall any waiver of any
other breach or default under this Agreement or any other Financing Document be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of Lender of any breach or default under this Agreement, or any waiver
on the part of Lender of any provision or condition of this Agreement, must be
in writing and shall be effective only to the extent specifically set forth in
such writing. Each and every default by Grantor in payment hereunder shall give
rise to a separate cause of action hereunder, and separate suits may be brought
hereunder as each cause of action arises. 

7.2 Attorney-In-Fact.
Grantor hereby constitutes and appoints Lender and each successor or assign of
Lender, the true and lawful attorney-in-fact of Grantor, with full power and
authority in the place and stead of Grantor and in the name of Grantor, Lender
or otherwise, subject to the terms of the Financing Agreement and the other
Financing Documents, to enforce all rights, interests and remedies of Grantor
with respect to the Collateral, including the right: (a) to ask, require,
demand, receive and give acquittance for any and all moneys and claims for
moneys due and to become due under or arising out of any of the Collateral,
including any insurance policies;

Exhibit D-1-8 

(b) to elect remedies thereunder and to
endorse any checks or other instruments or orders in connection therewith; 

(c) to file any claims or take any
action or institute any proceedings in connection therewith which Lender may
reasonably deem to be necessary or advisable; 

(d) to pay, settle or compromise all
bills and claims which may be or become liens or security interests against any
or all of the Collateral, or any part thereof, unless a bond or other security
satisfactory to Lender has been provided; 

(e) to vote, demand, receive and
enforce Grantor’s rights with respect to the Collateral; 

(f) to give appropriate receipts,
releases and satisfactions for and on behalf of and in the name of Grantor or,
at the option of Lender, in the name of Lender, with the same force and effect
as Grantor could do if this Agreement had not been made; and 

(g) upon foreclosure and to the extent
provided herein or in any other Financing Document, to do any and every act
which Grantor may do on its behalf with respect to the Collateral or any part
thereof; 

provided, however, that Lender shall not exercise
any of the aforementioned rights unless an Event of Default has occurred and is
continuing and has not been waived in accordance with the Financing Documents.
This power of attorney is a power coupled with an interest and shall be
irrevocable; provided further, however, that nothing in
this Agreement shall prevent Grantor from, prior to the exercise by Lender of
any of the aforementioned rights, undertaking Grantor’s operations in the
ordinary course of business in accordance with the Collateral and the Financing
Documents. 

7.3 Perfection; Further Assurances; Certain
Waivers. 

7.3.1 Perfection. Grantor agrees that from time to time,
at the expense of Grantor, Grantor shall promptly execute and deliver all
further instruments and documents, and take all further action, that may be
reasonably necessary, or that Lender may reasonably request, in order to
perfect, to ensure the continued perfection of, and to protect the assignment
and security interest granted or intended to be granted hereby or to enable
Lender to exercise and enforce its rights and remedies hereunder with respect to
any Collateral, including any notices or other filings that may be necessary or
reasonably desirable to be made under the Federal Assignment of Claims Act.
Without limiting the generality of the foregoing, Grantor shall: (a) subject to
any applicable thresholds set forth in Section 4.1 through 4.5, if any
Collateral shall be evidenced by a promissory note or other instrument, deliver
and pledge to Lender such note or instrument duly endorsed (without recourse)
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to Lender; and (b) authorize, execute and file
such financing statements or continuation statements, or amendments thereto, and
such other instruments, endorsements or notices, as may be reasonably necessary
or desirable, or as Lender may reasonably request or as required by applicable
Legal Requirements, in order to perfect and preserve the assignments and security
interests granted or purported to be granted hereby.

Exhibit D-1-9 

7.3.2 Filing of Financing and Continuation Statements.
Grantor hereby authorizes the filing of any financial statements or continuation
statements, and amendments to financing statements, or any similar document in
any jurisdictions and with any filing offices as Lender may determine, in its
sole discretion, are necessary or advisable to perfect the security interest
granted to Lender herein. Such financing statements may describe the Collateral
in the same manner as described herein or may contain an indication or
description of the Collateral that describes such property in any other manner
as Lender may determine, in its sole discretion, is necessary, advisable or
prudent to ensure the perfection of the security interest in the Collateral
granted to Lender herein. 

7.3.3 Information Concerning Collateral. Grantor shall
promptly upon request, and at the expense of Grantor, provide to Lender all
information and evidence it may reasonably request concerning the Collateral to
enable Lender to enforce the provisions of this Agreement.

7.3.4 Waiver. Grantor hereby waives, to the maximum
extent permitted by applicable Legal Requirements, (a) all rights under any law
to require Lender to pursue any Person other than Grantor, any security which
Lender may hold, or any other remedy before proceeding against Grantor; (b) all
rights of reimbursement or subrogation and all rights to participate in any
security held by Lender until the Obligations have been paid and the covenants
of the Financing Documents have been performed in full; (c) all rights to
require Lender to give any notices of any kind, including without limitation
notices of nonpayment, nonperformance, protest, dishonor, default, delinquency
or acceleration, or to make any presentments, demands or protests, except as set
forth herein or as expressly provided in the Financing Agreement or other
Financing Documents; (d) all rights to assert the bankruptcy or insolvency of
Grantor as a defense hereunder or as the basis for rescission hereof; (e)
subject to Section 7.6, all rights under any law purporting to reduce
Grantor’s obligations hereunder if the Obligations are reduced (other than as a
result of payment of such Obligations); (f) all defenses based on the disability
or lack of authority of Grantor or any Person, the repudiation of the Financing
Documents by Grantor or any Person, the failure by Lender to enforce any claim
against Grantor, or the unenforceability in whole or in part of any Financing
Documents; and (g) all suretyship and guarantor’s defenses generally.

7.4 Continuing Assignment and Security Interest; Transfer of
Notes. This Agreement shall create a continuing pledge and assignment
of and security interest in the Collateral and shall (a) remain in full force
and effect until the payment in full in cash and performance in full of the
Obligations and the termination of the Loan Commitment and other obligations of
Lender under the Financing Documents (other than any unasserted contingent
reimbursement or indemnify obligations); (b) be binding upon Grantor and its
successors and assigns; and (c) inure, together with the rights and remedies of
Lender, to the benefit of Lender and its successors and assigns. Without
limiting the generality of the foregoing clause (c), Lender may assign or
otherwise transfer the Note or other evidence of indebtedness held by them to
any other Person to the extent permitted by and in accordance with the Financing
Agreement, and such other Person shall thereupon become vested with all or an
appropriate part of the benefits in respect thereof granted to Lender herein or
otherwise. The release of the security interest in any or all of the Collateral, the taking or acceptance of
additional security, or the resort by Lender to any security it may have in any
order it may deem appropriate, shall not affect the liability of any Person on
the indebtedness secured hereby. 

Exhibit D-1-10 

7.5 Termination of Security Interest. Upon the payment
in full in cash of all Obligations and the termination of the Loan Commitment
and other obligations of Lender under the Financing Documents (other than any
unasserted contingent reimbursement or indemnity obligations), this Agreement
and the security interest and all other rights granted hereby shall terminate
and all rights to the Collateral shall revert to Grantor. Upon any such
termination, Lender shall, at Grantor’s expense and upon its written direction,
execute and, subject to Section 7.10 herein, deliver to Grantor
such documents (including UCC-3 termination statements) as Grantor shall
reasonably request to evidence such termination, to release all security
interest on the Collateral and to return such Collateral to Grantor.

7.6 Limitation on Duty of Lender with Respect to the
Collateral. The powers conferred on Lender hereunder are solely to protect
its interest in the Collateral and shall not impose any duty on it to exercise
any such powers. Except for the safe custody of any Collateral in its
possession, the accounting for monies actually received by it hereunder and any
duty expressly imposed on Lender by applicable Legal Requirements with respect
to any Collateral that has not been waived hereunder, Lender shall have no duty
with respect to any Collateral and no implied duties or obligations shall be
read into this Agreement against Lender. Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment that is substantially
equivalent to that which Lender accords its own property, it being expressly
agreed, to the maximum extent permitted by applicable Legal Requirements, that
Lender shall have no responsibility for (a) taking any necessary steps to
preserve rights against any parties with respect to any Collateral or (b) taking
any action to protect against any diminution in value of the Collateral, but, in
each case, Lender may do so and all expenses reasonably incurred in connection
therewith shall be part of the Obligations. 

7.7 Liability. Recourse against the Non-Recourse Parties
under this Agreement shall be limited to the extent provided in Article 8 of the
Financing Agreement. 

7.8 Amendments; Waivers; Consents. This Agreement may
not be amended, modified or supplemented, except in a writing signed by each of
the parties hereto and otherwise in accordance with the provisions of the
Financing Agreement. 

7.9 Notices. All notices required or permitted under the
terms and provisions hereof shall be in writing, and any such notice shall be
effective if given in accordance with Section 10.1 of the Financing Agreement.
Notices to Grantor or Lender may be given at the addresses set forth in Section
10.1 of the Financing Agreement.

7.10 Reinstatement. This Agreement and the obligations
of Grantor hereunder shall automatically be reinstated if and to the extent that
for any reason any payment made pursuant to this Agreement is rescinded or must
otherwise be restored or returned, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise with respect to Grantor or any other
Person or as a result of any settlement or compromise with any Person (including
Grantor) in respect of such payment, and Grantor shall pay Lender on demand
all of its reasonable costs and expenses (including reasonable fees of counsel)
incurred by Lender in connection with such rescission or restoration. 

Exhibit D-1-11 

7.11 Application of Proceeds. Upon the occurrence and
during the continuation of an Event of Default, the proceeds of any sale of, or
other realization upon, all or any part of the Collateral shall be applied as
described in the Liquidation Preference provision of Article 7 of the Financing
Agreement. Grantor shall remain liable for any deficiency. 

7.12 Lender May Perform. Upon the occurrence and during
the continuance of an Event of Default, if Grantor fails to perform any
agreement contained herein, Lender may itself perform, or cause performance of,
such agreement, and the reasonable expenses of Lender incurred in connection
therewith shall be part of the Obligations. 

7.13 Expenses; Interest. 

7.13.1 Expenses. Grantor agrees to pay on demand to
Lender all costs and expenses incurred by Lender (including the reasonable fees
and disbursements of counsel) incident to its enforcement, exercise, protection
or preservation of any of its rights, remedies or claims under this Agreement.

7.13.2 Interest. Any amount required to be paid by
Grantor pursuant to the terms hereof that is not paid when due shall bear
interest at the Default Rate or the maximum rate permitted by applicable Legal
Requirements, whichever is less, from the date due until paid in full. 

7.14 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction. 

7.15 Survival of Provisions. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the Financing Agreement and the making of the
Loans and extensions of credit thereunder. Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements, representations and
warranties of Grantor set forth herein shall terminate only upon the payment in
full in cash of all Obligations and the termination of the Loan Commitment and
other obligations of Lender under the Financing Documents (other than any
unasserted contingent reimbursement or indemnify obligations). 

7.16 Successions or Assignments. 

7.16.1 Successors. This Agreement shall inure to the
benefit of the successors or assigns of Lender who shall have, to the extent of
their interest, the rights of Lender hereunder. 

7.16.2 Assignment. This Agreement is binding upon
Grantor and its successors and assigns. Grantor is not entitled to assign its
obligations hereunder to any other Person without the written consent of Lender, and any purported
assignment in violation of this provision shall be void. Lender shall not assign
this Agreement except in conjunction with an assignment of the Financing
Agreement as provided therein.

Exhibit D-1-12 

7.17 Headings Descriptive. Article and section headings
have been inserted in this Agreement as a matter of convenience for reference
only and it is agreed that such article and section headings are not a part of
this Agreement and shall not be used in the interpretation of any provision of
this Agreement. 

7.18 Entire Agreement. This Agreement, together with the
Financing Documents, is intended by the parties as a final expression of their
agreement and is intended as a complete and exclusive statement of the terms and
conditions thereof. 

7.19 Time. Time is of the essence of this Agreement.

7.20 Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. 

7.21 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE
LIEN AND SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.

7.22 CONSENT TO JURISDICTION. SUBJECT TO CLAUSE (E) OF
THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY
ARISING OUT OF OR RELATING HERETO OR ANY OTHER FINANCING DOCUMENTS, OR ANY OF
THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH BORROWER AFFILIATE ENTITY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN
WITH RESPECT TO ACTIONS BY LENDER IN RESPECT OF RIGHTS UNDER ANY FINANCING
DOCUMENT GOVERNED BY LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH
RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEFENSE OF FORUM
NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ANY BORROWER AFFILIATE ENTITY AT ITS ADDRESS IN ACCORDANCE WITH
SECTION 7.9; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER ANY BORROWER AFFILIATE ENTITY IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT LENDER RETAINS THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST ANY BORROWER AFFILIATE ENTITY IN THE COURTS OF ANY OTHER JURISDICTION IN
CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY FINANCING DOCUMENT OR THE
ENFORCEMENT OF ANY JUDGMENT. 

Exhibit D-1-13 

7.23 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER
FINANCING DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THE LOAN TRANSACTIONS OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 7.23 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER FINANCING DOCUMENTS OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT. 

7.24 Third Party Rights. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon, or give
to any Person, other than Grantor and Lender, any security, rights, remedies or
claims, legal or equitable, under or by reason hereof, or any covenant or
condition hereof; and this Agreement and the covenants and agreements herein
contained are and shall be held to be for the sole and exclusive benefit of
Grantor and Lender. 

Exhibit D-1-14 

[SIGNATURE PAGES FOLLOW] 

Exhibit D-1-15 

IN WITNESS WHEREOF, the parties
hereto, by their officers duly authorized, intending to legally bound, have
caused this Agreement to be duly executed as of the date first above written.

GRANTOR: 

USG NEVADA LLC, 
a Delaware
limited liability company 

      By:
_______________________________________

      Name:
_______________________________________

     
Title: _______________________________________

LENDER: 

ARES CAPITAL CORPORATION,
a
Maryland corporation

      By:
_______________________________________

     
Name:
_______________________________________

     
Title: _______________________________________

	EXHIBIT D-2 
	to Financing
      Agreement 

FORM OF 
IDAHO SPONSOR PLEDGE AGREEMENT

among 

U.S. GEOTHERMAL INC., 
an Idaho corporation

(Pledgor) 

and 

NEVADA USG HOLDINGS, LLC, 
a Delaware limited
liability company 
(Pledged Company) 

and 

ARES CAPITAL CORPORATION,
a Maryland corporation

(Lender) 

 

	Dated as of November 9, 2011 
	 

TABLE OF CONTENTS 

Page 

	ARTICLE I. DEFINITIONS 	1 
	  	  	  
	       
                 1.1 	Defined Terms 	1 
	           
             1.2 	Financing Agreement and UCC Definitions 	2 
	       
                 1.3 	Rules of Interpretation 	2 
	ARTICLE II. PLEDGE AND GRANT OF SECURITY INTEREST
    	2 
	  	  	  
	           
             2.1 	Granting Clause 	2 
	       
                 2.2 	Delivery of Certificates 	3 
	           
             2.3 	Retention of Certain Rights 	3 
	ARTICLE III. OBLIGATIONS SECURED
    	4 
	  	  	  
	ARTICLE IV. EVENTS OF DEFAULT 	4 
	  	  	  
	ARTICLE V. REPRESENTATIONS AND
      WARRANTIES OF PLEDGOR 	4 
	  	  	  
	       
                 5.1 	Organization 	4 
	           
             5.2 	Power and Authorization; Enforceable
      Obligations 	4 
	       
                 5.3 	No Legal Bar 	5 
	           
             5.4 	Beneficial Ownership; Pledged Ownership
      Interests 	5 
	       
                 5.5 	No Prior Assignment 	5 
	           
             5.6 	No Other Financing Documents 	5 
	       
                 5.7 	Compliance with Law 	5 
	           
             5.8 	No Litigation 	5 
	       
                 5.9 	Financial Statements 	6 
	           
             5.10 	Permitted Activities of the Equity Pledgor. 	6 
	       
                 5.11 	Taxes 	6 
	           
             5.12 	Investment Company Act; Federal Energy Laws.
	6 
	       
                 5.13 	Name; Organizational Number 	6 
	           
             5.14 	Pledged Company Information 	6 
	       
                 5.15 	Capital Adequacy; Etc. 	6 
	           
             5.16 	Perfection of Security Interest 	7 
	       
                 5.17 	After Acquired Collateral 	7 
	           
             5.18 	No Ownership by Disqualified Persons 	7 
	ARTICLE VI. COVENANTS OF PLEDGOR
    	8 
	  	  	  
	       
                 6.1 	Compliance with Obligations 	8 
	           
             6.2 	Defense of Collateral 	8 
	       
                 6.3 	Preservation of Value;
      Limitation of Liens 	8 
	           
             6.4 	No Other Filings 	8 
	       
                 6.5 	No Sale of Collateral 	8 
	           
             6.6 	Notice 	8 
	       
                 6.7 	Filing of Bankruptcy
      Proceedings 	8 
	           
             6.8 	Distributions 	9 
	       
                 6.9 	Maintenance of Records 	9

Exhibit D-2-i 

	       
                 6.10 	Name; Jurisdiction of
      Organization 	9 
	           
             6.11 	Certificated Securities 	9 
	       
                 6.12 	Amendments to Organizational
      Documents 	9 
	           
             6.13 	Proceeds of Collateral 	9 
	ARTICLE VII. REMEDIES UPON EVENT
      OF DEFAULT 	10 
	  	  	  
	       
                 7.1 	Remedies Upon an Event of
      Default 	10 
	           
             7.2 	Minimum Notice Period 	11 
	       
                 7.3 	Right to Cure 	11 
	           
             7.4 	Expenses; Interest 	11 
	       
                 7.5 3	Sale of Collateral 	11 
	           
             7.6 	Compliance With Limitations and Restrictions
	12 
	       
                 7.7 	No Impairment of Remedies 	12 
	ARTICLE VIII. MISCELLANEOUS. 	13 
	  	  	  
	           
             8.1 	Remedies Cumulative; Delay Not Waiver 	13 
	       
                 8.2 	Pledged Company’s Consent and
      Covenant 	15 
	           
             8.3 	Attorney-in-Fact 	15 
	       
                 8.4 	Perfection; Further Assurances
    	16 
	           
             8.5 	Payment of Taxes 	17 
	       
                 8.6 	Place of Business; Location of
      Records 	17 
	           
             8.7 	Continuing Assignment and Security Interest;
      Transfer of Note 	17 
	       
                 8.8 	Termination of Security
      Interest 	17 
	           
             8.9 	Security Interest Absolute 	18 
	       
                 8.10 	Limitation on Duty of Lender
      with Respect to the Collateral 	18 
	           
             8.11 	Liability 	19 
	       
                 8.12 	Amendments; Waivers; Consents
    	19 
	           
             8.13 	Notices 	19 
	       
                 8.14 	Modification of Obligations 	19 
	           
             8.15 	Delivery of Collateral; Proxy 	20 
	       
                 8.16 	Reinstatement 	21 
	           
             8.17 	Severability 	21 
	       
                 8.18 	Survival of Provisions 	21 
	           
             8.19 	Headings Descriptive 	21 
	       
                 8.20 	Entire Agreement 	21 
	           
             8.21 	Time 	21 
	       
                 8.22 	Counterparts 	21 
	           
             8.23 	Limitation of Liability 	21 
	       
                 8.24 	Submission to Jurisdiction 	22 
	           
             8.25 	APPLICABLE LAW. 	22 
	       
                 8.26 	CONSENT TO JURISDICTION 	22 
	           
             8.27 	WAIVER OF JURY TRIAL 	23 
	       
                 8.28 	Knowledge and Attribution 	23 
	           
             8.29 	Rights of Lender 	23 
	       
                 8.30 	Consent and Acknowledgement 	24 
	           
             8.31 	Third Party Beneficiaries 	24 
	       
                 8.32 	Waiver of Transfer Restrictions
    	24

Exhibit D-2-ii 

	                   8.33
    	Article 8 Securities 	24 
	                   8.34
    	Appointment of Agent. 	24 

EXHIBITS AND SCHEDULE 

	Exhibit A 	Irrevocable Proxy 
	Exhibit B 	Transfer Document 
	Schedule I 	Description of Ownership
      Interests 

Exhibit D-2-iii 

IDAHO SPONSOR
PLEDGE AGREEMENT 

This IDAHO SPONSOR PLEDGE AGREEMENT, dated as of November 9,
2011 (as amended, amended and restated, supplemented or otherwise modified from
time to time, this “Agreement”), is entered into by and among U.S.
GEOTHERMAL INC., a corporation formed under the laws of the State of Idaho
(“Pledgor”), NEVADA USG HOLDINGS, LLC, a limited liability company formed
under the laws of the State of Delaware (“Pledged Company”), and ARES
CAPITAL CORPORATION, a corporation formed under the laws of the State of
Marlyand (together with its successors, designees and assigns in such capacity,
“Lender”).

RECITALS 

A. USG Nevada LLC, a limited liability company formed under the
laws of the State of Delaware (“Borrower”) owns and intends to develop,
construct, install, test, own, operate and use an approximately 8 MW geothermal
power facility located in Washoe County, Nevada (the “Project”). 

B. Borrower has entered into, among other things, (i) that
certain Financing Agreement, dated as of the date hereof (as amended, amended
and restated, modified or supplemented from time to time, the “Financing
Agreement”), by and among Borrower and Lender, pursuant to which, among
other things, Lender has extended commitments to make loans and other financial
accommodations to, and for the benefit of Borrower, and (ii) certain other
documents related to the Financing Agreement (collectively, the “Financing
Documents”).

C. Pledged Company directly owns 100% of the ownership
interests of Borrower.

D. Pledgor directly owns 100% of the ownership interests
of Pledged Company.

D. It is a condition precedent to the effectiveness of the
Financing Agreement and the other Financing Documents, and the making of the
advances of credit contemplated thereby, that Pledgor and Pledged Company shall
have executed and delivered this Agreement. 

AGREEMENT 

NOW, THEREFORE, in consideration of the promises contained
herein, and to induce the Lender to enter into the Financing Documents and to
make the advances of credit to Borrower contemplated thereby, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Pledged Company and Pledgor hereby agree with Lender, as follows:

ARTICLE I. 
DEFINITIONS 

1.1 Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and
recitals, shall have the following meanings: 

Exhibit D-2-1 

“Collateral” has the meaning given in Section
2.1. 

“Financing Agreement” has the meaning given in the
recitals to this Agreement. 

“Financing Documents” has the meaning given in the
recitals to this Agreement. 

“Lender” has the meaning given in the preamble to
this Agreement. 

“Pledged Company” has the meaning given in the
preamble to this Agreement. 

“Pledged Ownership Interests” has the meaning given in
Section 2.1. “Pledgor” has the meaning given in the
preamble to this Agreement. “Project” has the meaning given in the
recitals to this Agreement. 

“UCC” means the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of New York; provided,
however, that in the event that, by reason of mandatory provisions of
law, any or all of the perfection or priority of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or priority and for
purposes of definitions related to such provisions. 

1.2 Financing Agreement and UCC Definitions. Unless
otherwise defined herein, all capitalized terms used in this Agreement shall
have the meanings provided in Exhibit A to the Financing Agreement or, if not
defined therein, the UCC. 

1.3 Rules of Interpretation. Unless otherwise provided
herein, the rules of interpretation set forth in Exhibit A to the Financing
Agreement shall apply to this Agreement, including its preamble and
recitals. 

ARTICLE II. 
PLEDGE AND GRANT OF SECURITY INTEREST

2.1 Granting Clause. To secure the timely payment in
full in cash and performance in full of the Obligations, Pledgor hereby assigns,
grants and pledges to Lender, a continuing security interest in all the
estate(s), right(s), title(s) and interest(s) of Pledgor, now owned or hereafter
existing or acquired, in, to and under any and all of the following (the
“Collateral”): Any and all of Pledgor’s right(s), title(s) and
interest(s), whether now owned or hereafter existing or acquired, in Pledged
Company, and all of Pledgor’s ownership interests in Pledged Company related
thereto (the “Pledged Ownership Interests”), including the ownership
interests of Pledgor described on Schedule I hereto and Pledgor’s share
of: 

Exhibit D-2-2 

(a) all rights to receive income, gain,
profit, dividends and other distributions allocated or distributed to Pledgor in
respect of or in exchange for all or any portion of the Pledged Ownership
Interests; 

(b) all capital or ownership interest,
including capital accounts, in Pledged Company, and all accounts, deposits or
credits of any kind with Pledged Company; 

(c) all voting rights in or rights to
control or direct the affairs of Pledged Company; 

(d) all rights, title and interest, as
a member of Pledged Company, in, to or under any and all of Pledged Company’s
assets or properties; 

(e) all other rights, title and
interest in or to Pledged Company derived from the Pledged Ownership Interests;

(f) all indebtedness or other
obligations of Pledged Company owed to Pledgor; 

(g) all claims of Pledgor for damages
arising out of, or for any breach or default relating to, the Collateral, other
than any claims against Lender; 

(h) all rights of Pledgor to terminate,
amend, supplement, modify, or cancel, the governing documents of Pledged
Company, to take all actions thereunder and to compel performance and otherwise
exercise all remedies thereunder; 

(i) all securities, notes, certificates
and other instruments representing or evidencing any of the foregoing rights and
interests or the ownership thereof and any interest of Pledgor reflected in the
books of any financial intermediary pertaining to such rights and interests and
all non-cash dividends, cash, options, warrants, stock splits,
reclassifications, rights, instruments or other investment property and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such rights and
interests; and 

(j) all proceeds of the foregoing
Collateral, whether cash or non-cash; provided, however, that
“Collateral” shall not include any distribution to Pledgor expressly permitted
pursuant to the terms of the Financing Agreement or any other Financing
Document. 

2.2 Delivery of Certificates. All certificates, notes
and other instruments representing or evidencing any Collateral (including the
certificates described on Schedule I hereto) shall be delivered to and
held by or on behalf of, and, in the case of notes, endorsed to the order of,
Lender, or its designee pursuant hereto, in the manner set forth in Section
8.15. 

2.3 Retention of Certain Rights. So long as Lender has
not exercised remedies with respect to the Collateral under this Agreement or
any other Financing Document upon the occurrence and during the continuation of
an Event of Default, Pledgor reserves the right to exercise all voting and other
rights with respect to the Collateral (except as limited by the Financing Documents) and to receive all income, dividends and
other distributions from the Collateral (except as limited by the Financing
Documents). 

Exhibit D-2-3 

ARTICLE III. 
OBLIGATIONS SECURED 

Without limiting the generality of the foregoing, this
Agreement and all of the Collateral secure the payment and performance when due
of all Obligations of Borrower to Lender pursuant to the Financing Documents.
If, notwithstanding the representation and warranty set forth in Section
5.15 or anything to the contrary herein, enforcement of the liability of
Pledgor under this Agreement for the full amount of the Obligations would be an
unlawful or voidable transfer under any applicable fraudulent conveyance or
fraudulent transfer law or any comparable law, then the liability of Pledgor
hereunder shall be reduced to the highest amount for which such liability may
then be enforced without giving rise to an unlawful or voidable transfer under
any such law. 

ARTICLE IV. 
EVENTS OF DEFAULT 

The occurrence of an Event of Default under, and as defined in,
the Financing Agreement shall constitute an Event of Default hereunder. 

ARTICLE V. 
REPRESENTATIONS AND WARRANTIES OF PLEDGOR

Pledgor represents and warrants, to and in favor of Lender, as
of the date hereof, as follows: 

5.1 Organization. Pledgor is (a) a corporation duly
formed, validly existing and in good standing solely under the laws of the State
of Idaho, and (b) duly qualified, authorized to do business and in good standing
in each jurisdiction in which such qualification is necessary to execute,
deliver and perform this Agreement and each of the other Operative Documents to
which it is a party, except where failure to do so would not cause a Material
Adverse Effect. 

5.2 Power and Authorization; Enforceable Obligations.
Pledgor has the full power and authority to execute, deliver and perform this
Agreement and each other Operative Document to which it is a party and to take
all action as may be necessary to complete the transactions contemplated
hereunder and thereunder. Pledgor has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and each
other Operative Document to which it is a party and to complete the transactions
contemplated hereby and thereby. No consent or authorization of, filing with, or
other act by or in respect of any other Person or Governmental Authority is
required in connection with the execution, delivery or performance by Pledgor,
or the validity or enforceability as to Pledgor, of this Agreement and each
other Operative Document to which it is a party, except such consents or
authorizations or filings or other acts as have already been obtained or made or
where the failure to obtain such consent or authorization could not reasonably
be expected to have a Material Adverse Effect. This Agreement and each other
Operative Document to which Pledgor is a party have been duly executed and delivered by Pledgor and constitute, and each
other Operative Document to which it is a party will upon execution and delivery
thereof by Pledgor and the other parties thereto (if any) constitute, a legal,
valid and binding obligation of Pledgor enforceable against it in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
right of creditors generally and by general principles of equity. 

Exhibit D-2-4 

5.3 No Legal Bar. The execution, delivery and
performance by Pledgor of this Agreement and each other Operative Document to
which it is a party and the consummation of the transactions contemplated hereby
(including the granting of security interests hereunder) or under any other
Operative Document to which it is a party do not or will not violate any
applicable Legal Requirement or any material contractual obligation of Pledgor
and do not and will not result in, or require, the creation or imposition of any
Lien (other than Permitted Liens described in clause (a) of the definition of
“Permitted Liens” and, to the extent required by Governmental Rule, clause (b)
of the definition thereof) on any of the properties or revenues of Pledgor
pursuant to any applicable Legal Requirement or any such contractual obligation.

5.4 Beneficial Ownership; Pledged Ownership Interests.
Pledgor is the lawful and beneficial owner of and has full right, title and
interest in, to and under rights and interests comprising the Collateral,
subject to no Liens (except Permitted Liens described in clause (a) of the
definition of “Permitted Liens” and, to the extent required by Governmental
Rule, clause (b) of the definition thereof). The Pledged Ownership Interests
listed next to Pledgor’s name on Schedule 1 (a) have been duly authorized
and validly issued, (b) are fully paid and non-assessable and (c) constitute all
of Pledgor’s outstanding ownership interests of Pledged Company.

5.5 No Prior Assignment. Pledgor has not previously
assigned any of its rights in, to or under all or any portion of the Collateral,
except as specifically permitted by the Financing Agreement or the other
Financing Documents. 

5.6 No Other Financing Documents. Pledgor has not
executed and is not aware of any effective financing statement, security
agreement or other instrument similar in effect covering all or any part of the
Collateral on file in any recording office, except such as may have been filed
pursuant to this Agreement and the other Financing Documents. 

5.7 Compliance with Law. Pledgor is in compliance with
all Legal Requirements, except noncompliance which could not reasonably be
expected to have a Material Adverse Effect, and no written notices of any
material violation of any Governmental Rule relating to the Project or any
Operative Document have been received by Pledgor. 

5.8 No Litigation. There are no pending or, to Pledgor’s
knowledge, threatened in writing actions, suits, proceedings or investigations
of any kind, including actions or proceedings of or before any Governmental
Authority, relating to the Collateral or to which Pledgor is a party or is
subject, or by which it or its properties are bound that, if adversely
determined to or against Pledgor could reasonably be expected to have a Material
Adverse Effect. 

Exhibit D-2-5 

5.9 Financial Statements. The financial statements of
Pledgor delivered to Lender pursuant to Sections 3.1(q) and 5.4 of the Financing
Agreement, if any, are true, complete and correct in all material respects as of
the date of such statements and fairly presented the financial condition of
Pledgor as of the date thereof and fairly presented the results of the
operations and cash flow of Pledgor for the periods then ending. Such financial
statements have been prepared in accordance with GAAP. 

5.10 Permitted Activities of the Equity Pledgor. Pledgor
shall not fail to hold itself out to the public as a legal entity separate and
distinct from all other Persons. 

5.11 Taxes. Pledgor has timely filed all federal, state
and local tax returns that it is required to file, has paid all taxes it is
required to pay to the extent due (other than those taxes that it is contesting
in good faith and by appropriate proceedings, for which adequate reserves have
been established for such taxes in accordance with GAAP) and, to the extent such
taxes are not due, has established reserves that are adequate for the payment
thereof to the extent required by GAAP. Pledgor knows of no proposed tax
assessment against it which could reasonably be expected to have a Material
Adverse Effect (other than as is being actively contested by Pledgor in good
faith and by appropriate proceedings and for which reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP have been made
or provided therefore). 

5.12 Investment Company Act; Federal Energy Laws.
Pledgor is not an investment company or a company controlled by an investment
company, within the meaning of the Investment Company Act of 1940, as amended.
No provision of the FPA or PUHCA precludes Pledgor from entering into and
performing its obligations hereunder. 

5.13 Name; Organizational Number. The name of Pledgor is
as set forth in the preamble hereto, as indicated in the public records
of the State of Idaho, and Pledgor’s Federal Employer Identification Number and
Idaho organizational number are as set forth below its signature hereto. 

5.14 Pledged Company Information. Pledgor has
established adequate means of obtaining financial and other information
pertaining to the businesses, operations and condition (financial or otherwise)
of Pledged Company and its properties on a continuing basis, and Pledgor now is
and hereafter will be completely familiar with the businesses, operations and
condition (financial or otherwise) of Pledged Company and its properties.
Pledgor hereby agrees that Lender shall not have any duty to advise Pledgor of
information known to Lender regarding such condition or any such circumstances
or of any changes or potential changes affecting the Collateral. In the event
Lender, in its respective discretion, undertakes at any time or from time to
time to provide any such information to Pledgor, Lender shall be under no
obligation (a) to undertake any investigation not a part of its regular business
routine, or reasonable commercial lending practices or (b) to make any other or
future disclosure of such information to Pledgor. 

5.15 Capital Adequacy; Etc. 

(a) After giving effect to the
transactions contemplated by this Agreement and the contingent obligations
evidenced hereby (but excluding the effect of the provisions of Article III which limit the Obligations to
an amount that would not render Pledgor’s indebtedness, liabilities or
obligations under this Agreement subject to avoidance), Pledgor is Solvent on
both an unconsolidated basis and a consolidated basis with any subsidiaries of
Pledged Company, and Pledgor has and will have assets which, fairly valued,
exceed its indebtedness, liabilities or obligations. 

Exhibit D-2-6 

(b) Pledgor is not executing this Agreement with any intention
to hinder, delay or defraud any present or future creditor or creditors of
Pledgor. 

5.16 Perfection of Security Interest. The security
interest granted to Lender, pursuant to this Agreement constitutes as to
personal property included in the Collateral a valid lien. The security interest
granted to Lender pursuant to this Agreement in the Collateral consisting of
personal property will be perfected (a) with respect to any property that can be
perfected by filing, upon the filing of financing statements in the filing
offices identified on Exhibit D-8 to the Financing Agreement, and (b) with
respect to any property that can be perfected by control, upon Lender receiving
possession thereof, and, in each case, such security interest will be, as to
Collateral perfected under the UCC or otherwise as aforesaid, superior and prior
to the rights of all third persons now existing or hereafter arising whether by
way of mortgage, lien, security interests, encumbrance, assignment or otherwise
except (i) Permitted Liens described in clause (a) of the definition of
“Permitted Liens” and (ii) to the extent required by Governmental Rule,
Permitted Liens described in clause (b) of the definition thereof. Except to the
extent control of portions of such Collateral is required for perfection, all
such action as is necessary has been taken to establish and perfect Lender’s
rights in and to such Collateral to the extent Lender’s security interest can be
perfected by filing, including any recording, filing, registration, giving of
notice or other similar action. As of the Financial Closing Date, no filing,
recordation, re-filing or re-recording other than those listed on Exhibit D-8 to
the Financing Agreement is necessary to perfect and maintain the perfection of
the interest, title or Liens of this Agreement that can be perfected by filing,
and on the Financial Closing Date all such filings or recordings will have been
made to the extent Lender’s security interest can be perfected by filing.
Pledgor has properly delivered, caused to be delivered or is concurrently
delivering to Lender all such Collateral that requires perfection of the Lien
and security interest described above by control. 

5.17 After Acquired Collateral. It is understood and
agreed that the foregoing representations and warranties shall apply only to the
Collateral delivered on the date hereof and that, with respect to Collateral
delivered thereafter, Pledgor shall, upon the written request of Lender, be
required to make representations and warranties in form and substance
substantially similar to the foregoing in supplements hereto and that such
representations and warranties contained in such supplements hereto shall be
applicable to such Collateral hereafter delivered. 

5.18 No Ownership by Disqualified Persons. Neither
Pledgor nor any direct or indirect owner of Pledgor is a Disqualified Person
(other than a Disqualified Person whose ownership interest in Pledgor is
effected solely through a direct or indirect ownership interest through an
entity that is treated as a C corporation for Federal income tax purposes). 

Exhibit D-2-7 

ARTICLE VI. 
COVENANTS OF PLEDGOR 

Pledgor covenants, to and in favor of Lender as follows: 

6.1 Compliance with Obligations. Pledgor shall perform
and comply in all material respects with all obligations and
conditions on its part to be performed hereunder with respect to the
Collateral.

6.2 Defense of Collateral. Pledgor shall, until the
payment in full in cash of all Obligations and the termination of the Loan
Commitment and all other obligations of Lender under the Financing Documents
(other than any unasserted contingent reimbursement or indemnify obligations),
defend its title to the Collateral and the interest of Lender in the Collateral
pledged hereunder against the claims and demands of all other Persons. 

6.3 Preservation of Value; Limitation of Liens. Pledgor
shall not take or permit to be taken any action in connection with the
Collateral which would impair the Liens granted herein; provided,
however, that nothing in this Agreement shall prevent Pledgor, prior to
the exercise by Lender of any rights pursuant to the terms hereof, from
undertaking Pledgor’s operations in the ordinary course of business not in
violation of the Financing Documents. Pledgor shall not directly or indirectly
create, incur, assume or suffer to exist any Liens on or with respect to all or
any part of the Collateral (other than Permitted Liens described in clause (a)
of the definition of “Permitted Liens” and, to the extent required by
Governmental Rule, clause (b) of the definition thereof). Pledgor shall at its
own cost and expense promptly take such action as may be necessary to discharge
any such Liens. 

6.4 No Other Filings. Pledgor shall not file or
authorize or permit to be filed in any jurisdiction any financing statements
under the UCC or any like statement relating to the Collateral in which Lender
is not named as the sole secured party. 

6.5 No Sale of Collateral. Except as expressly permitted
by this Agreement or the other Financing Documents, Pledgor shall not cause,
suffer or permit the sale, assignment, conveyance, pledge or other transfer of
all or any portion of Pledgor’s ownership or interest in Pledged Company or any
other portion of the Collateral. As used herein, the transfer of an ownership
interest in Pledged Company shall not include any transfer of an ownership
interest in Pledgor, to the extent such transfer is permitted under the
Financing Documents. 

6.6 Notice. Pledgor shall promptly, upon acquiring
notice or giving notice, as the case may be, or obtaining knowledge thereof,
give written notice (with copies of any such underlying notices) to Lender of
any change in or transfer of ownership interests in Pledgor, such notice to be
given promptly, but in any event no later than fifteen (15) days prior to any
such change or transfer, and to include the identity of any transferee and such
transferee’s interest in Pledgor. 

6.7 Filing of Bankruptcy Proceedings. To the extent it
may do so under applicable Legal Requirements, Pledgor, for itself, its
successors and assigns, shall not cast any vote as an owner in Pledged Company
(a) in favor of the commencement of a voluntary case or other proceeding seeking
liquidation, reorganization, rehabilitation or other relief with respect to Pledged Company or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect in any jurisdiction or seeking
the appointment of a trustee, receiver, liquidator, custodian or other similar
official of the owners of Pledged Company or any substantial part of Pledged
Company’s property, (b) to authorize Pledged Company to consent to any such
aforesaid relief or to the appointment of or taking possession by any such
aforesaid official in an involuntary case or other proceeding commenced against
Pledged Company or (c) to authorize Pledged Company to make a general assignment
for the benefit of creditors. 

Exhibit D-2-8 

6.8 Distributions. If Pledgor in its capacity as an
owner of Pledged Company receives any income, dividend or other distribution of
money or property of any kind from Pledged Company (other than as expressly
permitted by the Financing Documents), then Pledgor shall hold such income or
distribution as trustees for and shall promptly deliver the same to Lender. 

6.9 Maintenance of Records. Pledgor shall, at all times,
keep accurate and complete records of the Collateral. Pledgor shall permit
representatives of Lender, upon reasonable prior notice, at any time during
normal business hours of Pledgor to inspect and make abstracts from Pledgor’s
books and records pertaining to the Collateral. Upon the occurrence and during
the continuation of any Event of Default, at Lender’s request, Pledgor shall
promptly deliver copies of any and all such records to Lender. 

6.10 Name; Jurisdiction of Organization. Pledgor shall
not change its name, its jurisdiction of organization, its organization
identification number or its fiscal year without notice to Lender at least
thirty (30) days prior to such change. In the event Pledgor changes the location
of its principal place of business, Pledgor shall provide notice to Lender of
such change no later than thirty (30) days after such change. In the event of
any of the foregoing changes, Pledgor shall at its expense or at the expense of
Pledged Company execute and deliver such instruments and documents as may be
required by Lender or applicable Legal Requirements to maintain a prior
perfected security interest in the Collateral. 

6.11 Certificated Securities. Pledgor shall cause its
partnership interests in Pledged Company to be evidenced by and remain
“certificated securities” as defined in Article 8 of the UCC. 

6.12 Amendments to Organizational Documents. Except as
expressly permitted by this Agreement or the other Financing Documents
(including in relation to a Permitted Transfer), Pledgor shall not terminate,
amend, supplement or otherwise modify, or cancel, the governing documents of
Pledged Company. 

6.13 Proceeds of Collateral. Pledgor shall, at all
times, keep pledged to Lender pursuant hereto all Collateral and all dividends,
distributions, interest, principal and other proceeds received by Lender with
respect thereto, and all other Collateral and other securities, instruments,
proceeds and rights from time to time received by or distributable to Pledgor in
respect of any Collateral and shall not permit Pledged Company to issue any
equity interests which shall not have been immediately duly pledged to Lender
hereunder on a first priority perfected basis. 

Exhibit D-2-9 

ARTICLE VII. 
REMEDIES UPON EVENT OF DEFAULT. 

