HTM U.S. Geothermal Inc. (delisted)

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “intend,” “estimates,” “may,” “should,” “will,” “could,” “plan,” “predict,” “potential,” or similar expressions in this proxy statement or in documents incorporated by reference in this proxy statement.

Examples of these forward-looking statements include, but are not limited to:

These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements:

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All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

We refer you to our filings with the Securities and Exchange Commission (“SEC”), and specifically to Item 1A-Risk Factors, of our latest Annual Report on Form 10-K, for a discussion of certain risks that could affect our business, financial results and results of operations. See the section entitled “Where You Can Find More Information”. These risk factors could cause our actual results and conditions to differ materially from our historical performance or those projected in our forward-looking statements. The risks highlighted therein are not the only ones that we face. There may be additional risks that are not presently material or known. If any of the risks actually occur, our business, financial condition or results of operations could be negatively affected.

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THE PARTIES TO THE MERGER

U.S. Geothermal Inc. (referred to in this proxy statement as the “Company,” “we” or “us” or words of similar import) is in the renewable “green” energy business. We were originally incorporated on March 10, 2000 in the State of Delaware. Through our subsidiary, U.S. Geothermal Inc., an Idaho corporation incorporated in February 2002 (“Geo-Idaho,” although our references to the Company include and refer to our operations through Geo-Idaho), we are engaged in the acquisition, development and utilization of geothermal resources in the Western United States and the Republic of Guatemala. Geothermal energy is the natural heat energy stored within the earth’s crust. In some areas of the earth, economic concentrations of heat energy result from a combination of geological conditions that allow water to penetrate into hot rocks at depth, become heated, and then circulate to a near surface environment. In these settings, commercially viable extraction of the geothermal energy and its conversion to electricity become possible and a “geothermal resource” is present. The Company constructs, manages and operates power plants that utilize geothermal resources to produce electricity.

Our business strategy is to identify, evaluate, acquire, develop and operate geothermal assets and resources economically, safely and efficiently. Our management evaluates our operating projects based on revenues and expenses and our projects under development, based on costs attributable to each project. We examine different factors when assessing projects at different stages of development or potential acquisitions, such as the internal rate of return of the investment, technical and geological matters and other relevant business considerations.

U.S. Geothermal’s executive offices are located at 390 E Parkcenter Blvd, Suite 250, Boise, Idaho 83706. U.S. Geothermal’s telephone number is (208) 424-1027.

Ormat Nevada Inc. (referred to in this proxy statement as “Ormat”), a Delaware corporation incorporated on November 12, 1991, is a wholly owned subsidiary of Ormat Technologies, Inc., also a Delaware corporation, incorporated on September 15, 1994. Ormat Technologies, Inc., based in Reno, Nevada, is a leading vertically integrated company that is currently primarily engaged in the geothermal and recovered energy power business. Ormat Technologies, Inc. designs, develops, builds, sells, owns, and operates clean, environmentally friendly geothermal and recovered energy-based power plants, usually using equipment that is designed and manufactured in-house. Ormat Nevada Inc. operates and maintains geothermal power plants and recovered energy-based power plants in the United States. It also recently entered the energy storage, demand response and energy management markets following its 2017 acquisition of Viridity Energy Inc.

Ormat’s executive offices are located at 6225 Neil Road, Reno, Nevada 89511. Ormat’s telephone number is (775) 356-9029.

OGP Holding Corp. (referred to in this proxy statement as “merger sub”) is wholly owned subsidiary of Ormat, whose principal executive offices are located at 6225 Neil Road, Reno, Nevada 89511. Merger sub’s telephone number is (775) 356-9029. Merger sub was formed solely for the purpose of facilitating Ormat’s acquisition of U.S. Geothermal.

