Document:

exh10-6_17887.htm

EXHIBIT 10.6

 

 

 

TEMPLATE

NOTICE OF NON-QUALIFIED OPTION GRANT

 

under the

 

LIFEWAY FOODS, INC. OMNIBUS INCENTIVE PLAN

 

No. of shares subject to option:_____________

 

This GRANT, made as of the ____ day of ___________, 20__, by Lifeway Foods, Inc., an Illinois corporation (the “Company”), to _______________  (“Participant”), is made pursuant and subject to the provisions of the Company’s Omnibus Incentive Plan (the “Plan”), a copy of which has been given to Participant. All terms used herein that are defined in the Plan have the same meanings given them in the Plan.

 

1.                 Grant of Option. Pursuant to the Plan, the Company, on ______________, granted to Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, the right and option to purchase from the Company all or any part of the aggregate of _______ shares of Common Stock at the option price of $XX.XX per share (the “Option Price”), being not less than the Fair Market Value per share of the Common Stock on the date the option was granted. Such option will be exercisable as hereinafter provided. This option is not intended to be treated as an incentive stock option under Code section 422.

 

2.                 Expiration Date. The Expiration Date of this option is the date that is ten (10) years from the date of the grant of this option. This option may not be exercised on or after the tenth anniversary of its grant.

 

3.                 Vesting of Option.  Except as provided in paragraphs 7, 8, 9, 10 or 11, this option shall become Vested as to _______ of the option (___ shares) on _________, 20__, as to another _______ of the option (___ shares) on _________, 20__, and as to the final _______ of the option (___ shares) on _________, 20__. [CAN ALSO VEST OVER LONGER THAN A 3-YEAR PERIOD OR ON A 3-YEAR OR LONGER CLIFF SCHEDULE]

 

4.                 Exercisability of Option. Except as provided in paragraphs 7, 8, 9, 10 or 11, this option shall be exercisable as to _______ of the option (___ shares) on _________, 20__, as to another _______ of the option (___ shares) on _________, 20__, and as to the final _______ of the option (___ shares) on _________, 20__. Once the option has become exercisable in accordance with the preceding sentence, it shall continue to be exercisable until the termination of Participant’s rights hereunder pursuant to paragraphs 7, 8, 9, 10 or 11, or until the option period has expired.  A partial exercise of this option shall not affect Participant’s right to exercise this option with respect to the remaining shares, subject to the terms and conditions of the Plan and those set forth herein.

 

 

 

  

  

  

5.                 Method of Exercising and Payment for Shares.  This option shall be exercised [through a licensed brokerage firm at Participant’s expense, in conjunction with established procedures and coordinated with the Company’s Human Resources and Law Departments. From time to time the procedures for exercising this option may be subject to modification by the aforesaid departments, but in no case shall the number of shares subject to the option or its terms for vesting be changed by the procedures for exercise or by the modification thereof. Procedures for the exercise of this option will be provided to Participant by the Company’s Human Resources Department.] [REVISE AS APPROPRIATE]

 

6.                 Nontransferability.  This option is nontransferable except by will or the laws of descent and distribution. During Participant’s lifetime, this option may be exercised only by Participant.

 

[REVISE PARAGRAPHS 7, 8, 9 AND 10, AS APPROPRIATE, TO REFLECT OPTION TREATMENT ON EARLY TERMINATIONS]

 

7.                 Vesting and Exercise in the Event of Death.  If the Participant dies while employed by the Company or an Affiliate, after __________ following the date the option was granted and prior to the Expiration Date, this option (to the extent not already Vested) shall become Vested as to a pro-rata portion of the option determined as follows: ______________________________________________________________________________________________________________________.  The non-Vested portion of the option shall be forfeited.  The Vested portion of the option may be immediately exercised and shall remain exercisable according to the terms provided in Paragraph 4, notwithstanding the date of death.  This option may be exercised by Participant’s beneficiary.  Participant shall have the right to designate his beneficiary in accordance with procedures established under the Plan for such purpose.  If Participant fails to designate a beneficiary, or if at the time of his death there is no surviving beneficiary, this option may be exercised by his estate.  Participant’s beneficiary (or estate as the case may be) may exercise this option during the remainder of the period preceding the Expiration Date.

 

8.                 Vesting and Exercise in the Event of Permanent and Total Disability.  If the Participant becomes permanently and totally disabled (within the meaning of Section 22(e)(3) of the Code) (“Disabled”) while employed by the Company or an Affiliate, after _________ following the date the option was granted and prior to the Expiration Date, this option shall become Vested as to a pro-rata portion of the option; such pro-rata portion shall be determined as follows: _________________________________________________________________________________________________.  The non-Vested portion of the option shall be forfeited.  The Vested portion of the option may be immediately exercised and shall remain exercisable according to the terms provided in Paragraph 4, notwithstanding the date of permanent and total disability.  The Participant may exercise this option during the remainder of the period preceding the Expiration Date.

 

9.                 Vesting and Exercise in the Event of Retirement. In the event that the Participant Retires from the employ of the Company or an Affiliate after _________ following the date the option was granted and prior to the Expiration Date, this option shall become Vested as to a pro-rata portion of the option; such pro-rata portion shall be determined as follows:  ___________________________________________________________________________________________________________________________.  

 

 

 

 

  

Page 2 of 4

  

The non-Vested portion of the option shall be forfeited.  Participant may exercise the Vested portion of the option with respect to the shares he is entitled to purchase, as of the date the option would have become exercisable pursuant to paragraph 4 above, provided that the option must be exercised during the remainder of the period preceding the Expiration Date. For purposes of this Grant, the terms “Retires” and “Retirement” means, for purposes of this Award, termination of employment after _______________________________. The preceding sentence shall not apply to a separation from service following the date that Participant is advised (upon recommendation by the Executive Compensation Committee of the Board of Directors of Albemarle Corporation) that his employment is being, or will be, terminated for Cause, on account of performance or in circumstances that prevent him from being in good standing with the Company, in which case all rights under this Grant shall terminate, and this option shall expire on the date of Participant’s termination of employment.

 

10.               Vesting and Exercise After Termination of Employment.  Except as provided in paragraphs 7, 8, or 9, in the event Participant ceases to be employed by the Company or an Affiliate, the rules under this paragraph 10 shall apply.  If Participant ceases to be employed prior to the time any portion of the option is Vested, such non-Vested portion of the option shall be forfeited.  If Participant ceases to be employed after the option is Vested, but prior to the Expiration Date, Participant may exercise this option with respect to the shares he is entitled to purchase pursuant to paragraphs 3 and 4 above within sixty (60) days of the date of such termination of employment (but in no event later than the Expiration Date).

 

11.               Change in Control.  Notwithstanding any other provision of this Notice of Award, upon a Change in Control as defined in the Plan _________________________ [COMPLETE AS APPROPRIATE].

 

12.               Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof may entitle Participant to a fractional share such fraction shall be disregarded.

 

13.               No Right to Continued Employment.  This option does not confer upon Participant any right with respect to continuance of employment by the Company or an Affiliate, nor shall it interfere in any way with the right of the Company or an Affiliate to terminate his employment at any time.

 

14.               Change in Capital Structure.  The terms of this option shall be adjusted as the Committee determines is equitable in the event the Company effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization.

 

15.               Governing Law.  This Grant shall be governed by the laws of the State of Illinois.  All disputes arising under this Grant shall be adjudicated solely within the state or Federal courts located within the State of Illinois.

 

16.               Conflicts.  In the event of any conflict between the provisions of the Plan as in effect on the date hereof and the provisions of this Grant, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof.

 

 

 

 

 

  

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17.               Binding Effect.  Subject to the limitations set forth herein and in the Plan, this Grant shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of Participant and the successors of the Company. 

 

18.               Taxes.  Tax withholding requirements attributable to the exercise of this option, including employment taxes, Federal income taxes, and state and local income taxes with respect to the state and locality where, according to the Company's system of records, the Participant resides at the time the option is exercised, except as otherwise might be determined to be required by the Company, will be satisfied by the Participant as instructed in the established procedures for exercising this option; provided, however, that the foregoing  employment, Federal, state and local income tax withholding provision shall be subject to any special rules or provisions that may apply to Participants who are non-US employees (working inside or outside of the United States) or US employees working outside of the United States.  It is the Participant's responsibility to properly report all income and remit all Federal, state, and local taxes that may be due to the relevant taxing authorities as the result of exercising this option.

 

19.               Clawback.  [COMPLETE AS APPROPRIATE]

 

IN WITNESS WHEREOF, the Company has caused this Grant to be signed by a duly authorized officer.

 

LIFEWAY FOODS, INC.

 

 

By:           _______________________________

 

 

PARTICIPANT

 

 

______________________________________

 

 

 

 

 

 

 

 

 

  

Page 4 of 4U.S. Geothermal Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

Execution Version 

PURCHASE AND SALE AGREEMENT 

THIS PURCHASE AND SALE AGREEMENT (this
“Agreement”) is entered into as of December 14, 2015 (the
“Effective Date”), by and between Raft River I Holdings, LLC, a
Delaware limited liability company (“Seller”), Idaho USG Holdings,
LLC, a Delaware limited liability company (“Purchaser”), Goldman,
Sachs & Co., a New York limited partnership
(“Seller’s Designee”) (solely for
purposes of Sections 2.1(d) and 2.2(c) and Article IV (in
particular, Section 4.6)), and U.S. Geothermal, Inc., an Idaho
corporation (“Purchaser Parent”)(solely for purposes of Section
3.3 and Article IV (in particular, Section 4.6)). Each of
Seller, Purchaser, Seller’s Designee, and Purchaser Parent are sometimes
referred to individually as a “Party,” and collectively as the “Parties.” 

WHEREAS, Seller and Purchaser are the members of Raft River
Energy I LLC, a Delaware limited liability company (the
“Company”); 

WHEREAS, Seller and Purchaser (as successor in interest to U.S.
Geothermal, Inc., an Idaho corporation) are parties to the Amended and Restated
Operating Agreement of the Company dated as of August 9, 2006 and amended on
November 7, 2006;

WHEREAS, pursuant to the Second Amended and Restated Operating
Agreement of Raft River Energy I LLC to be entered into by the Parties as the
Effective Date in the form attached hereto as Exhibit A (the
“Second A&R Operating Agreement”), Seller’s Class A Units in
theCompany will be converted into Class A Units and Class C Units (each as
defined in the Second A&R Operating Agreement), each having the rights and
preferences set forth in the Second A&R Operating Agreement; 

WHEREAS, Purchaser is an indirect, wholly-owned subsidiary of
U.S. Geothermal Inc., a Delaware corporation (“Parent”); 

WHEREAS, Parent will issue a convertible promissory note, in
the form attached hereto as Exhibit B, in the principal amount of
$1,597,000 (the “Convertible Note”), to Seller’s Designee at
Seller’s direction, for a portion of the Purchase Price (as defined below) and
such promissory note is partially convertible into the common stock of Parent
(“Parent Common Stock”); and 

WHEREAS, Seller desires to sell to Purchaser, and Purchaser
desires to purchase from Seller, all of Seller’s right, title and interest in
and to 100% of the Class C Units of the Company (the “Class C
Units”). 

NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties and covenants herein contained, the Parties
hereby agree as follows: 

ARTICLE 1.

PURCHASE AND SALE 

1.1                  Purchase and Sale. Subject to and in
accordance with the terms and conditions of this Agreement, Seller agrees to
sell to Purchaser, and Purchaser agrees to purchase from Seller, the Class C
Units for the aggregate purchase price of $5,097,000 (the “Purchase
Price”). 

ARTICLE 2. 

REPRESENTATIONS AND WARRANTIES 

2.1                  Representations and Warranties of Seller.
Seller hereby represents and warrants to Purchaser as follows: 

(a)                  Authorizations; Approvals. The execution and
delivery by Seller of this Agreement and the performance of its obligations
hereunder have been duly and validly authorized by all requisite action. This
Agreement has been duly executed and delivered by Seller and constitutes the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms. Seller is not required to give any notice to, make
any filing or register with, or obtain any consent, approval, authorization,
waiver, permit, certificate or order of, any governmental authority or any third
party to consummate the transactions contemplated by this Agreement. 

(b)                  Organization. Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite organizational power and authority to
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted. 

(c)                  Class C Units. Seller is the legal and beneficial
owner of the Class C Units (free and clear of all encumbrances and third party
interests).

(d)                  Investment Matters. Seller’s Designee has knowledge
and experience in financial and business matters such that it is capable of
evaluating the merits and risks of receiving the convertible promissory note
convertible into Parent Common Stock, and Seller’s Designee will exercise
independent judgment in evaluating the transaction. Seller’s Designee represents
and warrants to Purchaser and Parent that Seller’s Designee is acquiring the
Convertible Note and Parent Common Stock as principal for its own account and
not for the benefit of any other person. Seller’s Designee is aware that the
Convertible Note and Parent Common Stock have not been registered under the
United States Securities Act of 1933, as amended (the “U.S. Securities
Act”), or the securities laws of any state and that the Convertible Note
and Parent Common Stock may not be offered or sold, directly or indirectly,
without registration under the U.S. Securities Act or compliance with the
requirements of an exemption from registration and acknowledges the Convertible
Note and Parent Common Stock will bear a legend to such effect. Seller’s
Designee undertakes and agrees that it will not offer, sell, or otherwise
transfer the Convertible Note or Parent Common Stock unless such securities are
registered under the U.S. Securities Act and the securities laws of all
applicable states of the United States, or an exemption from such registration
requirement is available. Seller’s Designee undertakes and agrees that it will
not offer or sell the Parent Common Stock on the Toronto Stock Exchange.

2 

2.2                  Representations and Warranties of the
Purchaser. Purchaser hereby represents and warrants to Seller, and with
respect to Section 2.2(c) only, to Seller’s Designee, as follows: 

(a)                  Authorizations; Approvals. The execution and
delivery by Purchaser of this Agreement and the performance of its obligations
hereunder have been duly and validly authorized by all requisite action. This
Agreement has been duly executed and delivered by Purchaser and constitutes the
legal, valid and binding obligation of Purchaser enforceable against Purchaser
in accordance with its terms. Purchaser is not required to give any notice to,
make any filing or register with, or obtain any consent, approval,
authorization, waiver, permit, certificate or order of any governmental
authority or any third party to consummate the transactions contemplated by this
Agreement. 

(b)                  Organization. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and has all requisite organizational power and authority
to own, lease and operate its properties and assets and to carry on its business
as it is now being conducted. 

(c)                  Investment Matters. Purchaser has knowledge and
experience in financial and business matters such that it is capable of
evaluating the merits and risks of purchasing the Class C Units, and Purchaser
will exercise independent judgment in evaluating the transaction. Purchaser
acknowledges that it is not relying on any advice from Seller’s Designee and
that neither Seller’s Designee nor any of its affiliates is acting as a
financial advisor, agent, underwriter or broker to Purchaser or any of its
affiliates or otherwise on behalf of the Purchaser or any of its affiliates in
connection with the transactions contemplated by this Agreement and the
agreements entered into in connection herewith. Purchaser represents and
warrants to Seller that Purchaser is acquiring the Class C Units as principal
for its own account and not for the benefit of any other person. Purchaser is
aware that the Class C Units have not been registered under the U.S. Securities
Act or the securities laws of any state and that the Class C Units may not be
offered or sold, directly or indirectly, without registration under the U.S.
Securities Act or compliance with the requirements of an exemption from
registration and acknowledges the Class C Units will bear a legend to such
effect. Purchaser undertakes and agrees that it will not offer, sell, or
otherwise transfer the Class C Units unless such securities are registered under
the U.S. Securities Act and the securities laws of all applicable states of the
United States, or an exemption from such registration requirement is
available.

ARTICLE 3. 

CLOSING; CERTAIN OTHER OBLIGATIONS OF THE PARTIES 

3.1                  Closing. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place on
the date hereof at the offices of Vinson & Elkins L.L.P., 1001Fannin Street,
Suite 2500, Houston, Texas, or such other place as the Parties may agree. At the
Closing, the following shall occur:

3 

(a)                  Seller and Purchaser shall deliver executed counterparts of
the Second A&R Operating Agreement. 

(b)                  Seller shall deliver a completed and executed Selling
Shareholder Questionnaire, in the form attached hereto as Exhibit C. 

(c)                  Seller shall deliver a certificate of non-foreign status in
the form prescribed by Treasury Regulation Section 1.1445 -2(b)(2), duly
executed by Seller. 

(d)                  Purchaser shall (i) pay to Seller $3,500,000 of the
Purchase Price via wire transfer of immediately available funds and (ii) deliver
the Convertible Note for the remainder of the Purchase Price. Seller hereby
directs Purchaser to issue the Convertible Note to Seller’s Designee and
expressly acknowledges and agrees that such issuance will be deemed payment to
Seller under this Agreement and will fully satisfy Purchaser’s obligation under
Section 3.1(d)(ii). 

(e)                  Effective as of the Closing, Seller hereby irrevocably
assigns, transfers, conveys and delivers to Purchaser all of its right, title
and interest in and to the Class C Units, and Buyer hereby accepts such
assignment, transfer, conveyance and delivery. 

3.2                  Further Action. Each Party will use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, and will take such further actions
(including, but not limited to, the execution and delivery of such further
instruments and documents) as any other Party reasonably may request to fulfill
the purposes of this Agreement and to further perfect the conveyance, transfer
and assignment of the Class C Units to Purchaser. 

3.3                  Tax Matters.

(a)                  Purchaser shall be liable for 100% of all transfer, stamp,
documentary, sales, use and similar taxes arising from the transactions
contemplated by this Agreement (“Transfer Taxes”). Purchaser
Parent shall cause Purchaser to, and Purchaser shall, file in a timely fashion
all Tax Returns relating to Transfer Taxes, unless Seller is otherwise required
by law to do so, in which case Seller shall file such Tax Returns in a timely
fashion. To the extent Transfer Taxes are actually collected from Seller or its
affiliate, Purchaser Parent shall cause Purchaser to, and Purchaser shall,
promptly remit to Seller, upon demand, an amount in cash equal to the amount of
such Transfer Taxes. 

(b)                  The Parties agree that the transactions contemplated by
this Agreement shall be treated for federal income tax purposes, in accordance
with their form, as a taxable purchase by Purchaser of the Class C Units from
Seller in exchange for the consideration set forth in Section 1.1.
Neither Seller nor Purchaser shall file any income tax return taking any
position inconsistent with such treatment. 

3.4                  Survival. The representations, warranties,
and covenants of the Parties hereunder shall survive the Closing. 

4 

ARTICLE 4. 

MISCELLANEOUS 

4.1                  Governing Law. This Agreement and the rights
and obligations of the Parties hereunder shall be governed by and construed and
interpreted in accordance with the laws of the State of New York without giving
effect to any choice or conflict of law provision or rule. Each of the Parties
consents to submit itself to the exclusive jurisdiction of the courts of the
State of New York and the federal courts of the United States of America located
in the Borough of Manhattan in any legal proceeding arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement.
Each Party waives, to the fullest extent permitted by law, any right it may have
to a trial by jury.

4.2                  Entire Agreement. This Agreement, the
Convertible Note, and the Second A&R Operating Agreement constitute the
entire agreement of the Parties in respect of the subject matter of this
Agreement and supersede any prior expressions of intent or understandings with
respect thereto.

4.3                  Amendments and Waivers. Any amendment or
waiver of any provision of this Agreement shall only be effective if made in
writing and signed by each Party. 

4.4                  Counterparts. This Agreement may be executed
in any number of counterparts pursuant to original, facsimile, or electronic
copies of signatures with the same effect as if the relevant Party had signed
the same document pursuant to original signatures. Any single counterpart or a
set of counterparts signed, in either case, by all Parties shall constitute a
full and original agreement for all purposes. 

4.5                  Interpretation. Whenever the context
requires, the gender of all words used in this Agreement includes the masculine,
feminine, and neuter. Terms defined in the singular have the corresponding
meaning in the plural, and vice versa. 

4.6                  Confidentiality.

(a)                  No Party shall issue any news release or other public
notice or communication or otherwise make any disclosure to third parties
concerning this Agreement or the transactions contemplated hereby without the
prior consent of the other Party (which consent shall not be unreasonably
withheld or delayed) except (i) as required or expressly permitted by this
Agreement, (ii) as necessary to consult with the respective attorneys,
accountants, employees or other advisors of Seller or Purchaser retained in
order to consummate the transactions contemplated hereby, (iii) as required by
court order or otherwise mandated by law to which Seller or Purchaser are
subject, or (iv) as required or requested to be disclosed in any document to be
filed with any governmental entity or self-regulating similar agency
(provided, however, that the disclosing Party shall disclose only
so much of the confidential information as is legally required or requested).
Even in cases where such prior consent is not required, Purchaser, on the one
hand, and Seller, on the other hand, will, if legally permitted and practicable
to do so, promptly notify the other Party of such release in advance in order to
provide a reasonable opportunity to the other Party to prepare a corresponding
or other similar release or other action on a timely basis. Without the consent of the other, neither
Purchaser nor Seller will disclose the Purchase Price, except that such
disclosure may be made to (x) officers, directors, partners, members, advisors
and employees of Purchaser or Seller (which persons shall be notified of the
confidential nature of such information prior to such disclosure) and (y) as
required by law or by the organizational documents of the Company.
Notwithstanding the foregoing provisions of this Section 4.6, Seller and
Purchaser may make disclosures concerning this Agreement and the transactions
consummated at the Closing to their respective affiliates, and to their and
their respective affiliates’ respective partners, members, officers, directors,
employees, agents, accountants, attorneys and other parties who have a need to
know. 

