Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - U.S. Geothermal Inc. - Exhibit 4.3

Exhibit 4.3

Rights of Security Holders

  Articles VI through XI of the Certificate of Incorporation are hereby incorporated
  by reference.Filed by Automated Filing Services Inc. (604) 609-0244 - U.S. Geothermal, Inc. - Exhibit 10.1

 AGREEMENT  

  Dated as of December 3, 2002  

  By and Between 

  U.S. Geothermal, Inc. 

  and  

  Vulcan Power Company 

      THIS AGREEMENT ("Agreement"), dated December
  3, 2002 is by and between U.S. Geothermal, Inc., an Idaho corporation ("Buyer")
  and Vulcan Power Company, a Colorado corporation ("Seller"). 

 RECITALS

	A. 	The parties hereto wish to provide for the terms and conditions upon which
      Buyer will acquire certain, assets, properties, and rights of Seller. 
	 	 
	B. 	The parties hereto wish to make certain representations, warranties, covenants
      and agreements in connection with such acquisition of Seller’s Assets.
    
	 	 
	C. 	The parties wish to provide for the purchase by Buyer of Seller’s
      assets in “as-is” condition. 

AGREEMENT 

      Accordingly, and in consideration of the representations,
  warranties, covenants, agreements and conditions herein contained, the parties
  hereto agree as follows: 

 Section 1. Purchase of Assets . 

     (a) Assets to be Purchased.
  Pursuant to the terms and conditions contained herein, Seller shall sell, transfer,
  assign and deliver to Buyer, and Buyer shall purchase from such Seller, seller’s
  assets set forth in the schedules attached hereto as Exhibits A and B (the “Seller’s
  Assets”). 

	 	Raft River Agreement – Page 1	 
	_________________	 	_________________
	Buyer	 	Seller

      (b) Terms of Purchase .
  Seller hereby agrees to sell to Buyer and Buyer agrees to purchase from Seller
  a 100% interest in and to Seller’s Assets on the terms and conditions set
  forth herein.

	 	(i) 	Upon execution of this Agreement, Seller shall execute and deliver
        to Buyer a 20% undivided interest in Seller’s Assets and shall execute
        and deposit acceptable Title Escrow Instructions and Warranty Deeds (“Deed
        or Deeds”) for a 49% undivided interest in Seller’s Assets with
        Land Title Escrow, Inc., of Burley, Idaho (“Escrow”). Seller
        has already executed a 100% Deed which will be transferred to Buyer upon
        completion of the remaining 51% of Seller’s interest in Seller’s
        Assets as provided for in Section 1 (b) (ii) below. 

       Buyer has made payments to Seller in the total amount of $175,000. In
        addition, Buyer has made payments of taxes and other items necessary to
        maintain Seller’s Assets in the total amount of $20,514.88 for Cassia
        County property taxes and interest for tax years 1997 through 2002. Seller
        acknowledges that Buyer, in making such tax payments, makes no accusation
        of any noncompliance or breach of any prior agreement of the parties on
        account of tax payments, nor waives any right to future performance by
        Seller hereunder. Seller acknowledges no breach of any prior agreement
        nor waives any right to performance by Buyer on account of tax payments.
        In order to complete the purchase of the first 20% interest in Seller’s
        Assets, Buyer shall make the Intermediate Payments in (E) below at which
        time such interest will be transferred to Buyer. In order to complete
        the purchase of an additional 29% interest in Seller’s Assets, Buyer
        shall complete the items listed in (A), (B), (C), (D), (F) and (G) below:
      

	 	 	 

	 	 	(A) 	Buyer has issued to Seller 1,895,000 common shares
        of Buyer and 1,612,000 warrants to purchase commons shares of Buyer for
        24 months at a price of $0.75 per share (such shares and warrants held
        in escrow as security until “Acquisition Closing” when these
        shares and warrants will be exchanged for newly issued Pubco shares and
        warrants as detailed in (B) below); 

	 	 	 	 
	 	 	(B) 	Buyer has entered into agreement with the publicly
        traded company U.S. Cobalt, Inc., (hereinafter referred to as “Pubco”)
        pursuant to which Pubco agrees to acquire all outstanding and issued shares
        and warrants of Buyer (the “Acquisition”). The Acquisition will
        be accomplished by Pubco dissolving 100% of Buyer’s outstanding and
        issued shares and warrants, including those in (A) above, and issuing
        new Pubco shares and warrants. The date on which: i) the Acquisition is
        completely performed, ii) the cash funds have been transferred to Pubco
        as required under the terms of a public capital financing of Pubco; and,
        iii) Buyer is acquired by Pubco through the exchange of shares, is defined
        as “Acquisition Closing”. Acquisition Closing is a public market
        transaction and as such is subject to regulatory authority approvals,
        Pubco shareholder approvals, and market conditions all outside Buyer’s
        control. The parties hereto anticipate that Acquisition Closing will be
        completed March 18, 2003. 

