Item 1.01 Entry into a Material Definitive Agreement.
On
January 24, 2018, U.S. Geothermal Inc. (the Company) entered into an Agreement
and Plan of Merger (the Merger Agreement) by and among Ormat Nevada Inc., a
Delaware corporation (Ormat), OGP Holding Corp., a Delaware corporation and a
wholly-owned subsidiary of Ormat (Merger Sub) and the Company. Pursuant to the
Merger Agreement, Merger Sub will be merged with and into the Company (the
Merger), the separate corporate existence of Merger Sub will cease and the
Company will continue its corporate existence under the Delaware General
Corporation Law as the surviving company in the Merger and a subsidiary of
Ormat.
Subject
to the terms and conditions set forth in the Merger Agreement, at the effective
time of the Merger (the Effective Time), each share of common stock, par value
$0.001, of the Company (Company Shares) issued and outstanding immediately
prior to the Effective Time of the Merger (other than Company Shares owned by
Ormat, Merger Sub or the Company (as treasury stock or otherwise), or any of
their respective direct or indirect wholly-owned subsidiaries, in each case, not
Company Shares owned by shareholders who have exercised their rights as
dissenting owners under Delaware law) will be automatically converted into the
right to receive $5.45 per Company Share in cash, without interest.
The
Merger Agreement provides that, at the Effective Time, each of the Companys
then outstanding stock options will be treated as follows: (i) the accelerated
vesting and settlement of all then-outstanding Options immediately prior to and
contingent on the closing of the Merger, (ii) the cash-out of such Options
providing for payment of an amount equal to the excess, if any, of the Merger
Consideration per Company Share over the exercise price of such Options and
(iii) the cancellation, as of the Effective Time, of each Option that is
outstanding and unexercised as of immediately prior to the Effective Time.
Certain optionholders, such as directors and officers, will be required to sign
an Option Holder Acknowledgement Form, attached as an exhibit to the Merger
Agreement, in order to be automatically cashed-out as noted above in subsection
(ii).
The
Merger Agreement contains customary representations and warranties of the
Company, Ormat and Merger Sub relating to their respective businesses and
organizations, in appropriate cases subject to materiality qualifiers.
Additionally, the Merger Agreement provides for customary pre-closing covenants
of the Company, including covenants relating to conducting its business in the
ordinary course consistent with past practice and refraining from taking certain
actions without Ormats consent, covenants not to solicit proposals relating to
alternative transactions or, subject to certain exceptions, enter into
discussions concerning or provide information in connection with alternative
transactions and covenants requiring the Companys board of directors (the
Board), subject to certain exceptions, to recommend that the Company's
shareholders approve the Merger Agreement. In the event that the Board receives
an alternative acquisition proposal that it determines is a Superior Proposal
(as defined in the Merger Agreement) in accordance with the terms of the Merger
Agreement, the Company may, subject to compliance with requirements to provide
notice to and a period for Ormat to match such proposal, and subject to payment
of the termination fee payable by the Company to Ormat and other conditions and
requirements set forth in the Merger Agreement, terminate the Merger Agreement
to accept the applicable Superior Proposal.
The
Company, Ormat and Merger Sub have agreed to use their respective commercially
reasonable efforts, subject to certain exceptions, to, among other things,
consummate the transactions contemplated by the Merger Agreement as promptly as
reasonably practicable and make all required filings and obtain all required
consents, permits, regulatory approvals and expirations or terminations of
waiting periods. None of the Company, Ormat or Merger Sub is required to divest
any of its businesses, product lines or assets, or to take or agree to take any
other action or to agree to any limitation or restriction of any kind on its
business, operations, properties or assets.
Consummation
of the Merger is subject to various conditions, including, among others,
customary conditions relating to the approval of the Merger Agreement by the
requisite vote of the Company's shareholders, expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and any other applicable antitrust laws, any required
approvals from the Federal Energy Regulatory Commission and any other applicable
filings with or authorizations, consents or waivers from third parties. The
obligation of each party to consummate the Merger is also conditioned on the
other parties representations and warranties being true and correct (subject to
certain materiality exceptions) and the other parties having performed in all
material respects its obligations and complied in all material respects with the
agreements and covenants under the Merger Agreement. The transaction is not
conditioned on Ormats receipt of financing.
The
Merger Agreement contains termination rights for each of the Company and Ormat,
including, among others, if the Merger has not been consummated by May 24, 2018.
Either party may also terminate the Merger Agreement if the Company's
stockholder approval has not been obtained at a duly convened meeting of the
Company's stockholders or an order permanently restraining, enjoining, or
otherwise prohibiting consummation of the Merger becomes final and
non-appealable. Upon termination of the Merger Agreement under specified
circumstances, generally relating to alternative acquisition proposals, an
adverse change in the Boards recommendation in favor of the Merger, a knowing
and intentional breach of the Company representations or warranties, or a
failure by the Company to consummate the Merger when required to do so pursuant
to the terms of the Merger Agreement, the Company would be required to pay Ormat
a termination fee equal to 3% of the Merger Consideration (approximately $3.2
million). Upon termination of the Merger Agreement under specified
circumstances, generally relating to a knowing and intentional breach of Ormats
representations or warranties, or a failure by Ormat to consummate the Merger
when required to do so pursuant to the terms of the Merger Agreement, Ormat
would be required to pay the Company a reverse termination fee equal to 3% of
the Merger Consideration (approximately $3.2 million).
The
foregoing description of the Merger Agreement is qualified in its entirety by
the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1
and is incorporated by reference herein.
* * *
Important Statement regarding the Merger Agreement.
The Merger Agreement has been included to provide investors
with information regarding terms of the Merger. It is not intended to provide
any other factual information about the Company, Ormat, Merger Sub or their
respective subsidiaries or affiliates. The representations, warranties, and
covenants contained in the Merger Agreement were made only for purposes of the
Merger Agreement and as of specific dates, were solely for the benefit of the
parties to the Merger Agreement, may be subject to limitations, qualifications
or other particulars agreed upon by the contracting parties, including being
qualified by confidential disclosures made for the purposes of allocating
contractual risk between the parties to the Merger Agreement instead of
establishing these matters as facts or made for other purposes, and may be
subject to standards of materiality applicable to the contracting parties that
differ from those applicable to investors. Investors are not third-party
beneficiaries under the Merger Agreement and should not rely on the
representations, warranties, and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the parties
thereto or any of their respective subsidiaries or affiliates. Moreover,
information concerning the subject matter of representations and warranties may
change after the date of the Merger Agreement, which subsequent information may
or may not be fully reflected in the Company's public disclosures.