5 

(b)                  Each Party may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transaction;
provided, however, that any such information is required to be
kept confidential to the extent necessary to comply with any applicable
securities laws. The tax structure and tax treatment of the transaction includes
only those facts that may be relevant to understanding the purported or claimed
U.S. federal and state income tax treatment or tax structure of the transaction
and, to eliminate all doubt, therefore specifically does not include information
that either reveals or, standing alone or in the aggregate with other
information so disclosed, tends of itself to reveal or allow the recipient of
the information to ascertain the identity of any parties involved in any of the
transactions contemplated by this Agreement or other documents to be delivered
in connection herewith. 

[Signature Page Follows] 

6 

 

 

Exhibit A 

Form of 

Second Amended and Restated Operating Agreement 
of Raft
River Energy I LLC 

See attached. 

Execution Version 

SECOND AMENDED AND RESTATED 

OPERATING AGREEMENT 

OF 

RAFT RIVER ENERGY I LLC 

A Delaware Limited Liability Company 

As of December 14, 2015 

TABLE OF CONTENTS 

	ARTICLE I ORGANIZATION OF COMPANY
    	2 
	Section 1.1 	Organization; Continuation;
      Compliance. 	2 
	Section 1.2 	Name. 	2 
	Section 1.3 	Property of the Company. 	2 
	Section 1.4 	Place of Business. 	3 
	Section 1.5 	Purpose 	3 
	Section 1.6 	Powers 	3 
	Section 1.7 	Registered Agent 	3 
	Section 1.8 	Term of Existence. 	3 
	Section 1.9 	Liability to Third Parties 	3 
	 Section 1.10 	Separateness Covenants. 	3 
	ARTICLE II DEFINITIONS, RULES OF
      CONSTRUCTION 	5 
	 	  	  
	ARTICLE III MEMBERS 	13 
	Section 3.1 	Members. 	13 
	Section 3.2 	Membership Interest; Units 	14 
	Section 3.3 	Authority of Members 	14 
	Section 3.4 	Creation of Additional Units
	14 
	ARTICLE IV MEETINGS OF MEMBERS
	15 
	Section 4.1 	Place of Meetings 	15 
	Section 4.2 	Meetings 	15 
	Section 4.3 	Notice 	15 
	Section 4.4 	Waiver of Notice 	15 
	Section 4.5 	Quorum. 	15 
	Section 4.6 	Voting. 	15 
	Section 4.7 	Conduct of Meetings 	16 
	Section 4.8 	Action by Written Consent. 	17 
	Section 4.9 	Proxies 	17 
	ARTICLE V MANAGEMENT OF THE
      COMPANY 	18 
	Section 5.1 	Management of Business. 	18 
	Section 5.2 	General Powers of Manager;
      Activities. 	18 
	Section 5.3 	Limitations on Powers of
      Manager 	18 
	Section 5.4 	Compensation. 	18 
	Section 5.5 	Resignation and Removal. 	18 
	Section 5.6 	Other Business. 	19 
	Section 5.7 	Standard of Care; Liability 	19 
	Section 5.8 	Appointment and Authority of
      Officers 	20 
	Section 5.9 	Execution of Company Documents.
    	20 
	 Section 5.10 	Operating Budget. 	20 

i 

	ARTICLE VI BOOKS AND RECORDS; TAX MATTERS 	20 
	Section 6.1 	Bank Accounts; Investments 	20 
	Section 6.2 	Records Required by Act; Right of Inspection.
    	20 
	Section 6.3 	Books and Records of Account
	21 
	Section 6.4 	Other Information Rights 	21 
	Section 6.5 	Audits 	22 
	Section 6.6 	Fiscal Year. 	22 
	Section 6.7 	Tax Matters. 	22 
	ARTICLE VII RESTRICTIONS ON TRANSFERABILITY;
      ADMISSION OF NEW 	  
	 	MEMBERS 	26 
	Section 7.1 	Transfers. 	26 
	Section 7.2 	Admission of Transferee as
      Member. 	27 
	Section 7.3 	Admission of Additional Members 	27 
	Section 7.4 	Purchase Option. 	27 
	ARTICLE VIII CAPITAL OF THE COMPANY 	28 
	Section 8.1 	Capital Contributions on or
      Prior to the Effective Date. 	28 
	Section 8.2 	Further Required Capital Contributions 	28 
	Section 8.3 	Return of Capital Contributions
    	29 
	Section 8.4 	In-Kind Contributions 	29 
	Section 8.5 	Interest 	29 
	Section 8.6 	Loans From Members. 	29 
	ARTICLE IX CAPITAL ACCOUNTS,
      PROFITS AND LOSSES AND 	  
	 	ALLOCATIONS 	29 
	Section 9.1 	Capital Accounts 	29 
	Section 9.2 	Profits and Losses. 	30 
	ARTICLE X APPLICATIONS AND
      DISTRIBUTIONS OF AVAILABLE CASH 	33 
	Section 10.1 	Applications and Distributions. 	33 
	Section 10.2 	Liquidation 	34 
	Section 10.3 	Withholding Taxes 	34 
	ARTICLE XI DISSOLUTION 	35 
	Section 11.1 	Dissolution Events. 	35 
	ARTICLE XII LIQUIDATION 	35 
	Section 12.1 	Responsibility for Winding Up. 	35 
	Section 12.2 	Distribution of Assets Upon
      Winding Up 	35 
	ARTICLE XIII INDEMNIFICATION; EXCULPATION 	36 
	Section 13.1 	Indemnification of Members 	36 
	Section 13.2 	Indemnification of the Manager, Officers,
      Employees and Agents 	36 
	Section 13.3 	Exculpation. 	37 

ii 

	ARTICLE XIV MISCELLANEOUS 	37 
	Section 14.1 	Governing Law. 	37 
	Section 14.2 	Binding Effect; Entire Agreement. 	37 
	Section 14.3 	Creditor’s Interest in the
      Company. 	38 
	Section 14.4 	Headings. 	38 
	Section 14.5 	Amendments. 	38 
	Section 14.6 	Severability. 	38 
	Section 14.7 	Incorporation by Reference 	38 
	Section 14.8 	Variation of Pronouns. 	38 
	Section 14.9 	No Third-Party Beneficiaries.
    	38 
	 Section 14.10 	Counterpart Execution; Facsimile Signatures 	38 
	 Section 14.11 	Confidentiality and Disclosure.
    	38 
	 Section 14.12 	USG Promissory Note 	41 
	 Section 14.13 	Amendment and Restatement. 	41 
	 Section 14.14 	Notices. 	41 
	 Section 14.15 	Conference Telephone Meetings.
    	41 

Schedules 

	Schedule 1 	Members, Membership Interests
      and Information for Purposes of Providing Notice 
	Schedule 2 	[RESERVED] 
	Schedule 3 	[RESERVED] 
	Schedule 4 	Projected Distributable Free Cash 
	Schedule 5 	Class C Unit Rights 
	Schedule 6 	Baseline Net Revenue 
	Schedule 7 	Transfer Plan 
	Schedule 8 	Scheduled REC Income Amounts 
	Schedule 9 	Baseline Capital Expenditure
      Plan 
	Schedule 10 	Allocations Following Member B Capital
      Contributions 

Exhibits 

	Exhibit A 	Map of Site

iii 

SECOND AMENDED AND RESTATED 
OPERATING AGREEMENT 

THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT of RAFT
RIVER ENERGY I LLC, a Delaware limited liability company (the “Company”),
is dated this 14th day of December, 2015 (the “Effective Date”), by and
among the Company, RAFT RIVER I HOLDINGS, LLC, a Delaware limited liability
company, in its capacity as a member (“Member A”), and IDAHO USG
HOLDINGS, LLC, a Delaware limited liability company, in its capacity as a member
(“Member B”). 

RECITALS 

WHEREAS, the Company was formed by virtue of its Certificate of
Formation filed with the Secretary of State of the State of Delaware on August
18, 2005;

WHEREAS, prior to the date hereof, the Company has been
governed first by the Operating Agreement of the Company, effective as of
January 4, 2006 (the “Original Operating Agreement”), between U.S.
Geothermal, Inc., an Idaho corporation (as the initial member of the Company,
“U.S. Geothermal”), and the Company, and later by the Amended and
Restated Operating Agreement, dated as of August 9, 2006 and amended on November
7, 2006, by and between Member A, Member B (as successor in interest to U.S.
Geothermal), and the Company (the “Amended and Restated Operating
Agreement”); 

WHEREAS, pursuant to that certain Consent to Transfer by and
among Member A, Member B and U.S. Geothermal, dated as of the date hereof,
Member A consented to the transfer of 100% of U.S. Geothermal’s interest in the
Company to Member B, and whereas pursuant to that certain Contribution
Agreement, dated as of the date hereof, U.S. Geothermal and Member B effected
such transfer; 

WHEREAS, in connection with the transfer of U.S. Geothermal’s
membership interest in the Company to Member B, U.S. Geothermal provided a
parent guarantee in favor of Member A, dated as of the date hereof, guaranteeing
the payment and performance of all of Member B’s obligations under the Amended
and Restated Operating Agreement, as amended from time to time; 

WHEREAS, the Company was formed for the sole purpose of
engaging in the activities and transactions contemplated by the Project
Documents, including to acquire, own, maintain, manage, operate, improve,
develop, finance, pledge, encumber, mortgage, sell, lease, dispose and otherwise
deal with (publicly or privately and whether with unrelated third parties or
with affiliated entities) a geothermal power generation project with a 13 MW
nameplate capacity located on the Site in the Raft River Geothermal Resource
Area in Cassia County, Idaho (the “Project”); 

WHEREAS, pursuant to a Membership Admission Agreement, by and
among the Company, Member A and Member B (the “Admission Agreement”),
Member A purchased 500 units in the Company on the terms and subject to the
conditions set forth in the Admission Agreement and was admitted to the Company
as a member of the Company;

1 

WHEREAS, the Parties desire for the Amended and Restated
Operating Agreement to be amended and restated as stated herein in order to,
among other things, reflect the conversion, as of the Effective Date, of Member
A’s 500 Class A Units in the Company into 50 Class A Units and 450 Class C
Units, each having the rights and preferences set forth herein; and 

WHEREAS, pursuant to the Purchase and Sale Agreement by and
between Member A and Member B dated as of the date hereof, Member B is
purchasing 450 Class C Units from Member A; 

NOW, THEREFORE, in consideration of the declarations herein
contained and other good and valuable consideration, the Members and the Company
agree as follows: 

AGREEMENT 

ARTICLE I 
ORGANIZATION OF COMPANY 

Section 1.1                  Organization; Continuation; Compliance. 

Pursuant to the Delaware Limited Liability Company Act, Title 6
Del. Code § 18-101 et seq. (as it may be amended from time to time, the
“Act”), the Company was formed on August 18, 2005 by virtue of the filing
of its Certificate of Formation with the Delaware Secretary of State. The
parties hereby ratify the execution, delivery and filing of the Certificate with
the Secretary of State of the State of Delaware by the Initial Member. The
Members hereby continue the Company as a limited liability company pursuant to
the Act. Each of Member A and Member B shall continue as a member of the Company
upon its execution of a counterpart signature page to this Agreement. The
affairs of the Company shall be governed by this Agreement and the laws of the
State of Delaware. 

Section 1.2                  Name. 

The name of the Company is Raft River Energy I LLC, or such
other name as the Members may from time to time hereafter designate. 

Section 1.3                  Property of the Company. 

All business of the Company shall be conducted in the Company
name. Company Property shall be deemed to be owned by the Company as an entity,
and neither any Member nor the Manager, individually or collectively, shall have
any ownership interest in such Company Property or any portion thereof. Title to
any or all Company Property may be held in the name of the Company or one or
more nominees, as the Members may determine. All Company Property shall be
recorded as the property of the Company on its books and records, irrespective
of the name in which legal title to such Company Property is held. 

2 

Section 1.4                  Place of Business. 

The address of the office at which all of the records of the
Company shall be kept and principal place of business of the Company shall be
390 East Parkcenter Blvd., Suite 250, Boise, Idaho 83706, or such other place or
places as may be determined by the Manager. 

Section 1.5                  Purpose. 

The purpose of the Company shall be strictly limited to
activities and transactions contemplated in the Recitals and all activities
necessary, suitable, convenient or incidental thereto. 

Section 1.6                  Powers. 

The Company shall possess and may exercise all of the powers
and privileges granted by the Act or by any other Law of the State of Delaware
or by this Agreement (if not prohibited by the Act), together with any powers
incidental thereto, so far as such powers and privileges are necessary, suitable
or convenient to the conduct, promotion or attainment of the business purposes
or activities of the Company. 

Section 1.7                  Registered Agent. 

The Company’s registered office in the State of Delaware is
located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801. The registered agent of the
Company for service of process at such address is The Corporation Trust Company.

Section 1.8                  Term of Existence. 

The Company commenced upon the filing of its Certificate with
the Secretary of State of the State of Delaware and shall continue indefinitely
until such time as it shall be dissolved, wound up and terminated under the
provisions of Article XI hereof. 

Section 1.9                  Liability to Third Parties. 

Except as required by the Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Member, Manager, officer, employee, representative or agent of the Company shall
be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Member or acting as a Manager, officer,
employee, representative or agent of the Company. 

Section 1.10                  Separateness Covenants. 

(a)                  The Company shall: 

(i)                  Preserve its existence as an entity duly organized, validly
existing and in good standing under the laws of the State of Delaware; 

3 

(ii)                  Not commingle Company Property with those of any Member;

(iii)                  Maintain books and records for the Company separate from
any other Person; 

(iv)                  Conduct the Company’s own business in its own name; 

(v)
                   Prepare its own financial statements; 

(vi)                  Pay the Company’s own liabilities out
  of its own funds; 

(vii)                  Observe all Company formalities expressly required by
this Agreement or the Act; 

(viii)                  Maintain an arm’s-length relationship between the
Company, on the one hand, and each Member and any Person affiliated with any
Member, on the other hand; 

(ix)                  Not guarantee or become obligated for the debts of any
other Person or hold out the Company’s credit as being available to satisfy the
obligations of other Persons; 

(x)                  Not acquire obligations or securities of any Member; 

(xi)                  Use stationery, invoices, and checks for all material
Company business that separately identifies the Company; 

(xii)                  Not pledge Company Property for the benefit of any other
Person or make any loans or advances to any other Person, except in
accordance with the terms of this Agreement and/or the Project Documents; 

(xiii)                  Identify the Company as a separate entity in all
material written undertakings with third parties; 

(xiv)                  Correct any known misunderstanding as to its status as a
separate entity;

(xv)                  Not enter into or participate in any manner in any
“reportable transaction” as defined in Treasury Regulation Section 1.6011
-4(b);

(xvi)                  Notwithstanding anything to the contrary in the
Agreement, not, directly or indirectly, repurchase, redeem, retire or otherwise
acquire any of the Company’s capital stock, or take any other action, if, as a
result, Member A would (a) be deemed to “control” the Company (as “control” is
used for purposes of The Bank Holding Company Act of 1956, as amended), or (b)
own or control, or be deemed to own or control, greater than 24.99% of the total
equity of the Company; and 

4 

(xvii)                  Not enter into any new line of business that is
inconsistent with the current business model and that significantly and
adversely affects Member A or creates significant and adverse legal, regulatory
or reputational consequences to Member A. 

(b)                  Nothing in Section 1.10(a) shall be construed as
limiting, restricting or being breached by anything contemplated by Section 6.7 hereof. 

ARTICLE II 
DEFINITIONS, RULES OF
CONSTRUCTION 

In addition to terms otherwise defined herein, the following
terms are used herein as defined below: 

“Act” means the Delaware Limited Liability Company Act,
and any successor statute, as amended from time to time. 

“Admission Agreement” has the meaning set forth in the
Recitals. 

“Affiliate” means, when used with reference to a
specific Person (or when not referring to a specific Person shall mean an
Affiliate of a Member), any Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under common control with
such specific Person. 

“After-Tax Basis” means, for purposes of
determining a Member’s after-tax return from its investment in the Company, the
return the Member realizes from cash distributions from the Company increased or
decreased by increases or decreases in the Member’s Tax liability (or net Tax benefit) resulting from
allocations of the Company’s Net Profits and Net Losses. Solely, for this purpose: (a) each
  Member shall be assumed to be subject to Tax at the highest marginal U.S.
  federal income tax rate applicable to corporations; (b) each dollar of Renewable
  Electricity Production Credits allocated to such Member shall be treated as a
  dollar of cash distributed to the Member; and (c) each Member shall be deemed to
  fully utilize any Net Losses allocated to such Member in the year in which such
  Net Losses are allocated. Member A’s determination of its After-Tax Basis, as
  certified in writing by its Tax Matters Member, shall be conclusive for purposes
of this Agreement, absent manifest error. 

“Agreement” means this Second Amended and Restated
  Operating Agreement, which shall govern the operation of the Company and which
  may be amended or supplemented from time to time in writing only in accordance
with this Agreement. 

“Amended and Restated Operating Agreement” has the
meaning set forth in the Recitals. 

“Applicable Law” means, in respect of any Person, all
provisions of constitutions, laws, statutes, rules, regulations, treaties,
directives, decrees, guidelines, orders and other determinations of any
governmental authority or regulatory or self-regulatory body applicable to such
Person or any of its property, including without limitation, zoning ordinances
and the requirements of all Environmental Laws, environmental permits, all
disclosure and other requirements of ERISA, the requirements of OSHA, and all
orders, decisions, judgments and decrees of all courts and arbitrators in
proceedings or actions to which the Person in question is a party or by which it
or any of its property is subject or bound. 

5 

“Available Cash” means, for any fiscal period, the
excess, if any, of (a) the sum of (i) all cash receipts of the Company during
that fiscal period from whatever source and (ii) any cash reserves of the
Company existing at the start of that fiscal period, less (b) the sum of (i) all
cash amounts paid or payable (without duplication) in that fiscal period on
account of any expenses of any type whatsoever incurred in connection with the
Company’s business (including, but not limited to, capital expenditures,
operating expenses, taxes, amortization and interest on any debt of the
Company), and (ii) any cash reserves maintained consistent with the Operating
Budget for the working capital, capital expenditures and future needs of the
Company.

“Bankruptcy” means, with respect to any Person, if such
Person (a) makes an assignment for the benefit of creditors, (b) files a
voluntary petition in bankruptcy, (c) is adjudged a bankrupt or insolvent, or
has entered against it an order for relief, in any bankruptcy or insolvency
proceeding, (d) files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation or similar
relief under any statute, law or regulation, (e) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against it in any proceeding of this nature, (f) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of the Person
or of all or any substantial part of its properties, or (g) if one hundred and
twenty (120) days after the commencement of any proceeding against the Person
seeking reorganization, arrangement, composition, readjustment, liquidation or
similar relief under any statute, law or regulation, the proceeding has not been
dismissed, or if within ninety (90) days after the appointment without such
Person’s consent or acquiescence of a trustee, receiver or liquidator of such
Person or of all or any substantial part of its properties, the appointment is
not vacated or stayed, or if within ninety (90) days after the expiration of any
such stay, the appointment is not vacated. The foregoing definition of
“Bankruptcy” is intended to replace and shall supersede and replace the
definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the
Act. 

“Baseline Net Revenue” means, for any Fiscal Quarter,
the amount set forth with respect to such Fiscal Quarter on Schedule 6.

“Book Value” means, for any Company Property, its
adjusted basis for U.S. federal income tax purposes, except that the initial
Book Value of any asset contributed by a Member to the Company will equal the
agreed gross fair market value of the asset, and the Book Value will thereafter
be adjusted consistently with Section 1.704 -1(b)(2)(iv)(g) of the Treasury
Regulations for revaluations under Section 9.1(b)and for Depreciation
for that asset. 

“Business Day” means a day other than Saturday, Sunday
or other day on which commercial banks in New York City are authorized or
required by law to close. 

“Call Amount” has the meaning set forth in Section
8.2(b).

“Call Notice” has the meaning set forth in Section
8.2(b). 

“Capital Account” has the meaning set forth in
Section 9.1. 

6 

“Capital Contribution” means, for any Member, the
amount of cash and value of other property contributed or deemed contributed to
the Company by that Member in accordance with Article VIII. 

“Capital Improvement” means any addition or
modification, other than operations and maintenance activities consistent with
the Baseline Capital Expenditure Plan attached hereto as Schedule 9, to
the production wells, injection wells, power plant facilities or related
equipment (such as pipelines) comprising the Project that results, directly or
indirectly, from a Member B Capital Contribution on or after the Effective Date.

“Capital Improvement Net Cash Flow” means, for each
Taxable Year during which or after which a Member B Capital Contribution is
made, the amount by which the Company’s gross revenues from sales of electricity
(including REC Income) less expenses incurred in connection with Capital
Improvements (other than payments for Capital Improvements) exceeds the Baseline
Net Revenue in such year. 