	 	Raft River Agreement – Page 2	 
	_________________	 	_________________
	Buyer	 	Seller

 

	 	 	 	In exchange for the Buyer shares held in escrow as
        security on behalf of Seller as detailed in (A) above, Pubco will issue
        to Seller that number of common shares of Pubco that is equal to 14% of
        the issued and outstanding common shares of Pubco on Acquisition Closing
        plus warrants to purchase an additional 11% of the issued and outstanding
        common shares of Pubco as of the date of Acquisition Closing. Such warrants
        shall have a validity period of 24 months from Acquisition Closing at
        a price equal to $0.75. Restrictions and terms of sales of such shares
        and warrants may be imposed by the regulatory agencies of the Toronto
        Venture Exchange. In addition to the escrow provisions imposed by the
        regulatroy agencies, Buyer’s Pubco shares and warrants will be subject
        to the escrow arrangement described in Section 1(b) (i) (E) below; 

	 	 	 	 
	 	 	(C) 	For further certainty, as a result of this transaction
        with the issuance to Seller of 14% of the common shares and 11% of the
        warrants of Pubco as set out above, Seller will own, or through the exercise
        of warrants, have the right to acquire, a total of 25% of the issued and
        outstanding common shares of Pubco on a fully diluted basis as of the
        date of Acquisition Closing. 

	 	 	 	 
	 	 	(D) 	Seller will be entitled to nominate one seat representation
        on Pubco’s board upon Acquisition Closing so long as Seller shall
        own stock or warrants of Buyer. Such nominee shall be acceptable to Pubco
        and meet the requirements of the Canadian and US Securities regulatory
        requirements; 

	 	 	 	 
	 	 	(E) 	Buyer shall pay the balance of $54,485.12 upon execution
        of this Agreement (“Intermediate Payment”). Buyer may pay legitimate
        costs prior to Acquisition Closing to a third party to keep Seller’s
        Assets in good standing and/or to remove any charges, liens or encumbrances
        on Seller’s Assets after first gaining agreement to any such payments
        by Seller. Prior to Acquisition Closing, property taxes shall be apportioned
        according to the Parties various ownership interests, e.g. after 11/29/02,
        Buyer shall be responsible for 20% of property taxes. Seller may elect
        to make such payments, if any, itself and provide proof of same to Buyer.
        Any such approved payments made by Buyer on behalf of Seller may be deducted
        from the subsequent payment due to Seller pursuant to subsections F and
        G, below; 

	 	 	 	 
	 	 	(F) 	Spend $200,000 on or for the benefit of Seller’s
        Assets no later than 12 months following Acquisition Closing, which is
        expected to be May 2004 substantially in accordance with the program of
        work and budgeted costs set out in Exhibit C hereto (the “Work Program”).
        Such obligation of Buyer shall be reduced by: (i) any excess paid by Buyer
        as described in subsection E, above; (ii) any amounts approved by Seller
        and paid by Buyer after Intermediate Payment by Buyer to a third party
        to keep Seller’s Assets in good standing and/or to remove any charges,
        liens or encumbrances on Seller’s Assets; and, 

	 	 	 	 
	 	 	(G) 	Pay to Seller $100,000 upon Acquisition Closing.
        Buyer intends to build a 10 megawatt or larger Power Plant within a 10
        mile radius of the Seller’s Assets. 

	 	Raft River Agreement – Page 3	 
	_________________	 	_________________
	Buyer	 	Seller

 

	 	 	(H) 	Buyer has and agrees to continue to use its best
        efforts to acquire geothermal development rights and lease rights within
        a 10-mile radius of Seller’s Assets. Buyer has acquired rights to
        the Crank well and lease, and other leases which will be listed as Exhibit
        E hereto. Upon the date of a feasibility study for the construction of
        a Power Plant, Buyer will furnish Seller a complete list of all its geothermal
        development rights and leases. 

	 	 	 	 

	 	Upon completion of the terms set forth in subsections
        (A), (B),(C),(D),(F),and (G) an additional 29% interest in Seller’s
        Assets will be vested in Buyer, and the deed for such interest released
        from Escrow to Buyer. For further clarity, upon completion of items (A),(B),(C),(D),(E),(F),and
        (G) Buyer shall own 49% interest in Seller’s Assets. 

            (ii) In order to complete
        the purchase of the remaining 51% interest in Seller’s Assets, in
        addition to satisfying the terms set forth in Section 1(b)(i), above,
        Buyer shall pay to Seller $250,000 on or before receipt of project financing
        for construction of the Power Plant (“Project Financing”), currently
        expected to be within 30 months of Acquisition Closing. Upon such payment,
        the deed for Seller’s remaining interest in Seller’s Assets
        will be released from Escrow to Buyer. 

     (c) Escrow of Shares and Warrants.
  Upon Acquisition Closing the Buyer shares and warrants provided for in Section
  1. (b)(i)(A) above will be purchased by Pubco by issuance of new shares and
  warrants of Pubco to be issued to Seller pursuant to the Acquisition and will
  be issued to Seller in the following tranches: (i) two thirds of shares and
  warrants within 5 business days of Acquisition Closing; and (ii) one third of
  shares and warrants to be held in escrow and issued to Seller upon commencement
  of construction of the Power Plant. In addition to this Escrow holding period,
  there may be additional escrow requirements on Buyer and Seller regarding the
  sale of their Pubco shares and warrants imposed by the Toronto Venture Exchange.