7.1 Remedies Upon an Event of Default. Upon the
occurrence and during the continuation of an Event of Default, Lender shall have
the right, at its election, but not the obligation, to do any of the following:

(a) vote or exercise any and all of
Pledgor’s rights or powers incident to the ownership of the Pledged Ownership
Interests, including any rights or powers to manage or control Pledged Company;

(b) demand, sue for, collect or receive
any money or property at any time payable to or receivable by Pledgor on account
of or in exchange for all or any part of the Collateral; 

(c) cause any action at law or suit in
equity or other proceeding to be instituted and prosecuted to collect or enforce
any obligation or right hereunder or included in the Collateral, including
specific enforcement of any covenant or agreement contained herein, or to
foreclose or enforce the security interest in all or any part of the Collateral
granted herein, or to enforce any other legal or equitable right vested in it by
this Agreement or by applicable Legal Requirements; 

(d) amend, terminate, supplement or
modify Pledged Company’s governing documents; (e) incur reasonable expenses,
including reasonable attorneys’ fees, reasonable consultants’ fees, and other
costs appropriate to the exercise of any right or power under this Agreement;

(f) perform any obligation of Pledgor
hereunder or under any other Financing Document, make payments, purchase,
contest or compromise any encumbrance, charge, or lien, pay taxes and expenses
and insure, process and preserve the Collateral without, however, any obligation
to do so; 

(g) secure the appointment of a
receiver of the Collateral or any part thereof without notice to Pledged Company
or Pledgor, whether incidental to a proposed sale of the Collateral or
otherwise, and all disbursements made by such receiver and the expenses of such
receivership shall be added to and be made a part of the Obligations, and,
whether or not said principal sum, including such disbursements and expenses,
exceeds the indebtedness originally intended to be secured hereby, the entire
amount of said sum, including such disbursements and expenses, shall be secured
by this Agreement and shall be due and payable upon demand therefor and
thereafter shall bear interest at the Default Rate or the maximum rate permitted
by applicable Legal Requirements, whichever is less; 

(h) exercise any other or additional
rights or remedies granted to Lender under any other provision of this Agreement
or any other Financing Document, or exercisable by a secured party under the UCC
or under any other applicable Legal Requirement; 

Exhibit D-2-10 

(i) take any other action which Lender
deems necessary or desirable to protect or realize upon its security interest in
the Collateral or any part thereof, and Pledgor hereby irrevocably appoints
Lender as its attorney-in-fact (as set forth in Section 8.3) to take any
such action, including the execution and delivery of any and all documents or
instruments related to the Collateral or any part thereof in Pledgor’s name, and
said appointment shall create in Lender a power coupled with an interest which
shall be irrevocable; or 

(j) appoint another Person (who may be
an employee, officer or other representative of Lender) to do any of the
foregoing, or take any other action permitted hereunder, on behalf of
Lender.

7.2 Minimum Notice Period. If, pursuant to applicable
Legal Requirements, prior notice of any action described in Section 7.1
is required to be given to Pledgor or Pledged Company, Pledgor and Pledged
Company hereby acknowledge and agree that the minimum time required by such
applicable Legal Requirements, or if no minimum is specified, ten (10) Banking
Days, shall be deemed a reasonable notice period. 

7.3 Right to Cure. In addition to the foregoing
remedies, Lender may, but shall not be obligated to, cure any Event of Default
and incur reasonable fees, costs and expenses in doing so, in which event
Pledgor and Pledged Company shall reimburse Lender after demand for all such
fees, costs and expenses as provided for in Section 7.4 below. 

7.4 Expenses; Interest. 

(a) Pledgor and Pledged Company jointly
and severally agrees to pay on demand to Lender all costs and expenses incurred
by Lender (including the reasonable fees and disbursements of counsel) incident
to its enforcement, exercise, protection or preservation of any of its rights,
remedies or claims under this Agreement, but without duplication to any cost or
expenses previously paid by Pledgor or any Borrower Affiliate Entities under the
other Financing Documents. 

(b) Any amount required to be paid by
Pledgor or Pledged Company pursuant to the terms hereof that is not paid when
due shall bear interest at the Default Rate or the maximum rate permitted by
applicable Legal Requirements, whichever is less, from the date due until paid
in full. 

7.5 Sale of Collateral. In addition to exercising the
foregoing rights, upon the occurrence and during the continuation of an Event of
Default, Lender may, to the extent permitted by applicable Legal Requirements,
arrange for and conduct a sale of the Collateral at a public or private sale (as
Lender may elect) which sale may be conducted by an employee or representative
of Lender, without any demand of performance or notice of intention to sell or
dispose of, or of time or place of sale or disposition (except such notice as
required by any applicable Legal Requirement), and any such sale shall be
considered or deemed to be a sale made in a commercially reasonable manner.
Lender may release, temporarily or otherwise, to Pledgor any item of Collateral
of which Lender has taken possession pursuant to any right granted to Lender by
this Agreement without waiving any rights granted to Lender under this
Agreement, the Financing Agreement or the other Financing Documents. Pledgor, in
dealing with or disposing of the Collateral or any part thereof, hereby
waives all rights, legal and equitable, it may now or hereafter have to require
marshaling of assets or to require, upon foreclosure, sales of assets in a
particular order. Pledgor also waives its right to challenge the reasonableness
of any disclaimer of warranties, title and the like made by Lender in connection
with a sale of the Collateral. Each successor and assign of Pledgor, including a
holder of a Lien subordinate to the Lien created hereby (without implying that
Pledgor has, except as expressly provided herein, a right to grant an interest
in, or a subordinate Lien on, any of the Collateral), except as otherwise agreed
between such successor or assign of Pledgor and Lender, by acceptance of its
interest or Lien agrees that it shall be bound by the above waiver, to the same
extent as if such holder gave the waiver itself. If Lender sells any of the
Collateral upon credit, Pledgor will be credited only with payments actually
made by the purchaser, received by Lender and applied to the indebtedness of the
purchaser. In the event the purchaser fails to pay for the Collateral, Lender
may resell the Collateral and Pledgor shall be credited with the proceeds of the
sale. In the event Lender shall bid at any foreclosure or trustee’s sale or at
any private sale permitted by Legal Requirements or this Agreement or any other
Financing Document, Lender may bid all or less than the amount of the
Obligations. To the extent permitted by applicable Legal Requirements, the
amount of the successful bid at any such sale, whether Lender or any other party
is the successful bidder, shall, absent fraud or gross negligence, be
conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations. 

Exhibit D-2-11 

7.6 Compliance With Limitations and Restrictions.
Pledgor hereby agrees that in respect of any sale of any of the Collateral
pursuant to the terms hereof, Lender is hereby authorized to comply with any
limitation or restriction in connection with such sale as Lender may be advised
by counsel is necessary in order to avoid any violation of applicable Legal
Requirements, or in order to obtain any required approval of the sale or of the
purchaser by any Governmental Authority or official, and Pledgor further agrees
that such compliance shall not result in such sale being considered or deemed
not to have been made in a commercially reasonable manner, nor shall Lender be
liable or accountable to Pledgor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction. 

7.7 No Impairment of Remedies. If, in the exercise of
any of such rights and remedies under this Agreement, Lender shall forfeit any
of its rights or remedies, whether because of any applicable Legal Requirements
pertaining to “election of remedies” or otherwise, Pledgor hereby consents to
such action by Lender and, to the extent permitted by applicable Legal
Requirements, waives any claim based upon such action, even if such action by
Lender shall result in a full or partial loss of any rights of subrogation,
indemnification or reimbursement which Pledgor might otherwise have had but for
such action by Lender or the terms herein. Any election of remedies which
results in the denial or impairment of the right of Lender to seek a deficiency
judgment against any of the parties to any of the Financing Documents shall not,
to the extent permitted by applicable Legal Requirements, impair Pledgor’s
obligation hereunder. 

Exhibit D-2-12 

ARTICLE VIII. 
MISCELLANEOUS. 

8.1 Remedies Cumulative; Delay Not Waiver. 

8.1.1 Remedies Cumulative. No right, power or remedy
herein conferred upon or reserved to Lender is intended to be exclusive of any
other right, power or remedy, and every such right, power and remedy shall, to
the extent permitted by applicable Legal Requirements, be cumulative and in
addition to every other right, power and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy. Resort to any
or all security now or hereafter held by Lender may be taken concurrently or
successively and in one or several consolidated or independent judicial actions
or lawfully taken nonjudicial proceedings, or both. If Lender may, under
applicable Legal Requirements, proceed to realize its benefits under this
Agreement or any other Financing Document giving Lender a Lien upon any
Collateral, whether owned by Pledgor or by any other Person, either by judicial
foreclosure or by nonjudicial sale or enforcement, Lender may, at its sole
option, determine which of its remedies or rights it may pursue without
affecting any of the rights and remedies of Lender under this Agreement. 

8.1.2 No Waiver; Separate Causes of Action. No delay or
omission to exercise any right, power or remedy accruing to Lender upon the
occurrence and during the continuance of any Event of Default as aforesaid shall
impair any such right, power or remedy of Lender, nor shall it be construed to
be a waiver of any such Event of Default or of any similar breach or default
thereafter occurring or an acquiescence therein, nor shall any waiver of any
other breach or default under this Agreement or any other Financing Document be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Each and every default by Pledgor in payment hereunder shall give
rise to a separate cause of action hereunder, and separate suits may be brought
hereunder as each cause of action arises and every power and remedy given by
this Agreement may be exercised from time to time, and as often as shall be
deemed expedient, by Lender. 

8.1.3 Application of Proceeds. Upon the occurrence and
during the continuation of an Event of Default, the proceeds of any sale of or
other realization upon, all or any part of the Collateral shall be applied as
described in the Liquidation Preference provision of Article 7 of the Financing
Agreement. Pledged Company shall remain liable for any deficiency. 

Exhibit D-2-13 

8.1.4 Certain Waivers. Pledgor hereby waives and
relinquishes, to the maximum extent permitted by applicable Legal Requirements,
all rights and remedies accorded to pledgors, sureties or guarantors and agrees
not to assert or take advantage of any such rights or remedies, including: (a)
any law limiting remedies under an obligation secured by a mortgage or deed of
trust on real property if the real property is sold under a power of sale
contained in the mortgage or deed of trust, and all defenses based on any loss
whether as a result of any such sale or otherwise; (b) any right to require
Lender to proceed against Pledged Company or any other Person or to proceed
against or exhaust any security held by Lender at any time or to pursue any
other remedy in Lender’s power before proceeding against Pledgor; (c) any
defense that may arise by reason of the incapacity, lack of power or authority,
death, dissolution, merger, termination or disability of Pledgor, Pledged Company or any
other Person or the failure of Lender to file or enforce a claim against the
estate (in administration, bankruptcy or any other proceeding) of any of
Pledgor, Pledged Company or any other Person; (d) any right to enforce any
remedy that Lender may have against Pledged Company or any other Person and any
right to participate in any security held by Lender until the Obligations have
been paid and the covenants of the Financing Documents have been performed in
full; (e) any right to require Lender to give any notices of any kind,
including, without limitation, notices of nonpayment, nonperformance, protest,
dishonor, default, delinquency or acceleration, or to make any presentments,
demands or protests, except as set forth herein or expressly provided in the
Financing Agreement or any of the Financing Documents; (f) any right to assert
the bankruptcy or insolvency of Pledged Company or any other Person as a defense
hereunder or as the basis for rescission hereof and any defense arising because
of Lender’s election, in any proceeding instituted under the Bankruptcy Law, of
the application of Section 1111(b)(2) of the Bankruptcy Law; (g) subject to
Section 8.9, any right under any law purporting to reduce Pledgor’s
obligations hereunder if the Obligations are reduced other than as a result of
payment of such Obligations; (h) any defense based on the repudiation of the
Financing Documents by Pledged Company or any other Person, the failure by
Lender to enforce any claim against Pledgor, Pledged Company or any other Person
or the unenforceability in whole or in part of any Financing Documents; (i) all
suretyship and guarantor’s defenses generally; (j) any right to insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshaling of assets, redemption or
similar law, or exemption, whether now or at any time hereafter in force, which
may delay, prevent or otherwise affect the performance by Pledgor of its
obligations under, or the enforcement by Lender of, this Agreement; (k) any
defense based upon an election of remedies by Lender, including an election to
proceed by non-judicial rather than judicial foreclosure, which destroys or
otherwise impairs the subrogation rights of Pledgor, the right of Pledgor to
proceed against Pledged Company or another Person for reimbursement, or both;
(l) any defense based on any offset against any amounts which may be owed by any
Person to Pledgor for any reason whatsoever; (m) any defense based on any act,
failure to act, delay or omission whatsoever on the part of Pledged Company or
any of its Affiliates or the failure by Pledged Company or any of its Affiliates
to do any act or thing or to observe or perform any covenant, condition or
agreement to be observed or performed by it under the Financing Documents, (n)
any defense, setoff or counterclaim which may at any time be available to or
asserted by Pledged Company or any of its Affiliates against Lender or any other
Person under the Financing Documents; (o) any duty on the part of Lender to
disclose to Pledgor any facts Lender may now or hereafter know about Pledged
Company or any of its Affiliates, regardless of whether Lender has reason to
believe that any such facts materially increase the risk beyond that which
Pledgor intends to assume, or have reason to believe that such facts are unknown
to Pledgor, or have a reasonable opportunity to communicate such facts to
Pledgor; (p) any defense based on any change in the time, manner or place of any
payment under, or in any other term of, the Financing Documents or any other
amendment, renewal, extension, acceleration, compromise or waiver of or any
consent or departure from the terms of the Financing Documents; and (q) any
defense based upon any borrowing or grant of a security interest under Section
364 of the Bankruptcy Law.

8.1.5 Foreclosure Waiver. To the extent permitted by
Legal Requirements, Pledgor waives the posting of any bond otherwise required of
Lender in connection with any judicial process or proceeding to obtain
possession of, replevy, attach, or levy upon the Collateral, to enforce any judgment or other
security for the Obligations, to enforce any judgment or other court order
entered in favor of Lender, or to enforce by specific performance, temporary
restraining order, preliminary or permanent injunction, this Agreement or any
other agermeent or document between Pledgor, Lender. Pledgor further agrees that
upon the occurrence and during the continuation of an Event of Default, Lender
may elect to nonjudicially or judicially foreclose against any real or personal
property security it holds for the Obligations or any part thereof, or to
exercise any other remedy against Pledged Company or any other Person, any
security or any guarantor, even if the effect of that action is to deprive
Pledgor of the right to collect reimbursement from Pledged Company or any other
Person for any sums paid by Pledgor to Lender. 

Exhibit D-2-14 

8.1.6 Waiver of Rights of Subrogation. Until the
indefeasible payment in full in cash of the Obligations and the termination of
the Loan Commitment and all other obligations of Lender under the Financing
Documents, (a) Pledgor shall not have any right of subrogation and waives all
rights to enforce any remedy which the Lender now has or may hereafter have
against Pledged Company, and waives the benefit of, and all rights to
participate in, any security now or hereafter held by Lender from Pledged
Company, and (b) Pledgor waives any claim, right or remedy which it may now have
or hereafter acquire against Pledged Company that arises hereunder and/or from
the performance by Pledgor hereunder, including any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification, or
participation in any claim, right or remedy of Lender against Pledged Company,
or any security which Lender now have or hereafter acquire, whether or not such
claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise. Any amount paid to Pledgor on account of any such
subrogation rights prior to the payment in full in cash of the Obligations and
the termination of the Loan Commitment and all other obligations of the Lender
under the Financing Documents, shall be held in trust for the benefit of Lender
and shall immediately thereafter be paid to Lender. 

8.2 Pledged Company’s Consent and Covenant. Pledged
Company hereby consents to the assignment of and grant of a security interest in
the Collateral to Lender and to the exercise by Lender of all rights and powers
assigned or delegated to Lender by Pledgor hereunder, including the rights upon
and during an Event of Default to exercise Pledgor’s voting rights and other
rights to manage or control Pledged Company, all in accordance with the
Financing Documents. 

8.3 Attorney-in-Fact. Pledgor hereby constitutes and
appoints Lender and each successor or assign of Lender, the true and lawful
attorney-in-fact of Pledgor, with full power and authority in the place and
stead of Pledgor and in the name of Pledgor, Lender or otherwise, subject to the
terms of the Financing Agreement and the other Financing Documents, to enforce
all rights, interests and remedies of Pledgor with respect to the Collateral,
including the right: (a) to ask, require, demand, receive and give acquittance
for any and all moneys and claims for money due and to become due under or
arising out of the Collateral, including any insurance policies; 

Exhibit D-2-15 

(b) to elect remedies under the
Collateral and to endorse any checks or other instruments or orders in
connection therewith; 

(c) to vote, demand, receive and
enforce Pledgor’s rights with respect to the Collateral; 

(d) to give appropriate receipts,
releases and satisfactions for and on behalf of and in the name of Pledgor or,
at the option of Lender, in the name of Lender, with the same force and effect
as Pledgor could do if this Agreement had not been made; 

(e) to file any claims or take any
action or institute any proceedings in connection therewith which Lender may
reasonably deem to be necessary or advisable; and 

(f) to pay, settle or compromise all
bills and claims which may be or become liens or security interests against any
or all of the Collateral, or any part thereof, unless a bond or other security
satisfactory to Lender has been provided; 

provided, however, that Lender shall not exercise
any of the aforementioned rights unless an Event of Default has occurred and is
continuing and has not been waived in accordance with the Financing Documents.
This power of attorney is a power coupled with an interest and shall be
irrevocable; provided, however, that nothing in this Agreement
shall prevent Pledgor from, prior to the exercise by Lender of any of the
aforementioned rights, undertaking Pledgor’s operations in the ordinary course
of business in accordance with the Collateral and the Financing Documents. 

8.4 Perfection; Further Assurances.

8.4.1 Perfection. Pledgor agrees that from time to time,
at the expense of Pledged Company, Pledgor shall promptly execute and deliver
all further instruments and documents, and take all further action, that may be
reasonably necessary, or that Lender may reasonably request, in order to
perfect, to ensure the continued perfection of, and to protect the assignment
and security interest granted or intended to be granted hereby or to enable
Lender to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, Pledgor shall
(a) deliver the Collateral or any part thereof to Lender, as Lender may request,
accompanied by such duly executed instruments of transfer or assignment as
Lender may request, and (b) authorize, execute and file such financing or
continuation statements, or amendments thereto, and such other instruments,
endorsements or notices, as may be reasonably necessary or desirable or as
Lender may reasonably request, in order to perfect and preserve the assignments
and security interests granted or purported to be granted hereby. 

8.4.2 Filing of Financing and Continuation Statements.
Pledgor hereby authorizes the filing of any financing statements or continuation
statements, and amendments to financing statements, or any similar document in
any jurisdictions and with any filing offices as Lender may determine, in its
sole discretion, are necessary or advisable to perfect the security interest
granted to Lender herein. Such financing statements may describe the Collateral
in substantially the same manner as described herein or may contain an
indication or description of the Collateral that describes such property in any
other manner as Lender may determine, in its sole discretion, is necessary, advisable or prudent to ensure
the perfection of the security interest in the Collateral granted to Lender
herein. 

Exhibit D-2-16 

8.4.3 Information Concerning Collateral. Pledgor shall,
promptly upon request, provide to Lender all information and evidence it may
reasonably request concerning the Collateral to enable Lender to enforce the
provisions of this Agreement. 

8.5 Payment of Taxes. Pledgor shall pay or cause to be
paid, before any fine, penalty, interest or cost attaches thereto, all taxes,
assessments and other governmental or nongovernmental charges or levies (other
than those taxes that it is contesting in good faith and by appropriate
proceedings, and in respect of which it has established adequate reserves for
such taxes) now or hereafter assessed or levied against the Collateral pledged
by it hereunder (or against the Collateral in which Pledgor has granted to
Lender a security interest of first priority) and shall retain copies of, and,
upon request, permit Lender to examine receipts showing payment of any of the
foregoing. 

8.6 Place of Business; Location of Records. Unless
Lender is otherwise notified under Section 6.10, the chief executive
office of Pledgor is, and all records of Pledgor concerning the Collateral are
and will be, located at the address set forth in Section 8.13. 

8.7 Continuing Assignment and Security Interest; Transfer of
Note. This Agreement shall create a continuing pledge and assignment of and
security interest in the Collateral and shall (a) remain in full force and
effect until the payment in full in cash and performance in full of the
Obligations (other than any unasserted contingent reimbursement or indemnity
obligations) and as otherwise provided in Section 8.17; (b) be binding
upon Pledged Company, Pledgor, and their respective successors and assigns; and
(c) inure, together with the rights and remedies of Lender, to the benefit of
Lender, and its respective successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), Lender may assign or otherwise
transfer the Note or other evidence of indebtedness held by them to any other
Person to the extent permitted by and in accordance with the Financing
Agreement, and such other Person shall thereupon become vested with all or an
appropriate part of the benefits in respect thereof granted to the Lender herein
or otherwise. The release of the security interest in any or all of the
Collateral, the taking or acceptance of additional security, or the resort by
Lender to any security it may have in any order it may deem appropriate, shall
not affect the liability of any Person on the indebtedness secured hereby. 

8.8 Termination of Security Interest. Upon the payment
in full in cash of all Obligations and the termination of the Loan Commitment
and all other obligations of the Lender under the Financing Documents (other
than the obligations that are intended to survive the termination of the
Financing Documents), this Agreement and the security interest and all other
rights granted hereby shall terminate and all rights to the Collateral shall
revert to Pledgor. Upon any such termination, Lender will return all
certificates previously delivered to Lender representing the Pledged Ownership
Interests and, at Pledgor’s expense and upon its written direction, execute and,
subject to Section 8.17, deliver to Pledgor such documents (including
UCC-3 termination statements) as Pledged Company or Pledgor shall reasonably
request to evidence such termination, to release all security interest on the
Collateral and to return such Collateral to Pledgor. If this Agreement shall be
terminated or revoked by operation of law, Pledgor shall indemnify and save Lender and the other Secured
Parties harmless from any loss which may be suffered or incurred by Lender in
acting hereunder prior to the receipt by Lender, its successors, transferees, or
assigns of notice of such termination or revocation. 

Exhibit D-2-17 

8.9 Security Interest Absolute. All rights of Lender and
the security interest hereunder, and all obligations of Pledgor hereunder, shall
be absolute and unconditional irrespective of: (a) any lack of validity or
enforceability of the Financing Agreement, any other Financing Document or any
other agreement or instrument relating thereto; (b) the exercise by Lender of
any remedy, power or privilege contained in any Financing Document or available
at law, equity or otherwise; (c) the failure of Lender (i) to assert any claim
or demand or to enforce any right or remedy against Pledged Company, any
Affiliate of Pledged Company or any other Person under the provisions of the
Financing Agreement, the Note, any other Financing Document or otherwise or (ii)
to exercise any right or remedy against any other guarantor of, or collateral
securing, any of the Obligations; (d) any change in the time, manner or place of
payment of, or in any other term of the Obligations (including any increase in
the amount thereof), or any other amendment or waiver of or any consent to any
departure from the Financing Agreement or any other Financing Document; (e) any
action by Lender to take and hold security or collateral for the payment of the
Obligations, or sell, exchange, release, dispose of, or otherwise deal with, any
property pledged, mortgaged or conveyed, or in which Lender has been granted a
Lien, to secure any indebtedness to Lender of Pledgor, Pledged Company, any of
their respective Affiliates or any other Person party to a Financing Document;
(f) any reduction, limitation, impairment or termination of any of the
Obligations for any reason other than the written agreement of the Lender to
terminate the Obligations in full, but including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to, and Pledgor
hereby waives any right to or claim of, any defense or setoff, counterclaim,
recoupment, or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any other
event or occurrence affecting, any Obligation of Pledged Company, any Affiliate
of Pledged Company or otherwise; (g) any amendment to, rescission, waiver, or
other modification of, or any consent to departure from, any of the terms of the
Financing Agreement, the Note, or any other Financing Document; (h) any
exchange, surrender, release or non-perfection of any Collateral, or any
release, amendment or waiver or addition of or consent to departure from any
other security interest held by Lender securing any of the Obligations; (i) the
application by Lender of any sums by whomever paid or however realized to any
amounts owing by Pledgor, Pledged Company or any other Person party to the
Financing Documents to Lender in such manner as Lender shall determine in its
discretion; (j) any bankruptcy or insolvency of Pledged Company, Pledgor or any
other Person; or (k) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor or any third party pledgor
(other than the defense of payment). 

8.10 Limitation on Duty of Lender with Respect to the
Collateral. The powers conferred on Lender hereunder are solely to protect
its interest in the Collateral and shall not impose any duty on Lender or any of
its designated agents to exercise any such powers. Except for the safe custody
of any Collateral in its possession, the accounting for monies actually received
by it hereunder and any duty expressly imposed on Lender by applicable Legal
Requirements with respect to any Collateral that has not been waived hereunder,
Lender shall have no duty with respect to any Collateral and no implied duties
or obligations shall be read into this Agreement against Lender. Lender shall be
deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment that is substantially equivalent to that
which Lender accords its own property, it being expressly agreed, to the maximum
extent permitted by applicable Legal Requirements, that Lender shall have no
responsibility for (a) taking any necessary steps to preserve rights against any
parties with respect to any Collateral, or (b) taking any action to protect
against any diminution in value of the Collateral, but, in each case, Lender may
do so and all expenses reasonably incurred in connection therewith shall be part
of the Obligations. 

Exhibit D-2-18 

8.11 Liability. Recourse against the Non-Recourse
Parties under this Agreement shall be limited to the extent provided in Article
8 of the Financing Agreement. 

8.12 Amendments; Waivers; Consents. This Agreement may
not be amended, amended and restated, supplemented or otherwise modified, except
in a writing signed by each of the parties hereto and otherwise in accordance
with the provisions of the Financing Agreement. 

8.13 Notices. All notices required or permitted under
the terms and provisions hereof shall be in writing, and any such notice shall
be effective if given in accordance with the provisions of Section 10.1 of the
Financing Agreement. Notices to Lender may be given at the address set forth in
Section 10.1 of the Financing Agreement. Notices to Pledgor may be given at the
following address (or such other address as notified by Pledgor):

	 	U.S. Geothermal Inc. 
	 	Address: 	1505 Tyrell Lane 
	 	  	Boise, ID 83706 
	 	Telephone: 	(208) 424-1027 
	 	Fax: 	(208) 424-1030 
	 	Attention: 	Jonathan Zurkoff 

Notices to Pledged Company may be given at the following
address (or such other address as notified by Pledged Company):

	 	Nevada USG Holdings, LLC 
	 	Address: 	1505 Tyrell Lane 
	 	  	Boise, ID 83706 
	 	Telephone: 	(208) 424-1027 
	 	Fax: 	(208) 424-1030 
	 	Attention: 	Jonathan Zurkoff 

8.14 Modification of Obligations. If Lender shall at any
time or from time to time, with or without the consent of, or notice to, the
Pledgor: 

(a) change or extend the manner, place
or terms of payment of, or renew or alter all or any portion of, the
Obligations; 

Exhibit D-2-19 

(b) take any action under or in respect
of the Financing Documents in the exercise of any remedy, power or privilege
contained therein or available at law, equity or otherwise, or waive or refrain
from exercising any such remedies, power or privileges; 

(c) amend or modify, in any manner
whatsoever, the Financing Documents; 

(d) extend or waive the time for
Pledgor’s, Pledged Company’s or any other Person’s performance of, or compliance
with, any term, covenant or agreement on its part to be performed or observed
under the Financing Documents, or waive such performance or compliance or
consent to a failure of, or departure from, such performance or compliance; 

(e) take and hold security or
collateral for the payment of the Obligations, or sell, exchange, release,
dispose of, or otherwise deal with, any property pledged, mortgaged or conveyed,
or in which Lender has been granted a Lien, to secure any indebtedness of
Pledgor, Pledged Company or any other Person party to a Financing Document to
Lender; 

(f) release or limit the liability of
anyone who may be liable in any manner for the payment of any amounts owed by
Pledgor, Pledged Company or any other Person party to a Financing Document to
Lender; 

(g) modify or terminate the terms of
any intercreditor or subordination agreement pursuant to which claims of other
creditors of Pledgor, Pledged Company or any other Person party to a Financing
Document are subordinated to the claims of Lender; or 

(h) apply any sums by whomever paid or
however realized to any amounts owing by Pledgor or Pledged Company to Lender in
such manner as Lender shall determine in its discretion; 

then, subject to Section 8.9, Lender shall not incur any
liability to Pledgor pursuant hereto as a result thereof and no such action
shall impair or release the obligations of Pledgor under this Agreement. 

8.15 Delivery of Collateral; Proxy. All certificates or
instruments representing or evidencing the Collateral shall be delivered to and
held by or on behalf of Lender pursuant hereto. All such certificates or
instruments shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance acceptable to Lender. Lender shall have the right, at any
time in its discretion and without prior notice to Pledgor, following the
occurrence and during the continuation of an Event of Default, to transfer to or
to register in the name of Lender or any of its nominees any or all of the
Collateral and to exchange certificates or instruments representing or
evidencing Collateral for certificates or instruments of smaller or larger
denominations; provided, however, that once such Event of Default
has been cured, Lender will promptly transfer to or register in the name or
cause its nominees to transfer to or register in the name of Pledgor, as
applicable, all such Collateral. In furtherance of the foregoing, Pledgor shall
further execute and deliver to Lender an irrevocable power in the form of
Exhibit A with respect to the ownership interests of Pledged Company
owned by Pledgor. 

Exhibit D-2-20 

8.16 Reinstatement. This Agreement shall continue to be
effective or be automatically reinstated, as the case may be, if at any time any
payment pursuant to this Agreement is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, reorganization, liquidation of
Pledgor, Pledged Company or any other Person party to a Financing Document or
upon the dissolution of, or appointment of any intervenor or conservator of, or
trustee or similar official for, Pledgor, Pledged Company or any other Person
party to a Financing Document or any substantial part of Pledgor’s, any Pledged
Company’s or any other such Person’s assets, or otherwise, all as though such
payments had not been made, and Pledged Company shall pay Lender on demand all
reasonable costs and expenses (including reasonable fees of counsel) incurred by
Lender in connection with such rescission or restoration. 

8.17 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction. 

8.18 Survival of Provisions. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the other Financing Documents and the making of
the Loans and extensions of credit thereunder. Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements, representations and
warranties of Pledgor set forth herein shall terminate at the same time as the
security interest and other rights granted hereunder shall terminate pursuant to
Section 8.8. 

8.19 Headings Descriptive. The headings in this
Agreement are for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose or be given any substantive effect. 

8.20 Entire Agreement. This Agreement, together with
each other Financing Document, is executed in connection herewith, is intended
by the parties as a final expression of their agreement and is intended as a
complete and exclusive statement of the terms and conditions thereof. 

8.21 Time. Time is of the essence of this Agreement.

8.22 Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute one and
the same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. 

8.23 Limitation of Liability. No claim shall be made by
Pledgor or Pledged Company against Lender or any of its Affiliates, directors,
employees, attorneys or agents for any loss of profits, business or anticipated
savings, special or punitive damages or any indirect or consequential loss
whatsoever in respect of any breach or wrongful conduct (whether or not the claim therefor is based on contract, tort or duty imposed by
law), in connection with, arising out of or in any way related to the
transactions contemplated by this Agreement or the other Financing Documents or
any act or omission or event occurring in connection therewith; and Pledgor and
Pledged Company hereby waive, release and agree not to sue upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in their favor. 

Exhibit D-2-21 

8.24 Submission to Jurisdiction. Lender, Pledged Company
and Pledgor agree that any legal action or proceeding by or against Pledgor or
Pledged Company or with respect to or arising out of this Agreement or any other
Financing Document may be brought in or removed to the courts of the State of
New York, in and for the County of New York, or of the United States of America
for the Southern District of New York, as Lender may elect. By execution and
delivery of this Agreement, Lender, Pledged Company and Pledgor accept, for
themselves and in respect of their property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts. Lender, Pledged Company and
Pledgor irrevocably consent to the service of process out of any of the
aforementioned courts in any manner permitted by law. Nothing herein shall
affect the right of Lender to bring legal action or proceedings in any other
competent jurisdiction. Lender, Pledged Company and Pledgor hereby waive any
right to stay or dismiss any action or proceeding under or in connection with
this Agreement brought before the foregoing courts on the basis of forum
non-conveniens. 

8.25 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE PERFECTION OR
PRIORITY OF THE LIEN AND SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. 

8.26 CONSENT TO JURISDICTION. SUBJECT TO CLAUSE (E) OF
THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY
ARISING OUT OF OR RELATING HERETO OR ANY OTHER FINANCING DOCUMENTS, OR ANY OF
THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH BORROWER AFFILIATE ENTITY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN
WITH RESPECT TO ACTIONS BY THE LENDER IN RESPECT OF RIGHTS UNDER ANY FINANCING
DOCUMENT GOVERNED BY LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH
RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEFENSE OF FORUM
NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ANY BORROWER AFFILIATE ENTITY AT ITS ADDRESS PROVIDED 

Exhibit D-2-22 

IN ACCORDANCE WITH SECTION 8.13; (D) AGREES THAT SERVICE
AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER ANY BORROWER AFFILIATE ENTITY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E)
AGREES THAT THE LENDER RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY BORROWER AFFILIATE ENTITY
IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY
RIGHTS UNDER ANY FINANCING DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT. 

8.27 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER
FINANCING DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THE LOAN TRANSACTIONS OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 8.27 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER FINANCING DOCUMENTS OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT. 

8.28 Knowledge and Attribution. Reference in this
Agreement to the “knowledge”, “best knowledge” or facts and circumstances “known
to” Pledgor, and all like references, means facts or circumstances of which a
Responsible Officer of Pledgor has actual knowledge. 

8.29 Rights of Lender. Lender shall be entitled to the
rights, protections, immunities and indemnities set forth in the Financing
Agreement as if specifically set forth herein. 

Exhibit D-2-23 

8.30 Consent and Acknowledgement. Pledgor hereby
acknowledges receiving copies of the Financing Agreement, and the other
Financing Documents and consent to the terms and provisions of each. 

8.31 Third Party Beneficiaries. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon, or give to any Person, other than Pledgor, Pledged Company, and Lender,
any security, rights, remedies or claims, legal or equitable, under or by reason
hereof, or any covenant or condition hereof; and this Agreement and the
covenants and agreements herein contained are and shall be held to be for the
sole and exclusive benefit of Pledgor, Pledged Company, and Lender. 

8.32 Waiver of Transfer Restrictions. Notwithstanding
anything to the contrary contained in the Holdings LLC Agreement, Pledgor hereby
waives any requirement contained in the Holdings LLC Agreement that it consent
to a transfer of a ownership interest in Pledged Company in connection with a
foreclosure on such ownership interest under the Financing Documents. 

8.33 Article 8 Securities. Pledgor hereby represents and
warrants that (a) the terms of each of the Pledged Ownership Interests expressly
provide that they are securities governed by Article 8 of the UCC as in effect
in each applicable jurisdiction and (b) Section 5.2 of the Holdings LLC
Agreement is in full force and effect. Pledgor hereby covenants and agrees that
it will not agree to any amendment or repeal of Section 5.2 of the
Holdings LLC Agreement without the prior express written consent of Lender and,
in any event, shall promptly notify Lender in writing if for any reason the
Pledged Ownership Interests shall cease to be securities for purposes of the UCC
in any applicable jurisdiction. 

8.34 Appointment of Agent. Pledgor hereby irrevocably
designates, appoints and empowers CT Corporation System (the “Process
Agent”), with offices on the date hereof at 111 Eighth Avenue, New York, New
York 10011, as its permitted designee, appointee and agent to receive and
forward, for and on its behalf, service of any and all legal process, writs,
summons, notices and documents which may be served in any action or proceeding
arising out of this Agreement or any other Financing Document. Pledged Company
hereby agrees to cause the Process Agent to execute and deliver to the Lender a
letter from the Process Agent to the effect of the foregoing. If for any reason
such Process Agent shall cease to act as such, Pledgor agrees hereby to
designate a new permitted designee, appointee and agent in New York City on
terms satisfactory to the Lender. Pledgor shall promptly inform the Process
Agent of any change to Pledgor’s address for forwarding such items. 

[SIGNATURE PAGES FOLLOW]

Exhibit D-2-24 

IN WITNESS WHEREOF, the parties
hereto, by their officers duly authorized, intending to be legally bound, have
caused this Agreement to be duly executed and delivered as of the date first
above written. 

U.S. GEOTHERMAL INC., 
an
Idaho corporation,
as Pledgor 

	 	           
                   By:
      ____________________________________
	 	  
	 	           
                   Name:
      ____________________________________
	 	  
	 	           
                   Title:
      ____________________________________
	 	Federal Employer 
	 	Identification No.
      ____________________________________
	 	Idaho 
	 	Organizational No.
      ____________________________________
	 	  
	 	  
	 	  
	 	NEVADA USG HOLDINGS, LLC, 
	 	a Delaware limited liability company, 
	 	as Pledged Company 
	 	  
	 	  
	 	           
                   By:
      ____________________________________
	 	  
	 	           
                   Name:
      ____________________________________
	 	  
	 	           
                   Title:
      ____________________________________
	 	Federal Employer 
	 	Identification No.
      ____________________________________
	 	Delaware 
	 	Organizational No.
      ____________________________________

[SIGNATURE PAGE TO IDAHO SPONSOR PLEDGE AGREEMENT] 

ARES CAPITAL CORPORATION, 
a
Maryland corporation, 
as Lender 

	 	By: ____________________________________
	 	 
	 	Name:
____________________________________
	 	 
	 	Title:
  ____________________________________

[SIGNATURE PAGE TO IDAHO SPONSOR PLEDGE AGREEMENT] 

EXHIBIT A 
IRREVOCABLE PROXY 

Date: November 9, 2011 

The undersigned hereby appoints ARES CAPITAL CORPORATION, a
Maryland corporation, (“Lender”), as Proxy with full power of
substitution, and hereby authorizes Lender to represent and vote all of the
ownership interests of NEVADA USG HOLDINGS, LLC, a Delaware limited
liability company, owned by the undersigned on the date of exercise hereof
during the continuance of an Event of Default under, and as defined in, the
Idaho Sponsor Pledge Agreement, dated as of November 9, 2011 among U.S.
Geothermal Inc., Nevada USG Holdings, LLC, and Lender at any meeting or at any
other time chosen by Lender in its sole discretion. 

[SIGNATURE PAGE FOLLOWS]

Exhibit A 

U.S. GEOTHERMAL INC., 
an Idaho corporation, 
as
Pledgor 

By: ____________________________________

Name: ____________________________________

Title: ____________________________________

Exhibit A 

EXHIBIT B 
TRANSFER DOCUMENT 

FOR VALUE RECEIVED, U.S. Geothermal Inc., an Idaho corporation
hereby sells, assigns and transfers unto _______________________________all of
its ownership interest(s) in Nevada USG Holdings, LLC, a Delaware limited
liability company (“Pledged Company”), standing in its name on the books
of Pledged Company, represented by the following certificate(s): 001, and
irrevocably appoints ____________________________as attorney to transfer the
ownership interests with full power of substitution in the premises. 

[SIGNATURE PAGE FOLLOWS]

Exhibit A 

U.S. GEOTHERMAL INC., 
an Idaho corporation, 
as
Pledgor 

By: ____________________________________

Name:____________________________________ 

Title: ____________________________________

In the presence of: ____________________________________

Exhibit B 

SCHEDULE I 
DESCRIPTION OF OWNERSHIP INTERESTS

	Certificate No. 	Description: 
	001 	100% of the ownership interests of Nevada USG
      Holdings, LLC, a Delaware limited liability company

Schedule I 

	EXHIBIT D-3 
	to Financing
      Agreement 

FORM OF 
MEMBER PLEDGE AGREEMENT 

among 

NEVADA USG HOLDINGS, LLC, 
a Delaware limited
liability company 
(Pledgor) 

and 

USG NEVADA LLC,
a Delaware limited liability
company
(Pledged Company) 

and 

ARES CAPITAL CORPORATION,
a Maryland corporation

(Lender) 

	Dated as of November 9, 2011 
	 

TABLE OF CONTENTS 

Page 

	ARTICLE I. DEFINITIONS 	1 
	  	  	  
	       
                 1.1 	Defined Terms 	1 
	           
             1.2 	Financing Agreement and UCC Definitions 	2 
	       
                 1.3 	Rules of Interpretation 	2 
	ARTICLE II. PLEDGE AND GRANT OF SECURITY INTEREST
    	2 
	  	  	  
	           
             2.1 	Granting Clause 	2 
	       
                 2.2 	Delivery of Certificates 	3 
	           
             2.3 	Retention of Certain Rights 	3 
	ARTICLE III. OBLIGATIONS SECURED
    	4 
	  	  	  
	ARTICLE IV. EVENTS OF DEFAULT 	4 
	  	  	  
	ARTICLE V. REPRESENTATIONS AND
      WARRANTIES OF PLEDGOR 	4 
	  	  	  
	       
                 5.1 	Organization 	4 
	           
             5.2 	Power and Authorization; Enforceable
      Obligations 	4 
	       
                 5.3 	No Legal Bar 	5 
	           
             5.4 	Beneficial Ownership; Pledged Ownership
      Interests 	5 
	       
                 5.5 	No Prior Assignment 	5 
	           
             5.6 	No Other Financing Documents 	5 
	       
                 5.7 	Compliance with Law 	5 
	           
             5.8 	No Litigation 	5 
	       
                 5.9 	Financial Statements 	6 
	           
             5.10 	Permitted Activities of the Equity Pledgor. 	6 
	       
                 5.11 	Taxes 	6 
	           
             5.12 	Investment Company Act; Federal Energy Laws.
	6 
	       
                 5.13 	Name; Organizational Number 	6 
	           
             5.14 	Pledged Company Information 	6 
	       
                 5.15 	Capital Adequacy; Etc. 	6 
	           
             5.16 	Perfection of Security Interest 	7 
	       
                 5.17 	After Acquired Collateral 	7 
	           
             5.18 	No Ownership by Disqualified Persons 	7 
	ARTICLE VI. COVENANTS OF PLEDGOR
    	8 
	  	  	  
	       
                 6.1 	Compliance with Obligations 	8 
	           
             6.2 	Defense of Collateral 	8 
	       
                 6.3 	Preservation of Value;
      Limitation of Liens 	8 
	           
             6.4 	No Other Filings 	8 
	       
                 6.5 	No Sale of Collateral 	8 
	           
             6.6 	Notice 	8 
	       
                 6.7 	Filing of Bankruptcy
      Proceedings 	8 
	           
             6.8 	Distributions 	9 
	       
                 6.9 	Maintenance of Records 	9

Exhibit D-2-i 

	       
                 6.10 	Name; Jurisdiction of
      Organization 	9 
	           
             6.11 	Certificated Securities 	9 
	       
                 6.12 	Amendments to Organizational
      Documents 	9 
	           
             6.13 	Proceeds of Collateral 	9 
	ARTICLE VII. REMEDIES UPON EVENT
      OF DEFAULT 	10 
	  	  	  
	       
                 7.1 	Remedies Upon an Event of
      Default 	10 
	           
             7.2 	Minimum Notice Period 	11 
	       
                 7.3 	Right to Cure 	11 
	           
             7.4 	Expenses; Interest 	11 
	       
                 7.5 	Sale of Collateral 	11 
	           
             7.6 	Compliance With Limitations and Restrictions
	12 
	       
                 7.7 	No Impairment of Remedies 	12 
	ARTICLE VIII. MISCELLANEOUS. 	13 
	  	  	  
	           
             8.1 	Remedies Cumulative; Delay Not Waiver 	13 
	       
                 8.2 	Pledged Company’s Consent and
      Covenant 	15 
	           
             8.3 	Attorney-in-Fact 	15 
	       
                 8.4 	Perfection; Further Assurances
    	16 
	           
             8.5 	Payment of Taxes 	17 
	       
                 8.6 	Place of Business; Location of
      Records 	17 
	           
             8.7 	Continuing Assignment and Security Interest;
      Transfer of Note 	17 
	       
                 8.8 	Termination of Security
      Interest 	17 
	           
             8.9 	Security Interest Absolute 	18 
	       
                 8.10 	Limitation on Duty of Lender
      with Respect to the Collateral 	18 
	           
             8.11 	Liability 	19 
	       
                 8.12 	Amendments; Waivers; Consents
    	19 
	           
             8.13 	Notices 	19 
	       
                 8.14 	Modification of Obligations 	19 
	           
             8.15 	Delivery of Collateral; Proxy 	20 
	       
                 8.16 	Reinstatement 	20 
	           
             8.17 	Severability 	21 
	       
                 8.18 	Survival of Provisions 	21 
	           
             8.19 	Headings Descriptive 	21 
	       
                 8.20 	Entire Agreement 	21 
	           
             8.21 	Time 	21 
	       
                 8.22 	Counterparts 	21 
	           
             8.23 	Limitation of Liability 	21 
	       
                 8.24 	Submission to Jurisdiction 	21 
	           
             8.25 	APPLICABLE LAW. 	22 
	       
                 8.26 	CONSENT TO JURISDICTION 	22 
	           
             8.27 	WAIVER OF JURY TRIAL 	23 
	       
                 8.28 	Knowledge and Attribution 	23 
	           
             8.29 	Rights of Lender 	23 
	       
                 8.30 	Consent and Acknowledgement 	23 
	           
             8.31 	Third Party Beneficiaries 	23 
	       
                 8.32 	Waiver of Transfer Restrictions
    	24

Exhibit D-3-ii 

	                   8.33
    	Article 8 Securities 	24 
	                   8.34
    	Appointment of Agent. 	24 

EXHIBITS AND SCHEDULE 

	Exhibit A 	Irrevocable Proxy 
	Exhibit B 	Transfer Document 
	Schedule I 	Description of Ownership
      Interests 

Exhibit D-3-iii 

MEMBER PLEDGE
AGREEMENT 

This MEMBER PLEDGE AGREEMENT, dated as of November 9, 2011 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, this “Agreement”), is entered into by and among NEVADA USG
HOLDINGS, LLC, a limited liability company formed under the laws of the State of
Delaware (“Pledgor”), USG Nevada LLC, a limited liability company formed
under the laws of the State of Delaware (“Pledged Company”), and
ARES CAPITAL CORPORATION, a corporation formed under the laws of the State of
Marlyand (together with its successors, designees and assigns in such capacity,
“Lender”).