“Certificate of Formation” means the Certificate
of Formation of Raft River Energy I LLC filed with the Secretary of State of the
State of Delaware on August 18, 2005. 

“Class A Distribution Deficiency” means, with
respect to any Distribution Date on or before the Effective Date, the excess, if
any, of (a) the sum of (i) the Projected Distributable Free Cash with respect to
Member A with respect to such Distribution Date and (ii) all Projected
Distributable Free Cash with respect to Member A with respect to prior
Distribution Dates over (b) the sum of (i) all actual Available Cash distributed
to Member A with respect to such Distribution Date and (ii) all prior Available
Cash distributed to Member A with respect to prior Distribution Dates.

“Class A Initial Allocation Period” means all
Fiscal Years of the Company, commencing with the Fiscal Year in which the
effective date of the Amended and Restated Operating Agreement occurred and
ending with and including the Fiscal Year in which the tenth anniversary of the
Placed In Service Date occurs.

“Class A Units” means the Units designated as the Class
A Units, with the rights and preferences specified by this Agreement. 

“Class B Initial Distribution Amount” means, for any
Fiscal Year in the Class B Initial Distribution Period, $819,000. 

“Class B Initial Distribution Period” means the 48
calendar month period commencing with the first full calendar month after the
Placed In Service Date.

“Class B Units” means the Units designated as the Class
B Units, with the rights and preferences specified by this Agreement. 

“Class C Units” means the Units designated as the Class
C Units, with the rights and preferences specified by this Agreement and on
Schedule 5. 

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

7 

“Company” has the meaning set forth in the preamble.

“Company Minimum Gain” has the meaning set forth in
Sections 1.704 -2(b)(2) and 1.704 -2(d) of the Treasury Regulations for
“partnership minimum gain.” 

“Company Property” means all interests, properties,
whether real or personal, assets and rights of any type owned or held by the
Company, whether owned or held by the Company at the date of its formation or
thereafter acquired. 

“Confidential Information” means (a) any information
(oral or written) furnished by or on behalf of any of the Members concerning it
or its owners, members, partners, officers, directors, employees, agents,
representatives, advisors or Affiliates, or the Company, (b) any materials
prepared in connection with Meetings of the Members and (c) the Project
Documents; provided, that the term “Confidential Information” shall not
include any information that (i) was already known by or in the possession of
the receiving Person prior to the furnishing of such information by the
disclosing Person, (ii) was or is in the public domain (either prior to or after
the furnishing of such document or information) through no fault of such
receiving Person and not in violation of this Agreement, (iii) was acquired by
such receiving Person from another source (if such receiving Person was not
aware at the time of such acquisition that such source was under an obligation
of confidentiality with respect to such information) or (iv) is independently
developed by the receiving Person without use of Confidential Information. 

“Depreciation” means, for any Fiscal Year, all non-cash
deductions allowable under the Code, including all deductions attributable to
depreciation or cost recovery with respect to Company Property, including any
improvements made thereto and any tangible personal property located therein, or
amortization of the cost of any intangible property or other assets acquired by
the Company that have a useful life exceeding one year; except that, with
respect to any Company Property whose tax basis differs from its Book Value at
the beginning of that Fiscal Year or other period, Depreciation means an amount
that bears the same ratio to such beginning Book Value as the depreciation,
amortization or other cost recovery deduction for such period for such asset for
U.S. federal income tax purposes bears to its adjusted tax basis as of the
beginning of such Fiscal Year. However, if the U.S. federal income tax
depreciation, amortization or other cost recovery deduction for such Fiscal Year
is zero, Depreciation will be determined using any method selected by the
Manager, in their sole discretion. 

“Distribution Date” shall mean the fifteenth day
immediately following the end of each Fiscal Quarter and any other day so
designated by the Manager (or, if any such day is not a Business Day, then the
following Business Day). 

“Drilling Contract” means the Daywork Drilling Contract,
dated as of May 25,2006, by and between the Union Drilling, Inc. and U.S.
Geothermal, Inc. (as may be amended, restated, supplemented, otherwise modified
or replaced), which was assigned by Member B to the Company as contemplated by
the Transfer Plan. 

“Effective Date” has the meaning set forth in the
preamble. 

“Energy Sales Agreement” means the Firm Energy Sales
Agreement, dated as of December 29, 2004, between Idaho Power Corporation and
Member B (as may be amended, restated, supplemented, otherwise modified or replaced), which
was assigned by Member B to the Company as contemplated by the Transfer Plan.

8 

“EPC Contract” means the Engineering, Procurement
and Construction Contract, dated as of December 5, 2005, between Ormat Nevada,
Inc. and Member B (as may be amended, restated,
supplemented, otherwise modified or replaced), which was assigned by Member B to
the Company as contemplated by the Transfer Plan. 

“Fair Market Value” means the value of any specified
interest or property (which shall not in any event be less than zero) that would
be obtained in an arm’s length transaction for cash between an informed and
willing buyer and an informed and willing seller, neither of whom is an
affiliate of the other or under any compulsion to purchase or sell,
respectively, and without regard to the particular circumstances of the buyer or
seller; provided that in determining the Fair Market Value of the Class A
Units for the purposes of Section 7.4, no value shall be attributed to
Member B Capital Improvements or any other improvements to the Project
associated with or resulting from a Member B Capital Contribution. 

“Fiscal Quarter” has the meaning set forth in Section
6.6. 

“Fiscal Year” has the meaning set forth in Section
6.6. 

“GAAP” means United States generally accepted accounting
principles as in effect from time to time. 

“GS Entity” has the meaning set forth in Section
14.11(d). 

“Indemnitee” has the meaning set forth
in Section 13.2.

“Initial Member” means Member B. 

“Interconnection Agreement” means the Interconnection
and WheelingAgreement, dated as of March 9, 2006, by and between the Company and
Raft River Rural Electric Cooperative, Inc. (as may be amended, restated,
supplemented, otherwise modified or replaced). 

“IRS” has the meaning set forth in Section
6.7(g). 

“Issuer” has the meaning set forth in Section
14.11(d). 

“Majority Vote” means, with respect to actions to be
taken by Members, the affirmative vote or consent of Members holding, in
aggregate, more than 50% of the Units then outstanding. 

“Manager” has the meaning set forth in Section
5.1. 

“Master Services Agreements” means (a) the Master
Service Agreement, dated as of June 26, 2006, by and among the Company, Baker
Hughes Oilfield Operations, Inc. and Baker Petrolite Corporation, (b) the Master
Service Agreement, dated as of July 17, 2006, by and between the Company and Weatherford International, Inc., (c)
any other master services agreement that the Company may enter into with respect
to contracting work, services, supplies and equipment rental in furtherance of
or pertaining to development of the Facility and (d) any agreement entered into
under a master agreement referred to in clause (i), (ii) or (iii).

9 

“Member” means, at any time, any Person to whom Units
are issued by the Company in exchange for capital contributions in such amounts
and at such times as determined by the Manager and any Person who then owns a
Unit and is admitted as a Member in accordance with this Agreement.

“Member A” has the meaning set forth in the preamble.

“Member B” has the meaning set forth in the preamble.

“Member B Capital Contribution” has the meaning set
forth in Section 8.2(b).

“Member B Capital Improvement” means any Capital
Improvement funded by Capital Contributions made to the Company
solely by Member B in accordance with Section 8.2(b). 

“Member Minimum Gain” means an amount, with respect to
each Member Nonrecourse Liability, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Liability were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704 -2(i)(3) of the Treasury
Regulations. 

“Member Nonrecourse Liability” has the meaning set forth
in Section 1.704 -2(b)(4) of the Treasury Regulations for “partner nonrecourse
liability”. 

“Net Losses” has the meaning set forth in Section 9.2(a).

“Net Profits” has the meaning set forth in Section
9.2(a). 

“Nonrecourse Deductions” has the meaning set forth in
Sections 1.704 -2(b)(1) and 1.704 -2(c) of the Treasury Regulations. 

“Nonrecourse Liability” has the meaning set forth in
Section 1.704 -2(b)(3) of the Treasury Regulations. 

“Notice” has the meaning set forth in Section
14.14. 

“Notification; Notice” means a notice permitted or
required to be given to any Person hereunder. Each such Notification or Notice
must be given in the manner provided in Section 14.13. 

“O&M Agreement” means that certain Management
Services Agreement, dated as of the date hereof, between the Company and the
Operator. 

“Operating Budget” has the meaning set forth in
Section 5.10. 

10 

“Operator” means Raft River Services, LLC, in its
capacity as Operator of the Project, and any successor operator appointed from
time to time in accordance with this Agreement and the O&M Agreement. 

“Original Operating Agreement” has the meaning set forth
in the Recitals. 

“Other Income” means any proceeds realized from the
sale, transfer or other use of any of the steam or water derived from the
geothermal resources from the Project after such steam or water has been used
for the generation of electricity (or available for use in the event the Project
is not at such point generating electricity). 

“Party” means each party to this agreement. 

“Person” means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership or
other entity. 

“Phase II” has the meaning set forth in Section
5.6. 

“Pipeline Construction Contract” means the Construction
Contract, dated as of May 22, 2006, by and between the Company and IBI d/b/a
Industrial Builders (as may be amended, restated, supplemented, otherwise
modified or replaced). 

“Placed In Service Date” means the date that the Project
was “placed in service” for U.S. federal income tax purposes under Section 45 of
the Code. 

“Power Line Construction Contract” means the
Construction Contract for Well Distribution Lines, dated as of May 16, 2006, by
and between the Company and Raft River Rural Electric Cooperative, Inc. (as may
be amended, restated, supplemented, otherwise modified or replaced). 

“Power Transmission Agreement” means the Service
Agreement for Point-to-Point Transmission Service, dated as of June 24, 2005, by
and between the United States of America, Department of Energy (acting by and
through the Bonneville Power Administration) and U.S. Geothermal, Inc., as
amended April 6, 2006 (and as may be further amended, restated, supplemented,
otherwise modified or replaced), which was assigned by Member B to the Company
as contemplated by the Transfer Plan. 

“Proceeding” has the meaning set forth in Section
13.3. 

“Project” has the meaning set forth in the Recitals.

“Project Documents” means the following documents: this
Agreement, the Admission Agreement, the O&M Agreement, the Drilling
Contract, the Energy Sales Agreement, the EPC Contract, the Interconnection
Agreement, the Master Services Agreements, the Pipeline Construction Contract,
the Power Line Construction Contract, the Power Transmission Agreement, the
Project Permits, the REC Sale Agreement, the Revolver Agreement, the Site Leases
and any other contracts to which the Company is or becomes party to in
connection with the Project. 

11 

“Project Permits” means all of the permits listed on the
Transfer Plan. 

“Projected Distributable Free Cash” means, for any
Distribution Date, the amount set forth on Schedule 4.

“REC Income” means proceeds realized from the sale or
transfer of: (a) characteristics or attributes of energy generated by the
Project such as renewable or “green” characteristics, including pursuant to the
REC Sale Agreement; or (b) emission allowances, along with any governmental
payments or subsidies (other than Renewable Electricity Production Credits).

“REC Sale Agreement” means that Renewable Energy Credit
Purchase and SaleAgreement, dated as of July 29, 2006, by and between the
Company and Holy Cross Energy, a Colorado cooperative electric association, as
amended December 3, 2008 and December 15, 2010 (and as may be further amended,
restated, supplemented, otherwise modified or replaced), with respect to the
sale and purchase of Renewable Electricity Production Credits. 

“Renewable Electricity Production Credits” means any
qualifying tax credits claimed by Member A under Section 38 of the Code with
respect to electricity produced and sold by the Company from geothermal energy
at a qualified facility as described in Section 45 of the Code.

“Representative” has the meaning set forth in Section
14.11(a)(i). 

“Revolver Agreement” means that certain Revolving Credit
Agreement, dated as of the effective date of the Amended and Restated Operating
Agreement, between U.S. Geothermal and the Company. 

“Site” means the project site located in Cassia County,
Idaho, approximately 40 miles southeast of Burley, the county seat. The project
site encompasses 660 acres, divided into two parcels, both located in Township
15 South Range 26 East, Boise Meridian. The first parcel, which contains the
office complex and three geothermal production wells, is 240 acres and is
located in Sections 22 and 23. The second parcel, 320 acres, is located in
Section 25 and contains one production well and two injection wells. The company
also holds seven additional leases. The first parcel covers 160 acres and
includes the RRGE#2 geothermal production well. The second parcel encompasses
private geothermal rights. This description of the Site is qualified by
reference to the map of the Site attached hereto as Exhibit A. 

“Site Leases” means all of the leases listed on the
Transfer Plan. 

“Tax Correspondence” means all written and oral
communications from the Internal Revenue Service (or other taxing authority)
relating to any item of income, gain, loss or deduction arising with respect to
any activities or assets of the Company, whether communicated with respect to an
audit or otherwise. 

“Tax Matters Member” has the meaning set forth in
Section 6.7(a). 

“Taxable Year” has the meaning set forth in Section
6.7(f)(i). 

12 

“Transfer” has the meaning set forth in Section
7.1(a). 

“Transfer Plan” means the plan attached as Schedule
7 hereto pursuant to which certain assets and contracts were transferred or
assigned by Member B to the Company. 

“Treasury Regulations” means the U.S. federal income tax
regulations issued by the U.S. Treasury Department under the Code, as in effect
on the date hereof. 

“UCC” has the meaning set forth in Section
3.2(b). 

“Unit” means, with respect to any Member at any time,
the ownership interest of such Member in the Company at such time. Such interest
includes, without limitation, (a) all rights of a Member to receive
distributions of revenues, allocations of income and loss and distributions of
liquidation proceeds under this Agreement and (b) all management rights, voting
rights and rights to consent. 

“U.S. Geothermal” has the meaning set forth in the
Recitals. 

“USG Promissory Note” means that certain Promissory
Note, dated as of the Effective Date, with an initial principal amount of
$1,597,000, issued by U.S. Geothermal Inc. to Goldman, Sachs & Co., as the
same may be amended, restated, supplemented or otherwise modified from time to
time in accordance with its terms. 

“Written Submission” has the meaning set forth in
Section 6.7(b). 

Words used herein, regardless of the number and gender used,
shall be deemed and construed to include any other number, singular or plural,
and other gender, masculine, feminine or neuter, as the context requires.
References to any act, statute or regulation means such act, statute or
regulations as amended at the time and include any successor legislation or
regulations. References to any agreement or instrument means such agreement or
instrument as amended or modified from time to time in accordance therewith and
herewith. For purposes of this Agreement, unless the context clearly requires
otherwise, (a) the words “include,” “includes” and “including” shall be deemed
to be followed by the words “without limitation,” (b) the word “or” is not
exclusive and (c) the words “herein,” “hereof,” “hereby,” “hereto” and
“hereunder” and words of similar import shall refer to this Agreement as a whole
and not to any particular provisions hereof. Except as otherwise stated,
reference to Articles, Sections, Schedules, Exhibits and Annexes mean the
Articles and Sections of, and the Schedules, Exhibits and Annexes to, this
Agreement. The Schedules, Exhibits and Annexes hereto are hereby incorporated by
reference into and shall be deemed a part of this Agreement. 

ARTICLE III 
MEMBERS 

Section 3.1                  Members. 

The Members of the Company as of the Effective Date are Member
A and Member B, and the addresses of, and other information needed for purposes
of providing notice to, such Members are as set forth on Schedule 1,
which shall be revised from time to time as needed in order to keep such information current. As of the
Effective Date, there are no other Members of the Company and no other Person
has any right to take part in the ownership of the Company. 

13 

Section 3.2                  Membership Interest; Units. 

(a)                  For periods before the Effective Date, each Member shall be
entitled to the number and class of Units set forth opposite such Member’s name
on Schedule 1. Effective as of the Effective Date, the Class A Units are
recapitalized into Class A Units and Class C Units, with the rights and
preferences specified by this Agreement. For periods beginning on or after the
Effective Date, each Member shall be entitled to the number and classes of Units
set forth opposite such Member’s name on  Schedule 1-A . The Company shall
not issue any certificates evidencing any Units unless required in connection
with any loan issued to Member B or an affiliate that is secured by all or any
of the Class B or Class C Units. 

(b)                  Each Unit shall constitute a “security” within the meaning
of, and governed by, Article 8 of (i) the Uniform Commercial Code (including
Section 8-102(a)(15) thereof) as in effect from time to time in the State of
Delaware (6 Del. C. § 8-101, et seq.) (the “UCC”), and (ii) the Uniform
Commercial Code of any other applicable jurisdiction that now or hereafter
substantially includes the 1994 revisions to Article 8 thereof as adopted by the
American Law Institute and the National Conference of Commissioners on Uniform
State Laws and approved by the American Bar Association on February 14, 1995.
Each Member hereby agrees that its interest in the Company and its Unit for all
purposes shall be personal property. Notwithstanding any provision of this
Agreement to the contrary, to the extent that any provision of this Agreement is
inconsistent with any non-waivable provision of Article 8 of the UCC, such
provision of Article 8 of the UCC shall control. 

Section 3.3                  Authority of Members. 

Other than as may be authorized by the Manager, no Member has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company or to incur any expenditures on behalf of
the Company. 

Section 3.4                  Creation of Additional Units. 

The Company may (i) issue additional Units or (ii) create and
issue such additional classes or series of Units, and each such Unit shall have
all of the rights, privileges, preferences and obligations specifically provided
for in, or permitted by, this Agreement. Upon the issuance, pursuant to and in
accordance with this Article III, of any class or series of Units, this
Agreement may be amended in accordance with Section 14.5, and Persons may
be authorized to execute, acknowledge, deliver, file and record, if required,
such documents, to the extent necessary or desirable to reflect the admission of
any additional Member to the Company or the authorization and issuance of such
class or series of Units, and the related rights and preferences thereof. All
Units issued following the date hereof shall be either Class A Units, Class B
Units, or Class C Units, or a new class of Units, as shall be agreed at such
time among the Members. 

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ARTICLE IV 
MEETINGS OF MEMBERS 

Section 4.1                  Place of Meetings. 

All meetings of Members shall be held at the principal office
of the Company or at such other place as may be designated by the Manager or by
the Members calling the meeting. 

Section 4.2                  Meetings. 

(a)                  An annual meeting of Members for the transaction of such
business as may properly come before the meeting shall be held at such place, on
such date and at such time as the Manager shall determine. 

(b)                  Special meetings of Members for any proper purpose or
purposes may be called at any time by the Manager or by the holders of a
majority of either of the Class A Units or Class B Units then outstanding. 

Section 4.3                  Notice. 

A Notification of all meetings, stating the place, date and
time of the meeting and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the meeting to each Member. 

Section 4.4                  Waiver of Notice. 

Attendance of a Member at a meeting shall constitute a waiver
of Notification of the meeting, except where such Member attends for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened. Notification of a meeting may also
be waived in writing. Attendance at a meeting is not a waiver of any right to
object to the consideration of matters required to be included in the
Notification of the meeting but not so included, if the objection is expressly
made at the meeting. 

Section 4.5                  Quorum. 

The presence, either in person or by proxy, of Members holding
at least a majority of the outstanding Units of each class is required to
constitute a quorum at any meeting of the Members. 

Section 4.6                  Voting. 

(a)                  Except as expressly set forth in this Agreement (including
Section 4.6(c) below), Member A shall not be entitled to vote on any
matter submitted to the vote of the Members. Each Member (other than Member A)
shall be entitled to vote on any matter submitted to a vote of the Members and
shall be entitled to one (1) vote for each Unit held by such Member. Members may
vote either in person or by proxy at any meeting. 

15 

(b)                  With respect to any matter other than a matter for which
the affirmative vote of Members owning a specified percentage of the Units is
required by the Act, the Certificate of Formation or this Agreement, the
affirmative Majority Vote of the Members at a meeting at which a quorum is
present shall be the act of the Members. 

(c)                  Notwithstanding any other provision contained in this
Agreement to the contrary, no act shall be taken, sum expended, decision made,
obligation incurred or power exercised by the Company, or any officer or the
Manager on behalf of the Company, in each case without the approval of Members
holding at least (A) 51% of the Class A Units then outstanding and (B) 51% of
the Class B Units then outstanding, each class voting or consenting, as the case
may be, separately, with respect to any of the following: 

(i)                  amending, modifying or terminating this Agreement or the
Certificate of Formation in any manner that disproportionately and adversely
affects the rights, preferences or privileges of any holder of a class of Units
as compared to the holders of other classes of Units; 

(ii)                  reclassifying any Units, or consummating any restructuring
or reorganization of the Company, in any manner that disproportionately and
adversely affects the rights, preferences or privileges of any holder of a class
of Units as compared to the holders of other classes of Units; 

(iii)                  entering into, amending, terminating or failing to
enforce (or abandoning any right under) any agreement or other transaction with
any Affiliate; provided that this clause (iii) shall not apply to (A)
agreements or other transactions between or among the Company and its
wholly-owned subsidiaries or (B) such entry into or amendments to agreements
where the Company reasonably demonstrates that such agreement or amendment is on
terms no less favorable to the Company than those that might be obtained at the
time from an unaffiliated third party; 

(iv)                  until the earlier of (A) ten (10) years following the date
that Member A initially acquired Units in the Company and (B) the date on which
Member A notifies the Company that it is relinquishing the right set forth in
this clause (iv), selling, leasing or otherwise disposing of all or
substantially all of the assets of the Company;

(v)                  dissolving or liquidating the Company; 

(vi)                  permitting any of the Company’s subsidiaries to take any
action that, if taken by the Company, would require consent under this
Section 4.6(c); and

(vii)                  entering into any agreement to do any of the foregoing.