THE SPECIAL MEETING OF THE COMPANY’S STOCKHOLDERS

Time, Place and Purpose of the Special Meeting

The special meeting will be held at 10:00 a.m., MDT on April 19, 2018, at the offices of U.S. Geothermal, at 390 E Parkcenter Blvd, Suite 250, Boise, Idaho 83706. The purpose of the special meeting is to consider and vote on the proposal to adopt and approve the merger agreement and the transactions contemplated by the merger agreement, and the other proposals described in this proxy statement. The Board, by unanimous vote, has determined that it is advisable and in the best interests of U.S. Geothermal and its stockholders to enter into the merger agreement and to consummate the merger and the other transactions contemplated by the merger agreement, and unanimously recommends that stockholders vote FOR the proposal to adopt and approve the merger agreement and the transactions contemplated by the merger agreement, FOR the proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies and FOR the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to U.S. Geothermal’s named executive officers in connection with the merger, and the agreements and understandings pursuant to which such compensation may be paid or become payable.

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Who Can Vote at the Special Meeting

Only holders of record of U.S. Geothermal’s common stock, as of the close of business on March 1, 2018, which is the record date for the special meeting, are entitled to receive notice of and to vote at the special meeting. If you own shares that are registered in the name of someone else, such as a broker, you need to direct that person to vote those shares or obtain an authorization from them and vote the shares yourself at the meeting. On the record date, there were 19,494,566 shares of common stock outstanding.

Quorum; Vote Required

For purposes of transacting business at the special meeting, one-third of the voting power represented in person or by proxy of the outstanding shares of common stock will constitute a quorum. Once a share is represented at the special meeting, it will be counted for the purpose of determining a quorum and any adjournment of the special meeting, unless the holder is present solely to object to the special meeting. Votes FOR and AGAINST and abstentions will be counted for purposes of determining the presence of a quorum. However, if a new record date is set for an adjourned meeting, a new quorum will have to be established.

The adoption and approval of the merger agreement and the transactions contemplated by the merger agreement requires U.S. Geothermal to obtain the U.S. Geothermal stockholder approval. The U.S. Geothermal stockholder approval requires the affirmative vote of a majority of the outstanding shares of common stock. Because the required votes of U.S. Geothermal’s stockholders are based on the number of outstanding shares of common stock with respect to the U.S. Geothermal stockholder approval, and not based on the number of shares represented in person or by proxy at the special meeting, failure to submit a proxy or to vote in person will have the same effect as a vote AGAINST the merger agreement proposal, but, assuming a quorum is present, will have no effect on the adjournment proposal or on the compensation proposal. A vote to abstain or a broker non-vote will have the same effect as voting against the merger agreement proposal, but will have no effect on the adjournment proposal or the compensation proposal.

Approval of the adjournment proposal and the compensation proposal will each require the affirmative vote of holders of a majority of the votes cast, represented in person or by proxy.

If your shares of common stock are held in “street name” by your broker, bank, or other nominee, you should instruct your broker, bank or other nominee how to vote your shares using the instructions provided by your broker, bank or other nominee. Under applicable regulations, brokers, banks or other nominees who hold shares in “street name” for customers may not exercise their voting discretion with respect to non-routine matters such as the approval of the merger agreement proposal. As a result, if you do not instruct your broker, bank, or other nominee to vote your shares of common stock, your shares will not be voted, which will have the same effect as voting against the merger agreement proposal.

Voting by Proxy

This proxy statement is being sent to you on behalf of the Board for the purpose of requesting that you allow your shares of our common stock to be represented at the special meeting by the persons named in the enclosed proxy card. All shares of our common stock represented at the special meeting by properly executed proxy cards, voted over the telephone or voted over the Internet will be voted in accordance with the instructions indicated on those proxies. If you sign and return a proxy card without giving voting instructions, your shares will be voted as recommended by the Board. The Board recommends a vote FOR adoption and approval of the merger agreement and the transactions contemplated by the merger agreement, FOR the proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies and FOR the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to U.S. Geothermal’s named executive officers in connection with the merger, and the agreements and understandings pursuant to which such compensation may be paid or become payable.

