Document:

U.S. Geothermal Inc.: Exhibit 10.2 - Filed by newsfilecorp.com

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.U.S. Geothermal Inc.: Exhibit 10.3 - Filed by newsfilecorp.com

Execution Version 

PARENT COMPANY GUARANTEE

THIS PARENT COMPANY GUARANTEE (the “Guarantee”) is made
as of this 14th day of December, 2015 by U.S. Geothermal, Inc., an Idaho
corporation (“Guarantor”), for the benefit of Raft River I Holdings, LLC,
a Delaware limited liability company (“Raft River,” and collectively with
Guarantor, the “Guarantee Parties”). 

RECITALS 

WHEREAS, Raft River and Guarantor are parties to the Amended
and Restated Operating Agreement of Raft River Energy I LLC, dated as of August
9, 2006 and amended on November 7, 2006 (the “Operating Agreement,” and
Raft River Energy I LLC, the “Company”); 

WHEREAS, Guarantor desires to transfer 100% of its interest in
the Company to a newly-formed, wholly-owned subsidiary, Idaho USG Holdings, LLC
(“Idaho USG”) in order to facilitate obtaining certain financing; 

WHEREAS, the Operating Agreement requires, among other things,
Raft River’s consent to Guarantor’s transfer of its interest in the Company; and

WHEREAS, to induce Raft River to consent to the proposed
transfer, Guarantor is willing to execute and deliver this Guarantee to Raft
River for the purpose of guaranteeing the payment and performance of Idaho USG’s
obligations under the Operating Agreement, as amended from time to time (the
“Guaranteed Obligations”); 

NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor hereby covenants as follows: 

SECTION 1.     Definitions. Capitalized terms used in
this Guarantee but not otherwise defined herein shall have the meanings provided
for such terms in the Operating Agreement. 

SECTION 2.     Guarantee. Subject to the terms and
provisions hereof, Guarantor hereby irrevocably, absolutely and unconditionally
guarantees to Raft River, as a primary obligor and not merely as a surety, the
timely payment and performance of the Guaranteed Obligations when and as
required by the Operating Agreement. If Idaho USG fails to pay or perform any of
the Guaranteed Obligations, Guarantor will pay or perform such Guaranteed
Obligation, or cause such Guaranteed Obligation to be paid or performed, for
Raft River’s benefit promptly upon Raft River’s demand therefor and without Raft
River having to make prior demand on Idaho USG. All payments hereunder shall be
made without reduction or offset, except to the extent of any defenses to
payment or performance that Idaho USG may have under the Operating Agreement,
other than defenses arising out of the occurrence of a bankruptcy proceeding
with respect to Idaho USG, the power or authority of Idaho USG to enter into the
Operating Agreement and to perform thereunder, and the lack of validity or
enforceability of the Operating Agreement (the “Reserved
Defenses”). Time shall be of the essence for the performance of the
Guarantor’s obligations hereunder. 

SECTION 3.     Continuing Guarantee. This Guarantee is,
in all respects, an absolute, present, continuing and irrevocable guaranty of
payment and performance, and not of collection, in full of all Guaranteed
Obligations arising from time to time, and shall remain in full force and effect
until the Guaranteed Obligations have been paid or performed in full without
regard to: 

(a)     the extension of time for payment or performance of any
Guaranteed Obligation by written agreement of Raft River or the amendment,
extension or renewal of the Operating Agreement by Idaho USG and Raft River,
except that Guarantor shall have the benefit of any such extension, amendment or
renewal to the same extent as Idaho USG (e.g., if Idaho USG’s time for
payment of a Guaranteed Obligation is extended, Guarantor shall have no
obligation under this Guarantee to make payment of such Obligation until such
time as Idaho USG is required under the extension to make payment); 

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(b)     any delay or failure by Raft River to enforce or
exercise, or any waiver by Raft River of, any right or remedy under the
Operating Agreement; provided, however, that if Raft River's
delay, failure, or waiver increases the amount of any Guaranteed Obligation
(except as acknowledged and agreed by Idaho USG under the Operating Agreement)
or delays or prevents Guarantor from timely performing any Guaranteed Obligation
(provided that Guarantor diligently undertakes to perform it as and when
required), Guarantor shall not be responsible for such increased amount or any
adverse consequences of such delayed or failed performance; 

(c)     any bankruptcy proceeding with respect to Idaho USG;