Section 4.7                  Conduct of Meetings. 

The Manager shall have full power and authority concerning the
manner of conducting any meeting of the Members, including the determination of
Persons entitled to vote, the existence of a quorum, the satisfaction of the
requirements of this Article IV, the conduct of voting, the validity and
effectiveness of any proxies and the determination of any controversies, votes or challenges arising in connection with or during the
meeting or voting. The Manager shall designate a Person to serve as chairperson
of any meeting and shall further designate a Person to take minutes of any
meeting. The chairperson of the meeting shall have the power to adjourn the
meeting from time to time, without notice, other than announcement of the time
and place of the adjourned meeting. Upon the resumption of such adjourned
meeting, any business may be transacted that might have been transacted at the
meeting as originally called. 

16 

Section 4.8                  Action by Written Consent.

Any action that may be taken at a meeting of the Members may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, shall be signed and dated by the Members having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Units entitled to vote thereon were present and voted. Such
consent shall have the same force and effect as a vote of the signing Members at
a meeting duly called and held pursuant to this Article IV. No prior
notice from the signing Members to the Company or other Members shall be
required in connection with the use of a written consent pursuant to this
Section 4.8. Notification of any action taken by means of a written
consent of Members shall, however, be sent within a reasonable time after the
date of the consent by the Company to all Members who did not sign the written
consent, but in any event, such Notification shall be sent no later than five
(5) Business Days after such action is taken. 

Section 4.9                  Proxies.

A Member may vote either in person or by proxy executed in
writing by the Member. A facsimile, email or similar transmission by the Member
or a photographic, facsimile, photocopy or similar reproduction of a writing
executed by the Member shall be treated as an execution in writing for purposes
of this Section 4.9. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Company before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Manager who shall decide
all questions touching upon the qualification of voters, the validity of the
proxies and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairperson of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. A proxy shall be revocable unless the proxy
form conspicuously states that the proxy is irrevocable and the proxy is coupled
with an interest. Should a proxy designate two or more Persons to act as
proxies, unless such instrument shall provide to the contrary, a majority of
such Persons present at any meeting at which their powers thereunder are to be
exercised shall have and may exercise all the powers of voting or giving
consents thereby conferred, or if only one be present, then such powers may be
exercised by that one; or, if an even number attend and a majority do not agree
on any particular issue, the Company shall not be required to recognize such
proxy with respect to such issue if such proxy does not specify how the Units
that are the subject of such proxy are to be voted with respect to such issue.

17 

ARTICLE V 
MANAGEMENT OF THE COMPANY

Section 5.1                  Management of Business. 

Except as otherwise expressly provided in this Agreement, the
powers of the Company shall be exercised by or under the authority of, and the
business and affairs of the Company shall be managed under the direction of, the
“Manager.” The Manager shall be a “manager” of the Company within the
meaning of Section 18-101(10) of the Act. The Manager as of the Effective Date
shall be Member B. 

Section 5.2                  General Powers of Manager; Activities. 

(a)                  Except as may otherwise be expressly provided in this
Agreement, the Manager shall have complete and exclusive discretion in the
management and control of the business and affairs of the Company, including the
right to make and control all ordinary and usual decisions concerning the
business and affairs of the Company. The Manager shall, subject to Section
4.6(c), possess all power, on behalf of the Company, to do or authorize the
Company or to direct the officers of the Company, on behalf of the Company, to
do all things necessary or convenient to carry out the business and affairs of
the Company. 

(b)                  The Manager shall devote so much of its time to the affairs
of the Company and the conduct of the Company business as it, in its sole
judgment, shall reasonably determine to be required and shall not be obligated
to do or perform any act or thing in connection with the business of the Company
not expressly set forth herein. 

Section 5.3                  Limitations on Powers of Manager. 

The enumeration of powers in this Agreement shall not limit the
general or implied powers of the Manager or any additional powers provided by
law.

Section 5.4                  Compensation. 

The Manager shall serve without compensation.

Section 5.5                  Resignation and Removal. 

The Manager may resign by providing written Notice to the
Company and the Members; provided that the Manager’s resignation may not
be effective until a successor Manager is selected pursuant to this Section
5.5. The Manager may be removed for cause by the Members holding approval of
Members holding at least (a) 51% of the Class A Units then outstanding and (b)
51% of the Class B Units then outstanding, each class voting or consenting, as
the case may be, separately, but excluding the Units of any Member who is, or is
an Affiliate of, the Manager. For purposes of this section, “cause” means: (i)
fraud, intentional misconduct, gross negligence, or criminal violation of Law by
the Manager in the performance of its duties and obligations under this
Agreement or in connection with causing the Company to perform in accordance
with the Project Documents; (ii) the Bankruptcy or dissolution of the Manager;
(iii) a material breach by Manager of this Agreement which could reasonably be
expected to adversely affect the Tax credits available to the Members, which breach
has not been cured within thirty (30) days from the date Notice thereof is given
to the Manager by a Member; or (iv) if neither the Manager nor any Affiliates of
the Manager is a Member of the Company. Upon the resignation or removal of the
Manager, the Members holding (A) 51% of the Class A Units then outstanding and
(B) 51% of the Class B Units then outstanding shall select a new Manager but, in
the case of the removal of the Manager as provided herein, excluding the Units
of any member who is, or is an Affiliate of, the Manager so removed. Except as
provided in Section 5.5, the Manager shall not resign its rights or
obligations as Manager without the prior written approval of each Member. 

18 

Section 5.6                  Other Business.

The Manager and Members may engage in or possess an interest in
other business ventures of every kind and description, independently or with
others, including, without limitation, the development, construction and
operation of a separate geothermal power generation project near the Project
(referred to herein as “Phase II”). Neither the Company nor any Member
shall have any right, by virtue of this Agreement or the Company relationship
created hereby, in or to such other ventures or activities of the Manager or any
other Member or any of their respective Affiliates, or to the income or proceeds
derived therefrom, and the pursuit of such ventures, even if competitive with
the business of the Company, shall not be deemed wrongful or improper. 

Section 5.7                  Standard of Care; Liability. 

NOTWITHSTANDING ANY PROVISION TO THE CONTRARY ELSEWHERE IN THIS
AGREEMENT, TO THE EXTENT THAT, AT LAW OR IN EQUITY, THE MANAGER OR ANY MEMBER
HAS ANY DUTIES (FIDUCIARY OR OTHERWISE) AND LIABILITIES RELATING THERETO TO THE
COMPANY OR ANOTHER MEMBER OF THE COMPANY, (A) NEITHER THE MANAGER NOR ANY MEMBER
SHALL BE LIABLE TO THE COMPANY OR THE OTHER MEMBERS FOR ACTIONS TAKEN BY THE
MANAGER, ANY MEMBER OR ANY OF THEIR AFFILIATES IN RELIANCE UPON THE PROVISIONS
OF THIS AGREEMENT, (B) THE MANAGER IS EXPRESSLY PERMITTED TO SERVE AS A MANAGER
OR DIRECTOR OF ANY OTHER ENTITY, INCLUDING OTHER ENTITIES IN THE SAME OR SIMILAR
INDUSTRIES, (C) EACH MEMBER AND THE MANAGER IS PERMITTED TO EXPLORE AND DEVELOP
BUSINESS OPPORTUNITIES OUTSIDE OF THE COMPANY, EVEN IF SUCH OPPORTUNITIES MAY
COMPETE WITH THE ACTIVITIES OF THE COMPANY, (D) NO MANAGER OR MEMBER IS
REQUIRED, BY VIRTUE OF THEIR POSITION AS A MANAGER OR MEMBER, TO PRESENT
BUSINESS OPPORTUNITIES IN THE GEOTHERMAL INDUSTRY OR UTILIZING GEOTHERMAL
RESOURCES TO THE MANAGER, THE COMPANY OR THE OTHER MEMBERS BEFORE PURSUING SUCH
OPPORTUNITIES IN ANY CAPACITY OR ON BEHALF OF ANY OTHER ENTITY, AND (E) THE
DUTIES (FIDUCIARY OR OTHERWISE) OF THE MANAGER AND EACH MEMBER ARE INTENDED TO
BE MODIFIED AND LIMITED TO THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT, AND,
EXCEPT FOR THE IMPLIED CONTRACTUAL COVENANT OF GOOD FAITH AND FAIR DEALING, TO
THE GREATEST EXTENT PERMITTED BY LAW, NO IMPLIED COVENANTS, FUNCTIONS,
RESPONSIBILITIES, DUTIES, OBLIGATIONS OR LIABILITIES SHALL BE READ INTO THIS
AGREEMENT, OR OTHERWISE EXIST AGAINST THE MANAGER OR ANY MEMBER. 

19 

Section 5.8                  Appointment and Authority of Officers.

The Manager shall have the right to appoint officers of the
Company. The scope of any such officer’s power and authority shall be as
expressly set forth in a resolution of the Manager, and no officer shall have
greater power or authority than the Manager. Without the requisite prior
approval of the Members in respect thereof, no officer shall, on behalf of the
Company, authorize, engage in or enter into any of the transactions or actions
specified in Section 4.6(c). The Manager shall have the right to modify
or limit the authority of, or remove, and officer of the Company at any time,
either for or without cause. 

Section 5.9                  Execution of Company Documents. 

When the taking of such action has been authorized by the
Manager or (if required) the Members, the Manager or any officer of the Company,
as the case may be, may execute any contract, agreement, instrument, certificate
or other document on behalf of the Company and may execute and file on behalf of
the Company with the Secretary of State of the State of Delaware any document,
certificate or instrument, including without limitation any (a) certificate of
amendment to the Certificate of Formation, (b) one or more restated certificates
of formation, (c) certificate of merger or consolidation or (d) upon the
dissolution and completion of winding up of the Company, certificate of
dissolution. 

Section 5.10                  Operating Budget. 

The annual budget of the Company and any modification,
amendment or supplement thereto shall be established for each year pursuant to
the O&M Agreement (the “Operating Budget”). 

ARTICLE VI 
BOOKS AND RECORDS; TAX MATTERS

Section 6.1                  Bank Accounts; Investments. 

Capital Contributions, revenues and any other Company funds
shall be deposited by the Company in a bank account established in the name of
the Company, or shall be invested by the Company, at the direction of the
Manager, in furtherance of the purpose of the Company set forth in Section
1.5. No other funds shall be deposited into Company bank accounts or
commingled with Company investments. Funds deposited in the Company’s bank
accounts may be withdrawn only to be invested in furtherance of the Company’s
purposes, to pay Company debts or obligations or to be distributed to the
Members pursuant to this Agreement. 

Section 6.2                  Records Required by Act; Right of
Inspection. 

(a)                  During the term of the Company’s existence and for a period
of four (4) years thereafter, there shall be maintained in the Company’s
principal office all records required to be kept pursuant to the Act, including
a current list of the names, addresses and Units held by each of the Members (including the dates on which each of the
Members became a Member), copies of this Agreement and the Certificate of
Formation, including all amendments or restatements, and correct and complete
books and records of account of the Company. 

20 

(b)                  On written request, a Member may examine and copy, at any
reasonable time, for any purpose reasonably related to such Member’s interest as
a Member of the Company, and at the Member’s expense, records required to be
maintained under the Act and such other information regarding the business,
affairs and financial condition of the Company as is reasonable for the Member
to examine and copy. Upon written request by any Member made to the Company at
the address of the Company’s principal office, the Company shall provide to the
Member without charge true copies of this Agreement and the Certificate of
Formation and all amendments or restatements. 

Section 6.3                  Books and Records of Account. 

The Company shall maintain adequate books and records of
account that shall be maintained on the accrual method of accounting and on a
basis consistent with GAAP and appropriate provisions of the Code, containing,
among other entries, a Capital Account for each class of Units held by each
Member. The Company shall also maintain books for the purpose of registering the
transfer of Units. 

Section 6.4                  Other Information Rights. 

The Company shall furnish to each Member: 

(a)                  Within twenty (20) days after the end of each calendar
month and forty-five (45) days after the end of each calendar quarter (other
than for the month and calendar quarter ending simultaneously with the end of
the Company’s Fiscal Year), an unaudited balance sheet of the Company as at the
end of such month and unaudited statements of income and of changes in cash flow
of the Company for such month and for the current Fiscal Year to the end of such
month setting forth in comparative form the Company’s financial statements for
the corresponding periods for the prior Fiscal Year, if any, including a
comparison to the then current budget, all in reasonable detail.

(b)                  Within ninety (90) days after the end of each Fiscal Year,
an audited balance sheet of the Company as of the end of such year and audited
statements of income and of changes in cash flow of the Company for such year,
including comparisons to the corresponding periods in prior years, prepared in
accordance with GAAP consistently applied. 

(c)                  No later than sixty (60) days prior to the start of each
new Fiscal Year, the Operating Budget approved in accordance with Section
5.10, which Operating Budget shall be in reasonable detail and contain a
projected financial statement for such fiscal year on a monthly basis, and
operating goals for the Project, and promptly after preparation from time to
time, any revisions to the forecasts contained therein.

(d)                  Notice of any noncompliance by the Company with any
Applicable Law that could reasonably be likely to have a material adverse affect
on the business, assets, financial condition, prospects or results of operations
of the Company. 

21 

(e)                  Any other financial or other information available to the
officers of the Company as any Member reasonably requests. 

Section 6.5                  Audits. 

The fiscal year-end financial statements to be delivered
pursuant to Section 6.4(a) shall be audited. The audit shall be performed
by a nationally-recognized accounting firm selected by Manager in its sole
discretion. 

Section 6.6                  Fiscal Year. 

The fiscal year of the Company shall be as required under the
Code (the “Fiscal Year”). Beginning January 1, 2009, the Fiscal Year
shall be the calendar year. Each Fiscal Year shall consist of four quarters
(each, a “Fiscal Quarter”) ending on the last day in March, June,
September and December of each fiscal year. 

Section 6.7                  Tax Matters. 

(a)                  Member A is hereby designated Tax Matters Member for the
Company in accordance with the definition of “tax matters partner” set forth in
Section 6231 of the Code and shall be so designated in each U.S. federal
information return filed on behalf of the Company in the Class A Initial
Allocation Period; Member B is hereby designated Tax Matters Member for the
Company, with respect to Taxable Years after the Class A Initial Allocation
Period only, in accordance with the definition of “tax matters partner” set
forth in Section 6231 of the Code and shall be so designated in each U.S.
federal information return filed on behalf of the Company in all Taxable Years
after the Class A Initial Allocation Period. The Member so designated for the
Company at any time shall be referred to herein as the “Tax Matters
Member”. The Tax Matters Member shall not be liable to the Company or any
Member or Affiliate of the Company or any Member for any act or omission taken
or suffered by it in such capacity in good faith and in the belief that such act
or omission is in or is not opposed to the best interests of the Company and
shall, to the fullest extent permitted by law, be indemnified by the Company in
respect of any claim based upon such act or omission; provided,
however, that such act or omission does not constitute gross negligence,
fraud or willful misconduct.

(b)                  The Tax Matters Member shall promptly deliver to each
Member copies of all written Tax Correspondence and shall promptly advise each
Member of the content of any substantive verbal Tax Correspondence. The Tax
Matters Member shall use all reasonable efforts to provide each Member and its
attorneys the opportunity to attend any such conversations, and shall keep each
Member advised of all developments with respect to any proposed adjustments that
come to the Tax Matters Member’s attention. In addition, the Tax Matters Member
shall (x) provide to each Member draft copies of any substantive correspondence
or filing to be submitted by the Tax Matters Member to the IRS (or other taxing
authority), including, without limitation, with respect to any tax contest (a
“Written Submission”), at least 14 Business Days prior to the date the
Written Submission is required to be submitted, (y) shall consider in good faith
changes or comments to the Written Submission requested by other Members, and
shall consult with such other Members with respect to such changes and comments;
provided, however, that if the Tax Matters Member and the other Members, acting reasonably, cannot agree on the changes or
comments to the Written Submission, the Tax Matters Member’s changes or comments
shall control, and (z) shall provide to each Member a final copy of the Written
Submission. The Tax Matters Member shall provide each Member with notice
reasonably in advance of any scheduled meetings or conferences (including
telephone conferences) with respect to any tax contest, and such other Members
and their counsel will have the right to attend any such scheduled meetings or
conferences. The Tax Matters Member will take such reasonable actions, including
providing powers of attorney, as may be necessary for each Member and its
counsel to attend such meetings and conferences. Each Member shall provide the
Tax Matters Member with written comments to drafts of Written Submissions
delivered pursuant to this Section 6.7(b) within seven (7) Business Days
of receipt of such drafts. Each Member shall be deemed to have no comments if
the Tax Matters Member has not received such Member’s written comments within
seven (7) Business Days of receipt of such drafts. 

22 

(c)                  The Tax Matters Member agrees that it will not take the
following actions without each Member’s consent (such consent not to be
unreasonably withheld, delayed or conditioned): 

(i)                  Settling or proposing a settlement with the IRS regarding a
tax contest; 

(ii)                  Terminating an extension of the statute of limitations
regarding the Company’s tax year; 

(iii)                  Seeking technical advice or otherwise involving IRS
personnel outside the audit team or using procedures (e.g., a Pre-Filing
Agreement or Industry Issue Resolution Program) outside the normal audit
procedures with respect to a tax contest; and 

(iv)                  If a tax contest results in a deficiency, choosing the
forum for appeals or litigation, and settling or proposing a settlement for such
a controversy. 

(d)                  At the Company’s expense, the Tax Matters Member shall
cause a nationally-recognized accounting firm designated by Manager in its sole
discretion to prepare the U.S. federal income tax returns for the Company and
all other tax and information returns of the Company, including state and local
tax returns. The Tax Matters Member may extend the time for filing any such tax
returns as provided for under applicable statutes. Each Member shall provide
such information, if any, as may be reasonably needed by such accounting firm
for purposes of preparing such tax returns, provided that such
information is readily available from regularly maintained accounting records.
Draft Forms K-1 and any other information required for the Members to prepare
financial statements or tax returns (including state apportionment information)
shall be provided to the Members no later than sixty (60) days after the end of
the Company’s Taxable Year. At least sixty (60) days prior to filing the U.S.
federal and state income tax returns and information returns of the Company, the
Tax Matters Member shall deliver to the Members for their review a copy of the
Company’s U.S. federal and state income tax returns and information returns in
the form proposed to be filed for each Taxable Year, and shall incorporate all
reasonable changes or comments to such proposed tax returns and information returns requested by Members at least ten days
prior to the filing date for such returns. Notwithstanding the foregoing, in the
event the Tax Matters Member and another Member have a disagreement with respect
to such tax returns, such disagreement, to the extent the parties are not able
to reach agreement, shall be resolved by a nationally-recognized accounting firm
designated by Manager in its sole discretion, whose costs shall be shared
equally by Member A and Member B and whose determination shall be final. After
taking into account any such changes described above, the Tax Matters Member
shall cause the Company to timely file, taking into account any applicable
extensions, such tax returns. Within twenty (20) days after filing such U.S.
federal and state income tax returns and information returns of the Company, the
Tax Matters Member shall cause the Company to deliver to each Member a copy of
the Company’s U.S. federal and state income tax returns and information returns
as filed for each Taxable Year, together with any additional tax-related
information in the possession of the Company that such Member may reasonably and
timely request in order to properly prepare its own income tax returns. 

23 

(e)                  The Operator, to the extent that Company funds are
available, shall cause the Company to pay any taxes payable by the Company (it
being understood that the expenses of preparation and filing of the tax returns,
and the amounts of taxes, are expenses of the Company and not of the Tax Matters
Member); provided that the Tax Matters Member shall not be required to
cause the Company to pay any tax so long as the Company (under the direction of
the Tax Matters Member as described above) is in good faith and by appropriate
legal proceedings contesting the validity, applicability or amount thereof and
such contest does not materially endanger any right or interest of the Company.

(f)                  To the extent that the Company may, or is required to, make
elections for U.S. federal, state or local income or other tax purposes, such
elections shall be made by the Tax Matters Member. The Tax Matters Member agrees
to cause the Company to make the following elections for tax purposes: 

(i)                  To adopt the calendar year as its taxable year (the
“Taxable Year”), unless otherwise required by law; 

(ii)                  To adopt the accrual method of accounting; 

(iii)                  To compute the allowance for depreciation utilizing the
shortest life and fastest method permissible under the Modified Accelerated Cost
Recovery System or other applicable depreciation system, for tax purposes only;

(iv)                  To amortize organization expenditures, if any, over a
sixty (60) month period in accordance with Code Section 195(b) and any similar
state statute; 

(v)                  To amortize start-up expenditures, if any, over a sixty
(60) month period in accordance with Code Section 709(b) and any similar state
statute; 

(vi)                  To make such other elections as it may deem advisable to
reduce Company taxable income to the maximum extent possible and to take
deductions in the earliest Taxable Year possible; and 

24 

(vii)                  To make the election provided under Code Section 754 and
any corresponding provision of applicable state law at the request of any
Member. 

