Item 1.01
Entry into a Material Definitive Agreement
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Merger Agreement
On January 24, 2018, Ormat Nevada Inc., a Delaware corporation and a wholly owned subsidiary of Ormat Technologies, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with OGP Holding Corp., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and U.S. Geothermal Inc., a Delaware corporation (“USG”). Pursuant to the Merger Agreement, Merger Sub will merge with and into USG (the “Merger”), with USG surviving the Merger as a wholly owned subsidiary of the Company. Subject to satisfaction or waiver of the conditions set forth in the Merger Agreement, the closing of the Merger is expected to occur in the second quarter of 2018.
At the effective time of the Merger (the “Effective Time”), each share of USG’s common stock, par value $0.001 per share (collectively, the “Shares”) issued and outstanding immediately prior to the Effective Time will be converted into the right to receive $5.45 per Share in cash, without interest (the “Merger Consideration”), subject to customary exceptions, among others, for Shares held by (i) the parties to the Merger Agreement or their respective subsidiaries and (ii) USG stockholders who properly exercise appraisal rights for their Shares.
The Merger Agreement contains customary representations and warranties of each of the parties. It also contains customary covenants of the parties. These include, among others, covenants for each of the parties to cooperate and use their respective commercially reasonable efforts to cause the Merger to be consummated, and covenants requiring USG to carry on its business in the ordinary course consistent with past practice and to not solicit proposals relating to alternative transactions.
The closing of the Merger is subject to customary conditions, including, among other things, (a) approval of the Merger by USG’s stockholders, (b) expiration or termination of any applicable regulatory waiting periods and receipt of required antitrust approvals, (c) the absence of injunctions or other legal restraints prohibiting the Merger, (d) receipt of required approvals from the Federal Energy Regulatory Commission, (e) receipt of required consents, (f) the accuracy of the parties’ representations and warranties, (g) compliance by the parties with their respective covenants in the Merger Agreement and (h) the absence of any material adverse effect on USG.
The Merger Agreement may be terminated in certain circumstances, including if the Merger has not been consummated by May 24, 2018. If the Merger Agreement is terminated under certain circumstances, a termination fee of 3% of the Merger Consideration (approximately $3.2 million) is payable, either by the Company or by USG, depending on the circumstances set forth in the Merger Agreement.
The foregoing description of the Merger Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
Voting Agreement
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In connection with the Merger Agreement, certain of USG’s directors and executive officers who are also stockholders of USG entered into voting agreements (collectively, the “Voting Agreements”). The Voting Agreements require the applicable stockholder, among other things, to vote such stockholder’s Shares in favor of the approval of the Merger Agreement, the Merger and the transactions contemplated thereby.