(d)     any merger, consolidation or other reorganization to
which Idaho USG is a party, or any direct or indirect sale or disposition of
Guarantor’s direct or indirect ownership interest in Idaho USG or any change in
control of Idaho USG;

(e)     the existence of any collateral for the Guaranteed
Obligations, including any acceptance by Raft River of any new or additional
instrument, document, agreement, security or guarantee in connection with all or
any part of the Guaranteed Obligations; 

(f)     any incapacity or disability or lack or limitation of
status or power of Idaho USG or that Idaho USG may not be a legal entity; 

(g)     any change in the time, manner or place of payment or
performance of or in any other term of, all or any of the Guaranteed Obligations
or any other amendment, modification, extension, renewal or waiver of or any
consent to or other acquiescence in the departure from the terms of the
Operating Agreement, regardless of whether Guarantor receives notice thereof;
provided, however, that the Guaranteed Obligations shall be deemed
modified by any such change, amendment, modification, extension, renewal,
waiver, consent or acquiescence; 

(h)     any lack, with respect to Idaho USG, of genuineness,
validity or enforceability of the Guaranteed Obligations;

(i)     any change in the name, constitution or capacity of
Idaho USG; 

(j)     any act or omission of Raft River that does not
constitute the basis for a Reserved Defense; 

(k)     any failure of Raft River to disclose to Guarantor any
information relating to the financial condition, operations, properties or
prospects of Idaho USG now or in the future known to Raft River (Guarantor
waiving any duty on the part of each such person or entity to disclose such
information); 

(l)     any failure on the part of Idaho USG for any reason to
comply with or perform any of the terms of any agreement with Guarantor; 

(m)     the recovery of any judgment against any person or
entity or any action to enforce the same; provided, however, that
any amounts recovered from such other person or entity on account of the
Guaranteed Obligations shall reduce Guarantor’s liability hereunder by the
amount of such recovery; 

2 

(n)     the acceptance or receipt of the partial payment or
performance of the Guaranteed Obligations (whether as a result of the exercise
of any right, remedy, power or privilege or otherwise), except that Raft River
agrees that such partial payment or performance satisfies the applicable
Guaranteed Obligations to the extent of such partial payment or performance;

(o)     any failure, omission, or delay on the part of Raft
River to enforce, assert or exercise any right, power or remedy conferred on it
in this Guarantee, or any such failure, omission or delay on the part of Raft
River in connection with any Guaranteed Obligation; provided,
however, that if Raft River's delay, failure, or waiver increases the
amount of any Guaranteed Obligation or delays or prevents Guarantor from timely
performing any Guaranteed Obligation (provided that Guarantor diligently
undertakes to perform it as and when required), Guarantor shall not be
responsible for such increased amount or any adverse consequences of such delay
or failure of performance; 

(p)     any set-off, counterclaim, deduction, defense,
abatement, suspension, deferment, diminution, recoupment, limitation or
termination available with respect to any Guaranteed Obligation that does not
constitute a Reserved Defense (whether by reason of invalidity, illegality or
unenforceability thereof); provided, however, that if any set-off,
counterclaim, deduction, defense, abatement, suspension, deferment, diminution,
recoupment, limitation, or termination successfully pursued and/or obtained by
Raft River reduces the amount of, or extends the time for performance of, any
Guaranteed Obligations, Guarantor’s liability hereunder shall be reduced by such
amount and/or Guarantor shall have the benefit of any such extension of time for
performance; 

(q)     any circumstances (other than those that could
constitute a Reserved Defense) that might otherwise limit recourse by or against
Guarantor or any other person or entity for any of the Guaranteed Obligations;

(r)     the existence, validity, enforceability, perfection or
extent of any collateral securing the Guaranteed Obligations or any release,
surrender, exchange, loss or impairment of any property transferred or assigned
by any person or entity as collateral securing payment or performance of any
obligation of Idaho USG or any other person or entity under the Operating
Agreement; the failure of Idaho USG or any other person or entity to exercise
reasonable care in the preservation, protection, sale or other treatment of any
collateral or any other assets related to the Operating Agreement; or 

(s)     any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
foreclosure, sale or other disposition of or other election or remedies with
respect to, any collateral for all or any of the Guaranteed Obligations, even
though such foreclosure, sale, disposition or election of remedies may impair
the subrogation rights of Guarantor or may preclude Guarantor from obtaining
reimbursement, contribution, indemnification or other recovery from Idaho USG,
any other guarantor of any of the Guaranteed Obligations or any other person or
entity, and even though Idaho USG may not, as a result of such foreclosure,
sale, disposition or election of remedies, be liable for any deficiency;
provided, however, that any application of collateral or proceeds
thereof, and any foreclosure, sale, or other disposition of any collateral for
all or any of the Guaranteed Obligations shall reduce Guarantor’s liability
hereunder by the amount of such collateral or proceeds thereof so applied, and
any foreclosure, sale, or other disposition of any collateral. 