(viii)                  To the extent permitted by law, the Members agree to
report their tax items with respect to, and arising from, their interests in the
Company in a manner that is consistent with the Company’s tax returns. 

(g)                  Notwithstanding any other provisions of this Agreement, the
provisions of this Section 6.7 shall survive the dissolution of the
Company or the termination of any Member’s interest in the Company and shall
remain binding on all Members for a period of time necessary to resolve with the
Internal Revenue Service (“IRS”) or any applicable state or local taxing
authority all matters (including litigation) regarding the U.S. federal, state
and local income taxation, as the case may be, of the Company or any Member with
respect to the Company. 

(h)                  The Company shall take all steps necessary to be treated as
a partnership for U.S. federal income tax purposes and, to the extent relevant,
for state tax purposes. The Company shall not make an election or take any
action that would cause the Company to be excluded from the application of the
provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar
provision of applicable state law, and no provision of this Agreement shall be
construed to sanction or approve such election or action. No election shall be
made for the Company to be treated as a corporation, or an association taxable
as a corporation, under the Code or any provision of any state or local tax
laws. 

(i)                  It is the intent of the Members that the Company and the
Company Property be managed so as to ensure that the Members of the Company
shall be entitled to claim the Renewable Electricity Production Credits provided
under Sections 38(b)(8) and 45 of the Code with respect to all electricity sold
by the Company during the 10-year period set forth in Section 45(a)(2)(A)(ii) of
the Code in proportion with their allocation of Net Profits and Net Losses under
Article IX. No Member shall act in any manner that is inconsistent with
the allocation of the Renewable Electricity Production Credits set forth in this
Agreement. 

(j)                  The Company and Member B hereby represent, warrant and
covenant to Member A as follows: 

(i)                  At all times prior to the date of the Original Operating
Agreement, the Company will have had a single owner and will not have made an
election to be treated as a corporation under Treasury Regulations Section
301.7701 -3; 

(ii)                  Member B will not claim an energy credit under Section 48
with respect to the assets of the Company; 

(iii)                  Neither Member B nor the Company has or will receive: (A)
any grants from the United States, a state, or a political subdivision of a
state for use in connection with the transactions contemplated hereby; (B)
proceeds of an issue of state or local government obligations used to provide
financing for the transactions contemplated hereby the interest on which is
exempt from tax under Section 103; (C) any subsidized energy financing provided
(directly or indirectly) under a U.S. federal, state or local program provided
in connection with the transactions contemplated hereby; or (D) any credit allowable with respect to any property or business in
connection with the transactions contemplated hereby (other than the Renewable
Energy Production Credits); 

25 

(iv)                  Member B expects to have adequate assets, other than its
interest in the Company, to satisfy its obligations, if any, under Section
9.2(f)(ii) of this Agreement; and 

(v)                  Neither Member B nor the Company is directly or indirectly
related to the Idaho Power Company in any capacity. 

(k)                  For taxable years beginning on or after January 1, 2018,
the Company shall make the election described in Section 6221(b) of the Code (as
in effect at such time), in the manner prescribed by the IRS. 

ARTICLE VII 
RESTRICTIONS ON
TRANSFERABILITY; ADMISSION OF NEW MEMBERS 

Section 7.1                  Transfers. 

(a)                  Member A may sell, transfer, assign, pledge, encumber,
hypothecate or otherwise dispose of (a “Transfer”) all or any of its
Units without the approval of any other Member; provided, however,
that if any such Transfer is to be made during the Class A Initial Allocation
Period prior to the full funding of the Capital Contributions contemplated to be
made by Member A pursuant to Section 8.1, such Transfer may only be made
if (i) Member A remains obligated with respect to such Capital Contributions, or
(ii) Member B has consented in writing to such Transfer (which consent may not
be unreasonably withheld, delayed or conditioned). Notwithstanding the
foregoing, Member A may not Transfer all or any of its Units to a Competitor
unless (1) the O&M Agreement has been terminated in accordance with its
terms or (2) neither Member B nor any Affiliate of Member B is the Operator.

(b)                  Member B may sell its Class B Units and Class C Units
without the approval of any other Member, provided that:

(i)                  Member B may not Transfer any Class B Units or Class C
Units to a Person (A) that would cause the Company to be in violation of any
provision of the Project Documents, or (B) that would cause the Company to fail
to be eligible to receive the Renewable Electricity Production Credits; and 

(ii)                  such Transfer (A) is made to (I) a Person who has owned or
operated utility-scale geothermal projects in the United States for at least the
last five (5) preceding years or (II) any Person, including an investment bank,
private equity fund, or infrastructure fund, that has retained a Person that has
operated utility-scale geothermal projects in the United States for at least the
last five (5) preceding years to operate the Project after the Transfer from and
after such Transfer pursuant to a long-term, arm’slength operations and
management agreement, or (B) has the written consent of Member A, which consent
may not be unreasonably withheld. 

26 

(c)                  Notwithstanding anything in this Agreement to the contrary,
Member B may collaterally assign, pledge, encumber, or hypothecate all or any of
its Units to any third party providing financing to Member B without the
approval of any other Member; provided that if the third party providing
such financing forecloses on any of the Units, such third party shall be
obligated to enter into this Agreement and assume all of the obligations and
liabilities of Member B set forth herein. 

Section 7.2                  Admission of Transferee as Member. 

A transferee of a Unit desiring to be admitted as a Member must
execute and deliver to the Company a counterpart of, or an agreement adopting,
this Agreement, in form and substance satisfactory to the Company. Subject to
compliance with Section 7.1, upon such execution and delivery, such
transferee shall be admitted as a Member and the transferee shall have, to the
extent of the Unit transferred, the rights and powers and shall be subject to
the restrictions and liabilities of a Member under this Agreement, the
Certificate of Formation and the Act. The transferee shall also be liable, to
the extent of the Unit transferred, for the unfulfilled obligations, if any, of
the transferor Member to make Capital Contributions, but shall not be obligated
for liabilities unknown to the transferee at the time such transferee was
admitted as a Member and that could not be ascertained from this Agreement.
Whether or not the transferee of a Unit becomes a Member, the transferor Member
shall not be released from any liability to the Company under this Agreement,
the Certificate of Formation or the Act. 

Section 7.3                  Admission of Additional Members.

Additional Members of the Company may only be added if the
addition of any such proposed additional Member is approved in writing, prior to
such admission, by all of the then-existing Members and, in each such case, such
proposed additional Member satisfies the requirements of Section 7.2.

Section 7.4                  Purchase Option. 

At any time after the expiration of the Class A Initial
Allocation Period, Member B shall have the right, but not the obligation, to
cause Member A to sell to Member B all, but not less than all, of the Class A
Units (free and clear of all liens and encumbrances) for an amount of cash equal
to the Fair Market Value of such Units at such time. In the event Member B
desires to exercise such option under this Section 7.4, it shall notify
the Company and Member A, and Member B and Member A shall mutually agree upon
(i) the Fair Market Value of the Class A Units as of the time of such
determination or (ii) an independent appraiser who shall be qualified by his or
her education, training and experience in the renewable energy industry to
determine the Fair Market Value of the Class A Units as of the time of such
determination. Failing agreement by the Members, the Company shall request the
New York, New York office of the American Arbitration Association to appoint an
independent appraiser qualified by his or her education, training and experience
in the renewable energy industry to determine the Fair Market Value of the Class
A Units as of the time of such determination. Member B must exercise its option
to purchase all but not less than all of the Class A Units, and Member A and
Member B shall consummate such purchase and sale, within sixty (60) days after
such Fair Market Value determination. The costs and expenses of the independent appraiser shall be borne equally by
the Members.

27 

ARTICLE VIII 
CAPITAL OF THE COMPANY

Section 8.1                  Capital Contributions on
or Prior to the Effective Date. 

Member A and Member B have made
the following Capital Contributions in the aggregate amounts set forth below
prior to or on the Effective Date: 

	Member 	Capital Contribution (Cash)
  
	Member A 	$34,170,100 
	Member B 	$17,070,837 

	Member 	Capital Contribution (Property)
    
	Member A 	$ 0 
	Member B 	$882,803 

Member B made or caused to be
made all transfers listed in the Transfer Plan as contemplated by the Transfer
Plan. 

Section 8.2                  Further Required Capital Contributions. 

(a)                  Neither Member A nor Member B shall be obligated to make
any Capital Contributions other than such Member’s Capital Contribution set
forth in Section 8.1. Each Party agrees that no
additional Capital Contributions or capital calls may be made without the
consent of all Parties to this Agreement, except as provided in Section 8.2(b). 

(b)                  If at any time, after the
Effective Date, Member B determines to raise additional capital for the Company
to fund a Capital Improvement, then Member B shall first issue a written notice
to the Members (a “Call Notice”) setting forth the amount of Capital
Contributions Member B desires to raise (the “Call Amount”), a
description of the Capital Improvement to be funded by such Capital
Contributions, the date on which such Capital Contributions are due, and a
financial projection showing the anticipated additional project revenues and
expenditures if the Capital Improvements are completed. Member A shall have the
right, but not the obligation, to contribute its pro rata share based on the
ratio of Capital Contributions made by Member A pursuant to Section 8.1
to total Capital Contributions made by all Members. If Member A desires to
exercise its rights under this Section 8.2(b), it must deliver a written
notice to the Company within ten (10) Business Days after receipt of the Call
Notice. If Member A elects to contribute its pro rata share of the Call Amount,
Member A and Member B shall be obligated to make the Capital Contributions set
forth in the Call Notice on the date set forth in the Call Notice (or such other
date as Member B may determine). If Member A does not elect to contribute its
pro rata share of the Call Amount, Member B shall have the right, but not
the obligation, to make Capital Contributions to fund the Capital Improvement
(“Member B Capital Contribution”), and Member A shall have no further
right or obligation with respect to any Capital Improvements.

28 

Section 8.3                  Return of Capital Contributions. 

Except as otherwise provided
herein or in the Act, no Member shall have the right to withdraw, or receive any
return of, all or any portion of such Member’s Capital Contribution. 

Section 8.4                  In-Kind Contributions. 

The fair market value of
contributions of property, other than cash, made under this Article VIII
shall be the value agreed upon by the Members. 

Section 8.5                  Interest. 

No interest shall be paid by the
Company on Capital Contributions or on balances in Members’ Capital Accounts.

Section 8.6                  Loans From Members. 

Loans by a Member to the Company
shall not be considered Capital Contributions. If any Member shall advance funds
to the Company in excess of the amounts required hereunder to be contributed by
such Member to the capital of the Company, the making of such advances shall not
result in any increase in the amount of the Capital Account of such Member. The
amounts of any such advances shall be a debt of the Company to such Member and
shall be payable or collectible only out of the Company Property in accordance
with the terms and conditions upon which such advances are made. The repayment
of loans from a Member to the Company upon liquidation shall be subject to the
order of priority set forth in Section 12.2. 

ARTICLE IX 
CAPITAL ACCOUNTS, PROFITS AND
LOSSES AND ALLOCATIONS 

Section 9.1                  Capital Accounts. 

(a)                  The Company shall maintain a
capital account for each Member in accordance with Section 704 of the Code and
the Treasury Regulations thereunder (each, a “Capital Account”). Each
Member’s Capital Account as of the Effective Date will equal its Capital
Contributions made under Article VIII as of such date. 

(b)                  The Capital Account of each
Member will be increased by (i) the amount of any cash and the agreed Book Value
of any property (net of liabilities encumbering the property), as of the date of
contribution, contributed as a Capital Contribution to the capital of the
Company by that Member upon the agreement of all of the parties to this
Agreement, as contemplated by Section 8.2, (ii) the amount of any Net
Profits allocated to that Member, (iii) any items of income specially allocated
to that Member under this Article IX, (iv) that Member’s pro rata
share (determined in the same manner as that Member’s share of Net Profits
pursuant to Section 9.2) of income of the Company that is exempt from
tax. The Capital Account of each Member will be decreased by (i) the amount of
any Net Losses allocated to that Member, (ii) the amount of distributions to
that Member, (iii) any deductions specially allocated to that Member under this
Article IX, and (iv) that Member’s pro rata share (determined in
the same manner as that Member’s share of Net Losses pursuant to Section
9.2) of any other expenditures of the Company that are not deductible in
computing Company Net Profits or Net Losses and which are not chargeable to
capital account. In all respects, the Member’s Capital Accounts will be
determined in accordance with the detailed capital accounting rules set forth in
Section 1.704 -1(b)(2)(iv) of the Treasury Regulations and will be adjusted upon
the occurrence of certain events as provided in Section 1.704 -1(b)(2)(iv)(f) of
the Treasury Regulations. 

29 

(c)                  A transferee of all (or a portion) of a Unit will succeed
to the Capital Account (or portion of the Capital Account) attributable to the
transferred Interest. As of the Effective Date, Member B, as purchaser of the
Class C Units, succeeds to 90.5% percent of Member A’s Capital Account, which
the Parties have agreed is the portion attributable to the Class C Units. 

Section 9.2                  Profits and Losses.

(a)                  The net profits and net
losses of the Company (“Net Profits” and “Net Losses”) will be the
net income or net loss (including capital gains and losses and percentage
depletion deductions under Section 613 of the Code), respectively, of the
Company determined for each Fiscal Year in accordance with the accounting method
followed for U.S. federal income tax purposes, except that in computing Net
Profits and Net Losses, all depreciation and cost recovery deductions will be
deemed equal to Depreciation and gains or losses will be determined by reference
to Book Value rather than tax basis. Whenever a proportionate part of the Net
Profits or Net Losses is allocated to a Member, every item of income, gain,
loss, deduction or credit entering into the computation of such Net Profits or
Net Losses or arising from the transactions with respect to which such Net
Profits or Net Losses were realized will be credited or charged, as the case may
be, to such Member in the same proportion; except that “recapture income,” if
any, will be allocated to the Members who were allocated the corresponding
Depreciation deductions. 

(b)                  If any Member transfers all
or any part of its Interest during any Fiscal Year or its Interest is increased
or decreased, Net Profits and Net Losses attributable to that Interest for that
Fiscal Year (except as otherwise provided below) will be apportioned between the
transferor and transferee or computed as to such Members, as the case may be, in
accordance with the method selected by the Members, as long as such
apportionment is permissible under the Code and applicable regulations
thereunder. 

(c)                  Subject to, and after giving
effect to, Section 9.2(f), during each Fiscal Year during the Class A
Initial Allocation Period, Net Profits or Net Losses shall be allocated 99% to
Member A, as holder of the Class A Units, and 1% to Member B, as holder of the
Class B units and the Class C Units. 

(d)                  Subject to, and after giving
effect to, Section 9.2(f), during each Fiscal Year after the end of the
period described in Section 9.2(c), Net Profits and Net Losses shall be
allocated 95% to Member B, as holder of the Class B Units and Class C Units, and
5% to Member A, as holder of the Class A Units. 

30 

(e)                  Notwithstanding anything to
the contrary in Sections 9.2(a), (b), (c) and (d)
hereof, if and to the extent the Tax Matters Member determines that an
allocation of depreciation, depletion or other item of tax loss or deduction to
Member A would cause Member A’s Capital Account to fall below zero (or, if
Member A’s Capital Account is less than zero before such allocation, would
increase the amount by which Member A’s Capital Account is less than zero), only
the portion of such item or items that can be allocated to Member A without
causing Member A’s Capital Account to fall below zero (or to increase the amount
by which Member A’s Capital Account is less than zero) shall be allocated to
Member A. The remainder of any such item or items shall be allocated to Member
B. 

(f)                  Notwithstanding Sections 9.2(c), (d),
(e), (h), (i), and (j) hereof, 

(i)                  For federal income tax
purposes (but not for purposes of crediting or charging Capital Accounts),
depreciation or gain or loss realized by the Company with respect to any
property that was contributed to the Company or that was held by the Company at
a time when the Book Value of the Company Property was adjusted in accordance
with the third sentence of Section 9.1(b) will, in accordance with
Section 704(c) of the Code and Sections 1.704 -1(b)(2)(iv)(d) and (f) of the
Treasury Regulations, be allocated among the Members in a manner which takes
into account the differences between the adjusted basis for federal income tax
purposes to the Company of its interest in such property and the fair market
value of such interest at the time of its contribution or revaluation. The
Company shall adopt the traditional method with curative allocations as
specified in Section 1.704 -3(c) of the Treasury Regulations with respect to
allocations governed by Section 704(c) of the Code or such other method selected
by the Tax Matters Member; and 

(ii)                  If any Member receives an
adjustment, allocation or distribution that causes such Member to have a deficit
Capital Account balance as of the liquidation of such Member’s Units (taking
into account all capital account adjustments for the Fiscal Year during which
such liquidation occurs, other than those adjustment made as a result of this
Section 9.2(f)(ii)), such Member shall be unconditionally obligated to
restore the amount of such deficit balance to the partnership by the end of such
Fiscal Year (or, if later, within 90 days after the date of such liquidation),
which amount shall, upon liquidation of the partnership, be paid to creditors of
the partnership or distributed to other partners in accordance with their
positive capital balances (in accordance with Article XII). This
provision is intended and shall be interpreted to comply with the requirements
of Section 1.704 -1(b)(2)(ii)(b)(3) of the Treasury Regulations. 

(iii)                  To the extent and in the
manner provided in Section 1.704 -2(f) of the Treasury Regulations, if there is
a net decrease in Company Minimum Gain during any Fiscal Year each Member shall
be specially allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Member’s share of the
net decrease in Company Minimum Gain, determined in accordance with Section
1.704 -2(g) of the Treasury Regulations. This Section 9.2(f)(iii) is
intended to comply with the minimum gain chargeback requirement in Section 1.704
-2(f) of the Treasury Regulations and shall be interpreted consistently
therewith. 

31 

(iv)                  To the extent and in the
manner provided in Section 1.704 -2(i)(4) of the Treasury Regulations, if there
is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse
Liability during any Fiscal Year, each Member who has a share of the Member
Minimum Gain attributable to such Member Nonrecourse Liability shall be
specially allocated items of Company income and gain for such year(and, if necessary, subsequent years) in an amount equal to
such Member’s share of the net decrease in Member Minimum Gain attributable to
such Member Nonrecourse Liability, determined in accordance with Section 1.704
-2(i)(4) of the Treasury Regulations. The items to be so allocated shall be
determined in accordance with Sections l.704-2(i)(4) and 1.704 -2(j)(2) of the
Treasury Regulations. This Section 9.2(f)(iv) is intended to comply with
the minimum gain chargeback requirement in Section 1.704 -2(i)(4) of the
Treasury Regulations and shall be interpreted consistently therewith. 

(v)                  Nonrecourse Deductions for
any Fiscal Year shall be specially allocated to Member A and Member B in
accordance with the Members’ interest in Available Cash for such year, except
that any Nonrecourse Deductions attributable to debt proceeds distributed to a
Member will be allocated to that Member. 

(vi)                  Any Member Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Member who
bears the economic risk of loss with respect to the Member Nonrecourse Liability
to which such Nonrecourse Deductions are attributable in accordance with Section
1.704 -2(i)(1) of the Treasury Regulations. 

(vii)                  In connection with the
liquidation of the Company in accordance with Article XII, items of
Company income, gain, loss and deduction with be allocated to the Members first,
to restore any deficit in a Member’s Capital Account and thereafter in
accordance with this Article IX. 

(g)                  All Renewable Energy
Production Credits generated by the Company, together with any other Tax credits
generated by the Company, shall be allocated in the same manner in which Net
Profits and Net Losses for such Fiscal Year are allocated pursuant to this
Article IX. 

(h)                  Notwithstanding anything in
this Section 9.2 to the contrary (other than Section 9.2(f)), in
any Fiscal Year all items of gross income of the Company attributable to the
receipt of REC Income by the Company shall be allocated, and all Available Cash
that results from such REC Income in that Fiscal Year shall be distributed (i)
prior to the Effective Date, (A) 30% to Member A and 70% to Member B, up to the
amount of REC Income for such Fiscal Year identified on Schedule 8, and
(B) 50% to Member A and 50% to Member B with regard to any REC Income which
exceeds the applicable schedule amount as set forth on Schedule 8 for any
Fiscal Year and with regard to any REC Income earned in a Fiscal Year for which
no corresponding amount appears on Schedule 8, and (ii) after the
Effective Date, 5% to Member A, as holder of the Class A Units and 95% to Member
B, as holder of the Class B Units and the Class C Units, in each case to the
extent not subject to Section 10.1(e). 

32 

(i)                  Notwithstanding anything in
this Section 9.2 to the contrary (other than Section 9.2(f)), in
any Fiscal Year, all items of gross income of the Company attributable to the
receipt of Other Income by the Company shall be allocated, and all Available
Cash that results from such Other Income in that Fiscal Year shall be
distributed, 5% to Member A, as holder of the Class A Units, and 95% to Member
B, as holder of the Class B Units and the Class C Units. 