RECITALS 

A. Pledged Company owns and intends to develop, construct,
install, test, own, operate and use an approximately 8 MW geothermal power
facility located in Washoe County, Nevada (the “Project”). 

B. Pledged Company has entered into, among other things, (i)
that certain Financing Agreement, dated as of the date hereof (as amended,
amended and restated, modified or supplemented from time to time, the
“Financing Agreement”), by and among Pledged Company and Lender, pursuant
to which, among other things, Lender has extended commitments to make loans and
other financial accommodations to, and for the benefit of Pledged Company, and
(ii) certain other documents related to the Financing Agreement (collectively,
the “Financing Documents”).

C. Pledgor directly owns 100% of the ownership interests
of Pledged Company.

D. It is a condition precedent to the effectiveness of the
Financing Agreement and the other Financing Documents, and the making of the
advances of credit contemplated thereby, that Pledgor and Pledged Company shall
have executed and delivered this Agreement. 

AGREEMENT 

NOW, THEREFORE, in consideration of the promises contained
herein, and to induce the Lender to enter into the Financing Documents and to
make the advances of credit to Pledged Company contemplated thereby, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledged Company and Pledgor hereby agree with Lender, as
follows: 

ARTICLE I. 
DEFINITIONS 

1.1 Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and
recitals, shall have the following meanings: “Collateral” has the
meaning given in Section 2.1. 

Exhibit D-3-1 

“Financing Agreement” has the meaning given in the
recitals to this Agreement. 

“Financing Documents” has the meaning given in the
recitals to this Agreement. 

“Lender” has the meaning given in the preamble to
this Agreement. 

“Pledged Company” has the meaning given in the
preamble to this Agreement. 

“Pledged Ownership Interests” has the meaning given in
Section 2.1. “Pledgor” has the meaning given in the
preamble to this Agreement. “Project” has the meaning given in the
recitals to this Agreement. 

“UCC” means the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of New York; provided,
however, that in the event that, by reason of mandatory provisions of
law, any or all of the perfection or priority of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or priority and for
purposes of definitions related to such provisions. 

1.2 Financing Agreement and UCC Definitions. Unless
otherwise defined herein, all capitalized terms used in this Agreement shall
have the meanings provided in Exhibit A to the Financing Agreement or, if not
defined therein, the UCC. 

1.3 Rules of Interpretation. Unless otherwise provided
herein, the rules of interpretation set forth in Exhibit A to the Financing
Agreement shall apply to this Agreement, including its preamble and
recitals. 

ARTICLE II. 
PLEDGE AND GRANT OF SECURITY INTEREST

2.1 Granting Clause. To secure the timely payment in
full in cash and performance in full of the Obligations, Pledgor hereby assigns,
grants and pledges to Lender, a continuing security interest in all the
estate(s), right(s), title(s) and interest(s) of Pledgor, now owned or hereafter
existing or acquired, in, to and under any and all of the following (the
“Collateral”): Any and all of Pledgor’s right(s), title(s) and
interest(s), whether now owned or hereafter existing or acquired, in Pledged
Company, and all of Pledgor’s ownership interests in Pledged Company related
thereto (the “Pledged Ownership Interests”), including the ownership
interests of Pledgor described on Schedule I hereto and Pledgor’s share
of: 

Exhibit D-3-2 

(a) all rights to receive income, gain,
profit, dividends and other distributions allocated or distributed to Pledgor in
respect of or in exchange for all or any portion of the Pledged Ownership
Interests; 

(b) all capital or ownership interest,
including capital accounts, in Pledged Company, and all accounts, deposits or
credits of any kind with Pledged Company; 

(c) all voting rights in or rights to
control or direct the affairs of Pledged Company; 

(d) all rights, title and interest, as
a member of Pledged Company, in, to or under any and all of Pledged Company’s
assets or properties; 

(e) all other rights, title and
interest in or to Pledged Company derived from the Pledged Ownership Interests;

(f) all indebtedness or other
obligations of Pledged Company owed to Pledgor; 

(g) all claims of Pledgor for damages
arising out of, or for any breach or default relating to, the Collateral, other
than any claims against Lender; 

(h) all rights of Pledgor to terminate,
amend, supplement, modify, or cancel, the governing documents of Pledged
Company, to take all actions thereunder and to compel performance and otherwise
exercise all remedies thereunder; 

(i) all securities, notes, certificates
and other instruments representing or evidencing any of the foregoing rights and
interests or the ownership thereof and any interest of Pledgor reflected in the
books of any financial intermediary pertaining to such rights and interests and
all non-cash dividends, cash, options, warrants, stock splits,
reclassifications, rights, instruments or other investment property and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such rights and
interests; and 

(j) all proceeds of the foregoing
Collateral, whether cash or non-cash; provided, however, that
“Collateral” shall not include any distribution to Pledgor expressly permitted
pursuant to the terms of the Financing Agreement or any other Financing
Document. 

2.2 Delivery of Certificates. All certificates, notes
and other instruments representing or evidencing any Collateral (including the
certificates described on Schedule I hereto) shall be delivered to and
held by or on behalf of, and, in the case of notes, endorsed to the order of,
Lender, or its designee pursuant hereto, in the manner set forth in Section
8.15. 

2.3 Retention of Certain Rights. So long as Lender has
not exercised remedies with respect to the Collateral under this Agreement or
any other Financing Document upon the occurrence and during the continuation of
an Event of Default, Pledgor reserves the right to exercise all voting and other
rights with respect to the Collateral (except as limited by the Financing Documents) and to receive all income, dividends and
other distributions from the Collateral (except as limited by the Financing
Documents). 

Exhibit D-3-3 

ARTICLE III. 
OBLIGATIONS SECURED 

Without limiting the generality of the foregoing, this
Agreement and all of the Collateral secure the payment and performance when due
of all Obligations of Pledged Company to Lender pursuant to the Financing
Documents. If, notwithstanding the representation and warranty set forth in
Section 5.15 or anything to the contrary herein, enforcement of the
liability of Pledgor under this Agreement for the full amount of the Obligations
would be an unlawful or voidable transfer under any applicable fraudulent
conveyance or fraudulent transfer law or any comparable law, then the liability
of Pledgor hereunder shall be reduced to the highest amount for which such
liability may then be enforced without giving rise to an unlawful or voidable
transfer under any such law. 

ARTICLE IV. 
EVENTS OF DEFAULT 

The occurrence of an Event of Default under, and as defined in,
the Financing Agreement shall constitute an Event of Default hereunder. 

ARTICLE V. 
REPRESENTATIONS AND WARRANTIES OF PLEDGOR

Pledgor represents and warrants, to and in favor of Lender, as
of the date hereof, as follows: 5.1 Organization. Pledgor is (a) a
limited liability company duly formed, validly existing and in good standing
solely under the laws of the State of Delaware, and (b) duly qualified,
authorized to do business and in good standing in each jurisdiction in which
such qualification is necessary to execute, deliver and perform this Agreement
and each of the other Operative Documents to which it is a party, except where
failure to do so would not cause a Material Adverse Effect. 

5.2 Power and Authorization; Enforceable Obligations.
Pledgor has the full power and authority to execute, deliver and perform this
Agreement and each other Operative Document to which it is a party and to take
all action as may be necessary to complete the transactions contemplated
hereunder and thereunder. Pledgor has taken all necessary limited liability
company action to authorize the execution, delivery and performance of this
Agreement and each other Operative Document to which it is a party and to
complete the transactions contemplated hereby and thereby. No consent or
authorization of, filing with, or other act by or in respect of any other Person
or Governmental Authority is required in connection with the execution, delivery
or performance by Pledgor, or the validity or enforceability as to Pledgor, of
this Agreement and each other Operative Document to which it is a party, except
such consents or authorizations or filings or other acts as have already been
obtained or made or where the failure to obtain such consent or authorization
could not reasonably be expected to have a Material Adverse Effect. This
Agreement and each other Operative Document to which Pledgor is a party have been duly executed and delivered by Pledgor and
constitute, and each other Operative Document to which it is a party will upon
execution and delivery thereof by Pledgor and the other parties thereto (if any)
constitute, a legal, valid and binding obligation of Pledgor enforceable against
it in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the right of creditors generally and by general principles of equity. 

Exhibit D-3-4 

5.3 No Legal Bar. The execution, delivery and
performance by Pledgor of this Agreement and each other Operative Document to
which it is a party and the consummation of the transactions contemplated hereby
(including the granting of security interests hereunder) or under any other
Operative Document to which it is a party do not or will not violate any
applicable Legal Requirement or any material contractual obligation of Pledgor
and do not and will not result in, or require, the creation or imposition of any
Lien (other than Permitted Liens described in clause (a) of the definition of
“Permitted Liens” and, to the extent required by Governmental Rule, clause (b)
of the definition thereof) on any of the properties or revenues of Pledgor
pursuant to any applicable Legal Requirement or any such contractual obligation.

5.4 Beneficial Ownership; Pledged Ownership Interests.
Pledgor is the lawful and beneficial owner of and has full right, title and
interest in, to and under rights and interests comprising the Collateral,
subject to no Liens (except Permitted Liens described in clause (a) of the
definition of “Permitted Liens” and, to the extent required by Governmental
Rule, clause (b) of the definition thereof). The Pledged Ownership Interests
listed next to Pledgor’s name on Schedule 1 (a) have been duly authorized
and validly issued, (b) are fully paid and non-assessable and (c) constitute all
of Pledgor’s outstanding ownership interests of Pledged Company.

5.5 No Prior Assignment. Pledgor has not previously
assigned any of its rights in, to or under all or any portion of the Collateral,
except as specifically permitted by the Financing Agreement or the other
Financing Documents. 

5.6 No Other Financing Documents. Pledgor has not
executed and is not aware of any effective financing statement, security
agreement or other instrument similar in effect covering all or any part of the
Collateral on file in any recording office, except such as may have been filed
pursuant to this Agreement and the other Financing Documents. 

5.7 Compliance with Law. Pledgor is in compliance with
all Legal Requirements, except noncompliance which could not reasonably be
expected to have a Material Adverse Effect, and no written notices of any
material violation of any Governmental Rule relating to the Project or any
Operative Document have been received by Pledgor. 

5.8 No Litigation. There are no pending or, to Pledgor’s
knowledge, threatened in writing actions, suits, proceedings or investigations
of any kind, including actions or proceedings of or before any Governmental
Authority, relating to the Collateral or to which Pledgor is a party or is
subject, or by which it or its properties are bound that, if adversely
determined to or against Pledgor could reasonably be expected to have a Material
Adverse Effect. 

Exhibit D-3-5 

5.9 Financial Statements. The financial statements of
Pledgor delivered to Lender pursuant to Sections 3.1(q) and 5.4 of the Financing
Agreement, if any, are true, complete and correct in all material respects as of
the date of such statements and fairly presented the financial condition of
Pledgor as of the date thereof and fairly presented the results of the
operations and cash flow of Pledgor for the periods then ending. Such financial
statements have been prepared in accordance with GAAP. 

5.10 Permitted Activities of the Equity Pledgor. Pledgor
shall neither (a) engage in any business or activity or own any assets other
than holding the ownership interests of Pledged Company and performing
activities incidental thereto or (b) fail to hold itself out to the public as a
legal entity separate and distinct from all other Persons. 

5.11 Taxes. Pledgor has timely filed all federal, state
and local tax returns that it is required to file, has paid all taxes it is
required to pay to the extent due (other than those taxes that it is contesting
in good faith and by appropriate proceedings, for which adequate reserves have
been established for such taxes in accordance with GAAP) and, to the extent such
taxes are not due, has established reserves that are adequate for the payment
thereof to the extent required by GAAP. Pledgor knows of no proposed tax
assessment against it which could reasonably be expected to have a Material
Adverse Effect (other than as is being actively contested by Pledgor in good
faith and by appropriate proceedings and for which reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP have been made
or provided therefore). 

5.12 Investment Company Act; Federal Energy Laws.
Pledgor is not an investment company or a company controlled by an investment
company, within the meaning of the Investment Company Act of 1940, as amended.
No provision of the FPA or PUHCA precludes Pledgor from entering into and
performing its obligations hereunder. 

5.13 Name; Organizational Number. The name of Pledgor is
as set forth in the preamble hereto, as indicated in the public records
of the State of Delaware, and Pledgor’s Federal Employer Identification Number
and Delaware organizational number are as set forth below its signature hereto.

5.14 Pledged Company Information. Pledgor has
established adequate means of obtaining financial and other information
pertaining to the businesses, operations and condition (financial or otherwise)
of Pledged Company and its properties on a continuing basis, and Pledgor now is
and hereafter will be completely familiar with the businesses, operations and
condition (financial or otherwise) of Pledged Company and its properties.
Pledgor hereby agrees that Lender shall not have any duty to advise Pledgor of
information known to Lender regarding such condition or any such circumstances
or of any changes or potential changes affecting the Collateral. In the event
Lender, in its respective discretion, undertakes at any time or from time to
time to provide any such information to Pledgor, Lender shall be under no
obligation (a) to undertake any investigation not a part of its regular business
routine, or reasonable commercial lending practices or (b) to make any other or
future disclosure of such information to Pledgor. 

5.15 Capital Adequacy; Etc. 

Exhibit D-3-6 

(a) After giving effect to the
transactions contemplated by this Agreement and the contingent obligations
evidenced hereby (but excluding the effect of the provisions of Article
III which limit the Obligations to an amount that would not render Pledgor’s
indebtedness, liabilities or obligations under this Agreement subject to
avoidance), Pledgor is Solvent on both an unconsolidated basis and a
consolidated basis with any subsidiaries of Pledged Company, and Pledgor has and
will have assets which, fairly valued, exceed its indebtedness, liabilities or
obligations. 

(b) Pledgor is not executing this
Agreement with any intention to hinder, delay or defraud any present or future
creditor or creditors of Pledgor. 

5.16 Perfection of Security Interest. The security
interest granted to Lender, pursuant to this Agreement constitutes as to
personal property included in the Collateral a valid lien. The security interest
granted to Lender pursuant to this Agreement in the Collateral consisting of
personal property will be perfected (a) with respect to any property that can be
perfected by filing, upon the filing of financing statements in the filing
offices identified on Exhibit D-8 to the Financing Agreement, and (b) with
respect to any property that can be perfected by control, upon Lender receiving
possession thereof, and, in each case, such security interest will be, as to
Collateral perfected under the UCC or otherwise as aforesaid, superior and prior
to the rights of all third persons now existing or hereafter arising whether by
way of mortgage, lien, security interests, encumbrance, assignment or otherwise
except (i) Permitted Liens described in clause (a) of the definition of
“Permitted Liens” and (ii) to the extent required by Governmental Rule,
Permitted Liens described in clause (b) of the definition thereof. Except to the
extent control of portions of such Collateral is required for perfection, all
such action as is necessary has been taken to establish and perfect Lender’s
rights in and to such Collateral to the extent Lender’s security interest can be
perfected by filing, including any recording, filing, registration, giving of
notice or other similar action. As of the Financial Closing Date, no filing,
recordation, re-filing or re-recording other than those listed on Exhibit D-8 to
the Financing Agreement is necessary to perfect and maintain the perfection of
the interest, title or Liens of this Agreement that can be perfected by filing,
and on the Financial Closing Date all such filings or recordings will have been
made to the extent Lender’s security interest can be perfected by filing.
Pledgor has properly delivered, caused to be delivered or is concurrently
delivering to Lender all such Collateral that requires perfection of the Lien
and security interest described above by control. 

5.17 After Acquired Collateral. It is understood and
agreed that the foregoing representations and warranties shall apply only to the
Collateral delivered on the date hereof and that, with respect to Collateral
delivered thereafter, Pledgor shall, upon the written request of Lender, be
required to make representations and warranties in form and substance
substantially similar to the foregoing in supplements hereto and that such
representations and warranties contained in such supplements hereto shall be
applicable to such Collateral hereafter delivered. 

5.18 No Ownership by Disqualified Persons. Neither
Pledgor nor any direct or indirect owner of Pledgor is a Disqualified Person
(other than a Disqualified Person whose ownership interest in Pledgor is
effected solely through a direct or indirect ownership interest through an
entity that is treated as a C corporation for Federal income tax purposes). 

Exhibit D-3-7 

ARTICLE VI. 
COVENANTS OF PLEDGOR 

Pledgor covenants, to and in favor of Lender as follows: 

6.1 Compliance with Obligations. Pledgor shall perform
and comply in all material respects with all obligations and
conditions on its part to be performed hereunder with respect to the
Collateral.

6.2 Defense of Collateral. Pledgor shall, until the
payment in full in cash of all Obligations and the termination of the Loan
Commitment and all other obligations of Lender under the Financing Documents
(other than any unasserted contingent reimbursement or indemnify obligations),
defend its title to the Collateral and the interest of Lender in the Collateral
pledged hereunder against the claims and demands of all other Persons. 

6.3 Preservation of Value; Limitation of Liens. Pledgor
shall not take or permit to be taken any action in connection with the
Collateral which would impair the Liens granted herein; provided,
however, that nothing in this Agreement shall prevent Pledgor, prior to
the exercise by Lender of any rights pursuant to the terms hereof, from
undertaking Pledgor’s operations in the ordinary course of business not in
violation of the Financing Documents. Pledgor shall not directly or indirectly
create, incur, assume or suffer to exist any Liens on or with respect to all or
any part of the Collateral (other than Permitted Liens described in clause (a)
of the definition of “Permitted Liens” and, to the extent required by
Governmental Rule, clause (b) of the definition thereof). Pledgor shall at its
own cost and expense promptly take such action as may be necessary to discharge
any such Liens. 

6.4 No Other Filings. Pledgor shall not file or
authorize or permit to be filed in any jurisdiction any financing statements
under the UCC or any like statement relating to the Collateral in which Lender
is not named as the sole secured party. 

6.5 No Sale of Collateral. Except as expressly permitted
by this Agreement or the other Financing Documents, Pledgor shall not cause,
suffer or permit the sale, assignment, conveyance, pledge or other transfer of
all or any portion of Pledgor’s ownership or interest in Pledged Company or any
other portion of the Collateral. As used herein, the transfer of an ownership
interest in Pledged Company shall not include any transfer of an ownership
interest in Pledgor, to the extent such transfer is permitted under the
Financing Documents. 

6.6 Notice. Pledgor shall promptly, upon acquiring
notice or giving notice, as the case may be, or obtaining knowledge thereof,
give written notice (with copies of any such underlying notices) to Lender of
any change in or transfer of ownership interests in Pledgor, such notice to be
given promptly, but in any event no later than fifteen (15) days prior to any
such change or transfer, and to include the identity of any transferee and such
transferee’s interest in Pledgor. 

6.7 Filing of Bankruptcy Proceedings. To the extent it
may do so under applicable Legal Requirements, Pledgor, for itself, its
successors and assigns, shall not cast any vote as an owner in Pledged Company
(a) in favor of the commencement of a voluntary case or other proceeding seeking
liquidation, reorganization, rehabilitation or other relief with respect to 

Exhibit D-3-8 

Pledged Company or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect in any jurisdiction or seeking
the appointment of a trustee, receiver, liquidator, custodian or other similar
official of the owners of Pledged Company or any substantial part of Pledged
Company’s property, (b) to authorize Pledged Company to consent to any such
aforesaid relief or to the appointment of or taking possession by any such
aforesaid official in an involuntary case or other proceeding commenced against
Pledged Company or (c) to authorize Pledged Company to make a general assignment
for the benefit of creditors. 

6.8 Distributions. If Pledgor in its capacity as an
owner of Pledged Company receives any income, dividend or other distribution of
money or property of any kind from Pledged Company (other than as expressly
permitted by the Financing Documents), then Pledgor shall hold such income or
distribution as trustees for and shall promptly deliver the same to Lender. 

6.9 Maintenance of Records. Pledgor shall, at all times,
keep accurate and complete records of the Collateral. Pledgor shall permit
representatives of Lender, upon reasonable prior notice, at any time during
normal business hours of Pledgor to inspect and make abstracts from Pledgor’s
books and records pertaining to the Collateral. Upon the occurrence and during
the continuation of any Event of Default, at Lender’s request, Pledgor shall
promptly deliver copies of any and all such records to Lender. 

6.10 Name; Jurisdiction of Organization. Pledgor shall
not change its name, its jurisdiction of organization, its organization
identification number or its fiscal year without notice to Lender at least
thirty (30) days prior to such change. In the event Pledgor changes the location
of its principal place of business, Pledgor shall provide notice to Lender of
such change no later than thirty (30) days after such change. In the event of
any of the foregoing changes, Pledgor shall at its expense or at the expense of
Pledged Company execute and deliver such instruments and documents as may be
required by Lender or applicable Legal Requirements to maintain a prior
perfected security interest in the Collateral. 

6.11 Certificated Securities. Pledgor shall cause its
partnership interests in Pledged Company to be evidenced by and remain
“certificated securities” as defined in Article 8 of the UCC. 

6.12 Amendments to Organizational Documents. Except as
expressly permitted by this Agreement or the other Financing Documents, Pledgor
shall not terminate, amend, supplement or otherwise modify, or cancel, the
governing documents of Pledged Company. 

6.13 Proceeds of Collateral. Pledgor shall, at all
times, keep pledged to Lender pursuant hereto all Collateral and all dividends,
distributions, interest, principal and other proceeds received by Lender with
respect thereto, and all other Collateral and other securities, instruments,
proceeds and rights from time to time received by or distributable to Pledgor in
respect of any Collateral and shall not permit Pledged Company to issue any
equity interests which shall not have been immediately duly pledged to Lender
hereunder on a first priority perfected basis. 

Exhibit D-3-9 

ARTICLE VII. 
REMEDIES UPON EVENT OF DEFAULT. 

7.1 Remedies Upon an Event of Default. Upon the
occurrence and during the continuation of an Event of Default, Lender shall have
the right, at its election, but not the obligation, to do any of the following:

(a) vote or exercise any and all of
Pledgor’s rights or powers incident to the ownership of the Pledged Ownership
Interests, including any rights or powers to manage or control Pledged Company;

(b) demand, sue for, collect or receive
any money or property at any time payable to or receivable by Pledgor on account
of or in exchange for all or any part of the Collateral; 

(c) cause any action at law or suit in
equity or other proceeding to be instituted and prosecuted to collect or enforce
any obligation or right hereunder or included in the Collateral, including
specific enforcement of any covenant or agreement contained herein, or to
foreclose or enforce the security interest in all or any part of the Collateral
granted herein, or to enforce any other legal or equitable right vested in it by
this Agreement or by applicable Legal Requirements; 

(d) amend, terminate, supplement or
modify Pledged Company’s governing documents; (e) incur reasonable expenses,
including reasonable attorneys’ fees, reasonable consultants’ fees, and other
costs appropriate to the exercise of any right or power under this Agreement;

(f) perform any obligation of Pledgor
hereunder or under any other Financing Document, make payments, purchase,
contest or compromise any encumbrance, charge, or lien, pay taxes and expenses
and insure, process and preserve the Collateral without, however, any obligation
to do so; 

(g) secure the appointment of a
receiver of the Collateral or any part thereof without notice to Pledged Company
or Pledgor, whether incidental to a proposed sale of the Collateral or
otherwise, and all disbursements made by such receiver and the expenses of such
receivership shall be added to and be made a part of the Obligations, and,
whether or not said principal sum, including such disbursements and expenses,
exceeds the indebtedness originally intended to be secured hereby, the entire
amount of said sum, including such disbursements and expenses, shall be secured
by this Agreement and shall be due and payable upon demand therefor and
thereafter shall bear interest at the Default Rate or the maximum rate permitted
by applicable Legal Requirements, whichever is less; 

(h) exercise any other or additional
rights or remedies granted to Lender under any other provision of this Agreement
or any other Financing Document, or exercisable by a secured party under the UCC
or under any other applicable Legal Requirement; 

Exhibit D-3-10 

(i) take any other action which Lender
deems necessary or desirable to protect or realize upon its security interest in
the Collateral or any part thereof, and Pledgor hereby irrevocably appoints
Lender as its attorney-in-fact (as set forth in Section 8.3) to take any
such action, including the execution and delivery of any and all documents or
instruments related to the Collateral or any part thereof in Pledgor’s name, and
said appointment shall create in Lender a power coupled with an interest which
shall be irrevocable; or 

(j) appoint another Person (who may be
an employee, officer or other representative of Lender) to do any of the
foregoing, or take any other action permitted hereunder, on behalf of
Lender.

7.2 Minimum Notice Period. If, pursuant to applicable
Legal Requirements, prior notice of any action described in Section 7.1
is required to be given to Pledgor or Pledged Company, Pledgor and Pledged
Company hereby acknowledge and agree that the minimum time required by such
applicable Legal Requirements, or if no minimum is specified, ten (10) Banking
Days, shall be deemed a reasonable notice period. 

7.3 Right to Cure. In addition to the foregoing
remedies, Lender may, but shall not be obligated to, cure any Event of Default
and incur reasonable fees, costs and expenses in doing so, in which event
Pledgor and Pledged Company shall reimburse Lender after demand for all such
fees, costs and expenses as provided for in Section 7.4 below. 

7.4 Expenses; Interest. 

(a) Pledgor and Pledged Company jointly
and severally agrees to pay on demand to Lender all costs and expenses incurred
by Lender (including the reasonable fees and disbursements of counsel) incident
to its enforcement, exercise, protection or preservation of any of its rights,
remedies or claims under this Agreement, but without duplication to any cost or
expenses previously paid by Pledgor or any Borrower Affiliate Entities under the
other Financing Documents. 

(b) Any amount required to be paid by
Pledgor or Pledged Company pursuant to the terms hereof that is not paid when
due shall bear interest at the Default Rate or the maximum rate permitted by
applicable Legal Requirements, whichever is less, from the date due until paid
in full. 

Exhibit D-3-11 

7.5 Sale of Collateral. In addition to exercising the
foregoing rights, upon the occurrence and during the continuation of an Event of
Default, Lender may, to the extent permitted by applicable Legal Requirements,
arrange for and conduct a sale of the Collateral at a public or private sale (as
Lender may elect) which sale may be conducted by an employee or representative
of Lender, without any demand of performance or notice of intention to sell or
dispose of, or of time or place of sale or disposition (except such notice as
required by any applicable Legal Requirement), and any such sale shall be
considered or deemed to be a sale made in a commercially reasonable manner.
Lender may release, temporarily or otherwise, to Pledgor any item of Collateral
of which Lender has taken possession pursuant to any right granted to Lender by
this Agreement without waiving any rights granted to Lender under this
Agreement, the Financing Agreement or the other Financing Documents. Pledgor, in
dealing with or disposing of the Collateral or any part thereof, hereby
waives all rights, legal and equitable, it may now or hereafter have to require
marshaling of assets or to require, upon foreclosure, sales of assets in a
particular order. Pledgor also waives its right to challenge the reasonableness
of any disclaimer of warranties, title and the like made by Lender in connection
with a sale of the Collateral. Each successor and assign of Pledgor, including a
holder of a Lien subordinate to the Lien created hereby (without implying that
Pledgor has, except as expressly provided herein, a right to grant an interest
in, or a subordinate Lien on, any of the Collateral), except as otherwise agreed
between such successor or assign of Pledgor and Lender, by acceptance of its
interest or Lien agrees that it shall be bound by the above waiver, to the same
extent as if such holder gave the waiver itself. If Lender sells any of the
Collateral upon credit, Pledgor will be credited only with payments actually
made by the purchaser, received by Lender and applied to the indebtedness of the
purchaser. In the event the purchaser fails to pay for the Collateral, Lender
may resell the Collateral and Pledgor shall be credited with the proceeds of the
sale. In the event Lender shall bid at any foreclosure or trustee’s sale or at
any private sale permitted by Legal Requirements or this Agreement or any other
Financing Document, Lender may bid all or less than the amount of the
Obligations. To the extent permitted by applicable Legal Requirements, the
amount of the successful bid at any such sale, whether Lender or any other party
is the successful bidder, shall, absent fraud or gross negligence, be
conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations. 

7.6 Compliance With Limitations and Restrictions.
Pledgor hereby agrees that in respect of any sale of any of the Collateral
pursuant to the terms hereof, Lender is hereby authorized to comply with any
limitation or restriction in connection with such sale as Lender may be advised
by counsel is necessary in order to avoid any violation of applicable Legal
Requirements, or in order to obtain any required approval of the sale or of the
purchaser by any Governmental Authority or official, and Pledgor further agrees
that such compliance shall not result in such sale being considered or deemed
not to have been made in a commercially reasonable manner, nor shall Lender be
liable or accountable to Pledgor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction. 

7.7 No Impairment of Remedies. If, in the exercise of
any of such rights and remedies under this Agreement, Lender shall forfeit any
of its rights or remedies, whether because of any applicable Legal Requirements
pertaining to “election of remedies” or otherwise, Pledgor hereby consents to
such action by Lender and, to the extent permitted by applicable Legal
Requirements, waives any claim based upon such action, even if such action by
Lender shall result in a full or partial loss of any rights of subrogation,
indemnification or reimbursement which Pledgor might otherwise have had but for
such action by Lender or the terms herein. Any election of remedies which
results in the denial or impairment of the right of Lender to seek a deficiency
judgment against any of the parties to any of the Financing Documents shall not,
to the extent permitted by applicable Legal Requirements, impair Pledgor’s
obligation hereunder. 

Exhibit D-3-12 

ARTICLE VIII. 
MISCELLANEOUS. 

8.1 Remedies Cumulative; Delay Not Waiver. 

8.1.1 Remedies Cumulative. No right, power or remedy
herein conferred upon or reserved to Lender is intended to be exclusive of any
other right, power or remedy, and every such right, power and remedy shall, to
the extent permitted by applicable Legal Requirements, be cumulative and in
addition to every other right, power and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy. Resort to any
or all security now or hereafter held by Lender may be taken concurrently or
successively and in one or several consolidated or independent judicial actions
or lawfully taken nonjudicial proceedings, or both. If Lender may, under
applicable Legal Requirements, proceed to realize its benefits under this
Agreement or any other Financing Document giving Lender a Lien upon any
Collateral, whether owned by Pledgor or by any other Person, either by judicial
foreclosure or by nonjudicial sale or enforcement, Lender may, at its sole
option, determine which of its remedies or rights it may pursue without
affecting any of the rights and remedies of Lender under this Agreement. 

8.1.2 No Waiver; Separate Causes of Action. No delay or
omission to exercise any right, power or remedy accruing to Lender upon the
occurrence and during the continuance of any Event of Default as aforesaid shall
impair any such right, power or remedy of Lender, nor shall it be construed to
be a waiver of any such Event of Default or of any similar breach or default
thereafter occurring or an acquiescence therein, nor shall any waiver of any
other breach or default under this Agreement or any other Financing Document be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Each and every default by Pledgor in payment hereunder shall give
rise to a separate cause of action hereunder, and separate suits may be brought
hereunder as each cause of action arises and every power and remedy given by
this Agreement may be exercised from time to time, and as often as shall be
deemed expedient, by Lender. 

8.1.3 Application of Proceeds. Upon the occurrence and
during the continuation of an Event of Default, the proceeds of any sale of or
other realization upon, all or any part of the Collateral shall be applied as
described in the Liquidation Preference provision of Article 7 of the Financing
Agreement. Pledged Company shall remain liable for any deficiency. 

Exhibit D-3-13 

8.1.4 Certain Waivers. Pledgor hereby waives and
relinquishes, to the maximum extent permitted by applicable Legal Requirements,
all rights and remedies accorded to pledgors, sureties or guarantors and agrees
not to assert or take advantage of any such rights or remedies, including: (a)
any law limiting remedies under an obligation secured by a mortgage or deed of
trust on real property if the real property is sold under a power of sale
contained in the mortgage or deed of trust, and all defenses based on any loss
whether as a result of any such sale or otherwise; (b) any right to require
Lender to proceed against Pledged Company or any other Person or to proceed
against or exhaust any security held by Lender at any time or to pursue any
other remedy in Lender’s power before proceeding against Pledgor; (c) any
defense that may arise by reason of the incapacity, lack of power or authority,
death, dissolution, merger, termination or disability of Pledgor, Pledged Company or any
other Person or the failure of Lender to file or enforce a claim against the
estate (in administration, bankruptcy or any other proceeding) of any of
Pledgor, Pledged Company or any other Person; (d) any right to enforce any
remedy that Lender may have against Pledged Company or any other Person and any
right to participate in any security held by Lender until the Obligations have
been paid and the covenants of the Financing Documents have been performed in
full; (e) any right to require Lender to give any notices of any kind,
including, without limitation, notices of nonpayment, nonperformance, protest,
dishonor, default, delinquency or acceleration, or to make any presentments,
demands or protests, except as set forth herein or expressly provided in the
Financing Agreement or any of the Financing Documents; (f) any right to assert
the bankruptcy or insolvency of Pledged Company or any other Person as a defense
hereunder or as the basis for rescission hereof and any defense arising because
of Lender’s election, in any proceeding instituted under the Bankruptcy Law, of
the application of Section 1111(b)(2) of the Bankruptcy Law; (g) subject to
Section 8.9, any right under any law purporting to reduce Pledgor’s
obligations hereunder if the Obligations are reduced other than as a result of
payment of such Obligations; (h) any defense based on the repudiation of the
Financing Documents by Pledged Company or any other Person, the failure by
Lender to enforce any claim against Pledgor, Pledged Company or any other Person
or the unenforceability in whole or in part of any Financing Documents; (i) all
suretyship and guarantor’s defenses generally; (j) any right to insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshaling of assets, redemption or
similar law, or exemption, whether now or at any time hereafter in force, which
may delay, prevent or otherwise affect the performance by Pledgor of its
obligations under, or the enforcement by Lender of, this Agreement; (k) any
defense based upon an election of remedies by Lender, including an election to
proceed by non-judicial rather than judicial foreclosure, which destroys or
otherwise impairs the subrogation rights of Pledgor, the right of Pledgor to
proceed against Pledged Company or another Person for reimbursement, or both;
(l) any defense based on any offset against any amounts which may be owed by any
Person to Pledgor for any reason whatsoever; (m) any defense based on any act,
failure to act, delay or omission whatsoever on the part of Pledged Company or
any of its Affiliates or the failure by Pledged Company or any of its Affiliates
to do any act or thing or to observe or perform any covenant, condition or
agreement to be observed or performed by it under the Financing Documents, (n)
any defense, setoff or counterclaim which may at any time be available to or
asserted by Pledged Company or any of its Affiliates against Lender or any other
Person under the Financing Documents; (o) any duty on the part of Lender to
disclose to Pledgor any facts Lender may now or hereafter know about Pledged
Company or any of its Affiliates, regardless of whether Lender has reason to
believe that any such facts materially increase the risk beyond that which
Pledgor intends to assume, or have reason to believe that such facts are unknown
to Pledgor, or have a reasonable opportunity to communicate such facts to
Pledgor; (p) any defense based on any change in the time, manner or place of any
payment under, or in any other term of, the Financing Documents or any other
amendment, renewal, extension, acceleration, compromise or waiver of or any
consent or departure from the terms of the Financing Documents; and (q) any
defense based upon any borrowing or grant of a security interest under Section
364 of the Bankruptcy Law.

8.1.5 Foreclosure Waiver. To the extent permitted by
Legal Requirements, Pledgor waives the posting of any bond otherwise required of
Lender in connection with any judicial process or proceeding to obtain
possession of, replevy, attach, or levy upon the Collateral, to enforce any judgment or other
security for the Obligations, to enforce any judgment or other court order
entered in favor of Lender, or to enforce by specific performance, temporary
restraining order, preliminary or permanent injunction, this Agreement or any
other agreement or document between Pledgor, Lender. Pledgor further agrees that
upon the occurrence and during the continuation of an Event of Default, Lender
may elect to nonjudicially or judicially foreclose against any real or personal
property security it holds for the Obligations or any part thereof, or to
exercise any other remedy against Pledged Company or any other Person, any
security or any guarantor, even if the effect of that action is to deprive
Pledgor of the right to collect reimbursement from Pledged Company or any other
Person for any sums paid by Pledgor to Lender. 

Exhibit D-3-14 

8.1.6 Waiver of Rights of Subrogation. Until the
indefeasible payment in full in cash of the Obligations and the termination of
the Loan Commitment and all other obligations of Lender under the Financing
Documents, (a) Pledgor shall not have any right of subrogation and waives all
rights to enforce any remedy which the Lender now has or may hereafter have
against Pledged Company, and waives the benefit of, and all rights to
participate in, any security now or hereafter held by Lender from Pledged
Company, and (b) Pledgor waives any claim, right or remedy which it may now have
or hereafter acquire against Pledged Company that arises hereunder and/or from
the performance by Pledgor hereunder, including any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification, or
participation in any claim, right or remedy of Lender against Pledged Company,
or any security which Lender now have or hereafter acquire, whether or not such
claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise. Any amount paid to Pledgor on account of any such
subrogation rights prior to the payment in full in cash of the Obligations and
the termination of the Loan Commitment and all other obligations of the Lender
under the Financing Documents, shall be held in trust for the benefit of Lender
and shall immediately thereafter be paid to Lender. 

8.2 Pledged Company’s Consent and Covenant. Pledged
Company hereby consents to the assignment of and grant of a security interest in
the Collateral to Lender and to the exercise by Lender of all rights and powers
assigned or delegated to Lender by Pledgor hereunder, including the rights upon
and during an Event of Default to exercise Pledgor’s voting rights and other
rights to manage or control Pledged Company, all in accordance with the
Financing Documents. 

8.3 Attorney-in-Fact. Pledgor hereby constitutes and
appoints Lender and each successor or assign of Lender, the true and lawful
attorney-in-fact of Pledgor, with full power and authority in the place and
stead of Pledgor and in the name of Pledgor, Lender or otherwise, subject to the
terms of the Financing Agreement and the other Financing Documents, to enforce
all rights, interests and remedies of Pledgor with respect to the Collateral,
including the right: 

(a) to ask, require, demand, receive
and give acquittance for any and all moneys and claims for money due and to
become due under or arising out of the Collateral, including any insurance
policies; 

Exhibit D-3-15 

(b) to elect remedies under the
Collateral and to endorse any checks or other instruments or orders in
connection therewith; 

(c) to vote, demand, receive and
enforce Pledgor’s rights with respect to the Collateral; 

(d) to give appropriate receipts,
releases and satisfactions for and on behalf of and in the name of Pledgor or,
at the option of Lender, in the name of Lender, with the same force and effect
as Pledgor could do if this Agreement had not been made; 

(e) to file any claims or take any
action or institute any proceedings in connection therewith which Lender may
reasonably deem to be necessary or advisable; and 

(f) to pay, settle or compromise all
bills and claims which may be or become liens or security interests against any
or all of the Collateral, or any part thereof, unless a bond or other security
satisfactory to Lender has been provided; 

provided, however, that Lender shall not exercise
any of the aforementioned rights unless an Event of Default has occurred and is
continuing and has not been waived in accordance with the Financing Documents.
This power of attorney is a power coupled with an interest and shall be
irrevocable; provided, however, that nothing in this Agreement
shall prevent Pledgor from, prior to the exercise by Lender of any of the
aforementioned rights, undertaking Pledgor’s operations in the ordinary course
of business in accordance with the Collateral and the Financing Documents. 