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You may revoke your proxy at any time before the vote is taken at the special meeting. To revoke your proxy, you must either advise U.S. Geothermal’s Corporate Secretary in writing, deliver a proxy dated after the date of the proxy you wish to revoke or attend the special meeting and vote your shares in person. Attendance at the special meeting will not by itself constitute revocation of a proxy. If you have instructed your broker, bank, or other nominee to vote your shares, you must follow the directions provided by your broker, bank or other nominee to change those instructions.

Householding

The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. Although we do not household for our registered stockholders, some brokers household U.S. Geothermal Inc. proxy materials, delivering a single proxy statement to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies and wish to receive only one, please notify your broker. We will deliver promptly upon written or oral request a separate copy of our annual report to a stockholder at a shared address to which a single copy was delivered. For copies of the proxy statement, stockholders should write to U.S. Geothermal Inc., 390 E Parkcenter Blvd, Suite 250, Boise, Idaho 83706, or call (208) 424-1027.

Solicitation of Proxies

U.S. Geothermal will pay all of the costs of this proxy solicitation. In addition to soliciting proxies by mail, directors, officers and employees of U.S. Geothermal may solicit proxies personally and by telephone, email or otherwise. None of these persons will receive additional or special compensation for soliciting proxies. U.S. Geothermal will, upon request, reimburse brokers, banks and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners and obtaining their voting instructions.

U.S. Geothermal has engaged Georgeson Inc. (“Georgeson”) to assist in the solicitation of proxies for the special meeting and will pay Georgeson a fee of approximately $10,000, plus reimbursement of out-of-pocket expenses. The address of Georgeson is 1290 Avenue of the Americas, 9th Floor, New York, NY 10104, Shareholders, Banks and Brokers. You can call Georgeson toll-free at 800-248-3170.

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THE MERGER

The discussion of the merger in this proxy statement is qualified by reference to the merger agreement, which is attached to this proxy statement as Annex A. You should read the merger agreement carefully in its entirety.

Background of the Merger

To maximize value for its stockholders, U.S. Geothermal regularly and in the ordinary course of its business evaluates strategic alternatives, including opportunities for potential strategic transactions. In connection with its evaluation of potential strategic transactions, U.S. Geothermal has met from time to time with other companies in its sector, to evaluate potentially complementary acquisitions and other strategic investments and alternatives.

U.S. Geothermal also explores, from time to time at the direction of its Board, larger and more transformative strategic alternatives. For example, in July 2015, U.S. Geothermal was approached by Ormat with an unsolicited expression of interest in the company and the parties entered into a nondisclosure agreement for the purpose of exploring a potential transaction. The parties were unable to agree upon terms for a transaction, but Ormat remained subject to a standstill until April 15, 2016 which provided that they could not attempt to acquire or take control of U.S. Geothermal without consent of the Board. Following the conclusion of the negotiations with Ormat, in August 2015 U.S. Geothermal established a special committee and worked with a financial advisor to review its strategic alternatives, including a potential sale of the company. During this process, the special committee and the Board, with input from advisors, reviewed the potential transaction structures and pricing, tax implications and complexity of the potential structures and ultimate value that would be received by stockholders. Following a lengthy process, the company formally concluded this process in March 2016. Upon the recommendation of the special committee in that process, the Board had determined that continuing to execute the company’s strategic growth plan was the best path to maximizing long term stockholder value.

Commencement of the Process and Establishment of the Special Committee

In July 2016, U.S. Geothermal was approached by Party A, a foreign strategic party, regarding a potential investment in U.S. Geothermal. The inquiry from Party A was unsolicited. U.S. Geothermal entered into a nondisclosure agreement with Party A in the fall of 2016. Representatives of Party A visited the Neal project site during the Fall of 2016. During the weeks following Party A’s due diligence site visits, members of management had multiple calls with representatives of Party A regarding due diligence matters. In late November 2016, U.S. Geothermal received from Party A a proposal letter which included a nonbinding indication of interest to purchase the outstanding shares of the company’s common stock within a range of $5.30 to $5.93 per share. On November 22, 2016, the date of the proposal letter, the closing price for the company’s common stock was $4.11.