(j)                  Notwithstanding anything in
this Section 9.2 (including Sections 9.2(c) and (d)) to the
contrary (other than Section 9.2(f)), for each Taxable Year during which
or after which a Member B Capital Contribution is made, Net Profits and Net
Losses from sales of electricity will be allocated in the percentages calculated
in accordance with Schedule 10; provided that to the extent
permissible, REC Income and any items of loss or deduction attributable to a
Member Capital Improvement will be specially allocated to Member B. 

(k)                  Notwithstanding anything in
this Section 9.2 to the contrary, the allocations made pursuant to this
Article IX are intended to comply with Section 704(b) of the Code and the
Treasury Regulations promulgated thereunder. The Parties shall work together to
amend this Agreement (including this Article IX and Article X), if
necessary, to comply with this Section 9.1(j).

ARTICLE X 
APPLICATIONS AND DISTRIBUTIONS OF
AVAILABLE CASH 

Section 10.1                  Applications and Distributions.

(a)                  The Company will distribute
Available Cash for each Fiscal Year (other than the Fiscal Year in which the
Company liquidates) in accordance with Section 10.1(b), (c),
(d) or (e), as applicable; provided that the Manager may
reserve amounts for potential or pending litigation and other actual or
potential liabilities in such amounts and for such period of time (not to exceed
five (5) years from the final sale of Interests) as the Manager deems
appropriate. Subject to this Section 10.1(a), the Company will make any
such distributions to the Members in accordance with Section 10.1(b),
(c), (d) or (e), as applicable. In applying the terms of
Sections 10.1(b) and (c), (i) until a particular priority has been
satisfied in full, no amounts will be distributable under any junior priority,
(ii) the Members identified at each level of priority shall receive
distributions at the same time without preference or priority of one Member over
another until all Members at that level have received the full amount to which
they are entitled and before any distributions are made or paid to any Members
for amounts in a lower level of priority and (iii) all amounts distributable
under a particular priority will be prorated among the Members in the manner
specified within the priority, and the method of proration applied to each
dollar distributable in that priority will be the same until that priority is
satisfied in full. 

(b)                  Except as otherwise provided
in Section 9.2(h), Available Cash with respect to any Fiscal Quarter
during the Class B Initial Distribution Period will be distributed on each
Distribution Date in accordance with the following order of priorities: 

i)                  First, in the event that as
of any Distribution Date there is a Class A Distribution Deficiency greater than
$350,000, 100% to Member A until the Class A Distribution Deficiency is $350,000
or less; 

33 

(ii)                  Second, 100% to Member B
until Member B has received the Class B Initial Distribution Amount with respect
to such Fiscal Year (in the event that Available Cash with respect to any such
Fiscal Year is less than the Class B Initial Distribution Amount with respect to
such year, Member B shall not be entitled to any such shortfall in subsequent
Fiscal Years); and 

(iii)                  Third, 100% to Member A. 

(c)                  Except as otherwise provided
in Section 9.2(h), Available Cash with respect to
any Fiscal Quarter after the Class B Initial Distribution Period and before the
Effective Date will be distributed on each Distribution Date in accordance with
the following order of priorities:

(i)                  First, in the event that as
of any Distribution Date there is a Class A Distribution Deficiency greater than
$350,000, all Available Cash will be distributed to Member A until the Class A
Distribution Deficiency is $350,000 or less; and 

(ii)                  Second, 99% to Member A and 1% to Member B. 

(d)                  Except as otherwise provided
in Section 9.2(h) and Section 9.2(i), Available Cash with respect
to any Fiscal Quarter beginning on or after the Effective Date, will be
distributed on each Distribution Date 5% to Member A, as holder of the Class A
Units, and 95% to Member B, as holder of the Class B Units and the Class C
Units. 

(e)                  Notwithstanding anything in
this Section 10.1 or Section 9.2(h) to the
contrary, Capital Improvement Net Cash Flow shall be distributed on each
Distribution Date to Member B. 

Section 10.2                  Liquidation. 

In the event of the sale or other
disposition of all or substantially all the Company Property, the Company will
be dissolved and the proceeds of the sale or disposition will be distributed to
the Members in liquidation as provided in Article XII. 

Section 10.3                  Withholding Taxes.

The Manager may withhold or cause
to be withheld from any Member’s distributions from the Company any amounts on
account of taxes or similar charges, if any, as are required to be withheld by
applicable law. Any amounts withheld by the Company pursuant to this Section
10.3, shall be timely remitted by the Company to the appropriate taxing
authority. Any amounts withheld or offset by the Manager in accordance with this
Section 10.3 will nevertheless, for purposes of this Agreement, be
treated as if they had been distributed to the Member from which they are
withheld. 

34 

ARTICLE XI 
DISSOLUTION 

Section 11.1                  Dissolution Events. 

(a)                  The Company shall dissolve
and commence winding up upon the first to occur of the following: (i) subject to
Section 4.6(c), upon the written direction of the Manager, (ii) the
termination of the legal existence of the last remaining member of the Company
or the occurrence of any other event which terminates the continued membership
of the last remaining member of the Company in the Company unless the Company is
continued without dissolution in a manner permitted by this Agreement or the Act
or (iii) the entry of a decree of judicial dissolution under Section 18-802 of
the Act. Upon the occurrence of any event that causes the last remaining member
of the Company to cease to be a member of the Company (other than upon
continuation of the Company without dissolution upon (i) an assignment by such
member of all of its limited liability company interest in the Company and the
admission of the transferee pursuant to this Agreement, or (ii) the resignation
of such member and the admission of an additional member of the Company pursuant
to this Agreement), to the fullest extent permitted by law, the personal
representative of such member is hereby authorized to, and shall, within ninety
(90) days after the occurrence of the event that terminated the continued
membership of such member in the Company, agree in writing (i) to continue the
Company and (ii) to the admission of the personal representative or its nominee
or designee, as the case may be, as a substitute member of the Company,
effective as of the occurrence of the event that terminated the continued
membership of such member in the Company. 

(b)                  Notwithstanding any other
provision of this Agreement, the Bankruptcy of a Member shall not cause such
Member to cease to be a member of the Company and upon the occurrence of such an
event, the Company shall continue without dissolution. 

(c)                  Notwithstanding anything
herein to the contrary, the Company shall comply with any applicable
requirements of the Act pertaining to the winding up of the affairs of the
Company and the final distribution of its assets. Upon the completion of the
winding up, liquidation and distribution of the assets, the Company shall be
terminated when the Certificate of Formation is cancelled in the manner required
by the Act. The existence of the Company as a separate legal entity shall
continue until cancellation of the Certificate of Formation as provided in the
Act.

ARTICLE XII 
LIQUIDATION 

Section 12.1                  Responsibility for Winding Up. 

Upon dissolution of the Company
pursuant to Article XI, the Manager, or the authorized representative of
the Manager, shall be responsible for overseeing the winding up and liquidation
of the Company and shall take full account of the Company’s liabilities and
assets. 

Section 12.2                  Distribution of Assets Upon Winding Up.

Upon the winding-up of the Company, the assets will be
distributed as follows:

35 

(a)                  to the payment of expenses of the liquidation; 

(b)                  to the payment of debts and
liabilities of the Company, including debts and liabilities owed to Members
(other than liabilities for distributions to Members and former members under
Section 18-601 or Section 18-604 of the Act) to the extent permitted by
applicable law, in order of priority as provided by applicable law; 

(c)                  to the setting up of any
reserves that the Manager or the liquidating trustee, as the case may be,
determines are reasonably necessary for the payment of any contingent or
unforeseen liabilities or obligations of the Company or the Members; 

(d)                  to the payment of debts and
liabilities of the Company owed to Members to the extent not paid under
Section 12.2(b); and 

(e)                  to the Members in accordance
with their positive Capital Account balances after giving effect to the
allocations provided in Article IX for such year. 

     ARTICLE XIII

INDEMNIFICATION; EXCULPATION

Section 13.1                  Indemnification of Members. 

To the fullest extent not
prohibited by law, the Company shall indemnify and hold harmless each Member
from and against any and all losses, claims, demands, costs, damages,
liabilities (joint and several), expenses of any nature (including attorneys’
fees and disbursements), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits, or proceedings, civil,
criminal, administrative or investigative, in which a Member may be involved, or
threatened to be involved, as a party or otherwise, arising out of or incidental
to any business of the Company transacted or occurring while a Member was a
Member, regardless of whether the Member continues to be a Member of the Company
at the time any such liability or expense is paid or incurred, unless such act
or failure to act was the result of willful misfeasance, gross negligence or
fraud of such Member. 

Section 13.2                  Indemnification of the Manager, Officers,
Employees and Agents. 

Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a “proceeding”) by reason of the fact that he
or she is or was serving as a Manager, officer, employee or agent of the Company
or, at the request of the Company, another limited liability company or of a
corporation, partnership, joint venture, trust or other enterprise, including a
service with respect to an employee benefit plan (hereinafter an
“indemnitee”), whether the basis of such a proceeding is alleged action
in an official capacity as a Manager, officer, employee or agent or in any other
capacity while serving as a Manager, officer, employee or agent, shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the Act, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Company to
provide broader indemnification rights than such law permitted the Company to
provide prior to such amendment), against all expense, liability and loss
(including attorneys’ fees, judgments fines, excise taxes or penalties and
amounts paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith, unless such act or failure to act was the result of
willful misfeasance, gross negligence or fraud of such indemnitee. 

36 

Section 13.3                  Exculpation.

(a)                  No Member, Manager or officer
shall be liable to the Company for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Member, Manager or officer
in good faith on behalf of the Company. 

(b)                  No Member, Manager or officer
shall be liable to the Members or to the Company for any act or failure to act
on behalf of the Company, unless such act or failure to act resulted from the
willful misfeasance, gross negligence or the fraud of such Person.

(c)                  Each Member, Manager and
officer shall be fully protected in relying in good faith upon the records of
the Company and upon such information, opinions, reports or statements presented
to the Company by any Person as to matters such Member or Manager reasonably
believes are within such Person’s professional or expert competence. 

(d)                  The Manager may consult with
counsel and accountants in respect of the affairs of the Company at the
Company’s sole expense and shall be fully protected and justified in any action
or inaction which is taken in good faith in accordance with the advice or
opinion of such counsel or accountants. 

(e)                  Notwithstanding the
foregoing, the provisions of this Section 13.3 shall not be construed so
as to relieve (or attempt to relieve) a Member, Manager or officer of any
liability, to the extent (but only to the extent) that such liability may not be
waived, modified or limited under Applicable Law, but shall be construed so as
to effectuate the provisions of this Section 13.3 to the fullest extent
permitted by law.

ARTICLE XIV 
MISCELLANEOUS 

Section 14.1                  Governing Law. 

The laws of the State of Delaware
shall govern the validity of this Agreement, the construction of its terms, and
the interpretation of the rights, obligations and duties of the Members and the
Manager hereunder, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware. 

Section 14.2                  Binding Effect; Entire Agreement. 

Except as otherwise provided in
this Agreement, every covenant, term, and provision of this Agreement shall be
binding upon and inure to the benefit of the Members and their respective legal
representatives, successors, transferees, and assigns. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof. 

37 

Section 14.3
                  Creditor’s Interest in the Company. 

No creditor who makes a loan to
the Company shall have or acquire at any time as a result of making the loan any
direct or indirect interest in the profits, capital or property of the Company,
other than such interest as may be accorded to a secured creditor. 

Section 14.4
                  Headings. 

Article and other headings
contained in this Agreement are for reference purposes only and are not intended
to describe, interpret, define, or limit the scope, extent or intent of this
Agreement or any provision hereof. 

Section 14.5
                  Amendments. 

This Agreement may only be amended with the written consent of
the Members. 

Section 14.6
                  Severability. 

Every provision of this Agreement
is intended to be severable. If any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity or legality of the remainder of this Agreement. 

Section 14.7
                  Incorporation by Reference. 

Every schedule, exhibit or other
appendix attached to this Agreement and referred to herein is hereby
incorporated into this Agreement by reference.

Section 14.8
                  Variation of Pronouns. 

All pronouns and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter, singular or
plural, as the identity of the Person or Persons may require. 

Section 14.9
                  No Third-Party Beneficiaries. 

No term or provision of this
Agreement is intended to or shall be for the benefit of any Person, firm,
corporation or other entity not a party hereto, and no such other Person, firm,
corporation or other entity shall have any right or cause of action hereunder.

Section 14.10
                  Counterpart Execution; Facsimile
Signatures. 

This Agreement may be executed in
any number of counterparts pursuant to original or facsimile copies of
signatures with the same effect as if the relevant party had signed the same
document pursuant to original signatures. All counterparts shall be construed
together and shall constitute one agreement. 

Section 14.11
                  Confidentiality and Disclosure. 

(a)
                  Each Party agrees (on behalf
of itself and each of its Affiliates, members, directors, officers, employees
and representatives) that, except as may otherwise be agreed by the Party
disclosing Confidential Information, the Party receiving Confidential
Information will hold in complete confidence, in accordance with its customary
procedures for handling confidential information and in accordance with safe and
sound practices, and not disclose it to any other Person; provided, that
the receiving Party may disclose Confidential Information: 

38 

(i)
                  to those of its and its Affiliates’ officers,
directors, employees, counsel, auditors, accountants, examiners, consultants,
advisors and sources of financing (collectively, the “Representatives”) who need to know
such Confidential Information for the purpose of discussing, advising with
respect to or evaluating the Project or the Company or an investment in the
Project or the Company (it being understood and agreed that the receiving Party
shall have advised such persons of their obligations concerning the
confidentiality of all client affairs and information and shall instruct such
persons to maintain the confidentiality of such Confidential Information); 

(ii)
                  as may be required by a rule
or other requirement of a securities regulator, a stock exchange or a
self-regulatory organization; 

(iii)
                  in or pursuant to any
offering statement or similar document provided to purchasers or potential
purchasers of any direct or indirect ownership interests in the Company; 

(iv)
                  in an action or proceeding
brought in pursuit of its rights or in the exercise of its remedies under this
Agreement or any other Project Document; 

(v)
                  to any rating agency or
potential lender to the Company or the Party; 

(vi)
                  to any potential purchaser
of output of the Project or the output of Phase II or other geothermal projects
in which Member B is a participant, provided that any such potential
purchaser has agreed to confidentiality undertakings with respect thereto under
a confidentiality agreement that is at least as restrictive as this agreement in
all applicable respects; 

(vii)
                  to any provider or
potential provider of hedging or risk management in connection with any
transaction related to the transactions contemplated by the Project Documents;
and 

(viii)
                  as requested or required
in connection with a judicial, administrative or regulatory proceeding in which
a Party or a partner, officer, member, director, employee or Affiliate thereof
is involved, pursuant to a court order or subpoena or regulatory or government
inquiry or demand or as otherwise by law or regulation.

In the event that the receiving Party receives a request to
disclose any Confidential Information under clause (viii) in the prior sentence,
it will (A) promptly notify the disclosing Party thereof (to the extent
permitted by law or regulation and reasonably practicable) so that the
disclosing Party may seek a protective order or otherwise seek to resist or
narrow such request and (B) if the receiving Party is nonetheless required to
make such disclosure or if it is advised by its counsel that such disclosure is
necessary, it will take reasonable steps, at disclosing Party’s Party disclosing
Confidential Information, the Party receiving Confidential Information will hold
in complete confidence, in accordance with its customary procedures for handling
confidential information and in accordance with safe and sound practices, and
not disclose it to any other Person; provided, that the receiving Party
may disclose Confidential Information: 

39 

(b)
                  Each Member agrees to consult with the other Members
before issuing any press release or otherwise making any public or press
statement with respect to this Agreement and the transactions contemplated
hereby and the Project and, except as may be necessary for such Member or any of
its Affiliates to comply with the requirements of Applicable Law or of any stock
exchange or self-regulatory organization, agrees not to issue any such press
release or make any such public or press statement without the prior written
approval of the other Members, which shall not be unreasonably withheld;
provided, that written approval shall be deemed to be given by any Member
that fails to respond within five days of receiving the notice of intention from
a Member to issue a press release or make any public or press statement with
respect to this Agreement and the transactions contemplated hereby and the
Project. 

(c)
                  Notwithstanding anything
herein to the contrary, any Member (and any owner, member, partner, director,
officer, employee, agent, representative, adviser of any Member, and any
Affiliate of the foregoing) may disclose to any and all Persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and the Project and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure; provided, that any such information
relating to the federal income tax treatment or tax structure shall remain
subject to the provisions of this Section 14.11
(and the foregoing sentence shall not apply) to the extent reasonably necessary
to enable any Person to comply with applicable securities laws. The tax
structure and tax treatment of the transaction includes only those facts that
may be relevant to understanding the purported or claimed U.S. federal and state
income tax treatment or tax structure of the transaction and, to eliminate all
doubt, therefore specifically does not include information that either reveals
or standing alone or in the aggregate with other information so disclosed tends
of itself to reveal or allow the recipient of the information to ascertain the
identity of any parties involved in any of the transactions contemplated by this
Agreement or the Project Documents, or other documents to be delivered in
connection herewith. 

(d)
                  Notwithstanding any of the
foregoing in this Section 14.11, in connection with any offering of
securities by Member B or an affiliate (the “Issuer”), in which Member A
or an Affiliate thereof (the “GS Entity”) is involved as underwriter,
dealer, agent or other similar participant, nothing in this agreement shall (i)
prevent either the Issuer or the GS Entity from complying with all applicable
disclosure laws, regulations and principles in connection with such offering or
sale of securities, (ii) restrict the ability of the GS Entity to consider
information for due diligence purposes or to share information with other
underwriters participating in such offering or sale of securities, (iii) prevent
the GS Entity from retaining documents or other information in connection with
due diligence or (iv) prevent the GS Entity from using any such documents or
other information in investigating or defending itself against claims made or
threatened by purchasers, regulatory authorities or others in connection with
such an offering or sale of securities. 

40 

Section 14.12
                  USG Promissory Note.

Notwithstanding anything to the
contrary set forth in this Agreement, in the event that the USG Promissory Note
is not paid in full on or prior to the Maturity Date (as defined therein) or
there shall occur any other Event of Default (as defined therein), then until
such time as all obligations under the USG Promissory Note are paid in full, all
distributions or other amounts that Member B or any of its Affiliates would
otherwise be entitled to under this Agreement shall be paid by the Company
directly to the Holder (as defined therein), with any such payments being
deemed, for all purposes of this Agreement, as a distribution to Member B or
payments to such Affiliate and a payment from Member B or such Affiliate to the
Holder. 

Section 14.13
                  Amendment and Restatement. 

This Agreement is an amendment
and restatement, in its entirety, of the Amended and Restated Operating
Agreement, and from and after the Effective Date the Amended and Restated
Operating Agreement shall be without further force or effect. 

Section 14.14
                  Notices. 

Unless otherwise provided herein,
any offer, acceptance, election, approval, consent, certification, request,
waiver, notice or other communication required or permitted to be given
hereunder (collectively referred to as a “Notice”), shall be in writing
and delivered (a) in person, (b) by registered or certified mail with postage
prepaid and return receipt requested, or (c) by recognized overnight courier
service with charges prepaid, directed to the intended recipient at the address
of such Member, as set forth on Schedule 1 hereto or at such other
address as any Member hereafter may designate by giving Notice to the Members
and the Manager in accordance with this Section 14.14. A Notice or other
communication will be deemed delivered on the earliest to occur of (i) its
actual receipt when delivered in person, (ii) the fifth Business Day following
its deposit in registered or certified mail, with postage prepaid, and return
receipt requested or (iii) the second Business Day following its deposit with a
recognized overnight courier service. 

Section 14.15
                  Conference Telephone Meetings. 

Meetings of the Members may be
held by means of conference telephone or similar communications equipment so
long as all Persons participating in the meeting can hear each other.
Participation in a meeting by means of conference telephone shall constitute
presence in person at such meeting, except where a Person participates in the
meeting for the express purpose of objecting to the transaction of any business
thereat on the ground that the meeting is not lawfully called or convened. 

[SIGNATURE PAGES FOLLOW] 

41 

IN WITNESS WHEREOF, the undersigned
have duly executed this Second Amended and Restated Operating Agreement of Raft
River Energy I LLC as of December ___, 2015. 