8.4 Perfection; Further Assurances.

8.4.1 Perfection. Pledgor agrees that from time to time,
at the expense of Pledged Company, Pledgor shall promptly execute and deliver
all further instruments and documents, and take all further action, that may be
reasonably necessary, or that Lender may reasonably request, in order to
perfect, to ensure the continued perfection of, and to protect the assignment
and security interest granted or intended to be granted hereby or to enable
Lender to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, Pledgor shall
(a) deliver the Collateral or any part thereof to Lender, as Lender may request,
accompanied by such duly executed instruments of transfer or assignment as
Lender may request, and (b) authorize, execute and file such financing or
continuation statements, or amendments thereto, and such other instruments,
endorsements or notices, as may be reasonably necessary or desirable or as
Lender may reasonably request, in order to perfect and preserve the assignments
and security interests granted or purported to be granted hereby. 

8.4.2 Filing of Financing and Continuation Statements.
Pledgor hereby authorizes the filing of any financing statements or continuation
statements, and amendments to financing statements, or any similar document in
any jurisdictions and with any filing offices as Lender may determine, in its
sole discretion, are necessary or advisable to perfect the security interest
granted to Lender herein. Such financing statements may describe the Collateral
in substantially the same manner as described herein or may contain an
indication or description of the Collateral that describes such property in any
other manner as Lender may determine, in its sole discretion, is necessary, advisable or prudent to ensure
the perfection of the security interest in the Collateral granted to Lender
herein. 

Exhibit D-3-16 

8.4.3 Information Concerning Collateral. Pledgor shall,
promptly upon request, provide to Lender all information and evidence it may
reasonably request concerning the Collateral to enable Lender to enforce the
provisions of this Agreement. 

8.5 Payment of Taxes. Pledgor shall pay or cause to be
paid, before any fine, penalty, interest or cost attaches thereto, all taxes,
assessments and other governmental or nongovernmental charges or levies (other
than those taxes that it is contesting in good faith and by appropriate
proceedings, and in respect of which it has established adequate reserves for
such taxes) now or hereafter assessed or levied against the Collateral pledged
by it hereunder (or against the Collateral in which Pledgor has granted to
Lender a security interest of first priority) and shall retain copies of, and,
upon request, permit Lender to examine receipts showing payment of any of the
foregoing. 

8.6 Place of Business; Location of Records. Unless
Lender is otherwise notified under Section 6.10, the chief executive
office of Pledgor is, and all records of Pledgor concerning the Collateral are
and will be, located at the address set forth in Section 8.13. 

8.7 Continuing Assignment and Security Interest; Transfer of
Note. This Agreement shall create a continuing pledge and assignment of and
security interest in the Collateral and shall (a) remain in full force and
effect until the payment in full in cash and performance in full of the
Obligations (other than any unasserted contingent reimbursement or indemnity
obligations) and as otherwise provided in Section 8.17; (b) be binding
upon Pledged Company, Pledgor, and their respective successors and assigns; and
(c) inure, together with the rights and remedies of Lender, to the benefit of
Lender, and its respective successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), Lender may assign or otherwise
transfer the Note or other evidence of indebtedness held by them to any other
Person to the extent permitted by and in accordance with the Financing
Agreement, and such other Person shall thereupon become vested with all or an
appropriate part of the benefits in respect thereof granted to the Lender herein
or otherwise. The release of the security interest in any or all of the
Collateral, the taking or acceptance of additional security, or the resort by
Lender to any security it may have in any order it may deem appropriate, shall
not affect the liability of any Person on the indebtedness secured hereby. 

8.8 Termination of Security Interest. Upon the payment
in full in cash of all Obligations and the termination of the Loan Commitment
and all other obligations of the Lender under the Financing Documents (other
than the obligations that are intended to survive the termination of the
Financing Documents), this Agreement and the security interest and all other
rights granted hereby shall terminate and all rights to the Collateral shall
revert to Pledgor. Upon any such termination, Lender will return all
certificates previously delivered to Lender representing the Pledged Ownership
Interests and, at Pledgor’s expense and upon its written direction, execute and,
subject to Section 8.17, deliver to Pledgor such documents (including
UCC-3 termination statements) as Pledged Company or Pledgor shall reasonably
request to evidence such termination, to release all security interest on the
Collateral and to return such Collateral to Pledgor. If this Agreement shall be
terminated or revoked by operation of law, Pledgor shall indemnify and save Lender and the other Secured
Parties harmless from any loss which may be suffered or incurred by Lender in
acting hereunder prior to the receipt by Lender, its successors, transferees, or
assigns of notice of such termination or revocation. 

Exhibit D-3-17 

8.9 Security Interest Absolute. All rights of Lender and
the security interest hereunder, and all obligations of Pledgor hereunder, shall
be absolute and unconditional irrespective of: (a) any lack of validity or
enforceability of the Financing Agreement, any other Financing Document or any
other agreement or instrument relating thereto; (b) the exercise by Lender of
any remedy, power or privilege contained in any Financing Document or available
at law, equity or otherwise; (c) the failure of Lender (i) to assert any claim
or demand or to enforce any right or remedy against Pledged Company, any
Affiliate of Pledged Company or any other Person under the provisions of the
Financing Agreement, the Note, any other Financing Document or otherwise or (ii)
to exercise any right or remedy against any other guarantor of, or collateral
securing, any of the Obligations; (d) any change in the time, manner or place of
payment of, or in any other term of the Obligations (including any increase in
the amount thereof), or any other amendment or waiver of or any consent to any
departure from the Financing Agreement or any other Financing Document; (e) any
action by Lender to take and hold security or collateral for the payment of the
Obligations, or sell, exchange, release, dispose of, or otherwise deal with, any
property pledged, mortgaged or conveyed, or in which Lender has been granted a
Lien, to secure any indebtedness to Lender of Pledgor, Pledged Company, any of
their respective Affiliates or any other Person party to a Financing Document;
(f) any reduction, limitation, impairment or termination of any of the
Obligations for any reason other than the written agreement of the Lender to
terminate the Obligations in full, but including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to, and Pledgor
hereby waives any right to or claim of, any defense or setoff, counterclaim,
recoupment, or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any other
event or occurrence affecting, any Obligation of Pledged Company, any Affiliate
of Pledged Company or otherwise; (g) any amendment to, rescission, waiver, or
other modification of, or any consent to departure from, any of the terms of the
Financing Agreement, the Note, or any other Financing Document; (h) any
exchange, surrender, release or non-perfection of any Collateral, or any
release, amendment or waiver or addition of or consent to departure from any
other security interest held by Lender securing any of the Obligations; (i) the
application by Lender of any sums by whomever paid or however realized to any
amounts owing by Pledgor, Pledged Company or any other Person party to the
Financing Documents to Lender in such manner as Lender shall determine in its
discretion; (j) any bankruptcy or insolvency of Pledged Company, Pledgor or any
other Person; or (k) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor or any third party pledgor
(other than the defense of payment). 

8.10 Limitation on Duty of Lender with Respect to the
Collateral. The powers conferred on Lender hereunder are solely to protect
its interest in the Collateral and shall not impose any duty on Lender or any of
its designated agents to exercise any such powers. Except for the safe custody
of any Collateral in its possession, the accounting for monies actually received
by it hereunder and any duty expressly imposed on Lender by applicable Legal
Requirements with respect to any Collateral that has not been waived hereunder,
Lender shall have no duty with respect to any Collateral and no implied duties
or obligations shall be read into this Agreement against Lender. Lender shall be
deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment that is substantially equivalent to that
which Lender accords its own property, it being expressly agreed, to the maximum
extent permitted by applicable Legal Requirements, that Lender shall have no
responsibility for (a) taking any necessary steps to preserve rights against any
parties with respect to any Collateral, or (b) taking any action to protect
against any diminution in value of the Collateral, but, in each case, Lender may
do so and all expenses reasonably incurred in connection therewith shall be part
of the Obligations. 

Exhibit D-3-18 

8.11 Liability. Recourse against the Non-Recourse
Parties under this Agreement shall be limited to the extent provided in Article
8 of the Financing Agreement. 

8.12 Amendments; Waivers; Consents. This Agreement may
not be amended, amended and restated, supplemented or otherwise modified, except
in a writing signed by each of the parties hereto and otherwise in accordance
with the provisions of the Financing Agreement. 

8.13 Notices. All notices required or permitted under
the terms and provisions hereof shall be in writing, and any such notice shall
be effective if given in accordance with the provisions of Section 10.1 of the
Financing Agreement. Notices to Lender or Pledged Company may be given at the
address set forth in Section 10.1 of the Financing Agreement. Notices to Pledgor
may be given at the following address (or such other address as notified by
Pledgor):

	 	Nevada USG Holdings, LLC 
	 	Address: 	1505 Tyrell Lane 
	 	  	Boise, ID 83706 
	 	Telephone: 	(208) 424-1027 
	 	Fax: 	(208) 424-1030 
	 	Attention: 	Jonathan Zurkoff 

8.14 Modification of Obligations. If Lender shall at any
time or from time to time, with or without the consent of, or notice to, the
Pledgor: 

(a) change or extend the manner, place
or terms of payment of, or renew or alter all or any portion of, the
Obligations; 

(b) take any action under or in respect
of the Financing Documents in the exercise of any remedy, power or privilege
contained therein or available at law, equity or otherwise, or waive or refrain
from exercising any such remedies, power or privileges; 

(c) amend or modify, in any manner
whatsoever, the Financing Documents; 

(d) extend or waive the time for
Pledgor’s, Pledged Company’s or any other Person’s performance of, or compliance
with, any term, covenant or agreement on its part to be performed or observed
under the Financing Documents, or waive such performance or compliance or
consent to a failure of, or departure from, such performance or compliance; 

Exhibit D-3-19 

(e) take and hold security or
collateral for the payment of the Obligations, or sell, exchange, release,
dispose of, or otherwise deal with, any property pledged, mortgaged or conveyed,
or in which Lender has been granted a Lien, to secure any indebtedness of
Pledgor, Pledged Company or any other Person party to a Financing Document to
Lender; 

(f) release or limit the liability of
anyone who may be liable in any manner for the payment of any amounts owed by
Pledgor, Pledged Company or any other Person party to a Financing Document to
Lender; 

(g) modify or terminate the terms of
any intercreditor or subordination agreement pursuant to which claims of other
creditors of Pledgor, Pledged Company or any other Person party to a Financing
Document are subordinated to the claims of Lender; or 

(h) apply any sums by whomever paid or
however realized to any amounts owing by Pledgor or Pledged Company to Lender in
such manner as Lender shall determine in its discretion; then, subject to
Section 8.9, Lender shall not incur any liability to Pledgor pursuant
hereto as a result thereof and no such action shall impair or release the
obligations of Pledgor under this Agreement. 

8.15 Delivery of Collateral; Proxy. All certificates or
instruments representing or evidencing the Collateral shall be delivered to and
held by or on behalf of Lender pursuant hereto. All such certificates or
instruments shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance acceptable to Lender. Lender shall have the right, at any
time in its discretion and without prior notice to Pledgor, following the
occurrence and during the continuation of an Event of Default, to transfer to or
to register in the name of Lender or any of its nominees any or all of the
Collateral and to exchange certificates or instruments representing or
evidencing Collateral for certificates or instruments of smaller or larger
denominations; provided, however, that once such Event of Default
has been cured, Lender will promptly transfer to or register in the name or
cause its nominees to transfer to or register in the name of Pledgor, as
applicable, all such Collateral. In furtherance of the foregoing, Pledgor shall
further execute and deliver to Lender an irrevocable power in the form of
Exhibit A with respect to the ownership interests of Pledged Company
owned by Pledgor. 

8.16 Reinstatement. This Agreement shall continue to be
effective or be automatically reinstated, as the case may be, if at any time any
payment pursuant to this Agreement is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, reorganization, liquidation of
Pledgor, Pledged Company or any other Person party to a Financing Document or
upon the dissolution of, or appointment of any intervenor or conservator of, or
trustee or similar official for, Pledgor, Pledged Company or any other Person
party to a Financing Document or any substantial part of Pledgor’s, any Pledged
Company’s or any other such Person’s assets, or otherwise, all as though such
payments had not been made, and Pledged Company shall pay Lender on demand all
reasonable costs and expenses (including reasonable fees of counsel) incurred by
Lender in connection with such rescission or restoration. 

Exhibit D-3-20 

8.17 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction. 

8.18 Survival of Provisions. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the other Financing Documents and the making of
the Loans and extensions of credit thereunder. Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements, representations and
warranties of Pledgor set forth herein shall terminate at the same time as the
security interest and other rights granted hereunder shall terminate pursuant to
Section 8.8. 

8.19 Headings Descriptive. The headings in this
Agreement are for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose or be given any substantive effect. 

8.20 Entire Agreement. This Agreement, together with
each other Financing Document, is executed in connection herewith, is intended
by the parties as a final expression of their agreement and is intended as a
complete and exclusive statement of the terms and conditions thereof. 

8.21 Time. Time is of the essence of this Agreement.

8.22 Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute one and
the same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. 

8.23 Limitation of Liability. No claim shall be made by
Pledgor or Pledged Company against Lender or any of its Affiliates, directors,
employees, attorneys or agents for any loss of profits, business or anticipated
savings, special or punitive damages or any indirect or consequential loss
whatsoever in respect of any breach or wrongful conduct (whether or not the
claim therefor is based on contract, tort or duty imposed by law), in connection
with, arising out of or in any way related to the transactions contemplated by
this Agreement or the other Financing Documents or any act or omission or event
occurring in connection therewith; and Pledgor and Pledged Company hereby waive,
release and agree not to sue upon any such claim for any such damages, whether
or not accrued and whether or not known or suspected to exist in their favor.

8.24 Submission to Jurisdiction. Lender, Pledged Company
and Pledgor agree that any legal action or proceeding by or against Pledgor or
Pledged Company or with respect to or arising out of this Agreement or any other
Financing Document may be brought in or removed to the courts of the State of
New York, in and for the County of New York, or of the United States of America for the Southern District of New York, as
Lender may elect. By execution and delivery of this Agreement, Lender, Pledged
Company and Pledgor accept, for themselves and in respect of their property,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts. Lender, Pledged Company and Pledgor irrevocably consent to the service
of process out of any of the aforementioned courts in any manner permitted by
law. Nothing herein shall affect the right of Lender to bring legal action or
proceedings in any other competent jurisdiction. Lender, Pledged Company and
Pledgor hereby waive any right to stay or dismiss any action or proceeding under
or in connection with this Agreement brought before the foregoing courts on the
basis of forum non-conveniens. 

Exhibit D-3-21 

8.25 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE PERFECTION OR
PRIORITY OF THE LIEN AND SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. 

8.26 CONSENT TO JURISDICTION. SUBJECT TO CLAUSE (E) OF
THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY
ARISING OUT OF OR RELATING HERETO OR ANY OTHER FINANCING DOCUMENTS, OR ANY OF
THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH BORROWER AFFILIATE ENTITY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN
WITH RESPECT TO ACTIONS BY THE LENDER IN RESPECT OF RIGHTS UNDER ANY FINANCING
DOCUMENT GOVERNED BY LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH
RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEFENSE OF FORUM
NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ANY BORROWER AFFILIATE ENTITY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 8.13; (D) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER ANY BORROWER
AFFILIATE ENTITY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT
THE LENDER RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO BRING PROCEEDINGS AGAINST ANY BORROWER AFFILIATE ENTITY IN THE COURTS
OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER
ANY FINANCING DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT. 

Exhibit D-3-22 

8.27 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER
FINANCING DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THE LOAN TRANSACTIONS OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 8.27 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER FINANCING DOCUMENTS OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT. 

8.28 Knowledge and Attribution. Reference in this
Agreement to the “knowledge”, “best knowledge” or facts and circumstances “known
to” Pledgor, and all like references, means facts or circumstances of which a
Responsible Officer of Pledgor has actual knowledge. 

8.29 Rights of Lender. Lender shall be entitled to the
rights, protections, immunities and indemnities set forth in the Financing
Agreement as if specifically set forth herein. 

8.30 Consent and Acknowledgement. Pledgor hereby
acknowledges receiving copies of the Financing Agreement, and the other
Financing Documents and consent to the terms and provisions of each. 

8.31 Third Party Beneficiaries. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon, or give to any Person, other than Pledgor, Pledged Company, and Lender,
any security, rights, remedies or claims, legal or equitable, under or by reason
hereof, or any covenant or condition hereof; and this Agreement and the
covenants and agreements herein contained are and shall be held to be for the
sole and exclusive benefit of Pledgor, Pledged Company, and Lender. 

Exhibit D-3-23 

8.32 Waiver of Transfer Restrictions. Notwithstanding
anything to the contrary contained in the Borrower LLC Agreement, Pledgor hereby
waives any requirement contained in the Borrower LLC Agreement that it consent
to a transfer of a ownership interest in Pledged Company in connection with a
foreclosure on such ownership interest under the Financing Documents. 

8.33 Article 8 Securities. Pledgor hereby represents and
warrants that (a) the terms of each of the Pledged Ownership Interests expressly
provide that they are securities governed by Article 8 of the UCC as in effect
in each applicable jurisdiction and (b) Section 5.2 of the Borrower LLC
Agreement is in full force and effect. Pledgor hereby covenants and agrees that
it will not agree to any amendment or repeal of Section 5.2 of the Borrower LLC
Agreement without the prior express written consent of Lender and, in any event,
shall promptly notify Lender in writing if for any reason the Pledged Ownership
Interests shall cease to be securities for purposes of the UCC in any applicable
jurisdiction. 

8.34 Appointment of Agent. Pledgor hereby irrevocably
designates, appoints and empowers CT Corporation System (the “Process
Agent”), with offices on the date hereof at 111 Eighth Avenue, New York, New
York 10011, as its permitted designee, appointee and agent to receive and
forward, for and on its behalf, service of any and all legal process, writs,
summons, notices and documents which may be served in any action or proceeding
arising out of this Agreement or any other Financing Document. Pledged Company
hereby agrees to cause the Process Agent to execute and deliver to the Lender a
letter from the Process Agent to the effect of the foregoing. If for any reason
such Process Agent shall cease to act as such, Pledgor agrees hereby to
designate a new permitted designee, appointee and agent in New York City on
terms satisfactory to the Lender. Pledgor shall promptly inform the Process
Agent of any change to Pledgor’s address for forwarding such items. 

[SIGNATURE PAGES FOLLOW]

Exhibit D-3-24 

 IN WITNESS WHEREOF, the parties hereto, by their officers
duly authorized, intending to be legally bound, have caused this Agreement to be
duly executed and delivered as of the date first above written. 

	 	NEVADA USG HOLDINGS, LLC, 
	 	a Delaware limited liability company, 
	 	as Pledgor 
	 	  
	 	  
	 	           
                   By:
      ________________________________
	 	  
	 	           
                   Name:
      ________________________________
	 	  
	 	           
                   Title:
      ________________________________
	 	Federal Employer 
	 	Identification No.
      ________________________________
	 	Delaware 
	 	Organizational No.
      ________________________________
	 	  
	 	  
	 	  
	 	USG NEVADA LLC, 
	 	a Delaware limited liability company, 
	 	as Pledged Company 
	 	  
	 	  
	 	           
                   By:
      ________________________________
	 	  
	 	           
                   Name:
      ________________________________
	 	  
	 	           
                   Title:
      ________________________________
	 	Federal Employer 
	 	Identification No.
      ________________________________
	 	Delaware 
	 	Organizational No.
      ________________________________

[SIGNATURE PAGE TO MEMBER PLEDGE AGREEMENT] 

ARES CAPITAL CORPORATION, 
a
Maryland corporation, 
as Lender 

	 	By: ________________________________
	 	 
	 	Name: ________________________________
	 	 
	 	Title:
  ________________________________

[SIGNATURE PAGE TO MEMBER PLEDGE AGREEMENT] 

EXHIBIT A 
IRREVOCABLE PROXY 

Date: November 9, 2011 

The undersigned hereby appoints ARES CAPITAL CORPORATION, a
Maryland corporation, (“Lender”), as Proxy with full power of
substitution, and hereby authorizes Lender to represent and vote all of the
ownership interests of USG NEVADA LLC, a Delaware limited liability
company, owned by the undersigned on the date of exercise hereof during the
continuance of an Event of Default under, and as defined in, the Member Pledge
Agreement, dated as of November 9, 2011 among Nevada USG Holdings, LLC, USG
Nevada LLC, and Lender at any meeting or at any other time chosen by Lender in
its sole discretion. 

[SIGNATURE PAGE FOLLOWS]

Exhibit A 

	NEVADA USG HOLDINGS, LLC, 
	a Delaware limited liability company, 
	as Pledgor 
	 
	By: ________________________________
	 
	Name: ________________________________
	 
	Title: ________________________________

Exhibit A 

EXHIBIT B 
TRANSFER DOCUMENT 

FOR VALUE RECEIVED, Nevada USG Holdings, LLC, a Delaware
limited liability company hereby sells, assigns and transfers unto
_______________________________all of its ownership interest(s) in USG Nevada
LLC, a Delaware limited liability company (“Pledged Company”),
standing in its name on the books of Pledged Company, represented by the
following certificate(s): 001, and irrevocably appoints
____________________________as attorney to transfer the ownership interests with
full power of substitution in the premises. 

[SIGNATURE PAGE FOLLOWS]

Exhibit B 

	NEVADA USG HOLDINGS, LLC, 
	a Delaware limited liability company, 
	as Pledgor 
	 
	By: ________________________________
	 
	Name: ________________________________
	 
	Title: ________________________________
	 
	In the presence of:
  ________________________________

Exhibit B 

SCHEDULE I 
DESCRIPTION OF OWNERSHIP INTERESTS

	Certificate No. 	Description: 
	001 	100% of the ownership interests of USG Nevada
      LLC, a Delaware limited liability company 

Schedule I 

	EXHIBIT D-4 
	to Financing
      Agreement 

FORM OF 
SPONSOR CASH GRANT SHORTFALL GUARANTY

among 

U.S. GEOTHERMAL INC., 
a Delaware corporation

(Sponsor) 

and 

U.S. GEOTHERMAL INC., 
an Idaho corporation
(Idaho
Sponsor) 

and 

USG NEVADA LLC, 
a Delaware limited liability company

(Borrower) 

and 

ARES CAPITAL CORPORATION, 
a Maryland corporation

(Lender) 

	Dated as of November 9, 2011 
	 

TABLE OF CONTENTS 

Page 

	ARTICLE I. DEFINITIONS 	2 
	  	  	  
	           
             1.1 	Defined Terms. 	2 
	               
         1.2 	General Definitions 	3 
	           
             1.3 	Rules of Interpretation.
    	3 
	  	  	  
	ARTICLE II. GUARANTY 	3 
	  	  	  
	           
             2.1 	Guaranty 	3 
	               
         2.2 	Obligations Absolute and Unconditional
    	4 
	  	  	  
	ARTICLE III. REPRESENTATIONS AND WARRANTIES 	5 
	  	  	  
	               
         3.1 	Guarantors’ Representations and
      Warranties 	5 
	           
             3.2 	Borrower’s Representations
      and Warranties; Covenants. 	7 
	  	  	  
	ARTICLE IV. COVENANTS 	8 
	  	  	  
	           
             4.1 	Maintenance of Corporate
      Existence 	8 
	               
         4.2 	Compliance with Obligations. 	8 
	           
             4.3 	Compliance with Laws.
	8 
	               
         4.4 	Notice of Material Adverse Effect and
      Default. 	8 
	           
             4.5 	Financial Statements.
	8 
	               
         4.6 	Restrictions on Debt; Guaranties. 	8 
	           
             4.7 	Sponsor’s Minimum Net
      Worth 	8 
	  	  	  
	ARTICLE V. SUBORDINATION;
      SUBROGATION; ETC. 	9 
	  	  	  
	           
             5.1 	Taxes 	9 
	               
         5.2 	Subordination 	9 
	           
             5.3 	Waiver 	9 
	               
         5.4 	Subrogation 	11 
	           
             5.5 	Bankruptcy 	11 
	               
         5.6 	Reinstatement 	12 
	  	  	  
	ARTICLE VI. MISCELLANEOUS 	12 
	  	  	  
	               
         6.1 	Successions or Assignments. 	12 
	           
             6.2 	Other Waivers. 	13 
	               
         6.3 	Headings. 	13 
	           
             6.4 	Remedies Cumulative. 	13 
	               
         6.5 	Severability. 	13 

Exhibit D-4-i 

	                   6.6
    	Amendments. 	13 
	                   6.7
    	APPLICABLE LAW. 	13 
	                   6.8
    	CONSENT TO JURISDICTION.
    	13 
	                   6.9
    	WAIVER OF JURY TRIAL. 	14 
	                   6.10
    	Integration of Terms.
	15 
	                   6.11
    	Notices. 	15 
	                   6.12
    	Interest; Collection
      Expenses; Set-Off 	16 
	                   6.13
    	Counterparts 	16 
	                   6.14
    	Time. 	16 
	                   6.15
    	Termination 	16 
	                   6.16
    	Appointment of Agent.
	17

Exhibit D-4-ii 

SPONSOR CASH GRANT SHORTFALL GUARANTY 

This SPONSOR CASH GRANT SHORTFALL GUARANTY, dated as of
November 9, 2011 (as amended, amended and restated, supplemented or otherwise
modified from time to time, this “Guaranty”), is entered into by and
among U.S. GEOTHERMAL INC., a corporation organized and existing under the laws
of the State of Delaware (“Sponsor”), U.S. GEOTHERMAL INC., a corporation
organized and existing under the laws of the State of Idaho (“Idaho
Sponsor”, and together with Sponsor, the “Guarantors”), USG NEVADA
LLC, a limited liability company organized and existing under the laws of the
State of Delaware (“Borrower”), and ARES CAPITAL CORPORATION, a Maryland
corporation, (together with its successors, designees and assigns in such
capacity, “Lender”). 

RECITALS 

A. Borrower owns and intends to develop, construct, install,
test, own, operate and use an approximately 8 MW geothermal power facility
located in Washoe County, Nevada (the “Project”). 

B. Borrower has entered into, among other things, (i) that
certain Financing Agreement, dated as of the date hereof (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
“Financing Agreement”), by and between Borrower and Lender, pursuant to
which, among other things, Lender has extended commitments to make loans and
other financial accommodations to, and for the benefit of, Borrower, and (ii)
certain Financing Documents (as defined in the Financing Agreement). 

C. The Guarantors indirectly own one hundred percent (100%) of
the ownership interests of Borrower. Sponsor directly owns one hundred percent
(100%) of the membership interests of Idaho Sponsor. Idaho Sponsor
directly owns one hundred percent (100%) of the membership interests of Nevada
USG Holdings, LLC, a Delaware limited liability company (“Holdings”).
Holdings directly owns one hundred percent (100%) of the ownership interests of
Borrower.

D. Borrower will file a Cash Grant Application with respect to
the Project as and when required pursuant to the Financing Agreement. 

E. The primary source of repayment to Lender with respect to
the Loans will be the proceeds from Cash Grant paid by the United States
Treasury Department in connection with the filing of the Cash Grant Application.

F. The Guarantors will derive economic benefit from the Loans
to be made to Borrower pursuant to the Financing Agreement. 

G. It is a condition precedent to the effectiveness of the
Financing Agreement and the other Financing Documents, and the making of the
advances of credit contemplated thereby, that the Guarantors and Borrower shall
have executed and delivered this Guaranty. 

Exhibit D-4-1 

AGREEMENT 

NOW, THEREFORE, in consideration of the promises contained
herein, and to induce the Lender to enter into the Financing Documents and to
make the advances of credit to Borrower contemplated thereby, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each of the Guarantors and Borrower hereby agrees with Lender as
follows: 

ARTICLE I. 
DEFINITIONS 

1.1 Defined Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and
recitals, shall have the following meanings: “Borrower” has the
meaning given in the preamble to this Guaranty. 

“Cash Grant Filing Date” means the date on which
Borrower submits to the United States Treasury Department its Cash Grant
Application with respect to the Project. 

“Cash Grant Receipt Date” means the date on which the
Cash Grant is actually received by Borrower or Lender. 

“Financing Agreement” has the meaning given in the
recitals to this Guaranty. 

“Guaranteed Obligations” has the meaning given in
Section 2.1 of this Guaranty. “Guaranty” has the meaning given in
the preamble to this Guaranty. 

“Guarantors” has the meaning given in the
preamble to this Guaranty. 

“Idaho Sponsor” has the meaning given in the
preamble to this Guaranty. “Lender” has the meaning given in the
preamble to this Guaranty. 

“Material Adverse Effect” means (i) a material and
adverse change in the business, property, results of operation or financial
condition of a Guarantor, (ii) a material and adverse effect on a Guarantor’s
ability to perform its obligations under this Guaranty, or (iii) any “Material
Adverse Effect” under, and as defined in, the Financing Agreement. 

“Outstanding Loan Amount” shall mean, as of any given
date, the aggregate amount of the Loans (including principal and interest
accrued thereon, together with any costs, fees and expenses related thereto)
then outstanding. 

“Project” has the meaning given in the recitals
to this Guaranty. 

“Received Cash Grant Amount” means the actual amount, if
any, of the Cash Grant received by Borrower or Lender with respect to the Cash
Grant Application submitted by Borrower with respect to the Project. 

Exhibit D-4-2 

“Requested Cash Grant Amount” means the amount of the
Cash Grant applied for under the Cash Grant Application submitted by Borrower
with respect to the Project. 

“Sponsor” has the meaning given in the preamble
to this Guaranty.

“Sponsor’s Net Worth” means the three day average market
capitalization for Sponsor as stated by Bloomberg World Exchange Market
Capitalization USG at 4:30 PM EST. 

1.2 General Definitions. Unless otherwise defined herein
or unless the context otherwise requires, capitalized terms used in this
Guaranty, including its preamble and recitals, have the respective
meanings provided in the Financing Agreement. 

1.3 Rules of Interpretation. Unless otherwise provided
herein, the rules of interpretation set forth in Exhibit A to the Financing
Agreement shall apply to this Guaranty, including its preamble and
recitals. 

ARTICLE II. 
GUARANTY 

2.1 Guaranty. For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and as an inducement
to Lender to enter into the Financing Documents, each Guarantor hereby
unconditionally, absolutely and irrevocably guarantees, on a joint and several
basis, to Lender each of the following (collectively, the “Guaranteed
Obligations”): 

(a) in the event that the Requested
Cash Grant Amount is less than the Outstanding Loan Amount on the Cash Grant
Filing Date, such Guarantor shall pay to Lender on the Cash Grant Filing Date an
amount equal to the positive difference (if any) between the Outstanding Loan
Amount on the Cash Grant Filing Date and the Requested Cash Grant Amount; 

(b) in the event that the Received Cash
Grant Amount is less than the Outstanding Loan Amount on the Cash Grant Receipt
Date, such Guarantor shall pay to Lender on the Maturity Date an amount equal to
the positive difference (if any) between the then Outstanding Loan Amount on the
Cash Grant Receipt Date and the Received Cash Grant Amount; and 

(c) in the event that, as of the
Maturity Date, no Cash Grant has been received, such Guarantor shall pay the
then Outstanding Loan Amount to Lender on the Maturity Date. 

With respect to payment obligations set forth above, such
payments shall be due and payable (i) within five (5) Banking Days from the Cash
Grant Filing Date in the case of a Guaranteed Obligation under Section
2.1(a), (ii) within five (5) Banking Days of the Cash Grant Receipt Date in
the case of a Guaranteed Obligation under Section 2.1(b) above, and (iii)
on the Maturity Date in the case of a Guaranteed Obligation under Section
2.1(c).

Exhibit D-4-3 

2.2 Obligations Absolute and Unconditional.

(a) The obligations of the Guarantors
hereunder are primary obligations of each Guarantor, on a joint and several
basis, and are an absolute, unconditional, continuing and irrevocable guaranty
of payment of the Guaranteed Obligations and the other obligations of the
Guarantors hereunder and not of collectability, and are in no way conditioned on
or contingent upon any attempt to enforce in whole or in part Borrower’s or any
other Person’s liabilities and obligations to Lender. Each Guarantor, on a joint
and several basis, shall pay each Guaranteed Obligation in immediately available
funds as and when it is due. Each failure by the Guarantors to pay a Guaranteed
Obligation or any other obligation hereunder shall give rise to a separate cause
of action herewith, and separate suits may be brought hereunder as each cause of
action arises.

(b) Each Guarantor agrees that it is
directly and primarily liable to Lender, that its obligations hereunder are
independent of the obligations of any other guarantor of the Guaranteed
Obligations, and that a separate action or actions may be brought and prosecuted
against such Guarantor, whether action is brought against Borrower (or any other
guarantor of the Guaranteed Obligations) or whether Borrower (or any such other
guarantor) is joined in any such action or actions. Each Guarantor agrees that
any release which may be given to Borrower, the other Guarantor or any other
person or entity directly or indirectly liable for the Guaranteed Obligations
shall not release such Guarantor from its obligations under this Guaranty. 

(c) Lender may, at any time and from
time to time (whether or not after revocation or termination of this Guaranty)
without the consent of or notice to any Guarantor, except such notice as may be
required by the Financing Documents or applicable law which cannot be waived,
without incurring responsibility to any Guarantor, without impairing or
releasing the obligations of any Guarantor hereunder, upon or without any terms
or conditions and in whole or in part: 

(i) consent to any change in the
manner, place and terms of payment of, or renew or alter, any Guaranteed
Obligation, or any obligations and liabilities (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, or
consent to any modification or amendment of the Cash Grant Applications, and the
guarantees herein made shall apply to the Guaranteed Obligations or such other
obligations as changed, extended, renewed, modified, amended, supplemented or
altered in any manner; 

(ii) exercise or refrain from
exercising any rights against Borrower or others (including the Guarantors) or
otherwise act or refrain from acting; 

(iii) add or release any other
guarantor from its obligations without affecting or impairing the obligations of
the Guarantors hereunder; 

(iv) settle or compromise any
Guaranteed Obligations or any obligations and liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or hereof,
and may subordinate the payment of all or any part thereof to the payment or performance
of any obligations and liabilities which may be due to Lender or others; 

Exhibit D-4-4 

(v) sell, exchange, release,
surrender, realize upon or otherwise deal with in any manner or in any order any
property by whomsoever pledged or mortgaged to secure or howsoever securing the
Guaranteed Obligations or any liabilities or obligations (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof and/or
any offset there against; 

(vi) apply any sums by whomsoever paid
or howsoever realized to any obligations and liabilities of Borrower to Lender
under the Financing Documents in the manner provided therein regardless of what
obligations and liabilities remain unpaid; and 

(vii) act or fail to act in any manner
referred to in this Guaranty which may deprive any Guarantor of its right to
subrogation against Borrower to recover full indemnity for any payments or
performances made pursuant to this Guaranty or of its right of contribution
against any other party. 

(d) No invalidity, irregularity or
unenforceability of the Guaranteed Obligations or invalidity, irregularity,
unenforceability or non-perfection of any collateral therefor, shall affect,
impair or be a defense to this Guaranty, which is the primary obligation of the
Guarantors. 

This is a continuing guaranty and all obligations to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. In the event that, notwithstanding the
provisions of Section 2.2 above, this Guaranty shall be deemed revoked in
accordance with applicable law, then any such revocation shall become effective
only upon receipt by Lender of written notice of revocation signed by each
Guarantor. To the extent permitted by applicable law, no revocation or
termination hereof shall affect, in any manner, rights arising under this
Guaranty with respect to Guaranteed Obligations (i) arising prior to receipt by
Lender of written notice of such revocation or termination or (ii) arising as a
result of an Event of Default under the Financing Agreement occurring by reason
of the revocation or termination of this Guaranty. 

ARTICLE III. 
REPRESENTATIONS AND WARRANTIES 

3.1 Guarantors’ Representations and Warranties. Each
Guarantor represents and warrants to and in favor of Lender, as of the date
hereof, that: 3.1.1 Organization. (a) it is a corporation duly organized,
validly existing and in good standing under the laws of the State of its
formation, and (b) it is duly qualified, authorized to do business and in good
standing in each jurisdiction in which such qualification is necessary to
execute, deliver and perform this Guaranty. 

3.1.2 Power and Authorization; Enforceable Obligations.
Such Guarantor has the full corporate power and authority to execute, deliver
and perform this Guaranty and to take all action as may be necessary to complete
the transactions contemplated hereunder and thereunder. Such Guarantor has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Guaranty and to complete the transactions contemplated
hereby and thereby. No consent or authorization of, filing with, or other act by
or in respect of any other Person or Governmental Authority is required in
connection with the execution, delivery or performance by such Guarantor, or the
validity or enforceability as to such Guarantor, of this Guaranty, except such
consents or authorizations or filings or other acts as have already been
obtained or made or where the failure to obtain such consent or authorization
could not reasonably be expected to have a Material Adverse Effect. This
Guaranty has been duly executed and delivered by such Guarantor and constitutes
a legal, valid and binding obligation of such Guarantor enforceable against it
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the right of creditors generally and by general principles of equity. 

Exhibit D-4-5 

3.1.3 No Legal Bar. The execution, delivery and
performance by such Guarantor of this Guaranty and the consummation of the
transactions contemplated hereby (including the agreements, guarantees and
payments contemplated hereby) will not violate any applicable Legal Requirement
or any material contractual obligation of such Guarantor and will not result in,
or require, the creation or imposition of any Lien on any of the properties or
revenues of such Guarantor pursuant to any applicable Legal Requirement or any
such contractual obligation except, in each case, where such violation, creation
or imposition could not reasonably be expected to have a Material Adverse
Effect. 

3.1.4 Compliance with Law. Such Guarantor is in
compliance with all Legal Requirements, except noncompliance which could not
reasonably be expected to have a Material Adverse Effect. 

3.1.5 No Litigation. There are no pending or, to such
Guarantor’s knowledge, threatened in writing actions, suits, proceedings or
investigations of any kind, including actions or proceedings of or before any
Governmental Authority, to which such Guarantor is a party or is subject, or by
which it or its properties are bound that, if adversely determined to or against
such Guarantor, could reasonably be expected to have a Material Adverse Effect.

3.1.6 Financial Statements. The financial statements of
the Guarantors delivered to Lender pursuant to Sections 3.1(q) and 5.4 of the
Financing Agreement are true, complete and correct in all material respects as
of the date of such statements and fairly presented the financial condition of
each Guarantor as of the date thereof and fairly presented the results of the
operations and cash flow of each Guarantor for the periods then ending. Such
financial statements have been prepared in accordance with GAAP. 

3.1.7 Taxes. Such Guarantor has timely filed all
federal, state and local tax returns that it is required to file (except where a
failure to file such local tax return could not reasonably be expected to have a
Material Adverse Effect), has paid all taxes it is required to pay to the extent
due (other than those taxes that it is contesting in good faith and by
appropriate proceedings, with adequate reserves established for such taxes) and,
to the extent such taxes are not due, has established reserves that are adequate
for the payment thereof to the extent required by GAAP. Such Guarantor knows of no tax assessment that has
been proposed in writing against it which could reasonably be expected to have a
Material Adverse Effect (other than as is being actively contested by such
Guarantor in good faith and by appropriate proceedings and for which reserves or
other appropriate provisions, if any, as shall be required in conformity with
GAAP have been made or provided therefor). 

Exhibit D-4-6 

3.1.8 Investment Company Act; Federal Energy Laws. Such
Guarantor is not an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended. No provision of the FPA or PUHCA precludes such Guarantor from
entering into and performing its obligations under this such Guaranty. 

3.1.9 Financial and Other Information. Such Guarantor
has established adequate means of obtaining financial and other information
pertaining to the businesses, operations and condition (financial and otherwise)
of Borrower and its properties on a continuing basis, and such Guarantor now is
and hereafter will have responsibility for maintaining familiarity with the
businesses, operations and condition (financial and otherwise) of Borrower and
its properties. 

Operative Documents. Such Guarantor has reviewed and is
familiar with the terms of each of the Financing Documents (including the
Financing Agreement) that has been or will be executed and delivered on or prior
to the date hereof. 

3.1.10 Adequate Financial Means.

(a) After giving effect to the
transactions contemplated by this Guaranty and the contingent obligations
evidenced hereby, such Guarantor is Solvent, both on an unconsolidated basis and
a consolidated basis with any subsidiaries of the Guarantors. 

(b) Such Guarantor is not executing
this Guaranty with any intention to hinder, delay or defraud any present or
future creditor or creditors of such Guarantor. 

(c) Such Guarantor is not engaged in
any business or transaction which, after giving effect to the transactions
contemplated by this Guaranty, will leave such Guarantor with capital or assets
which are unreasonably small in relation to the business or transactions engaged
by such Guarantor, and such Guarantor does not intend to engage in any such
business or transaction. 

(d) Such Guarantor does not intend to
incur, nor does such Guarantor believe that it will incur, debts beyond such
Guarantor’s ability to repay such debts as they mature. 

3.2 Borrower’s Representations and Warranties;
Covenants. Borrower represents and warrants to and in favor of Lender, as of
the date hereof, that Borrower has provided the Guarantors with true, correct
and complete copies of each of the Operative Documents (including the Financing
Agreement) that has been or will be executed and delivered on or prior to the
Financial Closing Date and any amendments, supplements or modifications thereto.

Exhibit D-4-7 

ARTICLE IV. 
COVENANTS 

Each Guarantor hereby covenants and agrees for the benefit of
Borrower and Lender as follows, as long as this Guaranty remains in effect: 4.1
Maintenance of Corporate Existence. Such Guarantor shall maintain and
preserve its existence in good standing in the state of its formation and its
qualification to do business in each other jurisdiction where such qualification
is necessary to perform its obligations hereunder and all material rights,
privileges and franchises necessary in the normal conduct of its business. 

4.2 Compliance with Obligations. Such Guarantor shall
maintain in full force and effect all consents and approvals of any Governmental
Authority that are required to be obtained by it in order for it to perform its
obligations under this Guaranty and each other Operative Document to which it is
a party. Each Guarantor shall obtain any such consents and approvals that may
become required in the future as and when the same shall be so required. 

4.3 Compliance with Laws. Such Guarantor shall promptly
comply with all Governmental Rules, except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect. 

4.4 Notice of Material Adverse Effect and Default.
Promptly, and in any event within fifteen (15) Business Days after a Responsible
Officer of such Guarantor obtains knowledge thereof, such Guarantor shall give
to Lender notice of (a) the occurrence of any event (including any litigation or
governmental proceeding affecting or pending against such Guarantor or any of
its Affiliates) which has had, or could reasonably be expected to have, a
Material Adverse Effect and (b) the occurrence of any Event of Default. 

4.5 Financial Statements. Such Guarantor shall provide
each of the financial statements required by such Guarantor pursuant to Section
5.4 of the Financing Agreement.

4.6 Restrictions on Debt; Guaranties. Such Guarantor
shall not, without the consent of the Lender (which shall not be unreasonably
withheld, delayed or conditioned) incur, create, assume or permit to exist any
Debt or execute any guaranties, other than this Agreement, or provide other
credit support (including grants of Liens on any assets owned by the Guarantors)
to the extent that the issuance of such guaranties or credit support could
reasonably be expected to cause a Material Adverse Effect. 