While the Board had ended the prior process earlier in 2016, given the unsolicited proposal from Party A, the Board met on December 1, 2016 and concluded that it would be in the best interests of U.S. Geothermal and its stockholders to reevaluate potential transactions. The Board reviewed the offer from Party A, discussed potential interested parties based on the prior process and the establishment of a special committee for the new process. The special committee was formed of three independent directors consisting of Paul Larkin, James Pappas and Randy Hill. Mr. Hedayat, another independent director, joined the special committee following his appointment to the Board in February 2017.

In late November and early December 2016, Mr. Gilles, U.S. Geothermal’s CEO at the time, made contact with four public and private geothermal companies and one private equity fund. These parties had each expressed a similar unsolicited interest in a potential transaction but, unlike Party A, had not provided any indication of price.

On December 5, 2016, the special committee met to discuss the proposal from Party A, the role of the special committee in the negotiations, as well as the retention of a financial advisor. Dorsey & Whitney, counsel to the company, presented information to the special committee regarding duties and process with respect to potential strategic transactions. Since Party A was a foreign entity, the special committee discussed the impact of both Hart-Scott-Rodino and CFIUS on any transaction timing, as well as potential concerns relating to currency control regulations. While the special committee did not conduct a formal valuation process, the members of the special committee were informed by the prior process earlier in the year as well as its views of U.S. Geothermal’s operations and prospects. Finally, the special committee concluded that the range suggested by Party A was low.

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The special committee members discussed a roster of potential financial advisors and determined there were two preferred choices based on their credentials, reputation and the needs of the special committee. Prior to the next meeting of the special committee and at the request of the special committee, Mr. Pappas interviewed both as potential financial advisors.

On December 13, 2016, Messrs. Larkin, Gilles and Glaspey met with representatives of Party A to discuss the process the Board had undertaken, and Party A requested access to the data site for commencement of due diligence. Mr. Larkin indicated to Party A that an offer in the range of $6.00 to $6.50 would be more compelling to the special committee.

On December 15, 2016, the special committee met and determined to engage ROTH Capital Partners (“ROTH”) as its financial advisor. The special committee noted ROTH’s experience working with independent power producers, helping to sell public companies, transactions with foreign buyers of US based companies, and ROTH’s familiarity with the Company from providing some minor general financial advisory services to the Company in 2016. With input from Dorsey & Whitney, the special committee evaluated any potential conflicts of interest that ROTH might have, and discussed the terms of the ROTH engagement letter and fee structure, as well as the role the special committee desired for ROTH. The special committee also discussed the formal process in which U.S. Geothermal had engaged less than a year earlier to identify potential bidders.

The special committee negotiated the terms of the engagement with ROTH over the next two weeks. On January 9, 2017, the Board met to discuss, among other things, the status of discussions with potential parties, the authority of the special committee and approval of its charter, as well as the special committee’s choice of ROTH as its financial advisor. Following the meeting, ROTH was engaged as the financial advisor to the special committee on January 9, 2017.

On January 13, 2017, the company received a written, non-binding proposal from Party B, a foreign strategic party, for the purchase of certain of the company’s subsidiaries. Later that day, the special committee met with its legal and financial advisors to discuss the terms of the proposal letter from Party B and potential advantages and disadvantages of different types of transaction structures and potential regulatory challenges. Following the special committee meeting, the company received a written, non-binding proposal from Party C, a foreign fund, by which Party C would purchase the company’s shares at a non-binding price of $6.50 per share. The closing price for the company’s common stock on January 13, 2017 was $4.65 per share.

On January 16, 2017, the special committee met to discuss, with input from legal and financial advisors, the terms of the proposal from Party C, the potential interested parties, the process and a course of future communications with the bidders to elicit additional information or updated bids for further consideration by the special committee.

On January 17, 2017, Mr. Pappas spoke with a representative of Party B to determine whether it would modify its proposal to become a cash purchase for all of the company shares. While considering the request to modify its proposal, Party B sought more information regarding management’s view of the prospect for PPAs for the development assets.