	 	MEMBER A: 
	 	 
	 	 
	 	RAFT RIVER I HOLDINGS, LLC 
	 	 
	 	By:    
      ___________________________________________________
	 	           Name:
      Pooja Goyal 
	 	           Title:
      Director 
	 	 
	 	 
	 	MEMBER B: 
	 	 
	 	 
	 	IDAHO USG HOLDINGS, LLC 
	 	 
	 	By:    
      __________________________________________________
	 	           Name:
    
	 	           Title:
    
	 	 
	 	  
	 	COMPANY: 
	 	 
	 	RAFT RIVER ENERGY I LLC 
	 	 
	 	By:    
      ________________________________________________
	 	           Name:
    
	 	           Title:
    

SIGNATURE PAGE TO 
SECOND AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT 

SCHEDULE 1 

MEMBERS, MEMBERSHIP INTERESTS AND INFORMATION FOR PURPOSES OF
PROVIDING NOTICE (BEFORE THE EFFECTIVE DATE) 

	Member 	Membership 	Percentage of Class 	Notice Details 
	  	Interest 	Outstanding 	  
	A 	500 Class A
      Units 	100% of Class A
      Units 
Outstanding 	Raft River I Holdings, LLC
      
c/o The Goldman Sachs Group 
200 West Street 
New York, New York
      10282 
Attention: Charles Cognata 
Tel. No.: (212) 902-1000 
	  	  	  	  
	B 	500 Class B
      Units 	100% of Class B
      Units 
Outstanding 	Idaho USG Holdings, LLC 
390
      East Parkcenter Blvd. 
Suite 250 
Boise, Idaho 83706 

Tel.
      No.: (208) 424-1027 
Tel. No.: (208) 424-1030 

Schedule 1 

SCHEDULE 1-A 

MEMBERS, MEMBERSHIP INTERESTS AND INFORMATION FOR PURPOSES OF

PROVIDING NOTICE (ON AND AFTER THE EFFECTIVE DATE) 

	Member 	Membership 	Percentage of Class 	Notice Details 
	  	Interest 	Outstanding 	  
	A 	50 Class A Units 	100% of Class A Units
      
Outstanding 	Raft River I Holdings, LLC 
c/o The Goldman
      Sachs Group 
200 West Street 
New York, New York 10282
      
Attention: Charles Cognata 
Tel. No.: (212)902-1000 
	  	  	  	  
	B 	500 Class B Units 
450 Class
      C Units 	100% of Class B Units
      
Outstanding 
100% of Class C Units 
Outstanding 	Idaho USG Holdings, LLC 
390 East Parkcenter
      Blvd. 
Suite 250 
Boise, Idaho 83706 

Tel. No.: (208)
      424-1027 
Tel. No.: (208) 424-1030 

Schedule 1-A 

SCHEDULE 2 

[RESERVED] 

Schedule 2 

SCHEDULE 3 

[RESERVED] 

Schedule 4 

SCHEDULE 4 

PROJECTED DISTRIBUTABLE FREE CASH 

	Quarter Ending 	 	Projected Distributable Free Cash
      ($) 	 
	 	 	 	 
	August 31, 2006 	 	-	 
	November 30, 2006 	 	-	 
	February 28, 2007 	 	-	 
	May 31, 2007 	 	-	 
	August 31, 2007 	 	-	 
	November 30, 2007 	 	-	 
	February 29, 2008 	 	674,350 	 
	May 31, 2008 	 	683,934 	 
	August 31, 2008 	 	681,563 	 
	November 30, 2008 	 	667,212 	 
	February 28, 2009 	 	677,674 	 
	May 31, 2009 	 	699,714 	 
	August 31, 2009 	 	697,284 	 
	November 30, 2009 	 	682,597 	 
	February 28, 2010 	 	693,325 	 
	May 31, 2010 	 	715,867 	 
	August 31, 2010 	 	713,376 	 
	November 30, 2010 	 	698,346 	 
	February 28, 2011 	 	709,330 	 
	May 31, 2011 	 	732,387 	 
	August 31, 2011 	 	729,832 	 
	November 30, 2011 	 	714,450 	 
	February 29, 2012 	 	738,390 	 
	May 31, 2012 	 	748,684 	 
	August 31, 2012 	 	746,111 	 
	November 30, 2012 	 	730,641 	 
	February 28, 2013 	 	741,916 	 
	May 31, 2013 	 	765,619 	 
	August 31, 2013 	 	762,981 	 
	November 30, 2013 	 	747,149 	 
	February 28, 2014 	 	758,848 	 
	May 31, 2014 	 	782,721 	 
	August 31, 2014 	 	780,084 	 
	November 30, 2014 	 	764,187 	 
	February 28, 2015 	 	775,713 	 
	May 31, 2015 	 	799,891 	 
	August 31, 2015 	 	797,188 	 
	November 30, 2015 	 	781,021 	 
	February 29, 2016 	 	806,574 	 
	May 31, 2016 	 	817,547 	 
	August 31, 2016 	 	814,776 	 

Schedule 4 

	Quarter Ending 	 	Projected Distributable Free Cash
      ($) 	 
	 	 	 	 
	November 30, 2016 	 	798,229 	 
	February 28, 2017 	 	810,251 	 
	May 31, 2017 	 	835,546 	 
	August 31, 2017 	 	832,704 	 
	November 30, 2017 	 	815,771 	 
	February 28, 2018 	 	828,190 	 
	May 31, 2018 	 	854,064 	 
	August 31, 2018 	 	851,152 	 
	November 30, 2018 	 	833,820 	 
	February 28, 2019 	 	846,422 	 
	May 31, 2019 	 	872,886 	 
	August 31, 2019 	 	869,900 	 
	November 30, 2019 	 	852,163 	 
	February 29, 2020 	 	879,939 	 
	May 31, 2020 	 	891,933 	 
	August 31, 2020 	 	888,872 	 
	November 30, 2020 	 	870,721 	 
	February 28, 2021 	 	884,069 	 
	May 31, 2021 	 	911,755 	 
	August 31, 2021 	 	908,617 	 
	November 30, 2021 	 	890,039 	 
	February 28, 2022 	 	903,487 	 
	May 31, 2022 	 	931,805 	 
	August 31, 2022 	 	928,587 	 
	November 30, 2022 	 	909,574 	 
	February 28, 2023 	 	908,109 	 
	May 31, 2023 	 	937,072 	 
	August 31, 2023 	 	933,773 	 
	November 30, 2023 	 	914,316 	 
	February 29, 2024 	 	944,732 	 
	May 31, 2024 	 	957,843 	 
	August 31, 2024 	 	954,461 	 
	November 30, 2024 	 	934,549 	 
	February 28, 2025 	 	949,014 	 
	May 31, 2025 	 	979,312 	 
	August 31, 2025 	 	975,845 	 
	November 30, 2025 	 	955,466 	 
	February 28, 2026 	 	970,390 	 
	May 31, 2026 	 	1,001,383 	 
	August 31, 2026 	 	997,829 	 
	November 30, 2026 	 	976,971 	 
	February 28, 2027 	 	991,982 	 
	May 31, 2027 	 	1,023,682 	 
	August 31, 2027 	 	1,020,038 	 
	November 30, 2027 	 	998,692 	 

Schedule 4 

SCHEDULE 5 

CLASS C UNIT RIGHTS 

The Class C Units shall be
entitled to receive for periods beginning on or after the Effective Date: 

Net Profits and Losses 

		• 	
      From the first day following the end of the Class A
      Initial Allocation Period until the day before the 20th anniversary of the
      Placed In Service Date, allocations of 46% of the Net Profits and Net
      Losses 

	 	  	
       

		• 	
      From and after the 20th anniversary of the Placed In
      Service Date, allocations of 15% of the Net Profits and Net Losses
  

REC Income and Other Income 

		• 	
      Allocations of 25% of REC Income and distributions of all
      Available Cash that results from such REC Income up to the amount set
      forth on Schedule 8 for the applicable Fiscal Year and 45% of any
      REC Income that exceeds the applicable scheduled amount as set forth on
      Schedule 8 

	 	 	
       

		• 	
      Allocations of 25% of Other Income and distributions of
      all Available Cash that results from such Other Income for the applicable
      Fiscal Year 

Available Cash 

		• 	
      From the Effective Date until the last day of the Class A
      Initial Allocation Period, distributions of 94% of Available Cash (other
      than REC Income, Other Income and Available Cash resulting therefrom)
    

	 	 	
       

		• 	
      From the first day following the end of the Class A
      Initial Allocation Period, until the day before the 20th anniversary of
      the Placed In Service Date, distributions of 46% of Available Cash (other
      than REC Income, Other Income and Available Cash resulting therefrom)
    

	 	 	
       

		• 	
      From and after the 20th anniversary of the Placed In
      Service Date, distributions of 15% of Available Cash (other than REC
      Income, Other Income and Available Cash resulting therefrom)
  

Schedule 5 

SCHEDULE 6 

BASELINE NET REVENUE 

	Quarter 	Baseline Net 
	Ending 	   Revenue 
	 	 
	12/31/2015 	1,553,271 
	 	 
	3/31/2016 	1,262,673 
	 	 
	6/30/2016 	987,649 
	 	 
	9/30/2016 	1,303,332 
	 	 
	12/31/2016 	1,527,726 
	 	 
	3/31/2017 	1,262,885 
	 	 
	6/30/2017 	999,531 
	 	 
	9/30/2017 	1,319,510 
	 	 
	12/31/2017 	1,547,319 
	 	 
	3/31/2018 	1,349,473 
	 	 
	6/30/2018 	1,073,356 
	 	 
	9/30/2018 	1,396,613 
	 	 
	12/31/2018 	1,637,901 
	 	 
	3/31/2019 	1,365,535 
	 	 
	6/30/2019 	1,085,765 
	 	 
	9/30/2019 	1,413,577 
	 	 
	12/31/2019 	1,658,375 
	 	 
	3/31/2020 	1,398,692 
	 	 
	6/30/2020 	1,098,514 
	 	 
	9/30/2020 	1,430,956 
	 	 
	12/31/2020 	1,679,301 
	 	 
	3/31/2021 	1,380,786 
	 	 
	6/30/2021 	1,097,266 
	 	 
	9/30/2021 	1,429,397 
	 	 
	12/31/2021 	1,677,950 
	 	 
	3/31/2022 	1,379,482 
	 	 
	6/30/2022 	989,224 
	 	 
	9/30/2022 	1,427,721 
	 	 
	12/31/2022 	1,676,426 
	 	 
	3/31/2023 	1,378,003 

Schedule 6 

	6/30/2023 	1,094,486 
	 	 
	9/30/2023 	1,425,778 
	 	 
	12/31/2023 	1,674,562 
	 	 
	3/31/2024 	1,392,758 
	 	 
	6/30/2024 	1,092,713 
	 	 
	9/30/2024 	1,423,402 
	 	 
	12/31/2024 	1,672,178 
	 	 
	3/31/2025 	1,373,976 
	 	 
	6/30/2025 	1,090,584 
	 	 
	9/30/2025 	1,420,520 
	 	 
	12/31/2025 	1,669,191 
	 	 
	3/31/2026 	1,371,214 
	 	 
	6/30/2026 	1,087,988 
	 	 
	9/30/2026 	1,416,983 
	 	 
	12/31/2026 	1,665,439 
	 	 
	3/31/2027 	1,367,805 
	 	 
	6/30/2027 	1,084,845 
	 	 
	9/30/2027 	1,412,693 
	 	 
	12/31/2027 	1,660,823 
	 	 
	3/31/2028 	1,380,057 
	 	 
	6/30/2028 	1,081,070 
	 	 
	9/30/2028 	1,407,537 
	 	 
	12/31/2028 	1,655,217 
	 	 
	3/31/2029 	1,358,705 
	 	 
	6/30/2029 	971,842 
	 	 
	9/30/2029 	1,401,514 
	 	 
	12/31/2029 	1,648,623 
	 	 
	3/31/2030 	1,352,917 
	 	 
	6/30/2030 	1,071,540 
	 	 
	9/30/2030 	1,394,524 
	 	 
	12/31/2030 	1,640,930 
	 	 
	3/31/2031 	1,346,220 
	 	 
	6/30/2031 	1,065,672 
	 	 
	9/30/2031 	1,386,524 

Schedule 6 

	12/31/2031 	1,632,095 
	 	 
	3/31/2032 	1,354,662 
	 	 
	6/30/2032 	1,058,995 
	 	 
	9/30/2032 	1,377,431 
	 	 
	12/31/2032 	1,622,031 
	 	 
	3/31/2033 	1,329,925 
	 	 
	6/30/2033 	1,051,560 
	 	 
	9/30/2033 	1,367,319 
	 	 
	12/31/2033 	1,610,603

Schedule 6 

SCHEDULE 7 

TRANSFER PLAN 

Transfers from US Geothermal Inc. to Raft River Energy I LLC

	TRANSFER REQUIRED 	  	  	  	  	  
	Geothermal Leases 	Dated 	Consent 	Party 	Notes 	Recording 
	  	  	  	  	  	Required 
	Stewart 	12/1/04 	none 	Reid S and Ruth O 	  	  
	  	  	  	Stewart 	  	  
	Crank 	6/28/03 	none 	Janice Crank and the 	  	Yes 
	  	  	  	children of Paul Crank 	  	  
	Newbold 	3/1/04 	none 	Jay Newbold 	  	Yes 
	Doman 	6/23/05 	none 	Dale and Rhonda B 	  	Yes 
	  	  	  	Doman 	  	  
	Glover 	1/25/06 	none 	Phil Glover 	  	Yes 
	  	  	  	  	  	  
	Contracts 	  	  	  	  	  
	Power Purchase 	12/29/04 	yes 	Idaho Power Company 	Reasonable 	  
	Agreement 	  	  	  	  	  
	Power Plant Supply 	12/5/05 	yes 	Ormat Nevada 	Reasonable 	  
	EPC 	  	  	  	  	  
	12 MW Power 	6/24/05 	notice 	Bonneville Power 	30 to 60 	  
	Transmission 	  	  	Administration 	days 	  
	Agreement 	  	  	  	  	  
	Drilling Contract 	5/25/06 	yes 	Union Drilling 	Reasonable 	  

	Permits 
	Geothermal Resource Permits 	  	  
	43-GR-19 (RRGE-1) 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	43-GR-20 (RRGE-2) 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	43-GR-21 (RRGE-3) 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	43-GR-22 (RRGE-4) 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	43-GR-23 (RRGE-5) 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	43-GR-24 (RRGE-6) 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	43-GR-25 (RRGE-7) 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	MW-1 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 

Schedule 7 

	MW-2 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	MW-3 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	MW-4 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	MW-5 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	MW-6 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	MW-7 	4/21/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	Injection Well Permits 	  	  	  
	43-W001001 	6/3/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	43-W001002 	6/3/05 	none 	Idaho Department of 
	  	  	  	Water Resources 
	Conditional Use 	4/21/05 	none 	Cassia County 
	Permit 	  	  	  
	  	  	  	  
	Capital Transfers 	  	  	  
	2005 Capital 	$882,803 	none 	Engineering, Reports, 
	Investment Items 	  	  	Studies, Design 
	14 wells 	$480,911 	none 	Book Value 
	  	$1,363,714 	  	  

	No Transfer Required 
	TO BE SIGNED BY RAFT RIVER ENERGY I LLC
  
	Transmission 	3/9/06 	none 	Raft River Rural Electric Coop 
	Interconnect Services 	  	  	  
	Pipeline Crossing 	6/1/06 	none 	Raft River Highway District 
	Easement 	  	  	  
	Pipeline Construction 	5/22/06 	none 	Industrial Builders 
	and Installation 	  	  	  
	Transmission Line 	Pending 	none 	Raft River Rural Electric Coop 
	Construction Contract 	  	  	  
	Well Distribution Line 	5/16/06 	none 	Raft River Rural Electric Coop 
	Contract 	  	  	  
	Well Distribution Line 	Pending 	none 	Raft River Rural Electric Coop 
	O&M Contract 	  	  	  
	Drilling Services 	7/17/06 	none 	Weatherford Services 
	Contract 	  	  	  
	Drilling Equipment and 	7/26/06 	none 	Baker Hughes/Baker Petrolite 
	Supply 	  	  	  

Schedule 7 

	PERMITS HELD BY Raft River Energy I LLC
  
	Idaho Air Quality Permit 	5/26/06 	none 	Idaho Dept of 
	to Construct 	  	  	Environmental Quality 
	Authorization to reuse 	Pending 	none 	Idaho Dept of 
	Cooling Water 	  	  	Environmental Quality 
	Cassia County Building 	Pending 	  	Cassia County 
	Permit 	  	  	  

	AGREEMENT TO BE COMPLETED 
	Non Exclusive Surface Easement 	  	  	  
	US Geothermal Inc. 	Pending 	none 	US Geothermal Inc. 	Yes 
	Water Rights Lease 	  	  	  	  
	US Geothermal Inc. 	Pending 	none 	US Geothermal Inc. 	Yes 
	Geothermal Lease 	  	  	  	  
	US Geothermal Inc. 	Pending 	none 	US Geothermal Inc. 	Yes 

Schedule 7 

SCHEDULE 8 

SCHEDULED REC INCOME AMOUNTS 

	Fiscal Year 		$ /MWh 	 
	2008 	 	7.50 	 
	2009 	 	7.00 	 
	2010 	 	6.50 	 
	2011 	 	6.00 	 
	2012 	 	5.50 	 
	2013 	 	5.00 	 
	2014 	 	4.75 	 
	2015 	 	4.75 	 
	2016 	 	4.75 	 
	2017 	 	4.75 	 

Schedule 8 

SCHEDULE 9 

BASELINE CAPITAL EXPENDITURE PLAN 

See attached. 

 

 

Schedule 9 

SCHEDULE 9

BASELINE CAPITAL EXPENDITURE PLAN

	  	 	2016 	 	 	2017 	 
	  	 	1st Qtr 	 	 	2nd Qtr 	 	 	3rd Qtr 	 	 	4th Qtr 	 	 	1st Qtr 	 	 	2nd Qtr 	 	 	3rd Qtr 	 	 	4th Qtr 	 
	Inventory Purchases 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	
    10E amp 4160 fuses for PCM, 3 each. 
	 	0 	 	 	0 	 	 	1,700 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Lube oil/seal oil heat exchanger and fan. 
	 	3,800 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Lube oil/seal oil air operated pumps, 2
      each. 
	 	2,800 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    2 sets rebuild kits for air operated lube oil pumps. 
	 	2,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    6 Spare API rings for well head work. 
	 	0 	 	 	0 	 	 	1,400 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare PCM lube oil pump and motor. 
	 	0 	 	 	0 	 	 	3,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare PCM cooling water pump and motor. 
	 	0 	 	 	0 	 	 	2,600 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Replacement compressors for plant air compressors. 
	 	16,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare VFD for oil/cooling water at PCM's.
    
	 	0 	 	 	350 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare feed pump. 
	 	0 	 	 	0 	 	 	0 	 	 	60,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare cooling fan for cooling tower fan
      VFD. 
	 	0 	 	 	0 	 	 	1,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare Flexim flowmeter. 
	 	7,500 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare production pump head shaft nuts 
	 	1,800 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare parts 2017 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	20,000 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare parts 2018 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare parts 2019 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Spare parts 2020 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Total Inventory Purchases 
	 	33,900 	 	 	350 	 	 	9,700 	 	 	60,000 	 	 	20,000 	 	 	0 	 	 	0 	 	 	0 	 
	
      
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	
    Capital Expenditures 
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	
    New Operator truck 
	 	35,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Replace HMI SCADA computers 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Upgrade PLC's and panel view's at 3 prod
      wells and RO. 
	 	0 	 	 	28,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Vibration monitoring equipment/software (E-Monitor) 
	 	0 	 	 	50,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Second RS logix 5000 license for I&C
      laptop. 
	 	8,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    PT's/CT's/MTAP's for PdMA of MV Motors 
	 	0 	 	 	21,940 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Purchase aditional tool storage 
	 	0 	 	 	0 	 	 	7,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Backup generator for RO bldg comms cabinet 
	 	0 	 	 	7,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Awning for lunch area at plant 
	 	0 	 	 	0 	 	 	2,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Update site lighting to LED lights 
	 	35,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Wide angle and telephoto lenses for IR
      camera. 
	 	2,750 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Fluke 700G Pressure Calibrator. 
	 	0 	 	 	1,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Upgrade well head instrumentation plumbing
      at RRG-4. 
	 	0 	 	 	3,500 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Install site security camera system. 
	 	10,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Install gates to control site access. 
	 	0 	 	 	0 	 	 	3,200 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Purchase Hytorc tool 
	 	6,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Upgrade support structure for RRG-2 
	 	0 	 	 	70,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Upgrade pump support foundation at RO 
	 	2,000 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Install insitu vibration monitoring
      equipment. 
	 	0 	 	 	4,500 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Upgrade SCADA to Allen Bradley Factory Talk 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    4 copper/brass heat exchangers to replace
      aluminum at PCM's. 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	16,800 	 	 	0 	 	 	0 	 
	
    IR Windows for MCC switchgear. 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	2,200 	 	 	0 	 	 	0 	 
	
    Schweitzer motor protection relays for
      production wells. 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	11,200 	 	 	0 	 	 	0 	 
	
    Upgrade support structure for RRG-1 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	70,000 	 	 	0 	 	 	0 	 
	
    Upgrade support structure for RRG-4 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	70,000 	 	 	0 	 	 	0 	 
	
    Insulate pipeline to RRG-9. 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Upgrade support structure for RRG-7 
	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 	 	0 	 
	
    Total Capx
    
	 	98,750 	 	 	185,940 	 	 	12,200 	 	 	0 	 	 	0 	 	 	170,200 	 	 	0 	 	 	0 	 
	
      
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	
    Total Capx
      & Inventory Purchases 
	 	132,650 	 	 	186,290 	 	 	21,900 	 	 	60,000 	 	 	20,000 	 	 	170,200 	 	 	0 	 	 	0 	 

SCHEDULE 10 

ALLOCATIONS FOLLOWING MEMBER B CAPITAL CONTRIBUTIONS

During the Class A Initial Allocation Period, the Member A
allocation percentage of Net Profits and Net Losses shall be: 

[Baseline Net Revenue / (Baseline Net Revenue + Capital
Improvement Net Cash Flow)] * 0.99 

After the Class A Initial Allocation Period ends, the Member A
allocation percentage of Net Profits and Net Losses shall be: 

[Baseline Net Revenue / (Baseline Net Revenue + Capital
Improvement Net Cash Flow)] * 0.05 

Schedule 10 

Exhibit A 

MAP OF SITE 

See attached. 