4.7 Sponsor’s Minimum Net Worth. On the Financial
Closing Date and at all times until the indefeasible payment and performance in
full in cash of all Obligations and the termination of the Loan Commitment,
Sponsor’s Net Worth was and shall remain equal to at least twenty million
Dollars ($20,0000,000). 

Exhibit D-4-8 

ARTICLE V. 
SUBORDINATION; SUBROGATION; ETC. 

5.1 Taxes. Except as otherwise required by applicable
Governmental Rules, each payment required to be made by the Guarantors hereunder
shall be made without deduction or withholding for or on account of Taxes,
Excluded Taxes or Other Taxes.

5.2 Subordination. Except as otherwise specifically
provided in this Guaranty, all existing and future indebtedness of, or other
obligations owed by Borrower to the Guarantors is hereby subordinated to all of
the Obligations. Without the prior written consent of Lender, such subordinated
indebtedness (including interest thereon) shall not be paid or withdrawn in
whole or in part, nor shall the Guarantors accept any payment of or on account
of any such indebtedness, in each case until the indefeasible payment and
performance in full of all Obligations (other than unasserted contingent
indemnity obligations) and the termination of the Loan Commitment under the
Financing Agreement and the other obligations of the Lender under the Financing
Documents. Any payment by Borrower in violation of this Section 5.2 shall
be received by the Guarantors in trust for Lender, and the Guarantors shall
cause the same to be paid to Lender immediately upon demand by Lender on account
of the Obligations. The Guarantors shall not assign all or any portion of such
indebtedness while the Guaranty remains in effect except upon prior written
notice to Lender by which the assignee of any such indebtedness agrees that the
assignment is made subject to the terms of this Guaranty, and that any attempted
assignment of such indebtedness in violation of the provisions hereof shall be
void. Nothing in this Section 5.2 shall operate to limit Borrower’s
ability to make distributions to the Guarantors as and to the extent expressly
performed under Section 6.6 of the Financing Agreement. 

5.3 Waiver. Each Guarantor hereby unconditionally and
irrevocably waives and relinquishes, to the maximum extent permitted by
applicable Governmental Rules, all rights and remedies accorded to sureties or
guarantors and agrees not to assert or take advantage of any such rights or
remedies, other than, subject to Section 5.6, defenses of payment or
performance of the applicable Guaranteed Obligations, including:

(a) any right to require Lender to
proceed against Borrower or any other Person or to proceed against or exhaust
any security held by Lender at any time or to pursue any other remedy in
Lender’s power before proceeding against any Guarantor;

(b) any defense that may arise by
reason of the incapacity, lack of power or authority, death, dissolution,
merger, termination or disability of any Guarantor, Borrower or any other Person
or the failure of Lender to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any Guarantor, Borrower
or any other Person;

(c) promptness, diligence, demand,
presentment, protest and notice of any kind, including notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or of
any action or non-action on the part of Borrower, Lender, any endorser or
creditor of the foregoing or on the part of any other Person under this or any
other instrument in connection with any obligation or evidence of indebtedness
held by Lender as collateral or in connection with any Guaranteed Obligation;

Exhibit D-4-9 

(d) any defense based upon an election
of remedies by Lender, including an election to proceed by non-judicial rather
than judicial foreclosure, which destroys or otherwise impairs the subrogation
rights of any Guarantor or the right of any Guarantor to proceed against
Borrower or another Person for reimbursement, or both; 

(e) any defense based on any offset
against any amounts which may be owed by any Person to any Guarantor for any
reason whatsoever; 

(f) any defense based on any act,
failure to act, delay or omission whatsoever on the part of Borrower or any of
its Affiliates or the failure by Borrower or any of its Affiliates to do any act
or thing or to observe or perform any covenant, condition or agreement to be
observed or performed by such Person under any other Operative Document; 

(g) any defense based upon any statute
or rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the
principal; 

(h) any defense (including failure of
consideration, breach of warranty, statute of frauds, statute of limitations,
accord and satisfaction and usury), setoff or counterclaim which may at any time
be available to or asserted by Borrower against Lender, or any other Person
under the Financing Agreement or any Operative Document; 

(i) any duty on the part of Lender to
disclose to the Guarantors any facts Lender may now or hereafter know about
Borrower or any Affiliate thereof, regardless of whether Lender has reason to
believe that any such facts materially increase the risk beyond that which the
Guarantors intend to assume, or have reason to believe that such facts are
unknown to the Guarantors, or have a reasonable opportunity to communicate such
facts to the Guarantors, since each Guarantor acknowledges that such Guarantor
is fully responsible for being and keeping informed of the financial condition
of Borrower and of all circumstances bearing on the risk of non-payment of any
Guaranteed Obligation; 

(j) the fact that each Guarantor may at
any time in the future dispose of all or part of its direct or indirect interest
in Borrower; 

(k) any defense based on any change in
the time, manner or place of any payment or performance under, or in any other
term of, the Financing Agreement, any other Operative Document, or any other
amendment, renewal, extension, acceleration, compromise or waiver of or any
consent or departure from the terms of the Financing Agreement or any other
Operative Document; 

(l) any right to assert the bankruptcy
or insolvency of Borrower or any other Person as a defense hereunder or as the
basis for rescission hereof and any defense arising because of Lender’s
election, in any proceeding instituted under the Bankruptcy Law, of the
application of Section 1111(b)(2) of the Bankruptcy Law; 

(m) any defense based upon any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Law; and 

Exhibit D-4-10 

(n) any act or omission by Borrower, or
any existence of or reliance on any representation by Borrower or Lender that
might otherwise constitute a defense available to, or discharge of, any
guarantor or surety. 

5.4 Subrogation. Until the indefeasible payment and
performance in full of all Obligations (other than unasserted contingent
indemnity obligations) and the termination of the Loan Commitment under the
Financing Agreement and the other obligations of Lender under the Financing
Documents, (a) the Guarantors shall not exercise any right of subrogation or
enforce any remedy which Lender may have now or may hereafter have against
Borrower and will not claim the benefit of any rights to, or seek to participate
in, any security now or hereafter held by Lender from Borrower, and (b) the
Guarantors shall not enforce any claim, right or remedy which the Guarantors may
now have or may hereafter acquire against Borrower that arises hereunder, from
the existence or enforcement of this Guaranty or from the performance by the
Guarantors hereunder (including any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in
any claim, right or remedy of Lender against Borrower or any security which
Lender now may have or may hereafter acquire), whether or not such claim, right
or remedy arises in equity, under contract, by statute, under common law or
otherwise. 

5.5 Bankruptcy.

(a) To the extent permitted under
applicable Legal Requirements, the Guarantors shall not, without the prior
written consent of Lender, commence, or join with any other Person in commencing
any bankruptcy, reorganization, or insolvency proceeding against Borrower. The
obligations of the Guarantors under this Guaranty shall not be altered, limited
or affected by any proceeding, voluntary or involuntary, involving the
bankruptcy, reorganization, insolvency, receivership, liquidation or arrangement
of Borrower, or any Affiliate thereof, or by any defense which Borrower or any
Affiliate thereof may have by reason of any order, decree or decision of any
court or administrative body resulting from any such proceeding. 

(b) The Guarantors shall file, in any
bankruptcy or other proceeding in which the filing of claims is required or
permitted by law, all claims which the Guarantors may have against Borrower,
relating to any indebtedness of Borrower to Guarantor, and hereby assigns to
Lender all rights of the Guarantors thereunder. If the Guarantors do not file
any such claim, Lender, as attorney-in-fact for the Guarantors, is hereby
authorized to do so in the name of the Guarantors or, in Lender’s discretion, to
assign the claim to a nominee and to cause proofs of claim to be filed in the
name of Lender’s nominee. The foregoing power of attorney is coupled with an
interest and cannot be revoked. Lender or its nominee shall have the sole right
to accept or reject any plan proposed in any such proceeding and to take any
other action which a party filing a claim is entitled to take. In all such
cases, whether in administration, bankruptcy or otherwise, the person authorized
to pay such a claim shall pay the same to Lender to the extent of any
Obligations which then remain unpaid or unperformed, and, to the full extent
necessary for that purpose, the Guarantors hereby assign to Lender all of the
Guarantors’ rights to all such payments or distributions to which the Guarantors
would otherwise be entitled; provided, however, that the
Guarantors’ obligations hereunder shall not be satisfied except to the extent
that Lender receives cash by reason of any such payment or distribution. If
Lender receives anything hereunder other than cash,
the same shall be held as collateral for amounts due under this Guaranty. 

Exhibit D-4-11 

(c) Each Guarantor hereby irrevocably
waives, to the extent it may do so under applicable Governmental Rules, any
protection to which it may be entitled under Sections 365(c)(1), 365(c)(2) and
365(e)(2) of the Bankruptcy Law or equivalent provisions of the laws or
regulations of any other jurisdiction with respect to any proceedings, or any
successor provision of law of similar import, in the event of any Bankruptcy
Event with respect to Borrower. Specifically, in the event that the trustee (or
similar official) in a Bankruptcy Event with respect to Borrower or the
debtor-in-possession takes any action (including the institution of any action,
suit or other proceeding for the purpose of enforcing the rights of Borrower
under this Guaranty or any other Financing Document), the Guarantors shall not
assert any defense, claim or counterclaim denying liability hereunder on the
basis that this Guaranty or any other Financing Document is an executory
contract or a “financial accommodation” that cannot be assumed, assigned or
enforced or on any other theory directly or indirectly based on Section
365(c)(1), 365(c)(2) or 365(e)(2) of the Bankruptcy Law, or equivalent
provisions of the law or regulations of any other jurisdiction with respect to
any proceedings or any successor provision of law of similar import. If a
Bankruptcy Event with respect to Borrower shall occur, the Guarantors agree
after the occurrence of such Bankruptcy Event, to reconfirm in writing, to the
extent permitted by applicable Governmental Rules, its pre-petition waiver of
any protection to which it may be entitled under Sections 365(c)(1), 365(c)(2)
and 365(e)(2) of the Bankruptcy Law or equivalent provisions of the laws or
regulations of any other jurisdiction with respect to proceedings and, to give
effect to such waiver, each Guarantor consents to the assumption and enforcement
of each provision of this Guaranty and any other Financing Document by the
debtor-in-possession or Borrower’s trustee in bankruptcy, as the case may be.

5.6 Reinstatement. This
Guaranty and the obligations of the Guarantors hereunder shall continue to be
effective or be automatically reinstated, as the case may be, if and to the
extent that for any reason any payment by or on behalf of any Guarantor in
respect of the Guaranteed Obligations is rescinded or otherwise restored to any
Guarantor or Borrower, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as if such payment had not been made, and each
Guarantor agrees that it will indemnify Lender and its successors and assigns,
on demand for all reasonable costs and expenses (including reasonable fees of
counsel) incurred by Lender and its successors and assigns in connection with
any such rescission or restoration. 

ARTICLE VI. 
MISCELLANEOUS 

6.1 Successions or Assignments.

(a) This Guaranty shall inure to the
benefit of the successors or permitted assigns of Lender who shall have, to the
extent of their interest, the rights of Lender hereunder. Lender shall not
assign this Agreement except in conjunction with an assignment of the Financing
Agreement as provided therein.

Exhibit D-4-12 

(b) This Guaranty is binding upon each
of Borrower and each Guarantor and their respective successors and permitted
assigns. Neither Borrower nor any Guarantor may assign any of its obligations
hereunder without the prior written consent of Lender (and any purported
assignment in violation of this Section shall be void). 

6.2 Other Waivers.

(a) No delay or omission on the part of
Lender in exercising any of its rights (including those hereunder) and no
partial or single exercise thereof and no action or non-action by Lender, with
or without notice to the Guarantors, Borrower or any other Person, shall
constitute a waiver of any rights or shall affect or impair this Guaranty. 

(b) Each of Borrower and each Guarantor
hereby irrevocably waives, to the extent it may do so under applicable
Governmental Rules, any defense based on the adequacy of a remedy at law that
may be asserted as a bar to the remedy of specific performance in any action
brought against Borrower or any Guarantor for specific performance of this
Guaranty by Lender or for its benefit by a receiver, custodian or trustee
appointed for any Guarantor or Borrower or in respect of all or a substantial
part of its assets under the bankruptcy or insolvency laws of any jurisdiction
to which any Guarantor, Borrower or its respective assets are subject. 

6.3 Headings. The headings in this Guaranty are for
convenience of reference only and shall not constitute a part of this Guaranty
for any other purpose or be given any substantive effect. 

6.4 Remedies Cumulative. Each and every right and remedy
of Lender hereunder shall be cumulative and shall be in addition to any other
right or remedy given hereunder or under any other Financing Document, or now or
hereafter existing at law or in equity. 

6.5 Severability. Any provision of this Guaranty that
may be determined by competent authority to be prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. 

6.6 Amendments. This Guaranty may be amended, waived or
otherwise modified only with the written consent of the parties hereto. 

6.7 APPLICABLE LAW. THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF. 

6.8 CONSENT TO JURISDICTION. SUBJECT TO CLAUSE (E) OF
THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY
ARISING OUT OF OR RELATING HERETO OR ANY OTHER FINANCING DOCUMENTS, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK. BY EXECUTING AND DELIVERING THIS GUARANTY, EACH BORROWER AFFILIATE
ENTITY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS (OTHER THAN WITH RESPECT TO ACTIONS BY THE LENDER IN RESPECT OF
RIGHTS UNDER ANY FINANCING DOCUMENT GOVERNED BY LAWS OTHER THAN THE LAWS OF THE
STATE OF NEW YORK OR WITH RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES
ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ANY BORROWER AFFILIATE ENTITY AT
ITS ADDRESS IN ACCORDANCE WITH SECTION 6.11; (D) AGREES THAT SERVICE AS PROVIDED
IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER ANY
BORROWER AFFILIATE ENTITY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E)
AGREES THAT THE LENDER RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY BORROWER AFFILIATE ENTITY
IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY
RIGHTS UNDER ANY FINANCING DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT. 

Exhibit D-4-13 

6.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER
FINANCING DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THE LOAN TRANSACTIONS OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
GUARANTY, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 6.9 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER FINANCING DOCUMENTS OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER. IN THE EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT. 

Exhibit D-4-14 

6.10 Integration of Terms. This Guaranty, together with
any other agreement executed in connection herewith, is intended by the parties
as a final expression of their agreement and is intended as a complete and
exclusive statement of the terms and conditions thereof 

6.11 Notices. All notices required or permitted under
the terms and provisions hereof shall be in writing and any such notice shall be
effective if given in accordance with the provisions of Section 10.1 of the
Financing Agreement. Notices to the Guarantors may be given at the following
addresses (or such other address as notified by Guarantor to Lender and Borrower
in writing): Sponsor:

	 	U.S. GEOTHERMAL INC. 
	 	Address: 	1505 Tyrell Lane 
	 	  	Boise, ID 83706 
	 	Telephone:                       
    	(208) 424-1027 
	 	Fax: 	(208) 424-1030 
	 	Attention: 	Jonathan Zurkoff 
	 	  	  
	 	Idaho Sponsor: 	  
	 	  	  
	 	U.S. GEOTHERMAL INC. 
	 	Address: 	1505 Tyrell Lane 
	 	  	Boise, ID 83706 
	 	Telephone: 	(208) 424-1027 
	 	Fax: 	(208) 424-1030 
	 	Attention: 	Jonathan Zurkoff 
	 	  	  
	 	  	  
	 	Borrower: 	  
	 	  	  
	 	USG NEVADA LLC 
	 	Address: 	1505 Tyrell Lane 
	 	  	Boise, ID 83706 
	 	Telephone: 	(208) 424-1027 
	 	Fax: 	(208) 424-1030 
	 	Attention: 	Jonathan Zurkoff 

Exhibit D-4-15 

6.12 Interest; Collection Expenses; Set-Off.

(a) Without regard to any limitation
set forth in this Guaranty, any amount required to be paid by the Guarantors
pursuant to the terms hereof shall bear interest at the lower of (i) the
interest rate equivalent to the Default Rate under the Financing Agreement and
(ii) the maximum rate permitted by law from the date due until paid in full in
cash. 

(b) Without regard to any limitation
set forth in this Guaranty, if Lender is required to pursue any remedy against
the Guarantors hereunder, the Guarantors shall pay to Lender, upon demand
therefor, all reasonable attorneys’ fees and all other costs and expenses
incurred by Lender in enforcing this Guaranty (and such fees, costs and expenses
shall be deemed to be part of the Guaranteed Obligations). 

(c) In addition to any rights now or
hereafter granted under applicable Governmental Rules or otherwise, and not by
way of limitation of any such rights, upon the failure of the Guarantors to make
any payment as required hereunder, Lender is hereby authorized at any time or
from time to time, without presentment, demand, protest or other notice of any
kind to the Guarantors, 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) and any other indebtedness at any time held or
owing by Lender (including by branches and agencies of Lender wherever located)
to or for the credit or the account of the Guarantors against and on account of
the obligations of the Guarantors under this Guaranty. 

6.13 Counterparts. This Guaranty and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute one and
the same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. 

6.14 Time. Time is of the essence of this Guaranty. 

6.15 Termination. Subject to Section 5.6, this
Guaranty and all of the obligations of the Guarantors hereunder shall terminate
on the earliest to occur of (a) the indefeasible payment and performance in full
in cash of all Obligations (other than unasserted contingent indemnity
obligations) and the termination of the Loan Commitment under the Financing
Agreement and the other obligations of the Lender under the Financing Documents
and (b) the indefeasible payment in full in cash and performance in full of all
of the Guaranteed Obligations in accordance with the terms hereof;
provided, however, that the provisions of this Article 6
shall survive termination. Upon the indefeasible payment and performance in full
of all Obligations (other than unasserted contingent indemnity obligations) and
the termination of the Loan Commitment under the Financing Agreement and the
other obligations of the Lender under the Financing Documents, Lender shall
reassign back to the Guarantors any and all rights that the Guarantors may have
assigned to Lender pursuant to Section 5.5(b). 

Exhibit D-4-16 

6.16 Appointment of Agent. The Guarantors hereby
irrevocably designate, appoint and empower CT Corporation System (the
“Process Agent”), with offices on the date hereof at 111 Eighth Avenue,
New York, New York 10011, as its permitted designee, appointee and agent to
receive and forward, for and on its behalf, service of any and all legal
process, writs, summons, notices and documents which may be served in any action
or proceeding arising out of this Guaranty or any other Financing Document. The
Guarantors hereby agree to cause the Process Agent to execute and deliver to the
Lender a letter from the Process Agent to the effect of the foregoing. If for
any reason such Process Agent shall cease to act as such, the Guarantors agree
hereby to designate a new permitted designee, appointee and agent in New York
City on terms satisfactory to the Lender. The Guarantors shall promptly inform
the Process Agent of any change to the Guarantors’ addresses for forwarding such
items. 

[SIGNATURE PAGES FOLLOW] 

Exhibit D-4-17 

IN WITNESS WHEREOF, the parties hereto, by their officers duly
authorized, intending to be legally bound, have caused this Guaranty to be duly
executed and delivered as of the date first above written. 

	 	USG NEVADA LLC, 
	 	a Delaware limited liability company,
  
	 	as Borrower 
	 	         
           
       By:                                                              
      
	 	         
           
       Name:                                                               
	 	         
           
       Title:                                                              
	 	  
	 	U.S. GEOTHERMAL INC., 
	 	a Delaware corporation, 
	 	as Sponsor 
	 	By:                                                              
	 	Name:                                                              
	 	Title:                                                              
	 	  
	 	U.S. GEOTHERMAL INC., 
	 	an Idaho corporation, 
	 	as Idaho Sponsor 
	 	By:                                                              
	 	Name:                                                              
	 	Title:                                                              

[SIGNATURE PAGE TO SPONSOR CASH GRANT SHORTFALL GUARANTY] 

	 	ARES CAPITAL CORPORATION, 
	 	a Maryland corporation, 
	 	as Lender 
	 	By:                                                              
	 	Name:                                                              
	 	Title:                                                              

[SIGNATURE PAGE TO SPONSOR CASH GRANT SHORTFALL GUARANTY] 

     EXHIBIT D-5 
to Financing
Agreement 

FORM OF 
INTERCREDITOR
AGREEMENT

by and between 

SAIC CONSTRUCTORS, LLC 

(formerly known as Benham Constructors, LLC) 

as Construction Lender 

and 

ARES CAPITAL CORPORATION 

as Cash Grant Bridge Lender 

Dated as of November 9, 2011 

INTERCREDITOR AGREEMENT 

THIS INTERCREDITOR AGREEMENT (this “Agreement”),
dated as of November 9, 2011 by and between SAIC CONSTRUCTORS, LLC, an
Oklahoma limited liability company and formerly known as Benham Constructors,
LLC, having an office at 9400 N. Broadway, Suite 300, Oklahoma City, Oklahoma
73114 (together with its successors and permitted assigns, “Construction
Lender”), and ARES CAPITAL CORPORATION, having an office at 245 Park
Avenue, 44th Floor, New York, New York 10167 (together with its
successors and permitted assigns, “Cash Grant Bridge Lender”), and
acknowledged and agreed by USG NEVADA LLC, a Delaware limited liability
company (“Borrower”). 

RECITALS 

WHEREAS, pursuant to the terms, provisions and
conditions set forth in that certain Credit Addendum to Engineering, Procurement
and Construction Contract, dated August 27, 2010, as amended by that certain
First Amendment to Credit Addendum dated May 20, 2011, between Borrower and
Construction Lender (as further amended, restated, supplemented, modified,
replaced or refinanced from time to time subject to the provisions hereof the
“Construction Loan Agreement”), Construction Lender has made a loan to
Borrower in the original principal amount of $24,553,000 (the “Construction
Loan”), which Construction Loan is evidenced by that certain Promissory
Note, dated as of August 27, 2010, made by Borrower to Construction Lender in
the amount of the Construction Loan (the “Construction Note”), and
secured by, among other things, certain deeds of trust made by Borrower in favor
of Construction Lender (as amended, restated, supplemented, modified or replaced
from time to time, the “Construction Mortgage”), which Construction
Mortgage encumbers the real property described on Exhibit A attached
hereto and made a part hereof, and all improvements thereon and appurtenances
thereto (collectively, the “Site”); and 

WHEREAS, pursuant to the terms, provisions and
conditions set forth in that certain Financing Agreement, dated as of November
9, 2011, between Borrower and Cash Grant Bridge Lender (as amended, restated,
supplemented, modified, replaced or refinanced from time to time subject to the
provisions hereof the “Cash Grant Bridge Loan Agreement”), Cash Grant
Bridge Lender is the owner and holder of a loan to Borrower in the original
principal amount of $9,000,000 (the “Cash Grant Bridge Loan”), which Cash
Grant Bridge Loan is evidenced by that certain Note, dated as of November 9,
2011, made by Borrower in favor of Cash Grant Bridge Lender in the amount of the
Cash Grant Bridge Loan (the “Cash Grant Bridge Loan Note”), and secured
by, among other things, (i) a Member Pledge Agreement, dated as of November 9,
2011, from Nevada USG Holdings I LLC, a Delaware limited liability company
(“Holdings”), pursuant to which Cash Grant Bridge Lender is granted a
first priority security interest in all of Holdings’ ownership interests in
Borrower (as amended, restated, supplemented, modified or replaced from time to
time subject to the provisions hereof, the “Member Pledge Agreement”);
(ii) an Idaho Sponsor Pledge Agreement, dated as of November 9, 2011, from U.S.
Geothermal Inc., an Idaho corporation (“Idaho Sponsor”), pursuant to
which Cash Grant Bridge Lender is granted a first priority security interest in
all of Idaho Sponsor’s ownership interests in Holdings (as amended, restated,
supplemented, modified or replaced from time to time subject to the provisions hereof, the “Idaho Sponsor Pledge
Agreement”); (iii) a Cash Grant Security Agreement, dated as of November 9,
2011, made by Borrower in favor Cash Grant Bridge Lender (as amended, restated,
supplemented, modified, replaced or refinanced from time to time subject to the
provisions hereof the “Cash Grant Security Agreement”) pursuant to which
Cash Grant Bridge Lender is granted a first priority security interest in all of
Borrower’s right, title and interest in the Cash Grant Proceeds (as defined
therein); (iv) a Sponsor Cash Grant Shortfall Guaranty, dated as of November 9,
2011, from U.S. Geothermal Inc., a Delaware corporation (“Sponsor”), and
Idaho Sponsor in favor of Cash Grant Bridge Lender, pursuant to which Sponsor
and Idaho Sponsor jointly and severally indemnify Cash Grant Bridge Lender from
and against any Cash Grant Shortfall (as defined therein) (as amended, restated,
supplemented, modified or replaced from time to time subject to the provisions
hereof, the “Sponsor Cash Grant Shortfall Guaranty”); and (v) a
Deposit Account Control Agreement, pursuant which Borrower grants Cash Grant
Bridge Lender a first priority security interest in a blocked account (the
“Blocked Account”) (as amended, restated, supplemented, modified or
replaced from time to time subject to the provisions hereof, the “Deposit
Account Control Agreement”); and 

WHEREAS, Borrower will use the net proceeds from the
Construction Loan and the Cash Grant Bridge Loan to, among other things, expand
and repower an existing 3 MW geothermal power project located on the Site and
thereby increase the output thereof to approximately 8 MW, as more fully
described in the EPC Contract (as defined below) (the geothermal project
developed by such expansion and repowering, the “Project”); and

WHEREAS, Construction Lender and Cash Grant Bridge
Lender desire to enter into this Agreement to provide for the relative priority
of the Construction Loan Documents (as such term is hereinafter defined) and the
Cash Grant Bridge Loan Documents (as such term is hereinafter defined) on the
terms and conditions hereinbelow set forth, and to evidence certain agreements
with respect to the relationship between the Cash Grant Bridge Loan and the Cash
Grant Bridge Loan Documents, on the one hand, and the Construction Loan and the
Construction Loan Documents, on the other hand. 

NOW, THEREFORE, in consideration of the foregoing
recitals and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Construction Lender and Cash Grant
Bridge Lender hereby agree as follows: 

1.   CERTAIN DEFINITIONS; RULES OF
CONSTRUCTION. 

1.1 As used in this Agreement, the following capitalized terms
shall have the following meanings: 

“Affiliate” means, as to any particular Person, any
Person directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with the Person or Persons in question.

“Agreement” means this Intercreditor Agreement, as the
same may be amended, modified and in effect from time to time, pursuant to the
terms hereof. 

“Blocked Account” has the meaning provided in the
Recitals hereto. 

D-5-2 

“Borrower” has the meaning provided in the
Preamble hereto. 

“Borrower Affiliate Entity” means each of Borrower,
Holdings, Idaho Sponsor and Sponsor. 

“Business Day” means any day other than (i) a Saturday
and a Sunday and (ii) a day on which federally insured depository institutions
in the State of New York or the State of Oklahoma are authorized or obligated by
law, governmental decree or executive order to be closed. 

“Cash Grant” means, with respect to the Project, the
cash grant in lieu of the renewable energy tax credits available under Sections
45 and 48 of the Code issued by the United States Treasury Department pursuant
to the terms of Section 1603 of the American Recovery and Reinvestment Act of
2009 and the Cash Grant Terms and Conditions. 

“Cash Grant Application” means an “Application for
Section 1603: Payments for Specified Renewable Energy Property in Lieu of Tax
Credits” to be filed by Borrower, as an applicant, for the Cash Grant with
respect to the Project. 

“Cash Grant Bridge Lender” has the meaning provided in
the Preamble hereto. 

“Cash Grant Bridge Loan” has the meaning provided in the
Recitals hereto. 

“Cash Grant Bridge Loan Agreement“ has the meaning
provided in the Recitals hereto. 

“Cash Grant Bridge Loan Documents” means the Cash Grant
Bridge Loan Agreement, the Cash Grant Bridge Loan Note, the Cash Grant Notice of
Assignment, the Member Pledge Agreement, the Idaho Sponsor Pledge Agreement, the
Cash Grant Security Agreement, the Sponsor Cash Grant Shortfall Guaranty, the
Cash Grant Power of Attorney and the Deposit Account Control Agreement, together
with all other material documents and instruments set forth on Exhibit B
hereto (if any), as any of the foregoing may be modified, amended, extended,
supplemented, restated or replaced from time to time, subject to the limitations
and agreements contained in this Agreement. 

“Cash Grant Bridge Loan Modification” has the meaning
provided in Section 7.2 hereof. 

“Cash Grant Bridge Loan Note” has the meaning provided
in the Recitals hereto. 

“Cash Grant Notice of Assignment” means that certain
Notice of Assignment entered into as provided in the Cash Grant Bridge Loan
Agreement, by and between Borrower and Cash Grant Bridge Lender.

“Cash Grant Power of Attorney” has the meaning provided
in the Section 12.5 hereof. 

“Cash Grant Proceeds” has the meaning provided in the
Cash Grant Security Agreement. 

“Cash Grant Security Agreement” has the meaning provided
in the Recitals hereto.

“Cash Grant Terms and Conditions” means Section 1603 of
the American Recovery and Reinvestment Act of 2009, as amended, the “Payments
for Specified Energy Property in Lieu of Tax Credits under the American Recovery and Reinvestment Act of
2009 – Terms and Conditions” issued by the United States Treasury Department and
the United States Treasury Department’s program guidance publication entitled
“Payments for Specific Energy Property in Lieu of Tax Credits under the American
Recovery and Reinvestment Act of 2009,” dated July 2009 and revised March 2010,
in each case, as the same may be amended, and any other guidance, instructions
or terms and conditions published or issued by the United States Treasury
Department in respect of the Cash Grant or any Cash Grant Application. 

D-5-3 

“Code” means the Internal Revenue Code of 1986, as
amended, including any applicable United States Treasury Department Regulations.

“Construction Lender” has the meaning provided in the
Preamble hereto. 

“Construction Loan” has the meaning provided in the
Recitals hereto. 

“Construction Loan Agreement” has the meaning provided
in the Recitals hereto. 

“Construction Loan Default Notice” has the meaning
provided in Section 10.1 hereof. 

“Construction Loan Documents” means the EPC Contract,
the Construction Loan Agreement, the Construction Note, the Construction
Security Agreement and the Construction Mortgage, together with the other
material instruments and documents set forth on Exhibit C hereto, as any
of the foregoing may be modified, amended, extended, supplemented, restated or
replaced from time to time, subject to the limitations and agreements contained
in this Agreement. 

“Construction Loan Modification” has the meaning
provided in Section 7.1 hereof. 

“Construction Mortgage” has the meaning provided in the
Recitals hereto. 

“Construction Note” has the meaning provided in the
Recitals hereto. 

“Construction Security Agreement” means that certain
Security Agreement, dated as of August 27, 2010, by and between Borrower and
Construction Lender. 

“Control” means the ownership, directly or indirectly,
in the aggregate of more than fifty percent (50%) of the beneficial ownership
interests of an entity and the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of an entity,
whether through the ability to exercise voting power, by contract or otherwise.
The terms “controlled by,” “controlling” and “under common control with” shall
have the respective correlative meanings thereto. For purposes of this
definition, if more than one Qualified Transferee owns (directly or indirectly)
more than fifty percent (50%) of the beneficial ownership interests of an entity
and one or more of the Qualified Transferees possess the power to direct or
cause the direction of the management or policies of the entity, whether through
the ability to exercise voting power, by contract or otherwise, even though each
such Qualified Transferee individually owns less than fifty percent (50%) of
such beneficial interests, such entity shall be deemed to be “controlled by” a
Qualified Transferee.

“Deed in Lieu” has the meaning provided in Section
11 hereof. 

D-5-4 

“Deposit Account Control Agreement” has the meaning
provided in the Recitals hereto. 

“Disqualified Person” means, at any time during the
Recapture Period, (i) any Federal, State or local government (or any political
subdivision, agency or instrumentality thereof); (ii) any organization described
in Section 501(c) of the Code and exempt from tax under Section 501(a) of the
Code; (iii) any entity referenced in Section 54(j)(4) of the Code; (iv) any
foreign person or entity as defined in Section 168(h)(2)(C) of the Code unless
the exception under Section 168(h)(2)(B) of the Code applies with respect to the
income from Borrower for that Person; and (v) a partnership or other “pass-thru
entity” (within the meaning of paragraph (g)(4) of Section 1603 of division B of
the American Recovery and Reinvestment Act of 2009, including a single member
disregarded entity and a foreign partnership or foreign pass-through entity) any
direct or indirect partner (or other holder of an equity or profits interest) of
which is a person described in (i) through (iv) above unless such person owns
such direct or indirect interest in the partnership or pass-through entity
through a “taxable C corporation” (other than a real estate investment trust or
regulated investment company), as that term is used in the Cash Grant Terms and
Conditions; provided, further, that if and to the extent the definition
of “Disqualified Person” under Section 1603(g) of division B of the American
Recovery and Reinvestment Act of 2009 is amended after the date of this
Agreement and such amendment is applicable to the Cash Grant, the definition of
“Disqualified Person” under this Agreement shall be interpreted to conform to
such amendment and any Cash Grant Terms and Conditions with respect thereto.

“Eligibility Requirements” means, with respect to any
Person, that such Person (i) has total assets (in name or under management) in
excess of $600,000,000 and (except with respect to a pension advisory firm or
similar fiduciary) capital/statutory surplus or shareholder’s equity of
$250,000,000, (ii) is regularly engaged in, or has an investment advisor or
asset manager that is regularly engaged in, the business of making or owning
commercial real estate loans (including Cash Grant Bridge loans or loan
participations) or operating commercial mortgage properties, and (iii) is not a
Disqualified Person. 

“Enforcement Action” means any (i) judicial or
non-judicial foreclosure proceeding, the exercise of any power of sale, the
taking of a deed or assignment in lieu of foreclosure, the obtaining of a
receiver or the taking of any other enforcement action against the Project or
Borrower, including, without limitation, the taking of possession or control of
the Project, (ii) acceleration of, or demand or action taken in order to
collect, all or any indebtedness secured by the Project (other than giving of
notices of default and statements of overdue amounts) or (iii) exercise of any
right or remedy available to Construction Lender under the Construction Loan
Documents, at law, in equity or otherwise with respect to Borrower and/or the
Project.

“EPC Contract” means that certain Engineering,
Procurement and Construction Contract, dated August 27, 2010, between Borrower
and Construction Lender, as amended by (i) Change Order No. 1, dated November
12, 2010, (ii) Change Order No. 2, dated November 12, 2010, (iii) Change Order
No. 3, dated November 18, 2010, (iv) Change Order No. 4, dated December 1, 2010,
(v) Change Order No. 5, dated December 29, 2010, (vi) Change Order No. 6, dated
January 14, 2011, (vii) Change Order No. 7, dated March 11, 2011, (viii) Change
Order No. 8, dated May 23, 2011, (ix) Change Order No. 9, dated June 2, 2011,
(x) Change Order No. 10, dated July 11, 2011, (xi) Change Order No. 11, dated
August 30, 2011, (xii) Change Order No. 12, dated September 16, 2011, (xiii)
Change Order No. 13, dated September 23, 2011, and (xiv) Change Order No. 14, dated October 27, 2011, and as further
amended, restated, supplemented, modified, replaced or refinanced from time to
time, subject to the limitations and agreements contained in this Agreement.

D-5-5 

“Equity Collateral” means the: (i) equity interests in
Borrower, pledged by Holdings to Cash Grant Bridge Lender pursuant to the Member
Pledge Agreement; and (ii) equity interest in Holdings, pledged by Idaho Sponsor
to Cash Grant Bridge Lender pursuant to the Idaho Sponsor Pledge Agreement. 

“Equity Collateral Enforcement Action” means any action
or proceeding or other exercise of Cash Grant Bridge Lender’s rights and
remedies commenced by Cash Grant Bridge Lender (other than the giving of notices
of default and statements of overdue amounts), in law or in equity, or
otherwise, in order to realize upon the Equity Collateral, in whole or in part,
or any transaction, whether in the nature of a transfer in lieu of foreclosure
or otherwise, in order to acquire the Equity Collateral, in whole or in
part.

“Event of Default” as used herein means (i) with respect
to the Construction Loan and the Construction Loan Documents, any Event of
Default thereunder which has occurred, is continuing (i.e., has not been
cured by Borrower or by Cash Grant Bridge Lender in accordance with the terms of
the Construction Loan Agreement or this Agreement, respectively, or has not
otherwise been waived in accordance with the Construction Loan Documents) and
(ii) with respect to the Cash Grant Bridge Loan and the Cash Grant Bridge Loan
Documents, any Event of Default thereunder which has occurred and is continuing
(i.e., has not been cured by Borrower or has not otherwise been waived in
accordance with the Cash Grant Bridge Loan Documents). “Holdings” has the
meaning provided in the Recitals hereto. 

“Idaho Sponsor” has the meaning provided in the
Recitals hereto. 

“Idaho Sponsor Pledge Agreement” has the meaning
provided in the Recitals hereto. 

“Loan Purchase Price” has the meaning provided in
Section 11 hereof. 

“Member Pledge Agreement” has the meaning provided in
the Recitals hereto. 

“Person” means any individual, sole proprietorship,
corporation, general partnership, limited partnership, limited liability company
or partnership, joint venture, association, joint stock company, bank, trust,
estate unincorporated organization, any federal, state, county or municipal
government (or any agency or political subdivision thereof) endowment fund or
any other form of entity. 

“Placed in Service Date” means, with respect to the
Project, the date on which the Project shall be “placed in service” under and in
accordance with the Cash Grant Terms and Conditions 

“Proceeding” has the meaning provided in Section
9.2 hereof. 

“Project” has the meaning provided in the
Recitals hereto. 

D-5-6 

“Purchase Notice” has the meaning provided in Section
11 hereof. 

“Purchase Option Event” has the meaning provided in
Section 11 hereof. 

“Qualified Manager” shall mean an operator of the
Project which is a reputable owner and operator having at least five (5) years’
experience in the operation and management of domestic geothermal projects
similar to the Project and in an aggregate nameplate capacity of no less than
eight (8) megawatts “Qualified Transferee” means (i) Cash Grant Bridge
Lender, or (ii) one or more of the following: 

(A) a commercial bank, real estate
investment trust, saving and loan association, investment bank, insurance
company, trust company, commercial credit corporation, pension plan, pension
fund or pension advisory firm, mutual fund, government entity or plan, provided
that any such Person referred to in this clause (i)(A) satisfies the
Eligibility Requirements; 

(B) an investment company, money
management firm or “qualified institutional buyer” within the meaning of Rule
144A under the Securities Act of 1933, as amended, or an institutional
“accredited investor” within the meaning of Regulation D under the Securities
Act of 1933, as amended, provided that any such Person referred to in this
clause (ii)(B) satisfies the Eligibility Requirements; or 

(C) an institution substantially
similar to any of the foregoing entities described in clauses (ii)(A) or
(ii)(B) that satisfies the Eligibility Requirements. 

“Recapture Event” shall mean a determination by United
States Treasury Department that all or any portion of the Cash Grant shall be
recaptured, disallowed or invalidated as a result of (i) any disposal of
Specified Energy Property (as defined in Section 1603 of the American Recovery
and Reinvestment Act of 2009) subject to the Cash Grant, (ii) any transfer of
any direct or indirect equity interest in Borrower to any Disqualified Person,
or (iii) impermissible cessation of energy production from the Project.

“Recapture Liability” or “Recapture
Liabilities” shall mean an amount equal to (i) the amount of the Cash Grant
that is recaptured, disallowed, or invalidated as a result of a Recapture Event
plus (ii) any associated interest and penalties or other amounts imposed in
connection with the recapture or disallowance of the Cash Grant. 

“Recapture Period” means, with respect to any portion of
the Project, the period commencing on the Placed in Service Date and ending on
the first to occur of (i) the fifth (5th) anniversary of the Placed
in Service Date or such later date if the Cash Grant Terms and Conditions extend
the applicable vesting period, and (ii) the date on which all Recapture
Liability that could arise in respect of Borrower and the Project has been
incurred and has been paid or otherwise finally satisfied in full by or on
behalf of Borrower. 

“Separate Collateral” means collateral granted to the
Cash Grant Bridge Lender pursuant to the Cash Grant Bridge Loan Documents,
including the following: (i) the Equity Collateral, (ii) the Cash Grant, the Cash Grant Proceeds and all other “Collateral”
as defined in the Cash Grant Security Agreement; and (iii) the Blocked Account. 

D-5-7 

“Site” has the meaning provided in the Recitals
hereto. 

“Sponsor” has the meaning provided in the
Recitals hereto. 

“Sponsor Cash Grant Shortfall Guaranty” has the meaning
provided in the Recitals hereto. 

“Transfer” means any assignment, pledge, conveyance,
sale, transfer, mortgage, encumbrance, grant of a security interest, issuance of
a participation interest, or other disposition, either directly or indirectly,
by operation of law or otherwise. 

1.2 For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires: 

1.2.1 all capitalized terms defined in the recitals to this
Agreement shall have the meanings ascribed thereto whenever used in this
Agreement and the terms defined in this Agreement have the meanings assigned to
them in this Agreement, and the use of any gender herein shall be deemed to
include the other genders; 

1.2.2 terms not otherwise defined herein shall have the meaning
assigned to them in the Construction Loan Agreement (as in effect on the date
hereof), including the terms “payment in full,” “paid in full” and any other
similar terms or phrases; 

1.2.3 all references in this Agreement to designated Sections,
Subsections, Paragraphs, Articles, Exhibits, Schedules and other subdivisions or
addenda without reference to a document are to the designated sections,
subsections, paragraphs and articles and all other subdivisions of and exhibits,
schedules and all other addenda to this Agreement, unless otherwise specified;

1.2.4 a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall apply to Paragraphs and other
subdivisions; 

1.2.5 the terms “includes” or “including” shall mean without
limitation by reason of enumeration; 

1.2.6 the words “herein”, “hereof”, “hereunder” and other words
of similar import refer to this Agreement as a whole and not to any particular
provision; 

1.2.7 the words “to Cash Grant Bridge Lender’s knowledge” or
“to the knowledge of Cash Grant Bridge Lender” (or words of similar meaning)
shall mean to the actual knowledge of officers of Cash Grant Bridge Lender with
direct oversight responsibility for the Cash Grant Bridge Loan without
independent investigation or inquiry and without any imputation whatsoever; and

1.2.8 the words “to Construction Lender’s knowledge” or “to the
knowledge of Construction Lender” (or words of similar meaning) shall mean to
the actual knowledge of officers of Construction Lender with direct oversight
responsibility for the Construction Loan without independent investigation or
inquiry and without any imputation whatsoever. 