      (d) Pledge of Buyer’s
  Shares. The Buyer has placed in Escrow on behalf of Seller the Buyer shares
  and warrants as described in Section 1. (b)(i)(A) above. Upon execution of this
  agreement, Buyer shall demonstrate to the Seller in writing that it has pledged
  all of its shares outstanding as of March 5, 2002, to the Seller. The pledged
  security shall be released at Acquisition Closing upon Pubco issuing new shares
  and warrants to Seller as described in Section 1(b)(i)(B) above. If Pubco fails
  to issue shares and warrants to Seller as described in Section 1(b)(i)(B) above,
  Seller shall be entitled to retain all of the pledged shares and all of the
  directors of Buyer shall resign. Prior to Acquisition Closing, Buyer shall not
  transfer Seller’s Assets to any company other than Pubco without Seller
  approval. Such approval shall not be unreasonably withheld and will only be
  granted, if at all, if Seller determines it will realize equal or better value
  from the effect of any such transferal. 

      (e) Access to Seller’s
  Assets. Seller hereby grants Buyer the exclusive right and privilege from
  and after Intermediate Payment to enter onto Seller’s Assets for the purposes
  of the Work Program as described more specifically in Exhibit C, including the
  right of ingress and egress for personnel, machinery, equipment, supplies and
  products and the right to use so much of the surface of and water on or appurtenant
  to Seller’s Assets as Buyer needs, subject to any federal or state law
  concerning the appropriation and use of the water, including discharge. Buyer
  is granted the right to use Seller’s Assets 

	 	Raft River Agreement – Page 4	 
	_________________	 	_________________
	Buyer	 	Seller

 including, but without being limited to, the full right, authority,
  and privilege of placing and using excavations, ditches and drains, of constructing,
  maintaining, using all buildings, structures, roadways, pumps, pipelines, electrical
  power lines and all other improvements on Seller’s Assets. Prior to such
  access and use, Buyer shall have in place the indemnification insurance policy
  set forth in Section 8. Buyer shall also be responsible to Seller for loss or
  destruction of Seller’s Assets from March 5, 2002 through Buyer purchase
  completion of 100% of Seller’s Assets. 

     (f) Approvals. The parties
  acknowledge that the transaction with Pubco will require the approval of the
  shareholders of Public and the applicable regulatory authorities and that the
  conditions of regulatory approval may include the escrowing of the securities
  issued by Pubco. Seller and Buyer agree to abide by such conditions.

	 	(g) 	Estimated Asset Purchase Schedule. A list
        of the Seller’s Assets anticipated purchase actions of the Buyer
        and amounts and dates of purchase payments and estimated stock and warrant
        issuance to Seller is attached as Exhibit D and incorporated as if more
        fully set forth herein. The list is for reference only and the specific
        terms and conditions describing each action are set forth in Section 1
        above. 

	 	 	 
	 	(h) 	Area of Interest. An Area of Interest is established
        by the parties that includes the State of Idaho in which Seller shall
        not directly or indirectly acquire any interest in or rights to geothermal
        property. Seller is not precluded from non-geothermal power development
        in the Area of Interest and is not precluded from conducting geothermal
        power sales into the Area of Interest provided that the generating source
        is located outside the Area of Interest. 

	 	 	 
	 	(i) 	Seller’s Pubco Shares and Warrants. Buyer
        shall have the right for 36 months from Acquisition Closing to acquire
        any Pubco shares and warrants that Seller desires to sell or exercise,
        as the case may be, subject to these terms. Seller shall notify Buyer
        in writing (“Notice”) of Seller’s desire for a potential
        sale of Pubco shares and/or the potential exercise of Pubco warrants.
        Buyer shall, within 3 business day of the date of Buyer’s receipt
        of Notice, provide Seller with a written proposal (“Proposal”)
        for the acquisition of the shares and/or warrants. The Proposal market
        price for and number of shares of the Pubco shares, shall be established
        by Seller in the Notice. If Buyer fails to provide the Proposal and execute
        a market transaction and in the time prescribed then Seller is free to
        market the Pubco shares or warrants and this right shall expire as to
        the number of shares and/or warrants included in the Notice. Payment shall
        be by certified check via FedEx or wire transfer. Seller shall timely
        issue instructions to its broker transfer agent to transfer the shares.
        Seller shall have the right to decline any Proposal and withdraw the Notice.
        Buyer and Seller shall keep confidential the terms of any Notice under
        this clause. 

Section 2. Representations and Warranties of Sellers.

      Seller hereby represents and warrants to Buyer
  as of the date hereof as follows: 

      (a) Corporate Organization. Seller is
  a corporation duly organized, validly existing and in good standing under the
  law of the state of Colorado. 

	 	Raft River Agreement – Page 5	 
	_________________	 	_________________
	Buyer	 	Seller

      (b) Authorization. Seller
  has the legal capacity to enter into this Agreement and to carry out the transactions
  contemplated herein. This Agreement has been duly and validly executed by Seller
  and is the valid and binding legal obligation of Seller. 

      (c) Non-Contravention.
  Neither the execution, delivery and performance of this Agreement nor the consummation
  of the transactions contemplated herein will: 

	 	(i) violate or be in conflict with any provision of the articles or
        certificates of incorporation or bylaws of Seller; or 

      
	 	 
	 	(ii) to the knowledge of Seller, violate any law. 

     (d) Consents and Approvals.
  No consent or approval from any individual or entity, including without limitation
  any Authority (“Consent” or “Consents”), is required in
  connection with the performance of this Agreement by Seller. 

      (e) Real Properties.
  Seller has good and marketable fee simple record title in and to, all of its
  real property assets and fixtures reflected the schedule attached hereto as
  Exhibit A. Documents have been provided to Buyer which contain the legal description
  of all real property included in Seller’s Assets (the "Real Property").
  All leasehold or permit interests in the Real Property are valid and in full
  force and effect and enforceable in accordance with their terms. 