This Guarantee shall continue to be in full force and effect
until, and the Guarantor’s liability hereunder shall not be discharged except by
or upon, the payment in full and in cash or immediately available funds and the
performance in full of all Guaranteed Obligations by Idaho USG or by Guarantor
under this Guarantee. 

There are no conditions precedent to the enforcement of this
Guarantee. It shall not be necessary for Raft River, in order to enforce payment
or performance by Guarantor under this Guarantee, to exercise or assert any of its rights, remedies or recourse against Idaho
USG, any other guarantor, or any other person or entity. Raft River shall not be
obligated to file any claim related to the Guaranteed Obligations in the event
that Idaho USG becomes subject to a bankruptcy, insolvency or other proceeding,
and the failure of Raft River so to file shall not affect Guarantor’s
obligations hereunder. This Guarantee shall apply regardless of whether recovery
of any Guaranteed Obligations may be discharged or uncollectible in any
bankruptcy, insolvency or other similar proceeding. Guarantor covenants that its
obligations hereunder will not be discharged except by payment (in full and in
cash or immediately available funds) and the performance in full of all of the
Guaranteed Obligations. Guarantor agrees that Raft River may resort to Guarantor
for payment or performance of any of the Guaranteed Obligations, whether or not
Raft River shall have resorted to any collateral security or shall have
proceeded against any other obligor principally or secondarily obligated with
respect to any of the Guaranteed Obligations. 

3 

SECTION 4.     Rescission. Guarantor further agrees that,
if at any time all or any part of any payment to Raft River for any of the
Guaranteed Obligations is or must be rescinded or returned by Raft River for any
reason other than a Reserved Defense, such Guaranteed Obligations shall, for the
purposes of this Guarantee, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such payment to Raft River, and this Guarantee shall continue to be effective or
be reinstated, as the case may be, as to such Guaranteed Obligations, all as
though such payment to Raft River had not been made. 

SECTION 5.     Waiver of Certain Rights. To the fullest
extent permitted by law, Guarantor agrees not to assert, and hereby waives for
the benefit of Raft River:

(a)     all rights (whether by counter-claim, setoff or
otherwise) and defenses (other than the Reserved Defenses), whether acquired by
subrogation, assignment or otherwise, to the extent that such rights and
defenses may be otherwise available to avoid payment or performance of its
obligations under this Guarantee in accordance with the express provisions of
this Guarantee; 

(b)     notice of acceptance of this Guarantee, notice of the
creation or existence of any of the Guaranteed Obligations, notice of any action
by Raft River in reliance hereon or in connection herewith or of notice of any
matters referred to in Section 3 hereof; 

(c)     notice of any amendments, supplements or modifications
to the Operating Agreement; 

(d)     notice of any increase, reduction or rearrangement of
Idaho USG’s obligations under the Operating Agreement or notice of any extension
of time for the payment of any sums due and payable by Idaho USG or for the
performance of any obligations by Idaho USG under the Operating Agreement;
provided that Guarantor shall be entitled to the benefit of any such
reduction, rearrangement or extension; 

(e)     promptness, diligence, presentment, demand for payment,
notice of dishonor or nonpayment, protest and notice of protest, notices under
the Operating Agreement or any other notice of any other kind with respect to
the Guaranteed Obligations, all notices that may be required by statute, rule of
law or otherwise to preserve any of the rights of Raft River against Guarantor,
and the filing of claims with a court in the event of the bankruptcy of Idaho
USG; and 

(f)     any requirement that suit be brought against, or any
other action be taken by Raft River against, or any notice of default or other
notice to be given to, or any demand be made on Idaho USG or any other person,
or, except as set forth in this Guarantee, that any other action be taken or not
taken as a condition to Guarantor’s liability for the Guaranteed Obligations
under this Guarantee or as a condition to the enforcement of this Guarantee
against Guarantor. 