D-5-8 

2.   APPROVAL OF LOANS AND LOAN
DOCUMENTS. 

2.1 Cash Grant Bridge Lender hereby acknowledges that it has
received and reviewed the terms and provisions of the Construction Loan
Documents identified on Exhibit C. 

2.2 Construction Lender hereby acknowledges that: 

(i) it has received and reviewed the
terms and provisions of the Cash Grant Bridge Loan Documents identified on
Exhibit B, and, subject to the terms and conditions of this Agreement,
hereby consents to Borrower’s entering into the Cash Grant Bridge Loan Documents
and the making of the Cash Grant Bridge Loan; 

(ii) the receipt of the Cash Grant
Bridge Loan by Borrower will not constitute a default or an event which, with
the giving of notice or the lapse of time, or both, would constitute a default
under the Construction Loan Agreement; and 

(iii) any conditions precedent to
Construction Lender’s consent to the Cash Grant Bridge Loan as set forth in the
Construction Loan Documents or in any other agreements with Borrower, as they
apply to the Cash Grant Bridge Loan Documents or the making of the Cash Grant
Bridge Loan, have been either satisfied or waived.

2.3 Notwithstanding any provisions herein to the contrary,
Construction Lender agrees that no default or Event of Default or the exercise
of remedies and realization upon the Separate Collateral by Cash Grant Bridge
Lender under the Cash Grant Bridge Loan Documents shall, in and of itself,
constitute or give rise to an automatic cross-default or Event of Default under
the Construction Loan Documents, entitle Construction Lender to accelerate
payments under the Construction Loan Documents or entitle Construction Lender to
modify any provisions of the Construction Loan Documents; provided,
however, that the foregoing shall not be deemed to prohibit Construction
Lender from declaring an Event of Default under the Construction Loan Documents
if the underlying events and circumstances giving rise to the default or Event
of Default under the Cash Grant Bridge Loan Documents would otherwise have
constituted an independent default or Event of Default under the Construction
Loan Documents (as such Construction Loan Documents are in effect as of the date
of this Agreement) or any Enforcement Action undertaken pursuant to the Cash
Grant Bridge Loan Documents otherwise results in a default or Event of Default
under the Construction Loan Documents, except to the extent waived pursuant to
this Agreement. 

3.    CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Agreement is subject to the following conditions: 

3.1.1 No Default or Event of Default (as such terms are defined
in the Construction Loan Documents and Cash Grant Bridge Loan Documents) shall
have occurred and be continuing as of the date hereof; 

D-5-9 

3.1.2 Construction Lender shall have received fully executed
copies of each of the Cash Grant Bridge Loan Documents set forth on Exhibit
B, and Cash Grant Bridge Loan Lender shall have received fully executed
copies of each of the Construction Loan Documents set forth on Exhibit C;
and 

3.1.3 Each party hereto shall have received a fully executed
copy of this Agreement.

 4.    REPRESENTATIONS AND
WARRANTIES. 

4.1 Cash Grant Bridge Lender hereby represents and warrants as
follows as of the date hereof: 

4.1.1 Cash Grant Bridge Lender (i) is duly organized and
validly existing under the laws of Maryland, (ii) is duly qualified, authorized
to do business and in good standing in every jurisdiction necessary to perform
its obligations under the Cash Grant Bridge Loan Documents and this Agreement,
and (iii) has all requisite power and authority to enter into and to perform its
obligations hereunder and under the Cash Grant Bridge Loan Documents, and to
carry out the terms hereof and thereof and the transactions contemplated hereby
and thereby. 

4.1.2 All actions necessary to authorize the execution,
delivery, and performance of this Agreement on behalf of Cash Grant Bridge
Lender have been duly taken and all such actions continue in full force and
effect as of the date hereof 

4.1.3 Cash Grant Bridge Lender has duly executed and delivered
this Agreement and this Agreement constitutes the legal, valid, and binding
agreement of Cash Grant Bridge Lender enforceable against Cash Grant Bridge
Lender in accordance with its terms subject to (i) applicable bankruptcy,
reorganization, insolvency and moratorium laws, and (ii) general principles of
equity which may apply regardless of whether a proceeding is brought in law or
in equity.

4.1.4 Exhibit B attached hereto and made a part hereof
is a true, correct and complete listing of the material Cash Grant Bridge Loan
Documents as of the date hereof, including all amendments, modifications,
supplements and waivers with respect thereto as of the date hereof. The Cash
Grant Bridge Loan Documents and this Agreement are the only material agreements
between Borrower and Cash Grant Bridge Lender with respect to the Cash Grant
Bridge Loan and, to Cash Grant Bridge Lender’s knowledge, there currently exists
no default or event that, with the giving of notice or the lapse of time, or
both, would constitute a default under any of the Cash Grant Bridge Loan
Documents. 

4.1.5 Cash Grant Bridge Lender is the legal and beneficial
owner of the Cash Grant Bridge Loan free and clear of any lien, security
interest, option or other charge or encumbrance. 

4.1.6 Each of the representations and warranties set forth in
this Section 4.1 shall survive the execution and delivery of this
Agreement, the Cash Grant Bridge Loan Documents and the consummation of the
transactions contemplated hereby and thereby. 

4.2 Construction Lender hereby represents and warrants as
follows as of the date hereof: 

D-5-10 

4.2.1 Construction Lender (i) is an Oklahoma limited liability
company duly organized and validly existing under the laws of the Oklahoma, (ii)
is duly qualified, authorized to do business and in good standing in every
jurisdiction necessary to perform its obligations under the Construction Loan
Documents and this Agreement, and (iii) has all requisite power and authority to
enter into and to perform its obligations hereunder, and to carry out the terms
hereof and the transactions contemplated hereby. 

4.2.2 All actions necessary to authorize the execution,
delivery, and performance of this Agreement on behalf of Construction Lender
have been duly taken and all such actions continue in full force and effect as
of the date hereof. 

4.2.3 Construction Lender has duly executed and delivered this
Agreement and this Agreement constitutes the legal, valid, and binding agreement
of Construction Lender, enforceable against Construction Lender in accordance
with its terms subject to (x) applicable bankruptcy, reorganization, insolvency
and moratorium laws and (y) general principles of equity which may apply
regardless of whether a proceeding is brought in law or in equity. 

4.2.4 Exhibit C attached hereto and made a part hereof
is a true, correct and complete listing of the material Construction Loan
Documents as of the date hereof, including all amendments (including change
orders under the EPC Contract), modifications, supplements and waivers with
respect thereto as of the date hereof. The Construction Loan Documents and this
Agreement are the only material agreements between Borrower and Construction
Lender with respect to the Construction Loan and, to Construction Lender’s
knowledge, there currently exists no default or event that, with the giving of
notice or the lapse of time, or both, would constitute a default under any of
the Construction Loan Documents. 

4.2.5 There is no litigation, action, suit, proceeding or
investigation pending or (to Construction Lender’s knowledge) threatened against
Construction Lender before or by any court, administrative agency, arbitrator or
governmental authority, body or agency which, if adversely determined,
individually or in the aggregate, (i) could adversely affect the performance by
Construction Lender of its obligations hereunder or under the EPC Contract or
(ii) questions the validity, binding effect or enforceability hereof, any action
taken or to be taken pursuant hereto or any of the transactions contemplated
hereby. 

4.2.6 Construction Lender is the legal and beneficial owner of
the Construction Loan free and clear of any lien, security interest, option or
other charge or encumbrance. 

4.2.7 Each of the representations and warranties set forth in
this Section 4.2 shall survive the execution and delivery of this
Agreement, the Construction Loan Documents and the consummation of the
transactions contemplated hereby and thereby. 

4.2.8 As of the date hereof, the maturity date of the
Construction Loan is January 26, 2012. 

5.    TRANSFER OF CASH GRANT BRIDGE
LOAN OR CONSTRUCTION LOAN. 

5.1 Construction Lender may, from time to time, in its sole
discretion Transfer all or any portion of the Construction Loan or any of its
rights under the Construction Loan or any interest therein to the extent permitted under the Construction Loan
Documents as in effect on the date hereof; provided, however, that
Construction Lender shall not, whether in the exercise of remedies under the
Construction Loan Documents or otherwise, Transfer all or a portion of the
Construction Loan or any interests therein or any interest in the Project to a
Disqualified Person or cause the occurrence of a Recapture Event, and
provided further that any transferee of Construction Lender’s interests
or its collateral under the Construction Loan Documents, including, without
limitation, any lender that refinances the Construction Loan or otherwise
provides term loan financing to the Project, shall agree to be bound by all of
the terms, provisions and conditions of this Agreement. Construction Lender
agrees that it shall not Transfer all or any portion of the Construction Loan or
any interest therein to Borrower or any Affiliate of Borrower unless an Event of
Default is then continuing under the Construction Loan and Cash Grant Bridge
Lender shall have been afforded the purchase opportunity described in Section
11 hereof. 

D-5-11 

5.2 Subject to Section 6, Cash Grant Bridge Lender may,
from time to time, in its sole discretion, Transfer all of its portion of the
Cash Grant Bridge Loan or any part of its portion of the Cash Grant Bridge Loan
or any interest therein. 

6.    FORECLOSURE OF SEPARATE
COLLATERAL. 

6.1 Cash Grant Bridge Lender shall not complete a foreclosure
or other realization upon the Equity Collateral under the Member Pledge
Agreement or the Idaho Sponsor Pledge Agreement (including, without limitation,
obtaining title to the Equity Collateral under the Member Pledge Agreement or
the Idaho Sponsor Pledge Agreement or selling or otherwise transferring the
Equity Collateral under the Member Pledge Agreement or the Idaho Sponsor Pledge
Agreement) unless (i) the transferee of title to the Equity Collateral under the
Member Pledge Agreement or the Idaho Sponsor Pledge Agreement is a Qualified
Transferee, and (ii) the Project will be managed by a Qualified Manager promptly
after the transfer of title to the Equity Collateral under the Member Pledge
Agreement or the Idaho Sponsor Pledge Agreement. Any such transfer by Cash Grant
Bridge Lender that complies with this Section 6.1 shall not result in an
event of default under the Construction Loan Agreement, including without
limitation Section 6.6 (Owner Change in Control) thereof.

6.2 Subject to Section 6.1 above and Section 8.2
below, nothing contained herein shall limit or restrict the right of Cash Grant
Bridge Lender to exercise its rights and remedies under the Cash Grant Bridge
Loan Documents, in law or in equity, or otherwise, including in order to realize
on any Separate Collateral (including, without limitation, pursuant to the Cash
Grant Power of Attorney), and no consent of Construction Lender shall be
required prior to the exercise by Cash Grant Bridge Lender of any of Cash Grant
Bridge Lender’s rights and remedies under the Cash Grant Bridge Loan Documents.

7.    MODIFICATIONS, AMENDMENTS,
ETC. 

7.1 Subject to Section 6.2, Construction Lender shall
have the right without the consent of Cash Grant Bridge Lender in each instance
to enter into any amendment, deferral, extension, modification, increase,
renewal, replacement, consolidation, supplement or waiver (collectively, a
“Construction Loan Modification”) of the Construction Loan or the
Construction Loan Documents, provided that no such Construction
Loan Modification shall (i) shorten the scheduled maturity date of the
Construction Loan, (ii) amend or modify the provisions limiting transfers of
interests in Borrower or the Project, or provisions regarding the payment of
dividends or distributions to Borrower (including, without limitation, Section
5.15 (Restrictions on Redemptions, Distributions, and Payments to Affiliates) of
the Construction Loan Agreement), (iii) shorten any Borrower cure period or add
or modify any Borrower default under any Construction Loan Document, (iv) create
a lien on any of the Separate Collateral, (v) amend or modify the EPC Contract
to extend the Guaranteed Substantial Completion Date (as defined therein) beyond
December 23, 2011 or to effect changes in the aggregate in excess of $500,000,
or (vi) result in a Recapture Event. 

D-5-12 

7.2 Cash Grant Bridge Lender shall have the right without the
consent of Construction Lender in each instance to enter into any amendment,
deferral, extension, modification, increase, renewal, replacement,
consolidation, supplement or waiver (collectively, a “Cash Grant Bridge
Loan Modification”) of the Cash Grant Bridge Loan or the Cash Grant
Bridge Loan Documents, or a refinancing of the Cash Grant Bridge Loan or the
Cash Grant Bridge Loan Documents, provided that no such Cash Grant Bridge
Loan Modification shall create a lien on the Project, any of Borrower’s assets
or any other collateral that otherwise solely secures the Construction Loan
(other than, for the avoidance of doubt, any Separate Collateral) without the
written consent of Construction Lender unless, with respect to the creation of
any such liens, such liens are expressly subordinated to any liens in favor of
Construction Lender. 

7.3 Cash Grant Bridge Lender shall deliver to Construction
Lender, and Construction Lender shall deliver to Cash Grant Bridge Lender,
copies of any and all material modifications, amendments, extensions,
consolidations, spreaders, restatements, alterations, changes or revisions to
any one or more of their respective loan documents (including, without
limitation, any side letters, waivers or consents entered into, executed or
delivered by them) within a reasonable time after any of such applicable
instruments have been fully executed. 

8.    PRIORITY OF SECURITY
INTERESTS 

8.1 Notwithstanding anything to the contrary in any
Construction Loan Documents, including but not limited to the Construction
Security Agreement, Construction Lender hereby (i) relinquishes, subordinates
and makes junior any and all of its right, title, security interests and liens
on and in the Separate Collateral to (i) the Cash Grant Bridge Loan, (ii) the
liens and security interests created by the Cash Grant Bridge Loan Documents and
(iii) all of the terms, covenants, conditions, rights and remedies contained in
the Cash Grant Bridge Loan Documents and agrees that the same shall constitute
the separate collateral of, and shall constitute security solely in favor of,
Cash Grant Bridge Lender, regardless of whether there occurs a default under any
Construction Loan Document or the exercise of any remedy by Construction Lender
thereunder, and (ii) agrees that any such Separate Collateral or proceeds
thereof received by Construction Lender in connection with the exercise of any
right or remedy by Construction Lender in contravention of this Agreement shall,
whether or not any Proceeding has been commenced by or against any Borrower
Affiliate Entity, be segregated and held in trust and forthwith paid over to the
Cash Grant Bridge Lender in the same form as received, with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct. This
authorization is coupled with an interest and is irrevocable for so long as both
the Cash Grant Bridge Loan and the Construction Loan are outstanding. No
amendments or modifications to the Construction Loan Documents or waivers of any
provisions thereof shall affect the subordination thereof as set forth in this
Section. Construction Lender irrevocably authorizes and empowers Cash Grant
Bridge Lender to record the UCC-3 amendment attached hereto as Exhibit D
to the UCC financing statement filed in connection with the Construction
Security Agreement to effectuate the foregoing. 

D-5-13 

8.2 Notwithstanding anything to the contrary in any Cash Grant
Bridge Loan Documents, including but not limited to the Cash Grant Security
Agreement, Cash Grant Bridge Lender hereby (i) relinquishes, subordinates and
makes junior any and all of its right, title, security interests and liens on
and in the collateral of Construction Lender (other than, for the avoidance of
doubt, the Separate Collateral) under the Construction Loan Documents to (i) the
Construction Loan, (ii) the liens and security interests created by the
Construction Loan Documents and (iii) all of the terms, covenants, conditions,
rights and remedies contained in the Construction Loan Documents and agrees that
the same shall constitute the separate collateral of, and shall constitute
security solely in favor of, Construction Lender, regardless of whether there
occurs a default under any Cash Grant Bridge Loan Document or the exercise of
any remedy by Cash Grant Bridge Lender thereunder, and (ii) agrees that any such
collateral of Construction Lender under the Construction Loan Documents or
proceeds thereof received by Cash Grant Bridge Lender in connection with the
exercise of any right or remedy by Cash Grant Bridge Lender in contravention of
this Agreement shall, whether or not any Proceeding has been commenced by or
against any Borrower Affiliate Entity, be segregated and held in trust and
forthwith paid over to the Construction Lender in the same form as received,
with any necessary endorsements or as a court of competent jurisdiction may
otherwise direct. This authorization is coupled with an interest and is
irrevocable for so long as both the Cash Grant Bridge Loan and the Construction
Loan are outstanding. No amendments or modifications to the Cash Grant Bridge
Loan Documents or waivers of any provisions thereof shall affect the
subordination thereof as set forth in this Section. 

8.3 The parties hereto acknowledge that it is their intent that
the collateral in favor of Cash Grant Bridge Lender be separate and distinct
from the collateral in favor of Construction Lender; that Construction Lender
have no Lien upon the Separate Collateral; and that Cash Grant Bridge Lender
have no Lien upon the collateral of Construction Lender under the Construction
Loan Documents, as in effect as of the date hereof.

8.4 Until all obligations of Borrower under the Construction
Loan Documents (as in effect as of the date hereof) are paid or performed in
full, Cash Grant Bridge Lender will not pursue any remedy against Borrower other
than: (i) foreclosing upon or otherwise enforcing or exercising Cash Grant
Bridge Lender's rights to the Separate Collateral, including without limitation
pursuing collection of the Cash Grant Proceeds and exercising its rights under
the Cash Grant Power of Attorney (as hereinafter defined); (ii) naming Borrower
in any action with respect to fraud, willful misconduct, willful
misrepresentation or misappropriation of Cash Grant Proceeds or revenues that
are to be deposited into the Blocked Account, or any other earnings, revenues,
or proceeds from or of the Separate Collateral that should have been paid as
provided under the Cash Grant Bridge Loan Documents; and (iii) any other remedy
at law or in equity against Borrower (including the filing of any petition under
bankruptcy, insolvency or creditor's rights laws with respect to the Borrower)
after a period of one hundred eighty (180) days after Cash Grant Bridge Lender provides Construction Lender notice that an
Event of Default under the Cash Grant Bridge Loan Documents has occurred. 

D-5-14 

8.5 Cash Grant Bridge Lender shall be entitled to retain any
proceeds generated as a result of an Equity Collateral Enforcement Action or
funds received with respect to the Separate Collateral. Notwithstanding anything
to the contrary contained in this Agreement, Cash Grant Bridge Lender may accept
payments of any amounts due and payable (both current and delinquent) from time
to time which Borrower is obligated to pay Cash Grant Bridge Lender in
accordance with the terms and conditions of the Cash Grant Bridge Loan Documents
and Cash Grant Bridge Lender shall have no obligation to pay over to
Construction Lender any such amounts, and Cash Grant Bridge Lender may collect
and receive any amounts in respect of the Separate Collateral. 

8.6 Cash Grant Bridge Lender may take any Equity Collateral
Enforcement Action which is permitted under Section 5 hereof;
provided, however, that (i) Cash Grant Bridge Lender shall, prior
to commencing any Equity Collateral Enforcement Action, give Construction Lender
written notice of the default which would permit Cash Grant Bridge Lender to
commence such Equity Collateral Enforcement Action and (ii) Cash Grant Bridge
Lender shall provide Construction Lender with copies of any and all material
notices, pleadings, agreements, motions and briefs served upon, delivered to or
with any party to any Equity Collateral Enforcement Action and otherwise keep
Construction Lender reasonably apprised as to the status of any Equity
Collateral Enforcement Action. 

9.    MARSHALLING OF ASSETS. 

9.1 Subject to the other provisions of this Agreement, each of
Cash Grant Bridge Lender and Construction Lender hereby waives any requirement
for marshaling of assets thereby in connection with any foreclosure of any
security interest or any other realization upon collateral in respect of the
Construction Loan Documents or the Cash Grant Bridge Loan Documents, as
applicable, or any exercise of any rights of set-off or otherwise. Each of Cash
Grant Bridge Lender and Construction Lender assumes all responsibility for
keeping itself informed as to the condition (financial or otherwise) of
Borrower, the condition of the Project and all other collateral and other
circumstances and, except for notices expressly required by this Agreement,
neither Construction Lender nor Cash Grant Bridge Lender shall have any duty
whatsoever to obtain, advise or deliver information or documents to the other
relative to such condition, business, assets and/or operations.

9.2 Subject to Section 25 of this Agreement, the
provisions of this Agreement shall be applicable both before and after the
commencement, whether voluntary or involuntary, of any case, proceeding or other
action against any Borrower Affiliate Entity under any existing or future law of
any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of
debtors (a “Proceeding”).

10.    RIGHTS OF CURE. 

10.1 Prior to Construction Lender commencing any Enforcement
Action under the Construction Loan Documents, Construction Lender shall provide
Cash Grant Bridge Lender with written notice of the default which would permit
Construction Lender to commence such Enforcement Action, whether or not
Construction Lender is obligated to give notice thereof to Borrower (each, a
“Construction Loan Default Notice”) and shall permit Cash Grant Bridge
Lender an opportunity to cure such default in accordance with the provisions of
this Section 10.1.

D-5-15 

10.1.1 If the default is a monetary default relating to a
liquidated sum of money, Cash Grant Bridge Lender shall have ten (10) Business
Days after receipt of the Construction Loan Default Notice to cure such monetary
default by payment to Construction Lender of all amounts required for Borrower
to cure such default. 

10.1.2 If the default is of a non-monetary nature, Cash Grant
Bridge Lender shall have the same period of time, after receipt of the
Construction Loan Default Notice, as Borrower under the Construction Loan
Documents, as in effect as of the date hereof, to cure such non-monetary
default; provided, however, that with regard to the event of default set forth
at Section 6.7 of the Construction Loan Agreement (Abandonment), Cash Grant
Bridge Lender shall have thirty (30) Business Days after receipt of the
Construction Loan Default Notice to cure such default.

10.2 In addition to Cash Grant Bridge Lender’s rights herein
and notwithstanding anything to the contrary in this Agreement or the
Construction Loan Documents, Construction Lender covenants and agrees that
Construction Lender will not exercise any remedy during the Recapture Period if
such remedy would result in a Recapture Event.

10.3 Prior to Cash Grant Bridge Lender commencing any
Enforcement Action under the Cash Grant Bridge Loan Documents, Cash Grant Bridge
Lender shall provide Construction Lender with written notice of the default
which would permit Cash Grant Bridge Lender to commence such Enforcement Action
to the same extent Cash Grant Bridge Lender is obligated to give notice thereof
to Borrower (each, a “Cash Grant Bridge Loan Default Notice”) and shall
permit Construction Lender an opportunity to cure such default in accordance
with the provisions of this Section 10.3.

10.3.1 If the default is a monetary default relating to a
liquidated sum of money, Construction Lender shall have ten (10) Business Days
after receipt of the Cash Grant Bridge Loan Default Notice to cure such monetary
default by payment to Cash Grant Bridge Lender of all amounts required for
Borrower to cure such default. 

10.3.2 If the default is of a non-monetary nature, Construction
Lender shall have the same period of time, after receipt of the Cash Grant
Bridge Loan Default Notice, as Borrower under the Cash Grant Loan Documents, as
in effect as of the date hereof, to cure such non-monetary default. 

10.4 To the extent that any Qualified Transferee acquires the
Equity Collateral under the Member Pledge Agreement in accordance with the
provisions and conditions of this Agreement, such Qualified Transferee shall
acquire the same subject to the Construction Loan and the terms, conditions and
provisions of the Construction Loan Documents (including any outstanding
defaults or Events of Default thereunder) for the balance of the term thereof,
which shall not be accelerated by Construction Lender solely due to such
acquisition.

D-5-16 

11.    RIGHT TO PURCHASE CONSTRUCTION
LOAN. If (i) the Construction Loan has been accelerated, (ii) any
Enforcement Action has been commenced and is continuing under the Construction
Loan Documents, (iii) a monetary Event of Default has occurred under the
Construction Loan Documents, (iv) Cash Grant Bridge Lender has cured one or more
defaults on the part of Borrower under the Construction Loan Documents pursuant
to Section 10 hereof, or (v) Construction Lender proposes to Transfer the
Construction Loan to any Borrower Affiliate Entity or any Affiliate of the
foregoing (each of the foregoing, a “Purchase Option Event”),
Construction Lender shall provide written notice thereof to Cash Grant Bridge
Lender whereupon, on ten (10) Business Days’ prior written notice to
Construction Lender (the “Purchase Notice”), Cash Grant Bridge Lender
shall have the right to purchase, in whole but not in part, the Construction
Loan for a price equal to the sum of the outstanding principal balance thereof,
all accrued interest thereon (including default interest), and any other fees or
amounts of any nature payable to Construction Lender in connection with the
Construction Loan (the “Loan Purchase Price”). Concurrently
with payment to Construction Lender of the Loan Purchase Price, Construction
Lender shall deliver or cause to be delivered Cash Grant Bridge Lender (A) all
Construction Loan Documents held by or on behalf of Construction Lender and will
execute in favor of Cash Grant Bridge Lender or its designee assignment
documentation, in form and substance reasonably acceptable to Cash Grant Bridge
Lender and Construction Lender, at the sole cost and expense of Cash Grant
Bridge Lender to assign the Construction Loan and its rights under the
Construction Loan Documents (without recourse, representations or warranties,
except for representations as to the outstanding balance of the Construction
Loan and as to Construction Lender’s not having assigned or encumbered its
rights in the Loan) and (B) all funds on deposit in all accounts created under
the Construction Loan Documents. The right of Cash Grant Bridge Lender to
purchase the Construction Loan shall automatically terminate (i) upon a transfer
of the Project by foreclosure sale, sale by power of sale or delivery of a deed
in lieu of foreclosure or (ii) if a Purchase Option Event ceases to exist. In
addition to any and all other rights of Cash Grant Bridge Lender herein, if
Borrower offers to deliver or actually delivers to Construction Lender a deed in
lieu of foreclosure to the Project (each, a “Deed in Lieu”), Construction
Lender shall provide Cash Grant Bridge Lender not less than seven (7) Business
Days written notice prior to accepting a Deed in Lieu to the Project, and if
Cash Grant Bridge Lender shall deliver a Purchase Notice to Construction Lender
prior to the expiration of such seven (7) Business Day period Construction
Lender shall not accept the Deed in Lieu to the Project, provided that Cash
Grant Bridge Lender pays the Loan Purchase Price to Construction Lender and
acquires the Construction Loan as and when otherwise required under this
Section 11.

12. ADDITIONAL UNDERSTANDINGS. For as long as the
Cash Grant Bridge Loan remains outstanding: 

12.1 EPC Contract. Subject to the provisions of Section
7.1 hereunder, Construction Lender shall not, without the prior written consent
of Cash Grant Bridge Lender (such consent not to be unreasonably withheld,
delayed or conditioned), (i) cancel or terminate the EPC Contract except as
provided in the EPC Contract, or consent to or accept any cancellation,
termination or suspension thereof by Borrower, (ii) except as provided in the
EPC Contract, suspend performance of its obligations thereunder, or (iii) except as provided in the EPC
Contract, sell, assign or otherwise dispose (by operation of law or otherwise)
of any part of its interest in the EPC Contract.  

D-5-17 

12.2 Insurance Requirements. Cash Grant Bridge Lender
shall have the right to approve (such approval not to be unreasonably withheld,
conditioned or delayed) any proposed modification or waiver of any provision of
any Construction Loan Document governing the types, nature or amounts of
insurance coverage required to be obtained and maintained by Borrower. 

12.3 Use of Insurance Proceeds. In the event of any
damage to or destruction of all or any portion of the Project, the parties
hereto hereby agree that: (i) Borrower shall be required to promptly commence
and proceed diligently with the work of repair, reconstruction and restoration
of the Project, and (ii) all insurance proceeds and awards paid in connection
with such casualty shall be applied solely and exclusively to costs incurred in
connection with such repair, reconstruction and restoration.

12.4 Distributions. Borrower acknowledges that pursuant
to the Construction Loan Agreement, it is not entitled to any distributions,
whether on account of revenues generated by the Project or otherwise.
Notwithstanding the foregoing, Borrower hereby instructs Construction Lender,
and Construction Lender hereby agrees, that any dividends or other
distributions, direct or indirect, on account of any shares of any class of
equity of Borrower now or hereafter, or any other distributions (in cash,
property or obligation) on, or other payment on account of, any interest in
Borrower, that are otherwise to be released to Borrower pursuant to the
Construction Loan Agreement (including pursuant to any project revenue
“waterfall”), shall be deposited into the Blocked Account, which amounts shall
be held for the benefit of the Cash Grant Bridge Lender in accordance with the
terms and provisions of the Deposit Account Control Agreement and shall
constitute Separate Collateral. 

12.5 Cash Grant Power of Attorney. Construction Lender
acknowledges that in connection with the Cash Grant Application and as required
by the Cash Grant Bridge Loan Agreement, Borrower has granted to Cash Grant
Bridge Lender an irrevocable power of attorney to act in the place of Borrower
with respect to the Cash Grant Application and any filings or notices related
thereto (the “Cash Grant Power of Attorney”). Construction Lender hereby
acknowledges (notwithstanding anything to the contrary contained in the
Construction Security Agreement or any other Construction Loan Document), the
sole and exclusive right of Cash Grant Bridge Lender to exercise any and all
rights under the Cash Grant Power of Attorney.

13.    OBLIGATIONS HEREUNDER NOT
AFFECTED. 

13.1 All rights, interests, agreements and obligations of
Construction Lender and Cash Grant Bridge Lender under this Agreement shall
remain in full force and effect irrespective of: 

13.1.1 any lack of validity or enforceability of the
Construction Loan Documents or the Cash Grant Bridge Loan Documents or any other
agreement or instrument relating thereto; 

13.1.2 any taking, exchange, release or non-perfection of any
other collateral, or any taking, release or amendment or waiver of or consent to
or departure from any guaranty, for all or any portion of the Construction Loan
or the Cash Grant Bridge Loan; 

D-5-18 

13.1.3 any manner of application of collateral, or proceeds
thereof, to all or any portion of the Construction Loan or the Cash Grant Bridge
Loan, or any manner of sale or other disposition of any collateral for all or
any portion of the Construction Loan or the Cash Grant Bridge Loan or any other
assets of Borrower or any Affiliates of Borrower; 

13.1.4 any change, restructuring or termination of the
corporate structure or existence of Borrower or any Affiliates of Borrower; or

13.1.5 any other circumstance which might otherwise constitute
a defense available to, or a discharge of, Borrower or a subordinated creditor
subject to the terms hereof. 

13.2 This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of all or any portion
of the Construction Loan or Cash Grant Bridge Loan is rescinded or must
otherwise be returned by Construction Lender or Cash Grant Bridge Lender, as the
case may be, upon the insolvency, bankruptcy or reorganization of Borrower or
otherwise, all as though such payment had not been made. 

14.    NOTICES. All notices,
demands, requests, consents, approvals or other communications required,
permitted, or desired to be given hereunder shall be in writing sent by
facsimile (with answer back acknowledged) or by registered or certified mail,
postage prepaid, return receipt requested, or delivered by hand or reputable
overnight courier addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party may hereafter
specify in accordance with the provisions of this Section. Any such notice,
demand, request, consent, approval or other communication shall be deemed to
have been received: (i) three (3) Business Days after the date mailed, (ii) on
the date of sending by facsimile if sent during business hours (before 6:00 pm
recipient local time) on a Business Day (otherwise on the next Business Day),
(iii) on the date of delivery by hand if delivered during business hours on a
Business Day (otherwise on the next Business Day) and (iv) on the next Business
Day if sent by an overnight commercial courier, in each case addressed to the
parties as follows: 

	 	To Cash Grant Bridge Lender: 
	 	  
	 	ARES CAPITAL CORPORATION, 
	 	245 Park Avenue, 44th Floor 
	 	New York, NY 10167 
	 	Attn: Raymond Wright 
	 	Telecopy: (212) 750-1777 
	 	  
	 	With a copy to: 
	 	  
	 	Latham & Watkins LLP 
	 	600 West Broadway, Suite 1800 
	 	San Diego, CA 92104 
	 	Attention: Kelley Michael Gale, Esq. 
	 	Telecopy: (619) 696-7419 
	 	  
	 	To Construction Lender: 

D-5-19 

	 	SAIC CONSTRUCTORS, LLC 
	 	9400 N. Broadway, Suite 300 
	 	Oklahoma City, Oklahoma 73114 
	 	Attn: Greg Meacham 
	 	Telecopy: (405) 478-1238 
	 	  
	 	With a copy to: 
	 	  
	 	McAfee & Taft, A Professional Corporation
    
	 	10th Floor, Two Leadership Square
  
	 	211 N. Robinson 
	 	Oklahoma City, OK 73102-7103 
	 	Attn: Robert L. Garbrecht, Esq. 
	 	Telecopy: (405) 235-0439 

15.    ESTOPPEL. 

15.1 Cash Grant Bridge Lender shall, within ten (10) days
following a request from Construction Lender, provide Construction Lender with a
written statement setting forth the then current outstanding principal balance
of the Cash Grant Bridge Loan, the aggregate accrued and unpaid interest under
the Cash Grant Bridge Loan, and stating whether to Cash Grant Bridge Lender’s
knowledge any default or Event of Default exists under the Cash Grant Bridge
Loan or this Agreement. 

15.2 Construction Lender shall, within ten (10) days following
a request from Cash Grant Bridge Lender, provide Cash Grant Bridge Lender with a
written statement setting forth the then current outstanding principal balance
of the Construction Loan, the aggregate accrued and unpaid interest under the
Construction Loan, and stating whether to Construction Lender’s knowledge any
default or Event of Default exists under the Construction Loan or this
Agreement. 

16.    FURTHER ASSURANCES. So long
as all or any portion of the Construction Loan and the Cash Grant Bridge Loan
remains unpaid, Cash Grant Bridge Lender and Construction Lender will each
execute, acknowledge and deliver to the other, any other instruments or
agreements reasonably required in order to carry out the provisions of this
Agreement or to effectuate the intent and purposes hereof. 

17.    NO THIRD PARTY BENEFICIARIES;
NO MODIFICATION. The parties hereto do not intend the benefits of this
Agreement to inure to any Borrower Affiliate Entity or any other Person. This
Agreement may not be changed or terminated orally, but only by an agreement in
writing signed by the party against whom enforcement of any change is sought.
Notwithstanding the foregoing, the parties hereto intend the benefits and
obligations of this Agreement to inure to Cash Grant Bridge Lender and
Construction Lender.

D-5-20 

18.    SUCCESSORS AND ASSIGNS.
This Agreement shall bind all successors and permitted assigns of Cash Grant
Bridge Lender and Construction Lender and shall inure to the benefit of all
successors and permitted assigns of Construction Lender and Cash Grant Bridge
Lender. 

19.    COUNTERPART ORIGINALS. This
Agreement may be executed in counterpart originals, each of which shall
constitute an original, and all of which together shall constitute one and the
same agreement. 

20.    LEGAL CONSTRUCTION. This
Agreement and any claim or controversy arising out of the subject matter hereof
(whether sounding in contract law, tort law or otherwise) shall be governed by,
and construed and enforced in accordance with, the laws of the State of New York
(other than any choice of law rules that would result in the application of laws
other than the law of the State of New York). The parties irrevocably (i) agree
that any dispute shall be brought in any state or federal court in Washoe
County, Nevada; (ii) consent to the jurisdiction of each such court in any
dispute; (iii) waive any objection to venue of any dispute in any of such courts
and any claim that any dispute has been brought in an inconvenient forum; and
(iv) consent to service of any and all process in any dispute by service of
copies of such process at its notice address, provided that simultaneous copies
are also served on all copy recipients. Nothing in this paragraph limits any
Person’s right to serve legal process in any manner law allows or to bring any
suit, action or proceeding against Borrower or its property anywhere. THE
CONSTRUCTION LENDER AND CASH GRANT BRIDGE LENDER WAIVE JURY TRIAL IN ANY DISPUTE
RELATING TO OR ARISING OUT OF THIS AGREEMENT, ITS INTERPRETATION OR ENFORCEMENT,
OR THE RELATIONSHIP OF THE PARTIES WITH RESPECT TO THE PROJECT OR ANY COLLATERAL
HELD BY EITHER PARTY RELATING THERETO. 

21.    NO WAIVER; REMEDIES. No
failure on the part of Construction Lender or Cash Grant Bridge Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. 

22.    NO JOINT VENTURE. Nothing
provided herein is intended to create a joint venture, partnership,
tenancy-in-common or joint tenancy relationship between or among any of the
parties hereto. 

23.    CAPTIONS. The captions in
this Agreement are inserted only as a matter of convenience and for reference.

24.    CONFLICTS. In the event of
any conflict, ambiguity or inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any of the Construction Loan
Documents or the Cash Grant Bridge Loan Documents, the terms and conditions of
this Agreement shall control. 

D-5-21 

25.    NO RELEASE. Nothing herein
contained shall operate to release Borrower from (i) its obligation to keep and
perform all of the terms, conditions, obligations, covenants and agreements
contained in the Construction Loan Documents or any liability of Borrower under
the Construction Loan Documents; or (ii) its obligation to keep and perform all
of the terms, conditions, obligations, covenants and agreements contained in the
Cash Grant Bridge Loan Documents or any liability of Borrower under the Cash
Grant Bridge Loan Documents. 

26.    CONTINUING AGREEMENT. This
Agreement is a continuing agreement and shall remain in full force and effect
until the earliest of payment in full of either the Construction Loan or the
Cash Grant Bridge Loan; provided, however, that any rights or remedies of
either party hereto arising out of any breach of any provision hereof occurring
prior to such date of termination shall survive such termination. 

27.    SEVERABILITY. In the event
that any provision of this Agreement or the application hereof to any party
hereto shall, to any extent, be invalid or unenforceable under any applicable
statute, regulation, or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute, regulation or rule of law, and the
remainder of this Agreement and the application of any such invalid or
unenforceable provisions to parties, jurisdictions or circumstances other than
to whom or to which it is held invalid or unenforceable, shall not be affected
thereby nor shall same affect the validity or enforceability of any other
provision of this Agreement.

28.    EXPENSES. 

28.1 To the extent not paid by Borrower or out of or from any
collateral securing the Construction Loan which is realized by Construction
Lender, Cash Grant Bridge Lender agrees upon demand to pay to Construction
Lender the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of its counsel and of any experts
or agents, which Construction Lender may incur in connection with the (i)
exercise or enforcement of any of the rights of Construction Lender against Cash
Grant Bridge Lender hereunder to the extent that Construction Lender is the
prevailing party in any dispute with respect thereto or (ii) failure by Cash
Grant Bridge Lender to perform or observe any of the provisions hereof. 

28.2 To the extent not paid by Borrower out of or from any
collateral securing the Cash Grant Bridge Loan which is realized by Cash Grant
Bridge Lender, Construction Lender agrees upon demand to pay to Cash Grant
Bridge Lender the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of its counsel and of any experts
or agents, which Cash Grant Bridge Lender may incur in connection with the (i)
exercise or enforcement of any of the rights of Cash Grant Bridge Lender against
Construction Lender hereunder to the extent that Cash Grant Bridge Lender is the
prevailing party in any dispute with respect thereto or (ii) failure by
Construction Lender to perform or observe any of the provisions hereof. 

D-5-22 

29. INJUNCTION. Construction Lender and Cash
Grant Bridge Lender each acknowledge (and waive any defense based on a claim)
that monetary damages are not an adequate remedy to redress a breach by the
other hereunder and that a breach by either Construction Lender or Cash Grant
Bridge Lender hereunder would cause irreparable harm to the other. Accordingly,
Construction Lender and Cash Grant Bridge Lender agree that upon a breach of
this Agreement by the other, the remedies of injunction, declaratory judgment
and specific performance shall be available to such non-breaching party. 

30.    MUTUAL DISCLAIMER. 

30.1 Each of Construction Lender and Cash Grant Bridge Lender
are sophisticated lenders and/or financiers and their respective decision to
enter into the Construction Loan and the Cash Grant Bridge Loan, as applicable,
is based upon their own independent expert evaluation of the terms, covenants,
conditions and provisions of, respectively, the Construction Loan Documents and
the Cash Grant Bridge Loan Documents and such other matters, materials and
market conditions and criteria which each of Construction Lender and Cash Grant
Bridge Lender deem relevant. Each of Construction Lender and Cash Grant Bridge
Lender has not relied in entering into this Agreement, and respectively, the
Construction Loan, the Construction Loan Documents, the Cash Grant Bridge Loan
or the Cash Grant Bridge Loan Documents, upon any oral or written information,
representation, warranty or covenant from the other, or any of the other’s
representatives, employees, Affiliates or agents other than the representations
and warranties of the other contained herein. Each of Construction Lender and
Cash Grant Bridge Lender further acknowledges that no employee, agent or
representative of the other has been authorized to make, and that each of
Construction Lender and Cash Grant Bridge Lender have not relied upon, any
statements, representations, warranties or covenants other than those
specifically contained in this Agreement.

30.2 Each of Construction Lender and Cash Grant Bridge Lender
acknowledges that the Construction Loan and the Cash Grant Bridge Loan Documents
are distinct, separate transactions and loans, separate and apart from each
other. 

[NO FURTHER TEXT ON THIS PAGE] 

D-5-23 

IN WITNESS WHEREOF, Construction Lender and Cash Grant
Bridge Lender have executed this Intercreditor Agreement as of the date and year
first set forth above. 

	 	CONSTRUCTION LENDER: 
	 	  
	 	SAIC CONSTRUCTORS, LLC, 
	 	an Oklahoma limited liability company 
	 	  
	 	  
	 	By:                                                              
	 	Name: 
	 	Title: 
	 	  
	 	  
		CASH GRANT BRIDGE LENDER: 
	 	ARES CAPITAL CORPORATION 
	 	  
	 	  
	 	By:                                                              
	 	Name: 
	 	Title: 
	 	  
	 	  
	 	ACKNOWLEDGED AND AGREED: 
	 	  
	 	USG NEVADA LLC, 
	 	a Delaware limited liability company 
	 	  
	 	  
	 	By:                                                              
	 	Name: 
	 	Title: 

[Signature Page to Intercreditor Agreement] 

EXHIBIT A 

PARCEL A: 

Parcel 2 of a Map of Division into Large Parcels for the Kosmos
Company, a portion of Mineral Survey 4036 Brimstone Placer, a portion of Section
16, Township 29 North, Range 23 East, Mount Diablo Meridian, recorded on August
10, 1994 as File No. 1823117, Division Map No. 148, Washoe County Records. 

PARCEL B: 

An easement over a 50 foot roadway over Parcel 1 of said Map of
Division into Large Parcels as shown on said map. 

EXCEPTING THEREFROM all oil, gas, hydrocarbons, water,
geothermal resources and minerals of whatsoever nature found under said land,
together with right of ingress and egress to conduct surveys for the substances
and the right to remove any of the substances found below the surface of the
property and to maintain any operations on the property for those purposes
contemplated in that Geothermal Resource Supply Agreement dated June 18, 1993
between vestee and Empire Farms, a Nevada general partnership, provided that
such removal or operations shall in no way interfere with the surface of the
property. 