      (f) Except as set forth herein,
  Buyer is purchasing the Real Estate in “as-is” condition and Seller
  makes no representations or warranties as to the condition of the Real Property,
  or as to its fitness for a particular purpose or present or intended use. 

      (g) Machinery, Equipment,
  and Personal Property . Seller has good and merchantable right, title and
  interest in and to all its machinery, equipment, and other personal property
  reflected in Exhibit A as of March 5, 2002. Except as set forth herein, Buyer
  is purchasing Seller’s machinery, equipment and other personal property
  in “as-is” condition and Seller makes no representations or warranties
  as to the condition of the machinery, equipment and other personal property
  reflected on Exhibit A, or as to its fitness for a particular purpose or present
  or intended use or its location after March 5, 2002. 

	 	(i) Buyer represents that to the best of its knowledge
        all such machinery, equipment and personal property listed in Exhibit
        A is still at its original location as of the date of this Agreement;
      

	 	 
	 	(ii) Buyer agrees that Seller has no further responsibilities
        as to such machinery or equipment or personal property remaining in place
        henceforth after the date of Escrow which was March 5, 2002. 

     (h) Litigation. Seller
  is not a party to and knows of no litigation or administrative proceeding which
  would materially affect its ability to perform under and consummate this Agreement.

	 	Raft River Agreement – Page 6	 
	_________________	 	_________________
	Buyer	 	Seller

      (i) Compliance with Law.
  To the best of Seller’s knowledge, Seller’s Assets were in material
  compliance with all Laws in effect as of March 5, 2002. 

      (j) Environmental. Seller
  was not aware of any environmental problems concerning property as of March
  5, 2002 that it created or was responsible for. Both Parties are aware of Transite
  pipeline on Seller’s Assets and possibly on US Government or other lands
  placed there by a US Department of Energy contractor. No Party had made demand
  for removal of remaining Transite pipeline to the best knowledge of Seller as
  of March 5, 2002 

      (k) Brokers. Neither
  Seller nor its Subsidiaries, nor any of their directors, officers or employees
  has employed any broker, finder, or financial advisor or incurred any liability
  for any brokerage fee or commission, finder's fee or financial advisory fee,
  in connection with the transactions contemplated hereby, nor is there any basis
  known to Seller for any such fee or commission to be claimed by any person or
  entity. 

      (l) Accuracy of Information.
  No representation or warranty by Seller in this Agreement contains any untrue
  statement of material fact or omits to state any material fact necessary in
  order to make the statements herein or therein, in light of the circumstances
  under which they were made, not misleading as of the date of the representation
  or warranty. 

 Section 3. Representations and Warranties of
  Buyer. 

      Buyer represents and warrants
  to Seller as of the date hereof as follows: 

      (a) Corporate Organization.
  Buyer is a corporation duly organized, validly existing and in good standing
  under the law of the State of Idaho. 

      (b) Authorization. Buyer
  has full corporate power and authority to enter into this Agreement and to carry
  out the transactions contemplated herein. The Board of Directors of Buyer has
  taken all action required to authorize the execution, delivery and performance
  of this Agreement and the consummation of the transactions contemplated herein.
  This Agreement is the valid and binding legal obligation of Buyer. 

      (c) Non-Contravention.
  Neither the execution, delivery and performance of this Agreement nor the consummation
  of, the transactions contemplated herein will: 

	 	(i) violate any provision of the articles or certificates of incorporation
      or bylaws of Buyer; or 
	 	 
	 	 (ii) to the knowledge of Buyer, violate any Law. 

      

     (d) Accuracy of Information.
  No representation or warranty by Buyer in this Agreement contains or will contain
  any untrue statement of material fact or omits or will omit to state any material
  fact necessary in order to make the statements herein or therein, in light of
  the circumstances under which made, not misleading as of the date of the representation
  or warranty. 

	 	Raft River Agreement – Page 7	 
	_________________	 	_________________
	Buyer	 	Seller

      (e) Brokers. Neither
  Buyer nor any of its directors, officers or key employees have employed any
  broker, finder or financial advisor, or incurred any liability for any brokerage
  fee or commission, finder's fee or financial advisory fee, in connection with
  the transactions contemplated hereby, nor is there any basis known to Buyer
  for any such fee or commission to be claimed by any person or entity. 

 Section 4. Covenants.  

      (a) No Solicitation of Alternate
  Transaction. So long as Seller’s Assets shall be in Escrow under this
  Agreement, Seller shall not, and shall ensure its directors, officers and employees,
  independent contractors, consultants, counsel, accountants, investment advisors
  and other representatives and agents do not, directly or indirectly, solicit,
  initiate or encourage discussions or negotiations with, provide any nonpublic
  information to, or enter into any agreement with, any third party concerning
  Seller’s Assets. During such Escrow, Seller shall immediately inform Buyer
  of any unsolicited offer regarding Seller’s Assets, including the terms
  thereof and the identity of the person or entity making such offer. 

      (b) Access to Seller’s
  Assets. Prior to Intermediate Payment, Seller shall afford to Buyer and
  its authorized representatives and agents free and full access to Seller’s
  Assets and to the associated books and records of Seller in order to make such
  investigations as it shall desire; and Seller shall furnish such additional
  financial and operating data and other information relating to Seller’s
  Assets as Buyer shall reasonably request if Seller has such data. 