Exhibit A 

 

Exhibit B 

Form of Convertible Note 

See attached. 

Execution Version 

THIS NOTE HAS
NOT BEEN REGISTERED
UNDER THE SECURITIES ACT
OF 1933, AS AMENDED,
OR THE SECURITIES LAWS
OF ANY STATE AND
MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION
UNDER THE FOREGOING
LAWS. ACCORDINGLY, THIS
NOTE AND ANY SECURITIES
INTO WHICH IT MAY
BE CONVERTED MAY NOT
BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF
WITHOUT (1) AN OPINION
OF COUNSEL SATISFACTORY
TO U.S. GEOTHERMAL INC.
THAT SUCH SALE, TRANSFER
OR OTHER DISPOSITION MAY
LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE
SECURITIES ACT OF 1933
AND APPLICABLE STATE
SECURITIES LAWS OR (2)
SUCH REGISTRATION. 

CONVERTIBLE PROMISSORY
NOTE (“NOTE”)

	$1,597,000 	December 14, 2015 
	  	Boise, Idaho 

For value received U.S.
Geothermal Inc., a Delaware corporation (the “Company”),
promises to pay to Goldman, Sachs & Co., a New York limited partnership, at
200 West Street, New York, New York 10282 or its assigns
(“Holder”) the principal sum of $1,597,000 together with accrued
and unpaid interest thereon, each due and payable on the date and in the manner
set forth below.

1.                  Interest
Rate. The Company promises to pay simple interest on the outstanding
principal amount hereof from the date hereof until payment in full, which
interest shall be payable at the rate of 8.0% per annum and shall accrue daily.
Interest shall be due and payable on the Maturity Date and shall be calculated
on the basis of a 360-day year for the actual number of days elapsed.

2.                  Maturity; Payments; Prepayment; Waiver of
Presentment.

(a)                  Maturity
Date. Subject to Section 3(a), the outstanding principal amount and
all unpaid accrued interest shall be payable on the earlier of (i) March 31,
2016 and (ii) the date of consummation of a transaction resulting in a change of
control of the Company (the “Maturity Date”).

(b)                  
Payments. Subject to Section 3, all payments of principal and
interest shall be in lawful money of the United States of America and
shall be payable at the address set forth in the opening paragraph of this
Note unless another place of payment shall be specified in writing by
Holder.

(c)                  Interest
Payment. Unless converted in accordance with Section 3, the Company
shall pay the Holder all accrued and unpaid interest on the Maturity Date.

(d)                  Waiver.
The Company hereby waives demand, diligence, notice, presentment, and protest
and notice of protest, demand, dishonor and nonpayment of this Note, and
expressly agrees that this Note, or any payment hereunder, may be extended from
time to time, at the sole discretion of the Holder, and that the Holder may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of the Company hereunder. 

(e)                  Prepayment. The Company may prepay the
principal and accrued interest due hereunder without the consent of the Holder,
and without payment of any penalty or premium. Any prepayment made by the
Company shall be applied first to the payment of accrued interest and then to
the unpaid principal. 

3.                  Payment and Conversion.

(a)                  
Conversion. On or before the Maturity Date, the Company may elect to
pay up to an aggregate amount of $1,000,000 of principal and interest on this
Note by issuance of Conversion Shares at the Conversion Price (the date of such
conversion, the “Conversion Date”). The “Conversion
Price” shall be the weighted average of the closing prices for the
Company’s shares of common stock on the NYSE MKT stock exchange for the ten (10)
trading days immediately preceding the Conversion Date as reported by the NYSE
MKT (or, if the NYSE MKT is not the principal securities exchange or trading
market for the common stock, the closing price of the common stock on the
principal securities exchange or trading market where such security is listed or
traded as reported by the principal market). “Conversion Shares”
means shares of the common stock of the Company that are covered by a
Registration Statement filed with the Securities and Exchange Commission and
covering the resale on a continuous basis pursuant to Rule 415, on Form S-3. In
order to exercise its right to issue Conversion Shares, the Company shall
deliver a notice to the Holder on or prior to the Maturity Date, which notice
shall include a stock certificate representing the Conversion Shares or such
other evidence of share ownership as is reasonably acceptable to the Holder.
Notwithstanding anything to the contrary set forth herein, neither the Company
nor the Holder has any conversion rights other than the conversion of up to an
aggregate amount of $1,000,000 of principal and interest on this Note on the
Conversion Date pursuant to this Section 3(a). Without limiting the
foregoing, in the event that the Company does not validly issue Conversion
Shares on or before the Maturity Date (whether due to a failure to deliver
evidence of share ownership or otherwise), the Company shall forfeit any right
to pay any portion of the principal and interest on this Note in the form of
Conversion Shares. 

(b)                  No TSX
Sales. The Company and the Holder acknowledge and agree that no Conversion
Shares will be offered for sale or sold on the Toronto Stock Exchange (TSX).

(c)                  Beneficial
Ownership Limitation. Notwithstanding anything to the contrary, this Note
shall not convert into any Conversion Shares that, when aggregated with all
other shares of common stock then beneficially owned by the Holder and its
affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule
13d-3 promulgated thereunder), would result in the beneficial ownership by the
Holder and its affiliates of more than 9.99% of the then issued and outstanding
shares of common stock (the “Beneficial Ownership Limitation”).
The Holder and the Company shall each cooperate in good faith in the
determinations required hereby and the application hereof. To the extent that a
portion of the Note is not converted as a result of the Beneficial Ownership
Limitation (or for any other reason), that portion of the Note shall be paid in
cash on the Maturity Date. 

(d)                  Resale
Registration Statement. The Company shall use its commercially reasonable
efforts to keep the Registration Statement continuously effective and available
for use by Holder under the Securities Act until the date that is the earlier of
(i) one year after the Conversion Date or, (ii) such time as all of the
Conversion Shares covered by the Registration Statement have been publicly sold
by the Holder, or (iii) at such time as all of the Conversion Shares become
transferable without any restrictions or limitations in accordance with Rule
144(b)(1) (or any successor provision). 

(e)                  Fractional
Shares. No fractions of a share of Conversion Shares shall be issued, but in
lieu thereof the Holder otherwise entitled to a fraction of a Conversion Share
or an Additional Share shall be entitled to receive an amount of cash (without
interest) determined by multiplying the Conversion Price by the fractional share
interest to which such holder would otherwise be entitled. The parties
acknowledge that payment of the cash consideration in lieu of issuing fractional
shares was not separately bargained for consideration, but merely represents a
mechanical rounding off for purposes of simplifying the corporate and accounting
complexities that would otherwise be caused by the issuance of fractional
shares. 

(f)                  Cash
Payment. Any portion of principal or interest under this Note that is not
paid through the issuance of Conversion Shares on the Maturity Date shall be due
and payable in cash on the Maturity Date. 

4.                  Default. 

(a)                  Each of the following events shall be an
“Event of Default” hereunder: 

(i)                  the Company
files any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law or any other law for the relief of, or relating to,
debtors, now or hereafter in effect, or makes any assignment for the benefit of
creditors or takes any corporate action in furtherance of any of the
foregoing;

(ii)                  an involuntary
petition is filed against the Company under any bankruptcy statute now or
hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit
of creditors (or other similar official) is appointed to take possession,
custody or control of any property of the Company;

(iii)                  the Company
executes an assignment with respect to substantially all of its assets;

(iv)                  failure of the
Company to pay when due any amount owed to the Holder; and 

(v)                  the Company
breaches any obligation under this Note in any material respect and fails to
cure such breach within fifteen (15) days of the Company receiving notice of
such breach from Holder. 

(b)                  Upon the
occurrence of any Event of Default hereunder, (i) until such amounts are paid in
full, any amounts owing hereunder shall bear interest at a rate equal to twelve
percent (12%) per annum, and such rate shall increase by one percent (1.0%)
every ninety (90) days until such amounts are paid in full, (ii) all unpaid
principal, accrued interest and other amounts owing under this Note shall
automatically and immediately become due, payable and collectible by Holder
pursuant to applicable law, (iii) any amounts that would be distributed or
otherwise paid to the Company under the Second Amended and Restated Operating
Agreement of Raft River Energy I LLC, dated as of the date hereof, shall be paid
by Raft River Energy I LLC directly to the Holder in accordance with Section
14.12 thereunder, and (iv) the Holder may pursue any other rights or remedies it
may have at law or in equity. 

5.                  Miscellaneous. 

(a)                  Successors
and Assigns. The terms and conditions of this Note shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. The Company may not assign its rights or obligations under this Note
without the prior written consent of Holder. Holder shall have the unconditional
right to assign its rights and obligations under this Note without the prior
written consent of Company. Any assignment by either party must be made in
accordance with the requirements of all applicable securities laws and
regulations. 

(b)                  Governing
Law. This Note shall be governed by and construed and interpreted in
accordance with the laws of the State of New York without giving effect to any
choice or conflict of law provision or rule.

(c)                  Titles and
Subtitles. The titles and subtitles used in this Note are used for
convenience only and are not to be considered in construing or interpreting this
Note. 

(d)                  Notices.
All notices, payments, demands or communications required or permitted to be
given by any provision of this Agreement shall be in writing and shall be deemed
to be delivered, given and received for all purposes (a) as of the date and time
of actual receipt, in the case of notices delivered personally; (b) one day
after deposit with a nationally recognized overnight delivery service; (c) if
sent by electronic mail or facsimile, upon confirmed receipt by recipient; or
(d) five (5) days after deposit in registered or certified United States mail
return receipt requested, as applicable. If not emailed or faxed, such notices,
payments, demands or communications shall be delivered personally to the
recipient or to an officer of the recipient to whom the same is directed, or
sent by registered or certified United States mail return receipt requested, or
by nationally recognized overnight delivery service, addressed at the addresses
specified on the signature page hereto or to such other address as may be
specified from time to time by notice to parties hereto. 

(e)                  
Modification; Waiver. This Note may only be amended or waived in a
writing signed by both the Company and the Holder. 

(f)                  Entire
Agreement. This Note constitutes the entire agreement of the parties in
respect of the subject matter hereof. 

(g)                  Maximum
Rate. Notwithstanding anything herein to the contrary, if at any time
any interest rate applicable under this Note, together with all fees, charges
and other amounts that are treated as interest on this Note under applicable law
(collectively, the “Charges”), shall exceed the maximum lawful
rate (the “Maximum Rate”) that may be contracted for, charged,
taken, received or reserved by the Holder in accordance with applicable law, the
rate of interest payable in respect hereof, together with all Charges payable in
respect thereof, shall be limited to the Maximum Rate. 

COMPANY: 

U.S. GEOTHERMAL
INC., a Delaware corporation 

	By:	 	 
	Name:	 	 
	Title:	 	 

	Address: 	390 E. Parkcenter Blvd., Suite 250 
	  	Boise, Idaho 83706 

ACKNOWLEDGED AND AGREED BY 

HOLDER: 

GOLDMAN, SACHS
& CO., a New York limited
partnership 

By:     ____________________________
Name:
Pooja Goyal 
Title: Managing Director 

	Address: 	200 West Street 
	  	New York, New York 10282 
	  	Attn: Charles Cognata 

[Signature Page to Promissory Note] 

Exhibit C 

Form of Selling Shareholder Questionnaire 

See attached. 

SELLING STOCKHOLDER QUESTIONNAIRE 

U.S. Geothermal Inc. 
390 E. Parkcenter Blvd. 
Suite 250

Boise, ID 83706 

Ladies and Gentlemen: 

The undersigned acknowledges that
it/he/she will be the beneficial owner of securities of U.S. Geothermal Inc.
(the "Company"). The undersigned understands that, it will be named as a
selling stockholder in the prospectus that forms a part of the Company's
Registration Statement on Form S-3 (the "Registration Statement"). The
Registration Statement registers for resale under the Securities Act of 1933, as
amended (the "Securities Act"), the securities the undersigned is
expected to receive upon conversion of the promissory note (the "Registrable
Securities"). The Company will use the information that the undersigned
provides in this Questionnaire to ensure the accuracy of the Registration
Statement and the prospectus. 

Certain legal consequences arise
from being named as a selling securityholder in the Registration Statement and
the related prospectus. Accordingly, holders and beneficial owners of securities
to be registered under the Registration Statement are advised to consult their
own securities counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus. 

The undersigned acknowledges that
by completing, dating, executing and returning this Questionnaire to the
Company, the undersigned is giving written notice to the Company of its desire
to have the securities disclosed in response to Question 5(b) of this
Questionnaire included in the Registration Statement. 

Please answer every question.

If the answer to any question is "none" or "not applicable,"
please so state. 

1.                  Name. Type or print the full legal name of the
selling securityholder. 

Goldman, Sachs & Co. 

2.                  Contact Information. Provide the address, telephone
number, fax number and email address of the selling securityholder. 

	Address: 	200 West Street 
	 	 
	  	New York, NY 10282 
	 	 
	Phone: 	(212) 902 - 1000 
	 	 
	Fax: 	(212) 256-4809 
	 	 
	Email: 	Charles.cognata@gs.com

3.                  Relationship with the Company. Describe the nature of
any position, office or other material relationship the selling securityholder
has had with the Company during the past three years.

The Company and an affiliate of
the selling stockholder are co-investors in Raft River Energy I LLC. The selling
stockholder and/or its affiliates may have provided, or pitched, investment
banking or other services customarily provided by financial institutions for
customary fees. Additionally, the selling stockholder and/or its affiliates own
Company stock, but such ownership represents less than 1% of the Company’s total
stock outstanding 

4.                  Organizational Structure. Please indicate or (if
applicable) describe how the selling securityholder is organized. 

Is the selling securityholder a
natural              _____
Yes       _X__ No 
person? 

(If so, please mark the box and skip to Question 5.)

Is the selling securityholder a
reporting          ___
Yes           _X__ No

company under the Securities Exchange 
Act of 1934, as amended (the
"Exchange 
Act")? 

(If so, please mark the box and skip to Question 5.)

2 

Is the selling securityholder a
majority-           _X__
Yes           ___ No 
owned
subsidiary of a reporting company 
under the Exchange Act? 

(If so, please mark the box and skip to Question 5.)

Is the selling securityholder a
registered           ___
Yes           ___ No

investment company under the Investment 
Company Act of 1940? 

(If so, please mark the box and skip to Question 5.)

If the answer to all of the
foregoing questions is "no," please describe: (i) the exact legal description of
the selling securityholder (e.g., corporation, partnership, limited liability
company, etc.); (ii) whether the legal entity so described is managed by another
entity and the exact legal description of such entity (repeat this step until
the last entity described is managed by a person or persons, each of whom is
described in any one of (a) through (d) above); (iii) the names of each person
or persons having voting and investment control over the Company's securities
that the entity owns (e.g., director(s), general partner(s), managing member(s),

etc.).

	 	(a) 	Legal Description of Entity: 
	 	 	 
	 	 	 
	 	(b) 	Name of Entit(ies)/(y)
      Managing Such Entity (if any): 
	 	 	 
	 	 	 
	 	(c) 	Name of Entit(ies)/(y)
      Managing such Entit(ies)/(y) (if any): 
	 	 	 
	 	 	 
	 	 	 

(d)
                  Name(s) of Natural
Person(s) Having Voting or Investment Control Over the Shares Held by such
Entit(ies)/(y): 

 

5.                  Ownership of the Company’s Securities. This
question covers beneficial ownership of the Company's securities. Please consult
Appendix A to this Questionnaire for information as to the meaning of "beneficial ownership."
State (a) the number of shares of the Company's common stock (including any
shares issuable upon exercise of warrants or other convertible securities) that
the selling securityholder beneficially owned as of the date this Questionnaire
is signed, other than the shares to be issued upon conversion of the
promissory note: 

3 

	 	(a) 	
      Number of shares of common stock and other equity
      securities owned: 

	 	 	 
	 	 	Up to $1 million worth of shares at direction of company based on the
      10 day weighted average price proceeding March 31,
2016.

6.                  Broker-Dealer Status. 

(a) 

Is the selling securityholder a
broker-           _X__
Yes           ___ No

dealer? 

(b) 

If the answer to Section 6(a) is "yes,"
did      ___
Yes             _X__
No 
the selling securityholder receive the 
Registrable Securities as
compensation for 
investment banking services to the 
Company? 

(c) 

Is the selling securityholder an affiliate
of       ___
Yes          __X_ No 
a
broker-dealer? 

(d) 

If the selling securityholder is an
affiliate         ___
Yes          ___ No 
of a
broker-dealer, does the selling 
securityholder certify that it purchased the

Registrable Securities in the ordinary 
course of business, and at the
time of the 
purchase of the Registrable Securities to 
be resold, the
selling securityholder had 
no agreements or understandings, directly 
or
indirectly, with any person to distribute 
the Registrable Securities? 

Note: If the answer to 6(d) is "no," SEC guidance has indicated that the selling securityholder should
be identified as an underwriter in the Registration Statement. 

4 

7.                  Plan of Distribution. Do you have any agreement,
“arrangement” or understanding with any securities underwriter, broker or dealer
relating to the sale or proposed sale of any of the shares of Common Stock of
the Company held by you, or as to which you have the right to acquire, as listed
above in response to Question 5(b)? 

___
Yes           _X__ No 

If the answer is “yes”, please
describe: 

__________________________________________________________________

__________________________________________________________________

8.                  Legal Proceedings with the Company. Is the Company a
party to any pending legal proceeding in which the selling securityholder is
named as an adverse party? 

___
Yes         _X__ No 

State any exceptions here: 

__________________________________________________________________

__________________________________________________________________

9.                  Reliance on Responses. The undersigned acknowledges
and agrees that the Company and its legal counsel shall be entitled to rely on
its responses in this Questionnaire in all matters pertaining to the
Registration Statement and the sale of any Registrable Securities pursuant to
the Registration Statement. 

If the Company is required to
file a new or additional registration statement to register Registrable
Securities beneficially owned by the selling securityholder, the undersigned
hereby agrees to complete and return to the Company, upon the request of the
Company, a new Questionnaire (in a form substantially similar to this
Questionnaire). 

If the selling securityholder
transfers all or any portion of its Registrable Securities after the date on
which the information in this Questionnaire is provided to the Company, the undersigned hereby agrees to notify the
transferee(s) at the time of transfer of its rights and obligations hereunder.

5 

By signing below, the undersigned
represents that the information provided herein is accurate and complete. By
signing below, the undersigned consents to the disclosure of the information
contained herein and the inclusion of such information in the Registration
Statement and the related prospectus and any amendments or supplements thereto.
The undersigned understands that such information will be relied upon by the
Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus. 

[SIGNATURE PAGE FOLLOWS] 

6 

IN WITNESS WHEREOF the undersigned, by authority duly given,
has caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent. 

	Dated: 	 	Beneficial Owner: 
	 	 	 
	 	 	 
	  	 	By: 
      _________________________________________________________________
	  	 	Name: Pooja Goyal 
	  	 	Title: Managing Director 

AS SOON AS POSSIBLE, PLEASE EMAIL A COPY OF THE COMPLETED
AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT
MAIL, TO: 

U.S. Geothermal Inc. 
390 E. Parkcenter Blvd. 
Suite 250

Boise, ID 83706 
Attn: Kerry Hawkley 
Fax: (208) 424-1030
E-mail:
Khawkley@usgeothermal.com 

7

APPENDIX A 

DEFINITION OF "BENEFICIAL OWNERSHIP" 

1.                  A "Beneficial Owner" of a
security includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or shares: 

(a)                  Voting
  power which includes the power to vote, or to direct the voting of, such
  security; and/or 

(b)                  Investment power which includes the power to dispose, or
  direct the disposition of, such security. 

Please note that either voting
power or investment power, or both, is sufficient for you to be considered the
beneficial owner of shares. 

2.                  Any person who, directly or
indirectly, creates or uses a trust, proxy, power of attorney, pooling
arrangement or any other contract, arrangement or device with the purpose or
effect of divesting such person of beneficial ownership of a security or
preventing the vesting of such beneficial ownership as part of a plan or scheme
to evade the reporting requirements of the federal securities acts shall be
deemed to be the beneficial owner of such security. 

3.                  Notwithstanding the provisions
of paragraph (1), a person is deemed to be the "beneficial owner" of a security
if that person has the right to acquire beneficial ownership of such security
within 60 days, including but not limited to any right to acquire: (a) through
the exercise of any option, warrant or right; (b) through the conversion of a
security; (c) pursuant to the power to revoke a trust, discretionary account or
similar arrangement; or (d) pursuant to the automatic termination of a trust,
discretionary account or similar arrangement; provided, however, any person who
acquires a security or power specified in (a), (b) or (c) above, with the
purpose or effect of changing or influencing the control of the issuer, or in
connection with or as a participant in any transaction having such purpose or
effect, immediately upon such acquisition shall be deemed to be the beneficial
owner of the securities which may be acquired through the exercise or conversion
of such security or power. 

8

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