APN: 071-070-19 

Exhibit A-1 

EXHIBIT B 
Material Cash Grant Bridge Loan Documents

	1. 	
      Cash Grant Bridge Loan Agreement

	 	 
	2. 	
      Cash Grant Bridge Loan Note

	 	 
	3. 	
      Member Pledge Agreement

	 	 
	4. 	
      Idaho Sponsor Pledge Agreement

	 	 
	5. 	
      Cash Grant Security Agreement

	 	 
	6 	
      Sponsor Cash Grant Shortfall Guaranty

	 	 
	7. 	
      Deposit Account Control Agreement

	 	 
	8. 	
      Cash Grant Power of Attorney

	 	 
	9. 	
      Cash Grant Notice of Assignment

Exhibit B-1 

EXHIBIT C 
Material Construction Loan Documents

	1) 	
      The EPC Contract.

	 	 
	2) 	
      The Construction Loan Agreement.

	 	 
	3) 	
      The Construction Note.

	 	 
	4) 	
      The Construction Security Agreement.

	 	 
	5) 	
      Leasehold Deed of Trust with Power of Sale, Security
      Agreement and Fixture Filing dated as of August 27, 2010 between Borrower
      and Stewart Title Company of Nevada – Northern Division, for the benefit
      of Construction Lender.

	 	 
	6) 	
      Environmental Indemnification Agreement dated as of
      August 27, 2010 between Borrower and Construction Lender.

	 	 
	7) 	
      Collateral Assignment of Power Purchase Agreements dated
      as of August 27, 2010 between Borrower and Construction Lender.

	 	 
	8) 	
      Collateral Assignment of Contracts, Leases, Permits, and
      Rights of Way dated as of August 27, 2010 between Borrower and
      Construction Lender.

	 	 
	9) 	
      UCC-1 Financing Statement filed as document # 2010
      3025537 with the Delaware Department of State.

	 	 
	10) 	
      Landlord’s Consent Agreement dated as of August 27, 2010
      between U.S. Geothermal, Inc., an Idaho corporation, and Construction
      Lender.

	 	 
	11) 	
      Amended and Restated Change in Control Guaranty dated as
      of October 13, 2010 by U.S. Geothermal, Inc., a Delaware corporation, in
      favor of Construction Lender.

	 	 
	12) 	
      Indemnification Agreement dated as of August 27, 2010
      between U.S. Geothermal, Inc., a Delaware corporation, and Construction
      Lender.

	 	 
	13) 	
      Joint Escrow Instructions made by Borrower and
      Construction Lender to First American Specialty Services.

	 	 
	14) 	
      Assignments of Record Title Interest in Leases For Oil
      and Gas or Geothermal Resources (BLM Leases).

	 	 
	15) 	
      Oil, Gas, and Geothermal Notice of Change of Owner
      (Nevada Division of Minerals Well Permits).

	 	 
	16) 	
      Reports of Conveyance and Notice of Pledge (Nevada
      Division of Water Resources Water Permits).

Exhibit C-1 

	17) 	
      Assignment and Assumption of Lease dated as of August 27,
      2010 made by Borrower (Kosmos Lease).

	 	 
	18) 	
      Assignment and Assumption of Lease dated as of August 27,
      2010 made by Borrower (Water Lease).

	 	 
	19) 	
      Assignment and Assumption Agreement dated as of August
      27, 2010 made by Borrower (Power Purchase
Agreement).

A-2 

EXHIBIT D 
UCC-3 Amendment 

 

Exhibit A-1 

EXHIBIT D-6 
to Financing Agreement 

FORM OF 
IRREVOCABLE POWER OF ATTORNEY

USG NEVADA LLC 

November 9, 2011 

KNOW ALL MEN BY THESE PRESENTS: 

USG NEVADA LLC, a Delaware limited liability company
(“Borrower”), does hereby make, constitute and appoint ARES CAPITAL
CORPORATION, a Maryland corporation, as the Lender, as its true and lawful
attorney-in-fact (together with its successors, designees and assigns in such
capacity, the “Attorney-in-Fact”) with full power and authority to act,
for the purpose of performing the obligations and exercising the rights of the
Borrower with respect to the Cash Grant and the Cash Grant Application (as each
such term is defined in the Financing Agreement described below) and such
filings, reports, certifications or other documents or actions (including
communications or consultation with the United States Treasury Department) by
and among Borrower and the Attorney-in-Fact, including but not limited to the
power to execute all documents and instruments and taking all such other actions
and executing any instrument or making such communications (including with the
United States Treasury Department) which the Attorney-in-Fact may deem necessary
or advisable in connection with the Cash Grant and the Cash Grant Application;
provided, however, that Lender shall not exercise any of the
aforementioned rights unless an Event of Default has occurred and is continuing
and has not been waived in accordance with the Financing Documents. Any
capitalized terms used but not defined herein shall have the meaning assigned to
them in the Financing Agreement, dated as of the date hereof, by and among
Borrower and Lender (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Financing Agreement”). 

This power of attorney is irrevocable and coupled with an
interest. This Irrevocable Power of Attorney shall be effective until the
earlier of (a) the full satisfaction in cash of all Obligations (as defined in
the Financing Agreement), other than unasserted contingent indemnity
obligations, and (b) the end of the five-year period commencing on the
Placed-in-Service Date. 

IN WITNESS WHEREOF, Borrower has caused this Irrevocable Power
of Attorney to be executed by its officer thereunto duly authorized as of the
date first written above. 

	 	USG NEVADA LLC, 
	 	a Delaware limited liability company, 
	 	as Borrower 
	 	   
	 	           
         
       By:                                                              
	 	           
         
       Name:                                                              
	 	           
         
       Title:                                                              

[SIGNATURE PAGE TO POWER OF ATTORNEY] 

ACKNOWLEDGMENT 

State of ______________________) 

County of ______________________) 

On ________________________________before me,
________________________________, 

a Notary Public, personally appeared
________________________________, who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State
of [____________] that the foregoing paragraph is true and correct.

WITNESS my hand and official seal. 

________________________________(seal) 
Comm. # 
Exp.

[SIGNATURE PAGE TO POWER OF ATTORNEY] 

EXHIBIT D-7 
TO FINANCING AGREEMENT 

FORM OF
NOTICE OF ASSIGNMENT

This Notice refers to Treasury Application Number
____________________submitted by USG NEVADA LLC, a Delaware limited liability
company, to the United States Department of the Treasury for payment under
Section 1603 of Division B of the American Recovery and Reinvestment Act of
2009.

The payment due or to become due under the application
described above has been assigned to the undersigned assignee, ARES CAPITAL
CORPORATION, a Maryland corporation, under the provisions of the Assignment of
Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15.

A true copy of the instrument of assignment executed by the
above named applicant on ________________, 2011 is attached hereto as
Exhibit A.

The payment due or to become due under the application
described above should be made payable to the undersigned assignee, provided the
undersigned is registered in the Central Contractor Registry.

[SIGNATURE PAGES FOLLOW]

Exhibit D-7-1 

	ASSIGNOR:
    	ASSIGNEE: 	  
	  	  	  
	USG NEVADA LLC,
    	ARES CAPITAL
      CORPORATION, 
	a Delaware limited
      liability company 	a Maryland
      corporation 
	  	  	  
	  	  	  
	Signature:                                                              	DUNS No.:
	  
	Name:                                                              	Address: 	245 Park Avenue, 44th
      Floor 
	Title:                                                              	  	New York, NY 10167 
	  	Phone: 	(212) 750-4915 
	  	Fax: 	(212) 750-1777 
	  	Email: 	wright@aresmgmt.com 
	  	Attn: 	Raymond L. Wright 
	WITNESS 1:
    	  	  
	  	  	  
	  	  	  
	Signature:                                                              	Signature:
    	                                                               
	Name:                                                              	Name: 	                                                               
	  	Title: 	                                                               
	WITNESS 2:
    	  	  
	  	  	  
	  	  	  
	Signature:                                                              	Signature:
    	                                                               
	Name:                                                              	Name: 	                                                               
	  	Title: 	                                                               

[SIGNATURE PAGE TO NOTICE OF ASSIGNMENT]

ACKNOWLEDGMENT 

State of ______________________) 

County of ______________________) 

On ________________________________before me,
________________________________, 

a Notary Public, personally appeared
________________________________, who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State
of [________] that the foregoing paragraph is true and correct.

WITNESS my hand and official seal. 

________________________________(seal) 
Comm. # 
Exp.

[SIGNATURE PAGE TO NOTICE OF ASSIGNMENT]

ACKNOWLEDGMENT 

State of ______________________) 

County of ______________________) 

On ________________________________before me,
________________________________, 

a Notary Public, personally appeared
________________________________, who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State
of [___________] that the foregoing paragraph is true and correct.

WITNESS my hand and official seal. 

________________________________(seal) 
Comm. # 
Exp.

[SIGNATURE PAGE TO NOTICE OF ASSIGNMENT]

ACKNOWLEDGMENT 

State of ______________________) 

County of ______________________) 

On ________________________________before me,
________________________________, 

a Notary Public, personally appeared
________________________________, who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State
of [____________] that the foregoing paragraph is true and correct.

WITNESS my hand and official seal. 

________________________________(seal) 
Comm. # 
Exp.

[SIGNATURE PAGE TO NOTICE OF ASSIGNMENT]

ACKNOWLEDGMENT 

State of ______________________) 

County of ______________________) 

On ________________________________before me,
________________________________, 

a Notary Public, personally appeared
________________________________, who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State
of [____________] that the foregoing paragraph is true and correct.

WITNESS my hand and official seal. 

________________________________(seal) 
Comm. # 
Exp.

[SIGNATURE PAGE TO NOTICE OF ASSIGNMENT]

     Exhibit A 
to Notice of
Assignment 

INSTRUMENT OF ASSIGNMENT 

(See attached.) 

[EXECUTED COPY OF THE CASH GRANT SECURITY AGREEMENT TO BE
ATTACHED]

 

Exhibit A 

     EXHIBIT D-8 
to Financing
Agreement 

SCHEDULE OF SECURITY FILINGS 

KEY TO ABBREVIATIONS 

The abbreviations and words listed below when used herein have
the meanings assigned to them below. 

	“Borrower” 	= 	USG Nevada LLC, a Delaware limited liability
      company 
	“DESS” 	= 	The Office of the Delaware Secretary of State
    
	“Holdings” 	= 	Nevada USG Holdings, LLC, a Delaware limited
      liability company 
	“Idaho Sponsor” 	= 	U.S. Geothermal Inc., an Idaho corporation
  
	“IDSS” 	= 	The Office of the Idaho Secretary of State
  
	“Lender” 	= 	Ares Capital Corporation, a Maryland
      corporation 
	“SAIC” 	= 	SAIC Constructors, LLC, an Oklahoma limited
      liability company 
	“Treasury” 	= 	United States Treasury Department

Exhibit D-8-1 

UCC-3 AMENDMENT 

	
    Debtor 
	
    Secured Party 
	
     Granting Document 
	
    Collateral 
	
    Filing Office 

	
    Borrower 
	
    SAIC 
	
    Intercreditor
      Agreement 
	
    Amendment to exclude
      all Collateral granted to Lender pursuant to the Cash Grant Security
      Agreement 
	
    DESS

UCC-1 FINANCING STATEMENTS 

	
         Debtor 
	
    Secured Party 
	
    Granting Document 
	
    Collateral 
	
    Filing Office 

	
    Holdings 
	
    Lender 
	
    Member Pledge
      Agreement 
	
    All of Holdings’
      interests in Borrower and all of the membership interests of Borrower
      related thereto 
	
    DESS 

	
    Idaho Sponsor 
	
    Lender 
	
    Idaho Sponsor Pledge
      Agreement 
	
    All of Idaho
      Sponsor’s interests in Holdings and all of the membership interests of
      Holdings related thereto 
	
    IDSS 

	
    Borrower 
	
    Lender 
	
    Financing Agreement Cash Grant Security
      Agreement 
	
    All of Borrower’s interests in any proceeds of
      the Cash Grant 
	
    DESS 

NOTICE OF ASSIGNMENT 

	
    Debtor 
	
    Secured Party 
	
     Granting Document 
	
    Collateral 
	
    Filing Office 

	
    Borrower 
	
    Lender 
	
    Financing Agreement Cash Grant Security
      Agreement 
	
    All of Borrower’s interests in any proceeds of
      the Cash Grant 
	
    Treasury 

Exhibit D-8-2 

EXHIBIT D-9 
to Financing Agreement 

FORM OF
NOTICE OF BORROWING

(Delivered pursuant to Section 2.2(e)(ii) of the
Financing Agreement) 

Date:                                                              

	Ares Capital Corporation 
	as Lender 	  
	Address: 	245 Park Avenue, 44th Floor 
	  	New York, NY 10167 
	Telephone: 	(212) 750-4915 
	Fax: 	(212) 750-1777 
	Attention: 	Raymond Wright 
	  	  
	         
               Re: 	USG Nevada LLC Geothermal Project in Washoe
      County, Nevada 

Ladies and Gentlemen: 

This Notice of Borrowing is delivered to you pursuant to that
certain Financing Agreement dated as of November 9, 2011, (as amended, amended
and restated, modified or supplemented from time to time, the “Financing
Agreement”), by and between USG Nevada LLC, a Delaware limited liability
company (“Borrower”), and Ares Capital Corporation, a Maryland
corporation (“Lender”). All capitalized terms used herein shall have the
respective meanings specified in Exhibit A to the Financing Agreement
unless otherwise defined herein or unless the context requires otherwise. 

This Notice of Borrowing constitutes a request for a Borrowing
as set forth below: 

	 	1. 	
      The date of the proposed Borrowing is
      [Insert Date], which is a Banking Day on or
      before the Second Borrowing Deadline.

	 	 	 
	 	3. 	
      The aggregate principal amount of the Additional Loan
      requested is $[____________].

The undersigned further confirms and certifies to Lender, as of
the date of the proposed Borrowing: 

	 	(a) 	
      The conditions precedent set forth in Section 3.2 of the
      Financing Agreement have all been satisfied.

	 	 	 
	 	(b) 	
      Proceeds of the Borrowing shall be applied as provided in
      the Financing Agreement.

[SIGNATURE PAGE FOLLOWS] 

Exhibit D-9-1 

IN WITNESS WHEREOF, the undersigned party has executed this
Notice of Borrowing as of the date hereof. 

	 	USG NEVADA LLC, 
	 	a Delaware limited liability company, 
	 	as Borrower 
	 	           
         
       By:                                                              
	 	           
         
       Name:                                                              
	 	           
         
       Title:                                                              

Exhibit D-9-2 

EXHIBIT F-1 
to Financing Agreement 

FORM OF
BORROWER’S CLOSING
CERTIFICATE 

This certificate is delivered pursuant to Section 3.1(g) of
that certain Financing Agreement, dated as of November 9, 2011 (the
“Financing Agreement”), by and between USG Nevada LLC, a Delaware limited
liability company (“Borrower”), and Ares Capital Corporation, a Maryland
corporation (“Lender”). All capitalized terms used herein shall have the
respective meanings specified in Exhibit A of the Financing Agreement unless
otherwise defined herein or unless the context requires otherwise. 

I, Kerry D. Hawkley, am the duly elected, qualified and acting
Secretary of Borrower. I have reviewed the provisions of the Financing Agreement
which are relevant to the furnishing of this Borrower’s Closing Certificate. To
the extent that this Borrower’s Closing Certificate evidences, attests or
confirms compliance with any conditions precedent provided for in the Financing
Agreement, I have made such examination or investigation as was, in my opinion,
reasonably necessary to enable me to express an informed opinion as to whether
such conditions have been complied with. I do hereby certify on behalf of
Borrower, as of the Financial Closing Date, as follows: 

1. Attached as Exhibit G-7 to the Financing Agreement is a
true, correct and complete list of all agreements relating to the Project to
which the Borrower or any of its Affiliates is a party in effect as of the
Financial Closing Date (collectively, the “Project Documents”),
together with all amendments and supplements thereto and renewals thereof, and a
true, correct and complete copy of each such Project Document has been delivered
to Lender on or prior to the date hereof pursuant to Section 4.24 of the
Financing Agreement, and each such Project Document is in full force and effect.

2. Borrower is not in default under any material term of any
Operative Document or any agreement relating to any obligation of Borrower for
or with respect to borrowed money (including, without limitation, under the
Construction Loan Agreement), and to Borrower’s knowledge, no other party to any
Project Document is in material default thereunder. 

 3. Except with respect to the O&M Agreement and the
Power Purchase Agreement, all conditions precedent to the performance of
Borrower and, to Borrower’s knowledge, all conditions precedent to the
performance of other parties under the Project Documents to have been performed
have been satisfied 

4. No consents, exemptions, approvals, authorizations, or other
actions by, or notices to, or filings with, Governmental Authorities and other
Persons are reasonably required in connection with the execution, delivery or
performance by each Borrower Affiliate Entity of the Financing Documents to
which it is a party (including all federal, state and local regulatory filings,
consents and approvals necessary in connection therewith). 

Exhibit F-1 

5. The aggregate amount of the projected Qualifying Costs with
respect to the Project is $34,148,993, and (i) such projected Qualifying Costs
have been determined pursuant to a methodology consistent with the Cash Grant
Guidance and applicable law, (ii) the total Loan Commitment does not exceed
ninety percent (90%) of thirty percent (30%) of such Qualifying Costs basis of
the Project, and (iii) the Initial Loan does not exceed ninety percent (90%) of
thirty percent (30%) of Qualifying Costs incurred and paid as of the Financial
Closing Date. 

6. No direct or indirect equity interest in Borrower is
beneficially owned by a Disqualified Person. Attached hereto as Exhibit A
is an ownership diagram of Borrower, showing the complete direct and indirect
ownership of Borrower, and any partnership or other pass-through entity that
directly or indirectly owns any interest in Borrower, up to direct or indirect
owners that are individuals, non-grantor trusts, or taxable “C” corporations,
but not including the owners of a taxable “C” corporation.

7. Attached hereto as Exhibit B are true, correct and
complete copies of (i) the most recent annual audited financial statements and
(ii) the most recent unaudited quarterly financial statements, from each
Borrower Affiliate Entity. As of the Financial Closing Date, no material adverse
change in the assets, liabilities, operations or financial condition of any
Borrower Affiliate Entity has occurred from those set forth in the financial
statements attached hereto as Exhibit B.

8. Each representation and warranty of each Borrower Affiliate
Entity under the Financing Documents and the Project Documents to which it is a
party is true and correct in all material respects as of the Financial Closing
Date (or if such representation and warranty relates solely as of an earlier
date, as of such earlier date). 

9. No Event of Default or Inchoate Default has occurred and is
continuing as of the Financial Closing Date or will result from the Loans and
other financial accommodations made as of the date hereof. 

10. Attached hereto as Exhibit C is a Flow of Funds
Memorandum which sets forth a true and correct description of the currently
anticipated sources and uses of all proceeds of the Loans, as reasonably
expected to be used by Borrower as of the Financial Closing Date. 

11. The conditions precedent set forth in Section 3.1 of the
Financing Agreement required to be satisfied by Borrower have been satisfied or
have been waived in writing in accordance with the terms of the Financing
Agreement. 

[SIGNATURE PAGE FOLLOWS] 

Exhibit F-1-2 

IN WITNESS WHEREOF, the undersigned has duly executed this
Borrower’s Closing Certificate on behalf of Borrower on the Financial Closing
Date. 

	 	USG NEVADA LLC, 
	 	a Delaware limited liability company, 
	 	as Borrower 
	 	           
         
       By:                                                              
	 	           
         
       Name:                                                              
	 	           
         
       Title:                                                              

[SIGNATURE PAGE TO BORROWER’S CLOSING CERTIFICATE] 

EXHIBIT A 

Ownership Diagram of Borrower 

[Borrower to attach.]

 

Exhibit A 

EXHIBIT B 

Financial Statements of Borrower Affiliate Entities

[Borrower to attach.]

 

Exhibit B 

EXHIBIT C 

Flow of Funds Memorandum 

[Borrower to attach.] 

 

Exhibit C 

     EXHIBIT F-2 
to Financing
Agreement 

FORM OF
INDEPENDENT
ACCOUNTANT’S CERTIFICATE 

[Independent Accountant’s Letterhead] 

[Date of Closing/Certification] 

Ares Capital Corporation 
245 Park Avenue, 44th
Floor 
New York, NY 10167 

	Subject: 	Independent Accountant’s Certificate and
      Report – USG Nevada LLC, 
	  	San Emidio Geothermal Power Project in
      Washoe County, Nevada 

Ladies and Gentlemen: 

This letter is furnished pursuant to Section 3.2(j)(ii) of that
certain Financing Agreement, dated as of November 9, 2011 (as amended, amended
and restated, modified or supplemented from time to time, the “Financing
Agreement”) by and between USG Nevada LLC, a Delaware limited liability
company (“Borrower”), and Ares Capital Corporation, a Maryland
corporation (“Lender”). Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings provided in Exhibit A to the Financing
Agreement. 

Martinelli Mick (“Martinelli”) has been retained by
Lender and Borrower as the Independent Accountant, and it has prepared a report
dated [___________], 2011 (the “Independent Accountant’s Report”),
which identifies the cost categories and amounts of Qualifying Costs and
describes the methodology used in determining the categories and amounts of
Qualifying Costs, a current and complete copy of which is attached hereto as
Exhibit A.

In connection with the preparation of the Independent
Accountant’s Report, personnel of Martinelli have participated in meetings or
telephone discussions with representatives of the Borrower in regard to the
approximately 8 MW geothermal power facility located in Washoe County, Nevada
(the “Project”).

Martinelli hereby certifies, in accordance with Section
3.2(j)(ii) of the Financing Agreement, that (i) the amount of Qualifying Costs
incurred (within the meaning of the Cash Grant Guidance) through
[_______________] is [____________] Dollars ($[_________]),
(ii) the Project is on schedule to be placed in service (within the meaning of
the Cash Grant Guidance) prior to the qualification deadline of the Cash Grant
(with reasonable margin for delays, to be determined in consultation with the
Independent Engineer and Lender), and (iii) to the extent that Martinelli has relied upon a certificate from
the Independent Engineer and/or a “Report of Management on Eligible Cost Basis”
statement from Borrower, a copy of such certificate and/or report is attached
hereto as Exhibit B. 

Exhibit F-2-1 

This letter is solely for the information of, and assistance
to, Lender in conducting and documenting its investigation of the matters
covered by the Independent Accountant’s Report in connection with the Project
and is not to be used, circulated, quoted, or otherwise referred to for any
other purpose, nor is it to be referred to in whole or in part in any other
document, except that reference may be made to it in the above-mentioned
Financing Agreement and it may be included in the closing documents pertaining
to the Project. 

Martinelli disclaims any obligation to update this letter. This
letter is not intended to, and may not, be relied upon by any party other than
Lender. 

Very truly yours, 

Martinelli Mick, 
as Independent Accountant 

By:                                                              

Name:                                                              

Title:                                                              

Exhibit F-2-2 

     EXHIBIT A 
to Independent
Accountant’s Certificate 

INDEPENDENT ACCOUNTANT’S REPORT 

(See attached.) 

 

Exhibit A 

     EXHIBIT B 
to Independent
Accountant’s Certificate 

CERTIFICATES FROM INDEPENDENT ENGINEER AND/OR
BORROWER 

(See attached.)

 

Exhibit B 

     EXHIBIT F-3 
to Financing
Agreement 

FORM OF
INDEPENDENT ENGINEER’S
CERTIFICATE 

[Independent Engineer’s Letterhead] 

[Date of Closing/Certification] 

Ares Capital Corporation 245 Park Avenue, 44th Floor
New York, NY 10167 

	Subject: 	Independent Engineer’s Report – USG Nevada
      LLC, San Emidio 
	  	Geothermal Power Project in Washoe County,
      Nevada 

Ladies and Gentlemen: 

This letter is furnished pursuant to Section 3.1(k) of that
certain Financing Agreement, dated as of November 9, 2011 (as amended, amended
and restated, modified or supplemented from time to time, the “Financing
Agreement”) by and between USG Nevada LLC, a Delaware limited liability
company (“Borrower”), and Ares Capital Corporation, a Maryland
corporation (“Lender”).

Luminate, LLC (“Luminate”) has been retained by Lender and
Borrower as the Independent Engineer, and it has prepared an Independent
Engineer’s Report dated [final report date] (the “Report”),
a current and complete copy of which is attached hereto as Exhibit A.

The Report was prepared pursuant to the scope of services under
our Professional Services Agreement, dated October 21, 2011, and
those services were provided in accordance with generally accepted engineering
practices. Since the date of the Report nothing has come to our attention that
would cause us to believe that the Report, as of the date hereof, is not true
and correct, in all material respects. 

In connection with the preparation of the Report, personnel of
Luminate have participated in meetings or telephone discussions with
representatives of the Borrower in regard to the 8 MW geothermal power facility
located in Washoe County, Nevada (the “Project”).

Luminate hereby certifies, in accordance with Section
3.1(k) of the Financing Agreement, that as of the date hereof (i) the Placed in
Service Date (as defined in the Financing Agreement) is expected to occur by
December 31, 2011; (ii) construction of the Project is currently on-schedule and
on-budget; (iii) there are sufficient funds available to complete the Project in accordance with the Project Budget (as defined in
the Financing Agreement); and (iv) completion of all work done to date has been
in accordance with the Construction Contract (as defined in the Financing
Agreement).

Exhibit F-3-1 

This letter is solely for the information of, and assistance
to, Lender in conducting and documenting its investigation of the matters
covered by the Report in connection with the Project and is not to be used,
circulated, quoted, or otherwise referred to for any other purpose, nor is it to
be referred to in whole or in part in any other document, except that reference
may be made to it in the above-mentioned Financing Agreement and it may be
included in the closing documents pertaining to the Project. 

Luminate disclaims any obligation to update this letter.
This letter is not intended to, and may not, be relied upon by any party other
than Lender. 

Very truly yours, 
Luminate, LLC 

By:                                                              

Name:                                                             

Title:                                                              

Exhibit F-3-2 

     EXHIBIT A 
to Independent
Engineer’s Certificate 

INDEPENDENT ENGINEER’S REPORT 

(See attached.) 

 

Exhibit A 

     EXHIBIT F-4 
to Financing
Agreement 

FORM OF SOLVENCY CERTIFICATE 

THE UNDERSIGNED HEREBY CERTIFIES, IN SUCH PERSON’S CORPORATE
AND NOT INDIVIDUAL CAPACITY, ON BEHALF OF EACH BORROWER AFFILIATE ENTITY AS
FOLLOWS: 

1. I am the Chief Financial Officer of U.S. Geothermal Inc., a
Delaware corporation (“Sponsor”). 

2. This Solvency Certificate is being delivered pursuant to
Section 3.1(ll) of that certain Financing Agreement, dated as of November 9,
2011 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the “Financing Agreement”), by and between USG Nevada LLC, a
Delaware limited liability company (“Borrower”) and Ares Capital
Corporation, a Maryland corporation (“Lender”). Capitalized terms used
but not defined herein have the meanings assigned in the Financing
Agreement.

3. I have reviewed the definitions and provisions contained in
the Financing Agreement and the other Financing Documents that are relevant to
the matters certified by me in Paragraph 4 below, and, in my
opinion, have made, or have caused to be made under my supervision, such
examination or investigation as is necessary to enable me to express an informed
opinion as to the matters referred to herein. 

4. Based upon my review and examination described in
Paragraph 3 above, I certify that as of the date hereof, before and after
giving effect to the consummation of the Loan transaction as contemplated by and
described in the Financing Agreement and the other transactions contemplated by
the Financing Documents, that Borrower, Sponsor, U.S. Geothermal Inc., an Idaho
corporation, and Nevada USG Holdings, LLC, a Delaware limited liability company,
are Solvent. 

[SIGNATURE PAGE FOLLOWS]

The foregoing certifications are made and delivered as of the
Financial Closing Date. 

U.S. GEOTHERMAL INC. 
a Delaware corporation

By:                                                              

Name:                                                              

Title:                                                              

[Signature Page to Solvency Certificate] 

     EXHIBIT F-5 
to Financing
Agreement 

FORM OF
BORROWER’S ADDITIONAL LOAN
BORROWING CERTIFICATE 

This certificate is delivered pursuant to Section 3.2(b) of
that certain Financing Agreement, dated as of November 9, 2011 (as amended,
amended and restated, modified or supplemented from time to time, the
“Financing Agreement”), by and between USG Nevada LLC, a Delaware limited
liability company (“Borrower”) and Ares Capital Corporation, a Maryland
corporation (“Lender”). All capitalized terms used herein shall have the
respective meanings specified in Exhibit A of the Financing Agreement unless
otherwise defined herein or unless the context requires otherwise. 

I, ___________________, am the duly elected, qualified
and acting ____________________of Borrower. I have reviewed the provisions of
the Financing Agreement which are relevant to the furnishing of this Borrower’s
Additional Loan Borrowing Certificate. To the extent that this Borrower’s
Additional Loan Borrowing Certificate evidences, attests or confirms compliance
with any conditions precedent provided for in the Financing Agreement, I have
made such examination or investigation as was, in my opinion, reasonably
necessary to enable me to express an informed opinion as to whether such
conditions have been complied with. I do hereby certify on behalf of Borrower,
as of the Second Borrowing Date, as follows: 

1. Attached hereto as Exhibit A is a true, correct and
complete list of: (i) each Additional Project Document that was entered into
after the Financial Closing Date, together with all amendments and supplements
thereto and renewals thereof, and (ii) each amendment, supplement and renewal of
the Project Documents listed on Schedule G-7 to the Financing Agreement that
were entered into after the Financial Closing Date. Borrower has delivered to
Lender on or prior to the date hereof, true, correct and complete copies of each
document referenced in clauses (i) and (ii) above, and each such document is in
full force and effect. Borrower is not in default under any material term of any
Operative Document or any agreement relating to any obligation of Borrower for
or with respect to borrowed money (including, without limitation, under the
Construction Loan Agreement), and to Borrower’s knowledge, no other party to any
Project Document is in material default thereunder. 

2. The aggregate amount of the projected Qualifying Costs with
respect to the Project is $[______], and (i) such projected
Qualifying Co sts have been determined pursuant to a methodology consistent with
the Cash Grant Guidance and applicable law, and (ii) the total Loan Commitment
does not exceed ninety percent (90%) of thirty pe rcent (30%) of such Qualifying
Costs basis of the Project. 

3. No direct or indirect equity interest in Borrower is
beneficially owned by a Disqualified Person. Attached hereto as Exhibit B
is an ownership diagram of Borrower, showing the complete direct and indirect
ownership of Borrower, and any partnership or other pass-through entity that
directly or indirectly owns any interest in Borrower, up to direct or indirect
owners that are individuals, non-grantor trusts, or taxable “C” corporations.

Exhibit F-5 

4. Each representation and warranty of each Borrower Affiliate
Entity under the Financing Documents and the Project Documents to which it is a
party is true and correct in all material respects as of the Second Borrowing
Date (or if such representation and warranty relates solely as of an earlier
date, as of such earlier date). 

5. No Event of Default or Inchoate Default has occurred and is
continuing as of the Second Borrowing Date or will result from the Loans and
other financial accommodations made as of the date hereof. 

6. The conditions precedent set forth in Section 3.2 of the
Financing Agreement have been satisfied or have been waived in writing in
accordance with the terms of the Financing Agreement. 

[SIGNATURE PAGE FOLLOWS] 

 

Exhibit F-5-2 

IN WITNESS WHEREOF, the undersigned has duly executed this
Borrower’s Additional Loan Borrowing Certificate on behalf of Borrower this ___
day of __________, 2011. 

	 	USG NEVADA LLC, 
	 	a Delaware limited liability company, 
	 	  
	 	as Borrower 
	 	           
         
       By:                                                              
	 	           
         
       Name:                                                              
	 	           
         
       Title:                                                              

Exhibit F-5 

EXHIBIT A 

List of Additional Project Documents and Amendments 

[Borrower to provide.] 

 

Exhibit F-5 

EXHIBIT B 

Ownership Diagram of Borrower 

[Borrower to attach.] 

 

Exhibit F-5 

     EXHIBIT G-1 
to Financing
Agreement 

DESCRIPTION OF THE PROJECT AND THE SITE 

I. The Project 

The retrofit of an existing 3.6 megawatt geothermal electric
generating station located on the Site, increasing the output thereof to
approximately eight megawatts, including the development, construction,
maintenance and operation of replacement 8.6 megawatt geothermal facility, all
improvements or structures erected on the Site, all alterations thereto or
replacements thereof, all fixtures, attachments, appliances, equipment,
machinery and other articles attached thereto or used in connection therewith
and all parts which may from time to time be incorporated or installed in or
attached thereto, all contracts and agreements for the purchase or sale of
commodities or other personal property related thereto, all real or personal
property owned or leased related thereto, and all other real and tangible and
intangible personal property leased or owned by Borrower and placed upon or used
in connection with the generation of electricity upon the Site.

II. The Site 

The Site is located in Washoe County, in northern Nevada and
consists of the following property: 

“DeHy” Property 

The “DeHy” property, located on the real property described
below, is owned in fee simple by Idaho Sponsor and leased to Borrower pursuant
to that certain Office and Land Lease Agreement, dated August 27, 2010 between
Idaho Sponsor and Borrower. 

Real Property Description: 

PARCEL A: 
Parcel 2 of a Map of Division into Large Parcels
for the Kosmos Company, a portion of Mineral Survey 4036 Brimstone Placer, a
portion of Section 16, Township 29 North, Range 23 East, Mount Diablo Meridian,
recorded on august 10, 1994 as File No. 1823117, Division Map #148, Washoe
County Records. 

PARCEL B: 
An easement over a 50 foot roadway over Parcel 1
of said Map of Division into Large Parcels as shown on said map. 

EXCEPTING THEREFROM all oil. gas hydrocarbons, water,
geothermal resources and minerals of whatsoever nature found under said land,
together with the right of ingress and egress to conduct surveys for the
substances and the right to remove any of the substances found below the surface
of the property and to maintain any operations on the property for those purposes contemplated in that Geothermal Resource Supply
Agreement dated June 18, 1993 between vestee and Empire Farms, a Nevada general
partnership, provided that such removal or operations shall in no way interfere
with the surface of the property. 

EXHIBIT G-1 - 1 

Kosmos Property 

The Borrower has obtained a leasehold interest in the property
described below (the “Kosmos Property”), pursuant to that certain Geothermal
Lease between Kosmos Company (“Kosmos”) and Michael B. Stewart dated October 14,
1987, recorded October 16, 1987, in Book 2633, Page 282, Document No. 1200497,
official records, Washoe County, Nevada and amended March 15, 2008 and May 5,
2007, as assigned to San Emidio Resources, Inc., by an Assignment recorded June
22, 1992, as Document No. 1583278, official records, Washoe County, Nevada, as
assigned to Empire Farms, by an Assignment recorded September 16, 1995, Document
No. 1933483, official records, Washoe County, Nevada, as assigned to Empire
Energy, LLC by an Assignment recorded May 11, 2000, as Document No. 2446152,
official records, Washoe County, Nevada, as assigned to Empire Geothermal Power,
LLC by an Assignment of Geothermal Lease dated August 31, 2003, notice of which
was placed in public record by an Assignment of Geothermal Project Rights and
Leasehold Estates dated August 31, 2003 and recorded as Document No. 2934363,
official records, Washoe County, Nevada, on October 3, 2003, as assigned to USG
Nevada, LLC on April 30, 2008 by an Assignment recorded as Document No. 3645581,
official records, Washoe County, Nevada. 

Real Property Description: 

All that certain property situate in the County of Washoe,
State of Nevada, being all that portion of Township 29 North and Township 30
North, Range 23 East, M.D.B.844, being contained in United States Patent No.
356675, U.S. Survey No. 4036 and Patent No. 809407, U.S. Survey No.
4323, described as follows: 

Fanny Placer Survey No. 4823 
Black Sulphur Placer
Survey No. 4036 
Cy Edwards Placer Survey No. 4323 
Brimstone Placer
Survey No. 4036, also known as Parcels 1 and 2 of a Map of Division into large
Parcels for the Kosmos Company, a portion of Mineral Survey 4036 Brimstone
Placer, a portion of Section 16, Township 29 North, Range 23 East, Mount Diablo
Meridian, recorded on August 10, 1994, as Fle No. 1823117, Washoe County,
Records. 
Washoe Placer Survey No. 4323 
San Emidlo Placer Survey No. 4323

San Emilio Placer Survey No. 4323 
South 460 feet of Higgins Placer
Survey No. 4323 
South 460 feet of Antra Placer Survey No. 4036 

EXHIBIT G-1 - 2 

Bureau of Land Management and Department of Interior
Leases, Site Licenses and Rights of Way 

The remainder of the site consists of the following leasehold
interests acquired by the Borrower: 

	
    Number 
	
    Type
    
	
    Legal
      Description 
	
    Notes 

	
    NVN 75555 
	
    Lease 
	
    The East 1/2, and the East 1/2
      of the West 1/2 of Section 24, Township 29 North, Range 22 East,
      M.D.B.&M. 

 
	
    Company has complied
      with all stipulations necessary to construct, operate, and maintain the
      plant in its current and expanded condition. 

	
    The East 1/2 , and
      the East 1/2 of the West 1/2 of 
Section 25, Township 29 North, Range
      22 East, 
M.D.B.&M. 

	
    NVN 75556 

	
    Lease
    

	
    The East 1/2 of the
      East 1/2 of Section 11, Township 29 North, Range 22 East, M.D.B.&M. |

 
	
    Company
      has complied with all stipulations necessary to construct, operate, and
      maintain the plant in 
its current and expanded condition. 

	
    All of Sections
      12,13 and the Northeast 1/4 of the 
Northeast 1/4 of 14, Township 29
      North, Range 22 
East, M.D.B.&M. 

	
    NVN 75557 
	
    Lease 
	
    All of Section 30
      and 31 in Township 29 North, Range 23 East, M.D.B.&M. 
	
    Company has complied
      with all stipulations necessary to construct, operate, and maintain the
      plant in its current and expanded condition. 

	
    NVN 75558 
	
    Lease 
	
    The Southeast 1/4 of
      the Southeast 1/4 of Section 35, Township 29 North, Range 22 East,
      M.D.B.&M. 

 
	
    Company
      has complied with all stipulations necessary to construct, operate, and
      maintain the plant in 
its current and expanded condition. 

	
    All of Section 36,
      Township 29 North, Range 22 East, M.D.B.&M. 

	
    N 63006 
	
    Lease 
	
    All of Sections 32,
      33 and 34 in Township 29 North, Range 23 East, M.D.B.&M. 
	
    

	
    N 63007 
	
    Lease 
	
    All of Sections 27,
      28 and 29 in Township 29 North, Range 23 East, M.D.B.&M. 
	
    

	
    N 63004 
	
    Lease 
	
    All of Sections 15
      and 21 in Township 29 North, Range 23 East, M.D.B.&M. 
	
    

	
    N 42707 
	
    Lease 
	
    T. 29 N., R 23 E,
      Mount Diablo Meridian, State of Nevada, County of Washoe 
Sec. 16: Lots
      1,2,3,4; 
Sec. 17: Lots 1,2,3,4, SW 1/4 NE 1/4, W 1/2 W 1/2; SE
      1/4;
Sec. 20: Lot 1, NW 1/4 NE 1/4, S 1/2 NE 1/4, W 1/2, SE
      1/4;
Sec. 21: Lots 1,2,3,4, S 1/2 N 1/2 , S 1/2 
	
    

EXHIBIT G-1 - 3 

	
    Number 
	
    Type 
	
    Legal Description

	
    Notes 

	
    N 47169 

	
    Site license 

	
    A parcel of land situate in the Southeast
      one-quarter (1/4) of the Northwest one-quarter (1/4) of Section 21, T. 29
      N., R. 23 E., MDM, Washoe County, Nevada, containing 2.709 acres of land
      more or less and being more particularly described as follows: Commencing
      at the North one-quarter (1/4) of said Section 21 and proceeding, thence
      S. 5°13'58" W., 1,829.50 feet to the TRUE POINT OF BEGINNING, being the
      Northeasterly corner of said parcel. 

    

	
    Site license that authorizes
      construction, operation and maintenance of current power plant.
  

	
    Thence, around said parcel, the following 14
      courses and distances: 

    

	
    South 168.00 feet, East 58.00 feet,
      South 50.00 feet, West 50.00 feet, South 118.00 feet, West 212.00 feet,
      North 174,00 feet, West 143.00 feet, North 162.00 feet, East 25.00 feet,
      North 150.00 feet, East 150.00 feet, South 150.00 feet, East 172.00 feet
      to the TRUE POINT OF BEGINNING. 

	
    N 57441 

	
    ROW 

	
    T. 29 N., R. 23 E., Sec.
      21: Lots 2 and 3, SE 1/4 NW 1/4 Mount Diablo Meridian, Nevada. 

	
    Authorizes holder to construct,
      operate, maintain, and terminate a 6” water pipeline and buried telephone
      line to serve plant. 

    

	
    Because the Project is currently
      operating as a unitized resource, Borrower currently operates the
      geothermal field as a unit and is not required to obtain rights of way per
      regulation. 

	
    N 43284 

	
    ROW 

	
    Amended in 1993 to include
      buried water pipeline and telephone line described as follows: 
T. 30
      N., R. 22 E., Sec. 36, NE 1/4. 
T. 30 N., R. 23 E., Sec. 31, Lots 1, 2,
      and 3, 
SE 1/4 NW 1/4, E 1/2 SW 1/4. 
T. 29 N., R. 23 E., Sec. 6,
      Lots 2 and 3, SW 1/4 NE 1/4, N 1/2 SE 1/4, SE 1/4 SE 1/4, 
Sec. 7, E
      1/2 NE 1/4, 
Sec. 8, Lot 4, SW 1/4 NW 1/4, W 1/2 SW 1/4, SE 1/4 SW 1/4.
    

      

	
    ROW for access road and buried
      telephone cable and water pipeline. 

	
    Because the Project is currently
      operating as a unitized resource, Borrower currently operates the
      geothermal field as a unit and is not required to obtain rights of way per
      regulation. 

	
     
	
     
	
    Additionally, amended in 1993 to add
      a buried telephone cable that will continue on to the ORMAT geothermal
      power plant another 11,107.30 feet one foot east of the road center
    line.
	
     

EXHIBIT G-1 - 4 

	
    Number 
	
    Type 
	
    Legal Description 
	
    Notes 

	
    
N 47395 
	
    ROW 
	
    Mount Diablo Meridian, Nevada 
T.
      29 N., R. 23 E., 
Sec. 21, S 1/2 NE 1/4, SE 1/4 NW 1/4, 
Sec. 22, SW
      1/4 NE 1/4, S 1/2 NW 1/4, N 1/2 SE 1/4 
Sec. 23, N 1/2 SW 1/4, SE 1/4
      SW 1/4, S 1/2 SE 1/4 
Sec. 25, Lots 3 and 4, - W 1/2 NW 1/4, SE 1/4 NW
      1/4, NE 1/4 SW 1/4, NW 1/4 SE 1/4 Sec. 26, NE 1/4 NE 1/4 

	
    Right of Way for transmission line over and
      across Mount Diablo Meridian, Nevada. 