      (c) Further Assurances; Cooperation;
  Notification. Each party shall, during the performance of this Agreement,
  execute and deliver such instruments and take such other actions as the other
  party or parties, as the case may be, may reasonably require in order to carry
  out the intent of this Agreement. At all times from the date hereof until the
  conclusion of the events set forth in Section 1, above, each party shall promptly
  notify the other in writing of the occurrence of any event which it reasonably
  believes will or may result in a failure by such party to satisfy the conditions
  specified herein. 

      (d) Transactional Tax Undertakings. 

	 	     (i) The parties hereto
        shall cooperate and Buyer shall make any necessary filings with state
        and local taxing authorities and to furnish any required supplemental
        information to any state and local tax liabilities resulting from the
        consummation of the transactions contemplated herein so long as Sellers
        Assets remain in Escrow and/or after Closing. 

     (e) Title Insurance Policy
  Commitment. At least five (5) days prior to Acquisition Closing, Buyer,
  at its sole cost and expense, shall furnish to Seller and Buyer a title commitment
  (the "Title Commitment") from a company to be selected by Buyer (the "Title
  Company") with a Title insurance policy which shall be provided at the cost
  of Buyer. The Title Commitment shall:

	 	     (i) show good and marketable
        title to all of the Real Property included in Seller’s Assets; and
      

	 	 
	 	     (ii) commit to ensure
        good and marketable title to such Real Property, subject to the standard
        exceptions contained in a policy of title insurance issued in Cassia County,
        Idaho.; 

	 	Raft River Agreement – Page 8	 
	_________________	 	_________________
	Buyer	 	Seller

      (g) No Further Encumbrances.
  Seller shall not cause or allow any of Seller’s Assets to become subject
  to any further lien, encumbrance, default, charge or claim between the time
  of execution of this Agreement and the completion of Buyer’s purchase of
  Seller’s Assets. Buyer shall not allow any of Seller’s Assets to become
  subject to any further lien, encumbrance, default, charge or claim between the
  time of execution of this Agreement and the completion of Buyer’s purchase
  of Seller’s Assets. 

 Section 5. Conditions to Obligations of Buyer.
  The obligations of Buyer to effect the transactions contemplated herein
  shall be subject to the satisfaction at or prior to each deadline specified
  in Section 1(b), of each of the following conditions: 

      (a) Representations and Warranties
  True. The representations and warranties of Seller contained in this Agreement
  shall be in all material respects true, complete and accurate. 

      (b) Performance. Seller
  has performed and complied in all material respects with all agreements, covenants,
  obligations and conditions required by this Agreement to be performed or complied
  with by Seller. 

      (c) Certificates. Buyer
  has received such certificates from the Seller, in a form and substance reasonably
  satisfactory to Buyer, to evidence compliance with the conditions of this Agreement.

 Section 6. Conditions to Obligations of Seller.
  The obligation of Seller to effect the transactions contemplated herein
  shall be subject to the satisfaction at or prior to each deadline specified
  in Section 1(b), of each of the following conditions: 

      (a) Representations and Warranties
  True. The representations and warranties of Buyer contained in this Agreement
  shall be in all material respects true, complete and accurate. 

      (b) Performance. Buyer
  shall have performed and complied in all material respects with all agreements,
  covenants, obligations and conditions required by this Agreement to be performed
  or complied with by Buyer at or prior to each such deadline. 

      (c) No Proceeding or Litigation.
  No suit, action, investigation, inquiry or other proceeding by any Authority
  or other person or entity shall have been instituted or threatened which questions
  the validity or legality of the transactions contemplated hereby. 

      (d) Certificate from the State
  of Colorado with a recent date of issue indicating that Seller is a corporation
  in good standing and a certified consent resolution from the Seller’s board
  of directors consenting to this Agreement are provided to Buyer upon the date
  of this Agreement. 

 Section 7. Termination and Abandonment.

      (a) Methods of Termination.
  This Agreement may be terminated and the transactions contemplated herein may
  be abandoned prior to completion of the events set forth in Section 1 above:

	 	     (i) By mutual written consent of Buyer and
      Seller. 

	 	Raft River Agreement – Page 9	 
	_________________	 	_________________
	Buyer	 	Seller

 

	 	(ii) Through nonperformance of Buyer or Seller under this Agreement. 

     (b) Procedure Upon Termination. In the
  event of termination and abandonment pursuant to Section 7(a), written notice
  thereof shall forthwith be given to the other party, and the provisions of this
  Agreement (except to the extent provided in Section 8) shall terminate, and
  the transactions contemplated herein shall be abandoned. If this Agreement is
  terminated as provided herein, each party will redeliver all documents, work
  papers and other material of any other party relating to the transactions contemplated
  herein, whether so obtained before or after the execution hereof, to the party
  furnishing the same. If terminated or abandoned, Buyer shall immediately instruct
  Escrow agent to return any unearned portion of Seller Assets to Seller and corresponding
  undelivered Buyers shares and warrants to Buyer and provide a copy of those
  instructions to Seller by fax and FedEx. Provided, however, that the
  termination provisions set forth in this Section 7 shall be in the alternative
  to, and shall not limit, either party’s right to seek any other remedy
  available at law or equity for the other party’s breach or failure to perform.

Section 8.	Survival and Indemnification .

      (a) Survival. The representations and
  warranties of each of the parties hereto shall survive the complete performance
  of this Agreement. 