4 

SECTION 6.     Representations and Warranties. Guarantor
represents and warrants to Raft River that each of the following is true and
correct as of the date of this Guarantee:

(a)     Guarantor is a corporation duly organized and existing
in good standing under the laws of the State of Idaho and has requisite power to
carry on its business as it is now being conducted; 

(b)     Guarantor has the requisite power and authority to enter
into and perform this Guarantee and all requisite action required by law,
Guarantor’s certificate of incorporation, Guarantor’s bylaws or other governing
documents to authorize the execution, delivery and performance of this Guarantee
has been taken;

(c)     this Guarantee has been duly and validly executed and
delivered by Guarantor and it constitutes a legal, valid and binding obligation
of Guarantor, enforceable against Guarantor in accordance with its terms, except
to the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws,
presently or hereafter in effect, affecting the rights of creditors generally
and the application of general principles of equity; 

(d)     no authorizations, approvals and consents of, and no
filings and registrations with, any governmental or regulatory authority or
agency or any other party are necessary for the execution, delivery or
performance by the Guarantor of this Guarantee or for the validity or
enforcement thereof;

(e)     the Guarantor’s execution, delivery and performance of
this Guarantee and compliance by it with any of the terms and provisions hereof
(i) will not violate any governmental approval or law applicable to it or any of
its property or assets, (ii) will not violate any provision of its corporate
charter or bylaws or other governing documents and (iii) will not violate or
constitute a default under any material agreement or instrument to which it is a
party or by which it or any of its properties or assets may be bound, or result
in the creation or imposition of any lien upon any of its property or assets;

(f)     the execution, delivery and performance by Guarantor of
this Guarantee will not render Guarantor insolvent, nor is it being made in
contemplation of Guarantor’s insolvency; and 

(h)     there are no pending or, to Guarantor’s knowledge,
threatened actions, suits or proceedings against the Guarantor before or by any
court or administrative agency that, if adversely determined, would materially
and adversely affect its ability to perform its obligations under this
Guarantee. 

SECTION 7.     Demands and Payment.

(a)     Raft River may make one or more demands from time to
time for payment or performance hereunder. Each demand by Raft River for payment
or performance hereunder shall be in writing, reference this Guarantee,
reference the Guaranteed Obligations, be signed by a duly authorized officer of
Raft River and be delivered to Guarantor pursuant to Section 9 hereof.
There are no other requirements of notice, presentment or demand. 

(b)     Any payment hereunder shall be made in US Dollars.

(c)     All payments whatsoever under this Guarantee will be
made by Guarantor free and clear of, and without liability for withholding or
deduction for or on account of, any present or future tax of whatever nature
imposed or levied by or on behalf of any jurisdiction other than the United
States (or any political subdivision or taxing authority of or in such
jurisdiction) (a “Taxing Jurisdiction”), unless the withholding or
deduction of such tax is compelled by law. If any deduction or withholding for
any tax of a Taxing Jurisdiction shall at any time be required in respect
of any amounts to be paid by Guarantor under this Guarantee, Guarantor will pay
to the relevant Taxing Jurisdiction the full amount required to be withheld,
deducted or otherwise paid before penalties attach thereto or interest accrues
thereon (and promptly give to Raft River acceptable evidence of that payment)
and pay to Raft River such additional amounts as may be necessary in order that
the net amounts paid to Raft River pursuant to the terms of this Guarantee after
such deduction, withholding or payment (including, without limitation, any
required deduction or withholding of tax on or with respect to such additional
amount), shall be not less than the amounts then due and payable to Raft River
under the terms of this Guarantee before the assessment of such tax. Guarantor
will indemnify Raft River for any taxes paid by Raft River in respect of any
amount paid or payable by Guarantor hereunder. The provisions of this Section
7(c), as they pertain to taxes, shall survive the payment in full and in
cash of the Guaranteed Obligations and the other obligations hereunder. 

5 

(d)     Guarantor shall reimburse Raft River for any reasonable
out-of-pocket expenses incurred by Raft River in the enforcement of the
obligations of Guarantor hereunder, such reimbursement to be paid promptly upon
submission by Raft River to Guarantor of a written statement describing in
reasonable detail the nature, purpose and amount of such expenses. 

SECTION 8.     Cumulative Rights. The rights of Raft
River under this Guarantee may be exercised as often as necessary and are
cumulative and not exclusive of the rights, powers, privileges and/or remedies
under the Operating Agreement. Except as to applicable statutes of limitation,
no failure on the part of Raft River to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. 