	
    Because the Project is currently
      operating as a unitized resource,  Borrower currently operates the
      geothermal field as a unit and is not required to obtain rights of way per
      regulation. 

	
    N 49240
      

	
    ROW
      

	
    Mount Diablo Meridian, Nevada 
	
    Right of Way for roads, pipelines,
      buried cable and wells on public lands (or Federal land for MLA Rights of
      Way). 

	
      

	
    T. 30 N., R. 22 E, Sec 36, NE 1/4
  

	
    T. 29 N., R. 23E., Sec. 6, Lots 2
      and 3, SW 1/4 NE 1/4, N 1/2 SE 1/4, SE 1/4 SE 1/4, 

	
    Sec. 7, E 1/2 NE 1/4; 
	
    Because the Project is
      currently operating as a unitized resource, Borrower currently operates
      the geothermal field as a unit and is not required to obtain rights of way
      per regulation. 

	
    Sec. 8, SW 1/4 NW 1/4, W 1/2 SW 1/4,
      SE 1/4 

	
    SW 1/4, 

	
    Sec. 17, SW 1/4 NE 1/4, E 1/2 NW
      1/4, NE 1/4 

	
    SW 1/4, W 1/2 SE 1/4, 

	
    Sec. 20, Lot 1, NW 1/4 NE 1/4,

	
    Sec. 21, Lot 4, S 1/2 NW 1/4 

	
    T. 30 N., R 23 E., Sec 31, Lots 1,
      2, 3, SE 1/4 

	
    NW 1/4, E 1/2 SW 1/4.

EXHIBIT G-1 - 5 

     EXHIBIT G-2 
to Financing
Agreement 

SCHEDULE OF APPLICABLE PERMITS 

Part I - Current Permits 

	
    Agency 
	
    Permit 
	
    Notes 

	
    Nevada Division of Water Resources 
	
    Permit No. 69320 
	
    Water Right 

	
      
	
    Permit No. 79899 
	
    Water Right 

	
      
	
    Permit No. 79900 
	
    Water Right 

	
      
	
    Permit No. 66946 
	
    Water Right 

	
    Washoe County 
	
    Case No. SW10-002 
	
    Special Use Permit 

	
    
	
    
	
    Regional Plan Amendment required as a condition
      to permit, which amendment was approved by the Regional Planning Governing
      Board on February 10 2011. 

	
    
	
    
	
    Assignment to USG Nevada LLC in
      process. 

	
    State of Nevada Commission on 
	
    Permit No. 107, 
	
    Drilling Permit 

	
    Mineral Resources, Division of 
	
    API No. 27-031-90063 
	
      

	
    Minerals, Oil, Gas, and Geothermal 
	
    Well Name: 43-21 
	
      

	
    Permits 
	
    Permit No. 136, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90074 
	
      

	
      
	
    Well Name: 52-21 
	
      

	
      
	
    Permit No. 161, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90085 
	
      

	
      
	
    Well Name: 42-21 
	
      

	
      
	
    Permit No. 163, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90087 
	
      

	
      
	
    Well Name: 35-21 
	
      

	
      
	
    Permit No. 164, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90088 
	
      

	
      
	
    Well Name: 45-21 
	
      

	
      
	
    Permit No. 173, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90090 
	
      

	
      
	
    Well Name: 61-21 
	
      

	
      
	
    Permit No. 179, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90096 
	
      

	
      
	
    Well Name: 81-21 
	
      

	
      
	
    Permit No. 180, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90097 
	
      

	
      
	
    Well Name: 83-21 
	
      

	
      
	
    Permit No. 187, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90098 
	
      

	
      
	
    Well Name: 53-21 
	
      

EXHIBIT G-2 - 1 

	
      
	
    Permit No. 189, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90100 
	
      

	
      
	
    Well Name: 63-21 
	
      

	
      
	
    Permit No. 280, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90133 
	
      

	
      
	
    Well Name: 51-16 
	
      

	
      
	
    Permit No. 312, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90152 
	
      

	
      
	
    Well Name: 75-16 
	
      

	
      
	
    Permit No. 360; 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90160 
	
      

	
      
	
    Well Name: 65C-16 
	
      

	
      
	
    Permit No. 403; 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90184 
	
      

	
      
	
    Well Name: 75B-16 
	
      

	
      
	
    Permit No. 418; 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90191 
	
      

	
      
	
    Well Name: 76-16 
	
      

	
      
	
    Permit No. 279; 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90132 
	
      

	
      
	
    Well Name: 28-9 
	
      

	
      
	
    Permit No. 204, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90109 
	
      

	
      
	
    Well Name 32-21 
	
      

	
      
	
    Permit No. 111, 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90065 
	
      

	
      
	
    Well Name Obs #2 
	
      

	
      
	
    Permit No. 121; 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90068 
	
      

	
      
	
    Well Name Obs #3 
	
      

	
      
	
    Permit No. 122; 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90069 
	
      

	
      
	
    Well Name Obs #4 
	
      

	
      
	
    Permit No. 123; 
	
    Drilling Permit 

	
      
	
    API No. 27-031-90070 
	
      

	
      
	
    Well Name Obs #5 
	
      

	
    Washoe County Air Quality 
	
    Permit No. A01176A 
	
    Permit to Operate (Power Plant)
  

	
    Management Division (Permit to Operate) 
	
    Permit No. A04-0002 
	
    Permit to Operate (Standby
      Generators) 

	
      
	
    Permit No. D10007 
	
    Permit to Operate (Dust Control)
  

	
    
	
    Permit No. A08001 
	
    Permit to Operate (Exploratory
      Drilling) 

	
    Nevada Division of Environmental Protection 
	
    Permit No. TNEV2012334 
	
    Temporary Discharge Permit
      (Blowdown) 

	
    
	
    Permit No. UNEV87041 
	
    Underground Injection
      Control/Authorization to Inject/Discharge 

	
      
	
    Exempt per NDEP evaluation. 
	
    Sediment Control Plan and Permit
  

	
      
	
    Permit No. 10-2421 
	
    Grading Permit. Final. 

	
    Washoe County Building Permit and Grading
      Permits 
	
    Permit No. 10-2422 
	
    Comm Bldg- H-Plans Comm. (Site
      improvements) (need certificate of occupancy or completion)

EXHIBIT G-2 - 2 

	
    
	
    Permit No. 11-0096 
	
    Comm Bldg- H-Plans Comm. (equipment
      foundation and cooling tower footing) (need certificate of occupancy or
      completion) 

	
    
	
    Permit No. 11-0351 
	
    Comm Bldg- H-Plans Comm. (metal
      building to house chemicals) (need certificate of occupancy or completion)
    

	
    
	
    Permit No. 11-1039 
	
    Comm Bldg- H-Plans Comm. (process
      piping) (need certificate of occupancy or completion) 

	
    
	
    Permit No. 11-1040 
	
    Comm Bldg- H-Plans Comm. (cooling
      tower) (need certificate of occupancy or completion) 

	
    
	
    Permit No. 11-1115 
	
    Comm Bldg- H-Plans Comm.
      (telecommunications) (need certificate of occupancy or completion) 

	
    
	
    Permit No. 11-1476 
	
    Pending; Comm Bldg- H-Plans
      Comm. (transmission lines and poles) 

	
    
	
    Permit No. 11-2244 
	
    Pending Comm Bldg- H-Plans
      Comm. (fire sprinklers, other replacements) 

	
    
	
    Permit No. 11-0361 
	
    Pending - Comm Bldg- H-Plans
      Comm. (fire alarm) 

	
    Federal Energy Regulatory Commission (“FERC”)

	
    Form 556 filed by USG Nevada LLC on
      11/4/2011 
	
    Self-Certification of Qualifying
      Facility Status 

Part II - Pending Permits 

Certificate of Compliance/Completion will be required with
regard to Air Quality Permitting. 

Certificates of Completion or Occupancy will be required for
final approval of Building Permits, where noted in Part I. 

Permit Nos. 11-1476, 11-2244, and 11-0361 are currently
pending, but in the process of approval, no problems are currently known or
expected in obtaining approval. 

EXHIBIT G-2 - 3 

     EXHIBIT G-3 
to Financing
Agreement 

PROJECT BUDGET 

See attached. 

 

EXHIBIT G-3 - 1 

	San Emidio Geothermal Project - Unit 1
      (Repower) 	 	  	 	 	  	 	 	  	 	 	  	 
	Water Cooled Power Plant (South of Dehy
      Plant) 	 	  	 	 	  	 	 	  	 	 	  	 
	Capital Cost Summary 	 	  	 	 	  	 	 	  	 	 	  	 
	Rev 12i - 11/8/2011 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	Project 	 	 	Included 	 	 	Previoussly 	 	 	To Be Paid 	 
	Description 	 	Costs 	 	 	in Loan 	 	 	Paid By Equity 	 	 	by Equity 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	USG ADMINISTRATIVE:
	 	  	 	 	  	 	 	  	 	 	  	 
	     Construction
      Management & Operator Training/Startup Support 	$	 270,000 	 	 	  	 	 	  	 	$	 270,000 	 
	   
       Permits & Bonds 	$	 82,000 	 	$	 82,000 	 	 	  	 	 	  	 
	USG Administrative Cost 	$	 352,000 	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	EPC POWER PLANT CONTRACT: 	 	  	 	 	  	 	 	  	 	 	  	 
	     Power
      Plant (water cooled) 	$	 23,218,425 	 	$	 23,218,425 	 	 	  	 	 	  	 
	     Change Orders: 	 	  	 	 	  	 	 	  	 	 	  	 
	CHANGE ORDERS -
      EXECUTED: 	 	  	 	 	  	 	 	  	 	 	  	 
	           
         - Builders Risk Insurance - Provided by USGN but added to
      Loan (CO#1) 	$	 32,419 	 	$	 32,419 	 	 	  	 	 	  	 
	       
             - Technical Assistance & Services
      (budgeted above, but added to loan) (CO#2) 	$	 650,000 	 	$	 650,000 	 	 	  	 	 	  	 
	           
         - Accelerated work per USGN request for ITC (CO#3) 	$	 41,731 	 	$	 41,731 	 	 	  	 	 	  	 
	       
             - Added 2x50% CW pumps, changed to 90/10
      CuNi CLF condensers, Baldor motors for CT, Thicker Fill in CT (CO#4)
    	$	 764,594 	 	$	 764,594 	 	 	  	 	 	  	 
	           
       - Moved NVE transmission interconnection cost to loan (CO#5)
    	$	 266,800 	 	$	 266,800 	 	 	  	 	 	  	 
	              
      - Enhanced machinery monitoring, upgrade control infrastructure
      for Phase 2, install prod. Well VFDs, remove main breaker out
      of MCC, Refrig. Condenser water box protection, water pump replacement
      (CO#6) 	$	 564,859 	 	$	 564,859 	 	 		 	 		 
	             
       - Updated the "approved" schedule. The Guaranteed
      Substantial Completion Date remains at 10/31/11, with the
      following caveats; (1) Schedule bonus still based on 10/31/11, (2) the
      Delay Liquidated Damage will be waived until 11/23/11. No price
      change. (CO#7) 	$	 - 	 	$	 - 	 	 		 	 		 
	            
      - Added 3" brine drain line, added radiant floor heating, added
      water line to dehy tanks, removed concrete fence, changed
      color of cooling tower to cactus green, credit to USG for Benham's share
      of camera, added passive repeater tower, change chem bldg roof
      color, unforeseen soil conditions along t-line, added sales tax
      ($1,550,000). (CO#8) 	$	 1,735,102 	 	$	 1,735,102 	 	 		 	 		 
	            
      - Projects added to USG Scope that were previously thought to be
      added to Benham scope. Included sweet water well changes (new
      pump, vfd, pipe modifications, valving), additional controls for wells,
      remodel control room, install 480V power to office/control room
      (CO#9) 	$	 175,000 	 	$	 175,000 	 	 		 	 		 
	            
      - Added CW piping ($686,262.87), drain pond & ditch for
      brine/blowdown lines, evap. cooler, trench drains in chem
      bldg, fire line/hydrant, brine cross over, stairway on CW pits.
      (CO#10) 	$	 740,291 	 	$	 740,291 	 	 		 	 		 
	            
      - Cost and scope increases for projects added to USG Scope. Added
      scope is primarily for the injection controls needed to
      provide back pressure during startup (CO#11) 	$	 85,280 	 	$	 85,280 	 	 		 	 		 
	            
      - Added chemical system, water skid, unforeseen soil conditions on
      t-line poles, feeder cables to production wells,seal water
      heating, fire system engineering, and credit for reduced blowdown piping.
      (CO#12) 	$	 244,060 	 	$	 244,060 	 	 		 	 		 
	           
         - Added purchase cost of Spare Parts. (CO#13) 	$	 234,000 	 	$	 234,000 	 	 	  	 	 	  	 
	       
             - Added purchase cost of chemicals ($44,931)
      and added NVE cost for comm. lines ($514). (CO#14) 	$	 45,445 	 	$	 45,445 	 	 	  	 	 	  	 
	EXECUTED CHANGE ORDERS SUBTOTAL
      CHANGE ORDERS - IN PROCESS (Estimated costs): 	$	 5,579,580 	 	 		 	 		 	 		 
	       
             - Sulphric acid detection system &
      communications 	$	 5,000 	 	$	 5,000 	 	 	  	 	 	  	 
	           
         - Reduction in cost of e-monitor 	$	 (105,000	) 	$	 (105,000	) 	 	  	 	 	  	 
	       
             - Addition of oil cooler for motor thrust
      bearing (TAS), and piping, instrument connections (Benham) 	$	 15,000 	 	$	 15,000 	 	 	  	 	 	  	 
	           
         - Miscellaneous Unidentified/Unlisted Change Orders
	$	 5,000 	 	$	 5,000 	 	 	  	 	 	  	 
	CHANGE ORDERS IN PROCESS
      SUBTOTAL 	$	 (80,000	) 	 	  	 	 	  	 	 	  	 
	     Benham Interest During
      Construction (IDC) 	$	 1,350,000 	 	$	 1,350,000 	 	 	  	 	 	  	 
	     Sales
      Tax on Power Plant & Change Orders 	$	 1,450,000 	 	 	  	 	 	  	 	 	  	 
	     Outside the Fence
      Costs (Costs included in Power Plant Line Item): 	 	  	 	 	  	 	 	  	 	 	  	 
	       
           - Production & Injection Pipelines 	 	  	 	 	  	 	 	  	 	 	  	 
	           
       - Transmission Lines and Equipment 	 	  	 	 	  	 	 	  	 	 	  	 
	       
           - 12.5-kV Well Field Lines 	 	  	 	 	  	 	 	  	 	 	  	 
	           
       - Cooling Water Supply Piping, Blow-down Piping &
      Equipment 	 	  	 	 	  	 	 	  	 	 	  	 
	       
           - Davis-Bacon Allowance for DOE 1705 Loan 	 	  	 	 	  	 	 	  	 	 	  	 
	Benham EPC Subtotal 	$	 30,068,005 	 	 	  	 	 	  	 	 	  	 
	     Power
      Plant Cost per kW (Net of Power Plant) 	 	3,257 	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	NVE TRANSMISSION LINE
      UPGRADES: 	 	  	 	 	  	 	 	  	 	 	  	 
	     NVE
      Interconnection 	$	 25,000 	 	 	  	 	$	 25,000 	 	 	  	 
	NVE Transmission Upgrade
      Cost 	$	 25,000 	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	USG MISCELLANEOUS: 	 	  	 	 	  	 	 	  	 	 	  	 
	     Trucks, Fork Lift,
      Tools, Office Furnishings, Etc 	 	  	 	 	  	 	 	  	 	 	  	 
	     Sales
      Tax on Spare Parts 	$	 18,077 	 	 	  	 	 	  	 	$	 18,077 	 
	     Sales Tax on Other USG
      Miscellaneous 	$	 - 	 	 	  	 	 	  	 	 	  	 
	USG Miscellaneous Cost
    	$	 18,077 	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	TOTAL DIRECT CONSTRUCTION
      COST 	$	 30,463,082 	 	 	  	 	 	  	 	 	  	 
	     Total Construction
      Cost per kW (Net of Facility) 	 	3,540 	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	CONTINGENCIES: 	 	  	 	 	  	 	 	  	 	 	  	 
	   
       Contingency for Power Plant Scope 	$	 50,000 	 	$	 50,000 	 	 	  	 	 	  	 
	     Contingency for USG
      Scope, Except Drilling & PP 	$	 50,000 	 	$	 50,000 	 	 	  	 	 	  	 
	Total Contingencies
	$	 100,000 	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	TOTAL CONSTRUCTION BUDGET
      AMOUNT 	$	 30,563,082 	 	$	 30,250,005 	 	$	 25,000 	 	$	 288,077 	 

     EXHIBIT G-4 
to Financing
Agreement 

PROJECT SCHEDULE 

See attached. 

 

EXHIBIT G-4-1 

 

     EXHIBIT G-5 
to Financing
Agreement 

PENDING LITIGATION 

None. 

 

EXHIBIT G-5 - 1

     EXHIBIT G-6 
to Financing
Agreement 

HAZARDOUS SUBSTANCES DISCLOSURE 

None. 

 

EXHIBIT G-6 - 1 

     EXHIBIT G-7 
to Financing
Agreement 

SCHEDULE OF PROJECT DOCUMENTS 

Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Financing Agreement.

Engineering, Procurement and Construction Contract, dated
August 27, 2010, between Borrower and SAIC Constructors, LLC, an Oklahoma
limited liability company, formerly known as Benham Constructors, LLC (the
“Construction Lender”). 

Credit Addendum to Engineering, Procurement and Construction
Contract, dated August 27, 2010, as amended by that certain First Amendment to
Credit Addendum dated May 20, 2011 between Borrower and Construction Lender, and
all attachments thereto and documents executed in connection therewith,
including but not limited to the following: 

Promissory Note dated August 27, 2010
in the principal amount of $24,553,000 by Borrower to the order of Construction
Lender. 

Security Agreement dated August 27,
2010 between Borrower and Construction Lender; Leasehold Deed of Trust with
Power of Sale, Security Agreement and Fixture Filing, executed by Borrower, as
grantor, for the benefit of Construction Lender. 

UCC-1 Financing Statement filed with
the Delaware Department of State, Filing Number 2010 3025537. 

Collateral Assignment of Contracts,
Leases, Permits and Rights of Way dated August 27, 2010 between Borrower and
Construction Lender. 

Collateral Assignment of Power Purchase
Agreements dated August 27, 2010 between Borrower and Construction Lender. 

Indemnification Agreement (Kosmos
Lease) dated August 27, 2010 between U.S. Geothermal Inc. and construction
Lender. 

Environmental Indemnification Agreement
dated August 27, 2010 between Borrower and Construction Lender. 

Landlord’s Consent Agreement dated as
of August 27, 2010 between U.S. Geothermal, Inc., an Idaho corporation, and
Construction Lender. 

Exhibit G-7 - 1 

Amended and Restated Change in Control
Guaranty dated as of October 13, 2010 by U.S. Geothermal, Inc., a Delaware
corporation, in favor of Construction Lender. 

Joint Escrow Instructions made by
Borrower and Construction Lender to First American Specialty Services. 

Assignments of Record Title Interest in
Leases For Oil and Gas or Geothermal Resources (BLM Leases). 

Oil, Gas, and Geothermal Notice of
Change of Owner (Nevada Division of Minerals Well Permits). 

Reports of Conveyance and Notice of
Pledge (Nevada Division of Water Resources Water Permits). 

Assignment and Assumption of Lease
dated as of August 27, 2010 made by Borrower (Kosmos Lease). 

Assignment and Assumption of Lease
dated as of August 27, 2010 made by Borrower (Water Lease). 

Assignment and Assumption Agreement
dated as of August 27, 2010 made by Borrower (Power Purchase Agreement). 

Change Order No. 001 dated November 12, 2010 regarding builders
risk insurance premium. 

Change Order No. 002 dated November 12, 2010 regarding
technical assistances and consulting services. 

Change Order No. 003 dated November 18, 2010 regarding early
site mobilization to expedite preliminary site work and installation of new make
up water line. 

Change Order No. 004 dated December 1, 2010 regarding cooling
water pumps, cooling towers and related equipment. 

Change Order No. 005 dated December 29, 2010 regarding NV
Energy interconnection. Change Order No. 006 dated January 14, 2011 regarding
enhanced machinery condition monitoring, control infrastructure upgrades and
other equipment. 

Change Order No. 007 dated March 11, 2011 regarding scheduling
and guaranteed substantial completion. 

Change Order No. 008 dated May 23, 2011 regarding additional
work and taxes. 

Change Order No. 009 dated June 2, 2011 regarding changes to
equipment and remodel of control room. 

Exhibit G-7 - 2 

Change Order No. 010 dated July 11, 2011 regarding equipment
purchases and additional labor. 

Change Order No. 011 dated August 30, 2011 regarding repairs to
fire water system, inspections to pipeline and additional work. 

Change Order No. 012 dated September 16, 2011 regarding
additional work to chemical treatment equipment, building permits, and other
items. 

Change Order No. 013 dated September 23, 2011 regarding spare
parts for power plant. Change Order No. 014 dated October 27, 2011 regarding
increase to interconnection task and chemicals for startup. 

Management Services Agreement, dated as of September 30, 2010
between Borrower and U.S. Geothermal Services LLC. 

Amended and Restated Long-Term Portfolio Energy Credit and
Renewable Power Purchase Agreement between Borrower and Sierra Pacific Power
Company, dated May 31, 2011 (subject to approval by the Public Utilities
Commission of Nevada; upon approval by PUCN, the 1987 PPA will be terminated).

Long-Term Agreement for Purchase and Sale of Electricity dated
December 31, 1986 between Sierra Pacific Power Company and Borrower, as
successor in interest to Michael D. Steward, dba Empire Farms, as amended by the
Amendment to Long-term Agreement for Purchase and Sale of Electricity executed
as of December 28, 1987. 

Standby Service Agreement dated September 2008 between Borrower
and Sierra Pacific Power Company. 

USG Nevada LLC Empire 15 MW Project Interconnection Facilities
Study Report prepared by NV Energy and dated October, 2009. 

Interconnection Feasibility Study Agreement dated July 29, 2008
between Borrower and Sierra Pacific Power Company. 

Small Generator Interconnection Agreement (Service Agreement
No. #10-01277), dated as of December 28, 2010 between Sierra Pacific Power
Company d/b/a NV Energy and Borrower. 

Assistance Agreement between U.S. Geothermal Inc. and U.S.
Department of Energy, Golden Field Office, dated effective January 29, 2010,
Award No. DE-EE0002847. 

Water Lease Agreement dated as of August 1, 2010 between US
Geothermal Inc., an Idaho corporation, and Borrower. 

 Memorandum of Office and Land Lease dated as of August
27, 2010 between U.S. Geothermal Inc. and Borrower. 

Exhibit G-7 - 3 

Limited Liability Company Agreement of Borrower, dated as of
March 5, 2008, as amended by that certain First Amendment to Limited Liability
Company Agreement, dated as of September 19, 2011, and as further amended by
that Second Amendment to Limited Liability Company Agreement to be dated on or
before the Financial Closing Date. 

Limited Liability Company Agreement of Nevada USG Holdings,
LLC, dated as of September 19, 2011, and amended by that certain First Amendment
to Limited Liability Company Agreement to be dated on or before the Financial
Closing Date. 

All of the Leases, Rights of Way and Licenses listed on Part II
of Exhibit G-1. The Applicable Permits listed on Exhibit G-2. 

Exhibit G-7 - 4 

EXHIBIT H 
to Financing Agreement 

Insurance Requirements

U.S. GEOTHERMAL INC. 
INSURANCE COVERAGE
10/31/2011 

DIRECTORS & OFFICERS: 

CONTINENTAL CASUALTY COMPANY

$10,000,000 Executive Liability and Indemnification 
$100,000 Deductible

GENERAL LIABILITY: 

FEDERAL INSURANCE COMPANY

$2,000,000 Aggregate/ 
$1,000,000 per Occurrence 

EXCESS & UMBRELLA LIABILITY: 

FEDERAL INSURANCE COMPANY

$19,000,000 Aggregate/ 
$19,000,000 per Occurrence 

WORKERS’ COMPENSATION: 

LIBERTY NORTHWEST 
$1,000,000
Aggregate 

SURETY BOND/ LETTERS OF CREDIT: 

IDWR Reclamation Bond $260,000 
NV
Statewide Drilling Bond $50,000 
BLM Geothermal Lease Bonds $150,000 
OR
DOGAMI Reclamation Program $285,000 

COMMERCIAL AUTO: 

FEDERAL INSURANCE COMPANY

$1,000,000 Liability 

ALL RISK PROPERTY:

FEDERAL INSURANCE COMPANY 
All Risk
including flood, earthquake, boiler & machinery 
RREI- $23,300,000
coverage/ $250,000 deductible 
$4,938,000 Business Income, $648,519 Other
Buildings 
San Emidio- $1,800,000 Buildings, $3,200,000 Personal Property

$8,900,000 Oil & Gas Lease Property

     EXHIBIT I 
to Financing
Agreement 

LENDER/LENDING OFFICE 

	1. 	
      Ares Capital Corporation 
245 Park Avenue, 44th
      Floor 
New York, NY 10167 
Tel: (212) 750-4915 
Fax: (212)
      750-1777 
Attention: Raymond Wright

Exhibit I-1exhibit4-1.htm

Exhibit 4.1

THE CLOROX COMPANY 

___________________________________ 

 

THIRD SUPPLEMENTAL INDENTURE

Dated as of November 17, 2011

with

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee 

 

To 

 

INDENTURE

Dated as of October 9, 2007

with

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

____________________________________

 

Senior Debt Securities

 

1 

 

 

 

THIRD SUPPLEMENTAL INDENTURE 

 

     THIRD SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of November 17, 2011, is between The Clorox Company, a Delaware corporation (the “Issuer”), and Wells Fargo Bank, National Association, a national banking association (“Trustee”). 

 

W I T N E S S E T H : 

 

     WHEREAS, the Issuer and the Trustee are parties to an Indenture dated as of October 9, 2007 between the Issuer and The Bank of New York Mellon Trust Company, N.A. (“BNYMTC”), as supplemented by the First Supplemental Indenture, dated as of November 9, 2009, among the Issuer, BNYMTC and the Trustee (the “First Supplemental Indenture”) and the Second Supplemental Indenture, dated as of November 9, 2009, among the Issuer and the Trustee (the “Second Supplemental Indenture;” and such Indenture as supplemented by the First Supplemental Indenture and the Second Supplemental Indenture, the “Indenture”), which, pursuant to Section 301 of the Indenture, provides for the issuance of an unlimited amount of Securities in one or more series; 

 

     WHEREAS, the Issuer wishes to issue senior notes designated as 3.80% Senior Notes due 2021 in the aggregate principal amount of $300,000,000 (the “Notes”); 

 

     WHEREAS, pursuant to Section 901 of the Indenture, the Issuer and the Trustee are authorized to execute and deliver this Supplemental Indenture without the consent of any holder of Securities issued under the Indenture; 

 

     WHEREAS, the Issuer, by action duly taken, has authorized the execution of this Supplemental Indenture and the issuance of the Notes; 

 

     WHEREAS, all actions necessary to make the Notes (when executed by the Issuer and completed, authenticated, and delivered by the Trustee as required by the Indenture) the legal, valid and binding obligations of the Issuer and to constitute this document a legal, valid and binding Supplemental Indenture according to its terms have been duly taken; and 

 

     WHEREAS, in accordance with Sections 102 and 903 of the Indenture, there has been delivered to the Trustee on the date hereof an Officers’ Certificate and Opinion of Counsel certifying that this Supplemental Indenture complies with applicable provisions of the Indenture. 

 

2 

 

 

 

     NOW THEREFORE, in consideration of the foregoing and the mutual premises and covenants contained herein and for other good and valuable consideration, the parties hereto agree as follows: 

 

	1)	DEFINITIONS. Capitalized terms used but not defined in this Supplemental Indenture shall have the specified meanings set forth in the Indenture.
	       	 
	2)	AMENDMENTS OF INDENTURE:

(i) The definitions of the following terms contained in the Indenture shall not apply to the Notes and shall be replaced by the definitions set forth below:
	 
	 	
     “Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the Company’s properties or assets and of the Company’s subsidiaries’ properties or assets taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than the Company or one of the Company’s subsidiaries; (2) the adoption of a plan relating to the Company’s liquidation or dissolution; (3) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any “person” (as defined in clause (1) above) becomes the beneficial owner, directly or indirectly, of more than 50% of the Company’s then outstanding Voting Stock (measured by voting power rather than number of shares); (4) the first day on which a majority of the members of the Company’s board of directors are not Continuing Directors; or (5) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the Company’s outstanding Voting Stock or Voting Stock of such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person immediately after giving effect to such transaction.

 

     “Change of Control Triggering Event” means the Securities cease to be rated Investment Grade by both Rating Agencies on any date during the period commencing 60 days prior to the date of the public notice of an arrangement that could result in a Change of Control until 60 days following consummation of such Change of Control (the “Trigger Period”), (which Trigger Period shall be extended so long as the rating of the Securities is under publicly announced consideration for possible downgrade by either of the Rating Agencies). Unless both Rating Agencies are providing a rating for the Securities at the commencement of any Trigger Period, the Securities will be deemed to have ceased to be rated Investment Grade by such Rating Agencies during that Trigger Period. Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been completed.

 

3 

 

 

	 	
     “Comparable Treasury Price” means, with respect to any redemption date, (1) the Reference Treasury Dealer Quotation for such redemption date, after excluding the highest and lowest of the Reference Treasury Dealer Quotations, or (2), if the Company is unable to obtain at least three such Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained by the Company. 

 

     “Independent Investment Banker” means Citigroup Global Markets Inc., J.P. Morgan Securities LLC, or Wells Fargo Securities, LLC, as selected by the Company or, if all such firms are unwilling or unable to select the applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company. 

 

     “Reference Treasury Dealer” means Citigroup Global Markets Inc., J.P. Morgan Securities LLC, or a Primary Treasury Dealer (as defined below) selected by Wells Fargo Securities, LLC, and their respective successors; provided, however, that if any of the foregoing cease to be a U.S. government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefore another Primary Treasury Dealer. 

	 	 
	 	(ii) The following definitions shall apply to the Notes:
	       	       
	 	

     “Investment Grade” means “a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.

 

     “Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors, managers or trustees, as applicable. 

	 	 
	 	
(iii) The first sentence of Section 403 contained in the Indenture shall not apply to the Notes and shall be replaced by the following:

	 	 
	 	
     Upon the Company’s exercise under Section 401 of the option applicable to this Section 403, the Company shall be released from any obligations under the covenants contained in Sections 801, 1004, 1007, 1008 and 1009 hereof (and any other covenant in addition to those set forth herein applicable to the Securities of any series pursuant to Section 301 hereof specified to be released as provided under this Section 403) with respect to the Outstanding Securities of the particular series, along with any additional covenants contained in such Security or any supplemental Indenture in connection therewith, on and after the date the conditions set forth below in Section 404 are satisfied (hereinafter, “Covenant Defeasance”), and the Securities of that series shall thereafter be deemed not “Outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “Outstanding” for all other purposes hereunder (it being understood that such Securities shall not be deemed outstanding for accounting purposes).

 

4 

 

 

	 	(iv) The first sentence of Section 406 contained in the Indenture shall not apply to the Notes and shall be replaced by the following: 
	       	       
	 	
     Notwithstanding the satisfaction and discharge of this Indenture and of the Securities of a particular series referred to in Sections 401, 402, 404, or 405, the respective obligations of the Company and the Trustee for the Securities of a particular series under Sections 303, 304, 305, 309, 407, 408, 409, 410, and 508, Article Six, and Sections 701, 702, 1002, 1003, 1004 and 1006, shall survive with respect to the Securities of that series until the Securities of that series are no longer outstanding, and thereafter the obligations of the Company and the Trustee for the Securities of a particular series with respect to that series under Sections 407, 408, 409, and 410 shall survive.

	 	 
	 	
(v) Section 1004 contained in the Indenture shall not apply to the Notes and shall be replaced by the following: 

	 	 
	 	
Section 1004. Offer to Repurchase Upon Change of Control Triggering Event

 

          (A) Upon the occurrence of a Change of Control Triggering Event, unless the Company has exercised its right to redeem the Securities of such series pursuant to Section 1108, each Holder will have the right to require the Company to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of each Holder’s Securities pursuant to the offer described below (the “Change of Control Offer”) at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (the “Change of Control Payment”).  Within 30 days following any Change of Control Triggering Event or, at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall mail a notice to each Holder (with a written copy of such notice to the Trustee) describing the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase the Securities on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures required herein and described in such notice. The notice, if mailed prior to the date of consummation of the Change of Control, will state that the Change of Control Offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Securities as a result of a Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with this Section 1004(A), the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 1004 by virtue of such conflicts.

 

5 

 

 

	       	
          (B) The Company shall not be required to make a Change of Control Offer if a third party makes an offer to purchase the Securities at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, on such Securities to the date of purchase, in the manner, at the times and otherwise in compliance with the requirements for a Change of Control Offer made by the Company and such third party purchases all the Securities properly tendered and not withdrawn under its offer.

 

          (C) On the Change of Control Payment Date, the Company shall, to the extent lawful, (i) accept for payment all the Securities or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all the Securities of such series or portions thereof properly tendered and (iii) deliver or cause to be delivered for cancellation to the Trustee the Securities properly accepted together with an Officers’ Certificate stating the aggregate principal amount of the Securities or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to each Holder of the Securities properly tendered the Change of Control Payment for such Securities, and the Trustee, upon receipt of a Company Request, shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Security of such series equal in principal amount to any unpurchased portion of the Securities surrendered by such Holder, if any; in denominations as set forth in the Indenture.

 

6 

 

 

	3)	ISSUE OF NOTES. The Notes shall be executed, authenticated and delivered in accordance with the provisions of and, except as provided under Clause 2 hereof, shall in all respects be subject to the terms, conditions, and covenants of the Indenture. The aggregate principal amount of the Notes created hereby, which may be authenticated and delivered under this Supplemental Indenture, shall be limited initially to $300,000,000; however, an unlimited amount of additional Securities may be issued as provided in Section 301 of the Indenture.
	       	 
	4)	FORM OF NOTES; INCORPORATION OF TERMS. The Notes and the Trustee’s certificate of authentication thereto shall be substantially in the form provided in Exhibit A to this Supplemental Indenture, the terms of which are hereby incorporated in and made a part of this Supplemental Indenture.
	 
	5)	RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURE PART OF INDENTURE. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities (whether heretofore or hereafter authenticated and delivered) shall be bound hereby.
	 
	6)	GOVERNING LAW. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
	 
	7)	CONFLICTS WITH TRUST INDENTURE ACT. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Supplemental Indenture by any provision of the Trust Indenture Act of 1939, as amended, such required provision shall control.
	 
	8)	COUNTERPARTS. This Supplemental Indenture may be executed and delivered in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
	 
	9)	EFFECT OF HEADINGS. The section headings herein are for convenience only and shall not affect the construction hereof.
	 
	10)	SUCCESSORS AND ASSIGNS. All covenants and agreements in this Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
	 
	11)	SEPARABILITY CLAUSE. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

7 

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above. 

 

	 	COMPANY:
	 	 
	 	THE CLOROX COMPANY
	 	 	 
	 	 	 
	 	By:  	 
	 	 	Name: Charles R. Conradi
	 	 	Title: Vice President – Treasurer
	 	 
	 	  
	 	By:	 
	 	 	Name: Laura Stein
	 	 	Title: Senior Vice President – General Counsel
	 	 
	 	 
	 	TRUSTEE:
	 	 
	 	WELLS FARGO BANK, NATIONAL
	 	ASSOCIATION, as Trustee
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

8 

 

 

EXHIBIT A 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9 

 

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY (THE “DEPOSITARY”) TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

 

THE CLOROX COMPANY 

 

3.80% Senior Notes due 2021 

 

	No. 1	CUSIP NO. 189054 AS8
	 	ISIN NO. US189054 AS87

$300,000,000

as revised by “Exchanges of Interests

in the Global Security,” attached hereto 

 

The Clorox Company, a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000), or such greater or lesser amount set forth on “Exchanges of Interests in the Global Security,” attached hereto, on November 15, 2021 and to pay interest thereon from November 17, 2011 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on May 15 and November 15 in each year, commencing May 15, 2012 at the rate of 3.80% per annum, until the principal hereof is paid or made available for payment; provided that any principal and any such installment of interest that is overdue shall bear interest at the rate of 3.80% per annum (to the extent that payment of such interest shall be legally enforceable) from the dates such amounts are due until they are paid or made available for payment. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable, and punctually paid or duly provided for (except for Defaulted Interest), on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be May 1 or November 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date even if the Securities are cancelled, repurchased or redeemed after the Regular Record Date and on or before the Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. 

 

10 

 

 

Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) will be made by the transfer of immediately available funds to the accounts specified by DTC or any successor depositary. 

 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 

 

[Signatures on the following page] 

 

11 

 

 

     Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

 

     In Witness Whereof, the Company has caused this instrument to be duly executed. 

 

Dated: November 17, 2011 

 

	 	THE CLOROX COMPANY
	 	 	 
	 	 	 
	 	By:  	 
	 	 	Name: Charles R. Conradi
	 	 	Title: Vice President – Treasurer
	 	 
	 	  
	 	By:	 
	 	 	Name: Laura Stein
	 	 	Title: Senior Vice President – General Counsel

     This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. 

 

Dated: November 17, 2011 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

       as Trustee 

 

	By:  	 	 	 
	 	Authorized Signatory	 

12 

 

 

(Form of Reverse of Security) 

 

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued under an Indenture, dated as of October 9, 2007, between the Company and The Bank of New York Mellon Trust Company, N.A. (“BNYMTC”), as trustee, as supplemented by the First Supplemental Indenture dated as of November 9, 2009 among the Company, BNYMTC, and Wells Fargo Bank, National Association, as trustee, the Second Supplemental Indenture dated as of November 9, 2009 between the Company and Wells Fargo Bank, National Association (the “Trustee,” which term includes any successor trustee under the Indenture) and the Third Supplemental Indenture dated as of November 17, 2011 between the Company and the Trustee (the Indenture, as amended by the First Supplemental Indenture, the Second Supplemental Indenture and the Third Supplemental Indenture is herein called the “Indenture”), and reference is hereby made to the Indenture and all indentures supplemental thereto for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. 

 

The Securities are subject to redemption prior to the Stated Maturity upon not less than 30 nor more than 60 days’ notice by mail, at any time, as a whole or from time to time, in part, at the election of the Company, at a Redemption Price equal to the greater of (1) 100% of the principal amount of the Securities to be redeemed or (2) the sum of the present values of the remaining scheduled payments on the Securities to be redeemed consisting of principal and interest, exclusive of interest accrued to the Redemption Date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 30 basis points, plus accrued and unpaid interest to the Redemption Date; provided, that interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities of record at the close of business on the relevant Regular Record Dates referred to on the face hereof, all as provided in the Indenture. 

 

Upon the occurrence of a Change of Control Triggering Event, each Holder of the Securities will have the right to require the Company to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of such Holder’s Securities pursuant to a Change of Control Offer provided for in the Indenture at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, thereon, to the Change of Control Payment Date. Within 30 days following any Change of Control Triggering Event, the Company shall mail to each Holder a notice setting forth the procedures governing such Change of Control Offer as required by the Indenture. 

 

In the event of redemption or repurchase of this Security in part only, a new Security or Securities of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. 

 

13 

 

 

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture. 

 

If an Event of Default with respect to the Securities shall occur and be continuing, the principal of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. 

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification or waiver of the rights and obligations of the Company and the rights of the Holders of the Securities to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of more than 50% in aggregate principal amount of the Securities at the time Outstanding to be affected. The Indenture also contains provisions permitting the Holders of more than 50% in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all of the Securities, to waive compliance with certain provisions of the Indenture and certain past defaults (other than with respect to nonpayment or in respect of a provision that cannot be amended without the written consent of each Holder affected) under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. 

 

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities, the Holders of not less than 25% in aggregate principal amount of the Securities at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee satisfactory indemnity, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. 

 

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.  

 

14 

 

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Securities of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 

 

The Securities are issuable only in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of the Securities of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. 

 

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 

 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 

 

The Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York. 

 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 

 

15 

 

 

ASSIGNMENT FORM 

 

To assign this Security, fill in the form below and have your signature guaranteed: (I) or (we) assign and transfer this Note to 

 

	  
	(Insert assignee’s soc. sec. or tax I.D. no.)
	  
	 
	 
	 
	(Print or type assignee’s name, address and zip code)

and irrevocably appoint ____________________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

 

	Date  	 	 
	 	Your Name:	 
	 	 	(Print your name exactly as it appears on the face of this Note)
	 	 	 
	 	Your Signature:	 
	 	 	(Sign exactly as your name appears on the face of this Note)
	 	 	 
	 	Signature Guarantee*:  	 

____________________ 

 

	*	       	Participant in a Recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

16 

 

 

OPTION OF HOLDER TO ELECT PURCHASE 

 

If you want to elect to have this Security purchased by the Company pursuant to Section 1004 of the Indenture, check the box below:

 

[_] Section 1004

 

If you want to elect to have only part of the Note purchased by the Company pursuant to Section 1004 of the Indenture, state the amount you elect to have purchased:

 

$ ______________

 

	Date:  	 	 
	             	 	 
	 	Your Signature:  	 
	 	 	(Sign exactly as your name appears on the face of this Note)

	 	 	 
	             	Tax Identification No:  	 

	Signature Guarantee*:
	 
	 
	(*Participant in a Recognized Signature
	Guarantee Medallion Program)

17 

 

 

EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY 

 

The following exchanges of a part of this Global Security for an interest in another Global Security or for a definitive Security, or exchanges of a part of another Global Security or definitive Security for an interest in this Global Security, have been made: 

 

	 	 	 	 	 	 	Principal	 	Signature of
	 	 	Amount of	 	Amount of	 	Amount of this	 	authorized
	 	 	decrease in	 	increase in	 	Global Security	 	signatory of
	 	 	Principal	 	Principal	 	following such	 	Trustee or
	Date of	 	Amount of this	 	Amount of this	 	decrease (or	 	Security
	Exchange	     	Global Security	     	Global Security	     	increase)	     	Custodian

 

 

 

 

 

 

 

 

18

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