      (b) Indemnification 

	 	     (i) The Buyer shall indemnify and hold Seller
      harmless from any claims, demands, liabilities or liens arising out of Buyer’s
      activities on and responsibilities related to Seller’s Assets. Buyer
      will obtain and carry and maintain a policy of liability insurance naming
      Seller as additional named insured in the amount of $2,000,000 or more to
      protect Seller against any claims resulting from Buyer’s operations.
      Buyer will obtain or require its drill contractor to carry a control of
      well insurance policy prior to commencement of any physical work on the
      wells included in Seller’s Assets and/or any new wells drilled on Seller’s
      Assets. 

Section 9. Force Majeure. 

      In the event the performance by either party
  of an obligation hereunder is prevented or delayed by a cause beyond that party’s
  control, in the exercise of due care, such party’s obligation shall be
  deferred until the conclusion of such prevention or delay. The party claiming
  such prevention or delay shall promptly notify the other party thereof. Lack
  of funds or inability to obtain financing shall not constitute an excusable
  prevention or delay of performance. 

Section 10. Miscellaneous Provisions.

      (a) Expenses. Except as otherwise provided
  herein, each of the parties hereto shall bear its own costs, fees and expenses
  in connection with the negotiation, preparation, execution, delivery and performance
  of this Agreement and the consummation of the transactions contemplated hereby.

      (b) Confidentiality. Except as required
  to be made public by regulatory agencies, any information disclosed by either
  party to the other or its representatives in connection with the transactions
  contemplated by this agreement, which information is not public information
  and is not otherwise known 

	 	Raft River Agreement – Page 10	 
	_________________	 	_________________
	Buyer	 	Seller

to the person to which it is disclosed, shall be deemed to be confidential information of the party disclosing it and shall be used only for purposes of evaluating the transactions contemplated by this agreement and shall not be disclosed to any
other person, except with the consent of the parties.

      (c) Amendment and Modification. This
  Agreement may be amended or modified by the parties at any time; provided,
  however, that all such amendments and modifications must be in writing duly
  executed by all of the parties. 

      (d) Waiver of Compliance; Consents. Any
  failure of a party to comply with any obligation, covenant, agreement or condition
  herein may be expressly waived in writing by the party entitled hereby to such
  compliance, but such waiver or failure to insist upon strict compliance with
  such obligation, covenant, agreement or condition shall not operate as a waiver
  of, or estoppel with respect to, any subsequent or other failure. No single
  or partial exercise of a right or remedy shall preclude any other or further
  exercise thereof or of any other right or remedy hereunder. Whenever this Agreement
  requires or permits the consent by or on behalf of a party, such consent shall
  be given in writing in the same manner as for waivers of compliance. 

      (e) No Third Party Beneficiaries. Nothing
  in this Agreement shall entitle any person or entity (other than a party hereto
  and his, her or its respective successors and assigns permitted hereby) to any
  claim, cause of action, remedy or right of any kind. 

      (f) Notices. All notices, requests, demands
  and other communications required or permitted hereunder shall be made in writing
  and shall be deemed to have been duly given and effective.

	 	(i) on the date of delivery, if delivered personally; 
	 	 
	 	(ii) on the earlier of the fifth day after mailing or the date of the
      return receipt acknowledgement, if mailed, postage prepaid, by certified
      or registered mail, return receipt requested; or 
	 	 
	 	(iii) on the date of transmission, if sent by facsimile telefax transmission:

     If to Seller: 

	 	To: 	Mr. Steve Munson, CEO 

      Vulcan Power Company 

      1183 NW Wall St., Suite G 

      Bend, OR 97701 

      Fax: 541-317-2879 

or to such other person or address as Seller shall furnish to Buyer in writing
  in accordance with this subsection. 

If to Buyer:

To: Daniel Kunz

	 	Raft River Agreement – Page 11	 
	_________________	 	_________________
	Buyer	 	Seller

 

	 	 	U.S. Geothermal, Inc. 

      3392 Maze Ave. 

      Boise, ID 83706 

      Fax: 208-367-1014 

or to such other person or address as Buyer shall furnish to Seller in writing
  in accordance with this subsection. 

      (g) Assignment. This
  Agreement and all of the provisions hereof shall be binding upon and inure to
  the benefit of the parties hereto and their respective successors and permitted
  assigns, but neither this Agreement nor any of the rights, interests or obligations
  hereunder shall be assigned (whether voluntarily, involuntarily, by operation
  of law or otherwise) by either party hereto without the prior written consent
  of the other party. 

      (h) Governing Law. This
  Agreement and the legal relations among the parties hereto shall be governed
  by and construed in accordance with the internal substantive laws of the State
  of Idaho as to all matters, including without limitation matters of validity,
  construction, effect, performance and remedies. 

      (i) Counterparts. This
  Agreement may be executed simultaneously in one or more counterparts, each of
  which shall be deemed an original, but all of which together shall constitute
  one and the same instrument. 

      (j) Headings. The table
  of contents and the headings of the Sections and subsections of this Agreement
  are inserted for convenience only and shall not constitute a part hereof. 