SECTION 9.     Notices; English Language. Any notice,
statement, demand, claim, offer or other written instrument required or
permitted to be given pursuant to this Agreement shall be in writing signed by
the party giving such notice and shall be sent by hand messenger delivery,
overnight courier service, or certified mail (receipt requested) to each other
party at the address set forth below: 

	 	(i) 	If to Guarantor, to it at: 
	 	  	  
	 	  	U.S. Geothermal Inc. 
	 	  	390 East Parkcenter Blvd. 
	 	  	Suite 250 
	 	  	Boise, Idaho 83706 
	 	  	Phone No.: (208) 424-1027 
	 	  	  
	 	(ii) 	If to Raft River, to it at: 
	 	  	  
	 	  	Raft River I Holdings, LLC 
	 	  	c/o The Goldman Sachs Group 
	 	  	200 West Street 
	 	  	New York, New York 10282 
	 	  	Attention: Charles Cognata 
	 	  	Telephone: (212) 902-1000 

Each Guarantee Party shall have the right to change the place
to which notices shall be sent or delivered or to specify one additional address
to which copies of notices may be sent, in either case by similar notice sent or
delivered in like manner to each other party. Without limiting any other means
by which a Guarantee Party may be able to prove that a notice has been received
by another party, all notices and communications shall be deemed to have been
duly given: (i) at the time delivered by hand, if personally delivered during regular business hours; (ii) three Business
Days after being deposited in the mail, postage prepaid, if mailed by first
class certified mail, receipt requested; and (iii) on the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery. In any case hereunder in which a Guarantee Party
is required or permitted to respond to a notice from another Guarantee Party
within a specified period, such period shall run from the date on which the
notice was deemed duly given as above provided, and the response shall be
considered to be timely given if given as above provided by the last day of the
period provided for such response.

6 

SECTION 10.     Severability. In case any provision in or
obligation under this Guarantee is or becomes invalid or unenforceable, the
remainder of this Guarantee shall be binding upon the Parties hereto and shall
be enforceable to the extent permitted by law. 

SECTION 11.     Governing Law. The laws of the State of
Delaware shall govern the validity of this Guarantee, the construction of its
terms, and the interpretation of the rights, obligations and duties of the
Guarantee Parties 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 12.     Binding. The terms of this Guarantee
shall apply to, inure to the benefit of, and bind all parties hereto, their
successors and assigns. Whenever used, the words “Guarantor” and “Raft River”
shall all be deemed to include the respective successors and assigns of the
undersigned as applicable.

 SECTION 13.     No Third-Party Beneficiary. This
Guarantee is hereby made by Guarantor solely for the benefit of Raft River. All
conditions of the obligations of Guarantor hereunder are imposed solely and
exclusively for the benefit of Raft River and may be freely waived in whole or
in part by Raft River at any time if Raft River, in its sole discretion, deems
it advisable to do so, and no person other than Raft River shall have standing
to require Guarantor to perform its obligations hereunder or to be a beneficiary
of this Guarantee. 

SECTION 14.     Amendment and Waiver. This Guarantee may
be amended or modified only by a written instrument executed by the Guarantee
Parties. No right of Raft River hereunder shall be waived other than by a
written instrument executed by Raft River. 

SECTION 15.     Miscellaneous. 

(a)     Preparation of this Guarantee has been a joint effort of
the Guarantee Parties and the resulting document shall not be construed more
severely against one Guarantee Party than against the other Guarantee Party.

(b)     The captions contained in this Guarantee are for
convenience and reference only and in no way define, describe, extend or limit
the scope or intent of this Guarantee or the intent of any provision contained
herein. An email attachment or faxed copy of a signature page of this Guarantee
shall have the same effect as an originally signed signature page. 

(c)     This Guarantee may be executed in one or more
counterparts, each of which shall constitute an original but all of which, taken
together, shall constitute but one agreement. 

(d)     The Guarantor shall, from time to time upon the request
of Raft River, do or procure the doing of all such acts and execute or procure
the execution of all such documents as may reasonably be necessary to evidence
or confirm the due authorization and execution of this Guarantee by Guarantor
and the legally binding nature and enforceability of this Guarantee with respect
to and against Guarantor. 

7 

SECTION 16.     Termination. This Guarantee and the
obligations of Guarantor hereunder shall terminate and be of no further force or
effect upon the earliest of (a) the mutual agreement of Guarantor and Raft River
and (b) the indefeasible payment in full and in cash or immediately available
funds and the performance in full of all Guaranteed Obligations and all other
obligations hereunder.

[Signature page follows] 

8

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