      (k) Entire Agreement; Severability.
  The exhibits and schedules referred to in this Agreement are part of this Agreement,
  and together with this document they embody the entire agreement and understanding
  of the parties hereto in respect of the transactions contemplated by this Agreement
  and together they are referred to as "this Agreement" or the "Agreement". This
  Agreement supersedes and nullifies all prior agreements and understandings between
  the parties with respect to Seller’s Assets and the terms and conditions
  of their sale and obligations of the Parties to this Agreement. There are no
  restrictions, promises, warranties, agreements, covenants or undertakings, other
  than those expressly set forth or referred to in this Agreement. If any provision
  of this Agreement shall become invalid or unenforceable under applicable law
  such provision shall be stricken to the extent necessary and the remainder of
  such provisions and the remainder of this Agreement shall continue in full force
  and effect. 

	 	Raft River Agreement – Page 12	 
	_________________	 	_________________
	Buyer	 	Seller

      IN WITNESS WHEREOF, the parties hereto have
  caused this Agreement to be duly executed as of the day and year first above
  written. 

	 	 	U.S. Geothermal, Inc.
	 	 	 
	 	 	By ____________________________
	 	 	Its President
	 	 	 
	 	 	Vulcan Power Company
	 	 	 
	 	 	By ____________________________
	 	 	Its CEO and President
	 	 	 
	STATE OF IDAHO	)	 
	 	: ss.	 
	County of Ada	)	 

      On this ______ day of May, 2004, before me,
  the undersigned, a Notary Public in and for said state, personally appeared
  ________________, known or identified to me to be the ________________ of U.S.
  Geothermal, Inc., the person who executed the foregoing instrument on behalf
  of said corporation, and acknowledged to me that __________ executed the same.

      IN WITNESS WHEREOF, I have hereunto set my hand
  and affixed my official seal the day and year first above written.

	 	      __________________________________________
	 	Notary Public for Idaho
	 	 Residing at ______________________ , Idaho 
	 (SEAL)	My Commission Expires: ____________________

	 	Raft River Agreement – Page 13	 
	_________________	 	_________________
	Buyer	 	Seller

 

	STATE OF __________	)
	 	: ss.
	County of ________	)

      On this ______ day of May, 2004, before me,
  the undersigned, a Notary Public in and for said state, personally appeared
  _________ , known or identified to me to be the __________ of Vulcan Power Company,
  the person who executed the foregoing instrument on behalf of said corporation,
  and acknowledged to me that ___ executed the same. 

      IN WITNESS WHEREOF, I have hereunto set my hand
  and affixed my official seal the day and year first above written. 

	 	      __________________________________________
	 	Notary Public for Idaho
	 	 Residing at ______________________ , Idaho 
	 (SEAL)	My Commission Expires: ____________________

	 	Raft River Agreement – Page 14	 
	_________________	 	_________________
	Buyer	 	Seller

 EXHIBIT A  

Real Property

	Parcel No. 1: 	The Northeast 1⁄4 of the Southeast 1⁄4
        of Section 22, the Northwest 1⁄4 of the Southwest 1⁄4 of Section
        23, and the East 1⁄2 of the Southwest 1⁄4 of Section 23, all
        in Township 15 South, Range 26 East, Boise Meridian, Cassia County, Idaho
      

	 	 
	Parcel No. 2: 	The Southeast 1⁄4 of the Southeast 1⁄4
        of Section 22, and the Southwest 1⁄4 of the Southwest 1⁄4 of
        Section 23, all in Township 15 South, Range 26 East of the Boise Meridian,
        Cassia County, Idaho, excepting and reserving therefrom all dips,
        spurs, angles, metals, ores, gold and silver bearing quartz, mineral bearing
        rocks and earth therein, and all mineral rights, privileges and franchises
        thereof incident, appendant and appurtenant, or therewith usually had
        and enjoyed. 

	 	 
	Parcel No. 3:	 The South 1⁄2 of the North 1⁄2 of Section
        25, and the Southeast 1⁄4 of Section 25, all in Township 15 South,
        Range 26 East, Boise Meridian, Cassia County, Idaho. 

Geothermal Production, Injection and Monitoring Wells 

PRODUCTION WELLS

	RRGE-1	NE4SE4, Sec. 23, T15S, R26E, B.M.	IDWR Permit #43-GR-6
	RRGE-3	SE4NW4, Sec. 25, T15S, R26E, B.M.	IDWR Permit #43-GR-8
	RRGP-4*	SE4SW4, Sec. 23, T15S, R26E, B.M.	IDWR Permit #43-GR-9
	RRGP-5*	NW4SW4, Sec. 23, T15S, R26E, B.M.	IDWR Permit #43-GR-10

INJECTION WELLS

	RRGI-6*	SE4NE4, Sec. 25, T15S, R26E, B.M.	IDWR Permit #43-GR-11
	RRGI-7*	NW4NE4, Sec. 25, T15S, R26E, B.M.	IDWR Permit #43-GR-12

MONITORING WELLS

	MW-1	MW-3	MW-5	MW-7
	MW-2	MW-4	MW-6	 

 *The parties hereto understand and agree that the following
  wells are permitted with the state of Idaho under different well numbers but
  represent the same wells: 

	Current Well No.	Permitted Well No.
	RRGP-4	RRGE-4
	RRGP-5	RRGE-5
	RRGI-6	RRGE-6
	RRGI-7	RRGE-7

	 	Raft River Agreement – Page 15	 
	_________________	 	_________________
	Buyer	 	Seller

Improvements (all dimensions are approximate) 

PLANT SITE AND/OR SELLER’S ASSETS REAL PROPERTY:

 Pump house – 40’x 30’ 

  Office/shop – 30’x 100’x 50’, including a 15-ton overhead
  bridge crane

  Office/Control Building – 95’x 50’ 

  Storage tank – 300,000 gallon capacity 

  Storage ponds – triple lined 2-3 million total capacity 

  Two sheds 

  Five underground storage tanks 

  All pipelines on or in Seller’s Assets Real Property 

  Pipeline rights, if any, located off Seller’s Assets 

WELL SITE 1:

 Warehouse building – 40’x 40’x 20’ 

  Office building – 100’x 50’ 

  Well house – 14’x 14’ 

 WELL SITE 3: 

Well house – 12’x 14’ 

WELL SITE 4: 

Well house – 10’x 10’ 

WELL SITE 5: 

Well house – 12’x 14’ 

WELL SITE 6: 

Pump house – 14’x 16’ Instrument building – 10’x 12’

WELL SITE 7:

Pump house – 12’x 14’ Instrument building – 10’x 12’

MONITORING WELLS:

Insulated, steel silos on all sites

	 	Raft River Agreement – Page 16	 
	_________________	 	_________________
	Buyer	 	Seller

 EXHIBIT B 

Permits 

1) Idaho Department of Water Resources Geothermal Permits:

	 	Permit No.	Well No.
	 	43-GR-6	RRGE-1
	 	43-GR-8	RRGE-3
	 	43-GR-9	RRGP-4
	 	43-GR-10	RRGP-5
	 	43-GR-11	RRGI-6
	 	43-GR-12	RRGI-7

	 	Raft River Agreement – Page 17	 
	_________________	 	_________________
	Buyer	 	Seller

EXHIBIT C 

Work Program 

 Property expenditures of $200,000 include direct corporate
  overhead and expenses associated with the following activities: 

 Acquisition of adjoining property and Crank well. 

 Completion of a reservoir test sufficient to use as a basis
  for a feasibility study. 

 Feasibility study. 

 Negotiation and acquisition of a power purchase agreement,
  and Engineering Procurement Construction Management contract. 

 Political efforts focused on the State of Idaho implementing
  a Renewable Portfolio Standard and/or PUC directive for the use of renewable
  energy. 

 Insurance, taxes and other payments required to keep the Property
  in good standing. 

 US Department of Energy Grant  

 Buyer has applied for and has been notified that it has been
  awarded, subject to Congressional funding allocations to be made in the months
  ahead, a grant for reimbursement of 80% of the costs associated with the reservoir
  test work portion of the Work Program. 

	 	Raft River Agreement – Page 18	 
	_________________	 	_________________
	Buyer	 	Seller

EXHIBIT D 

     Anticipated Timetable of Buyer/Seller Actions To Demonstrate Seller’s Assets and Funds Transfers 

	 	Estim ated Date Action To	Funds To	Stock and W arrant
	Action	Be Competed By	Vulcan	Amounts To Vulcan
	20% Assets Transferred to Buyer	11/29/02	$54,485.12	 
	 	 	 	 
	Anticipated Acquisition Closing	3/18/03	$100,000.00	 
	 	 	 	 
	Escrow Vulcan:	3/18/03	 	 
	   Common Stock	 	 	33% of 14%
	   Warrants @ $0.75	 	 	33% of 11%
	 	 	 	 
	Issue Vulcan:	3/21/03	 	 
	   Common Stock	 	 	67% of 14%
	   Warrants @ $0.75	 	 	67% of 11%
	 	 	 	 
	49% Assets Transferred to Buyer	3/18/03	 	 
	 	 	 	 
	Complete	 	 	 
	Feasibility Study	3/18/04	 	 
	 	 	 	 
	Issue $2 Million	 	 	 
	Well Indemnification	 	 	 
	Vulcan Co-Insured	6/18/03	 	 
	 	 	 	 
	Escrow Release To Vulcan:	9/18/2005	 	 
	   Shares	 	 	33% of 14%
	   Warrants	 	 	33% of 11%
	 	 	 	 
	Complete Work Program	 	 	 
	at Raft River	3/18/2004	 	 
	($200,000)	 	 	 
	 	 	 	 
	Begin to Construct Power Plant	9/18/2005	$250,000.00	 
	Transfer 51% Asset to Buyer	9/18/2005	 	 
	 	 	 	 

	Estimated Pubco Share Structure at Acquisition
      Closing
	 	 	Basic	Warrants	Fully Diluted	Fully Diluted
	 	Shares	Ownership Warrants	Price	Shares	Ownership
	Existing Pubco	2,259,452	20.5%	 	2,259,452	14.6%
	Buyer (with Performance Sh	5,200,000	47.3%	 	5,200,000	33.6%
	Seller	1,540,548	14.0% 2,325,000	$0.750	3,865,548	25.0%
	Public Financing	2,000,000	18.2% 2,140,000	$0.875	4,140,000	26.8%
	Total	11,000,000	100.0% 4,465,000	 	15,465,000	100.0%

	 	Raft River Agreement – Page 19	 
	_________________	 	_________________
	Buyer	 	Seller

 EXHIBIT E  

Geothermal Interest Within Ten Mile Radius

1.) Crank Lease – encompasses geothermal well RRGE#2 and 160 acres of geothermal rights.

2.) Jensen Lease – encompasses 2,954.75 acres of geothermal rights.

3.) Jensen Investments Lease – encompasses 44.5 acres of surface and geothermal rights

	 	Raft River Agreement – Page 19	 
	_________________	 	_________________
	Buyer	 	Seller

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