On January 18, 2017, members of the special committee spoke with representatives of Party A and Party C, and in each call, indicated that the special committee considered the current bids to be inadequate. Party C was unwilling to consider increasing its current bid price until it met with company management.

On January 23, 2017, the special committee, along with its legal and financial advisors, met to discuss updates regarding, and feedback from, potential interested parties.

On January 27, 2017, the special committee met, along with Mr. Hedayat, a nominee to the Board and Dorsey & Whitney, to discuss the background of the prior sale process that ended in March 2016 as well as the current process and interested parties. The special committee discussed the plans for the company, its projects and company leadership in light of the different proposals.

During the week of January 30th, Party C executed a nondisclosure agreement, and representatives of Party C met with members of management to conduct due diligence.

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On February 15, 2017, the special committee, with Mr. Hedayat and a representative from Dorsey & Whitney and ROTH also in attendance, discussed the status of the various bidders, including Party C who continued to conduct due diligence. Mr. Pappas noted that Party D wanted a meeting. There was an extended conversation of the different parties, whether any particular structures had been considered with respect to some of the parties, and the pace of the process. Dorsey & Whitney advised the special committee concerning the fiduciary duties of directors in the context of a sale of the company and noted the importance of independent director oversight, particularly for transactions in which members of the company’s management may be employed by the acquirer. As part of its discussions of its fiduciary duties, the special committee discussed and concluded that it did not consider the sale of the company inevitable at this time.

On March 2, 2017, representatives of ROTH met with Party D’s financial advisors to discuss their potential bid.

On March 3, 2017, the special committee was informed by Party A that while its prior proposal remained in place, it would not be increasing its bid as requested by the special committee.

On March 6, 2017, the special committee, with Mr. Hedayat and representatives from Dorsey & Whitney and ROTH also in attendance, met to discuss the current status of the potential bidders, including Party D who was expected to submit a proposal, and Party C who indicated that it was not interested in moving forward.

On March 15, 2017, Party D submitted a proposal for a share exchange transaction using an equity valuation of the company of $120 million (approximately $5.66 per share). This proposal from Party D was later replaced with a joint proposal with Party E.

On March 16, 2017, Mr. Larkin had a call with a representative of Ormat to discuss Ormat’s potential interest in U.S. Geothermal. The representative from Ormat indicated that Ormat would need to conduct additional due diligence before formalizing any offer and would require an exclusivity agreement, but that their current indicative range for the whole company was $90 to $95 million (approximately $4.25 to $4.48 per share).

In mid-April, Party B informed Mr. Pappas that it was withdrawing its proposal.

During April and May, members of the special committee held discussions with various parties who expressed an interest in a potential transaction with U.S. Geothermal.

On May 9, 2017, Messrs. Larkin, Pappas and Hedayat met with representatives of Ormat (Isaac Angel, Doron Blachar and Rinat Gazit) to discuss terms on which Ormat might be willing to acquire the company. Ormat agreed to provide a proposal by the end of May, 2017. Following that meeting, various representatives of Ormat and the company engaged in telephonic and electronic communications concerning possible terms for that proposal.

In mid-May, 2017, Mr. Gilles was contacted by the representatives for Party A, who informed him that the prior bid may not be the final offer.

In late May, Mr. Pappas discussed a potential bid with Party F, and Mr. Hedayat had further conversations with Ormat and joint bidder Party D/E.

On May 23, 2017, the special committee met, along with its legal advisor, to discuss the status of discussions with the various parties as well as potential transaction structures.

During late May and early June, Mr. Hedayat held discussions with representatives from Ormat on the potential price range with Ormat, the factors impacting the price range and how Ormat valued the development projects.

On June 1, 2017, there was a video conference call during which representatives of Ormat (Doron Blachar and Rinat Gazit) presented Ormat’s analysis and some preliminary terms for the proposed acquisition to members of the special committee. No agreement on valuation or price was reached during that call. The Ormat representatives informed the special committee that Ormat would need access to non-public information and further due diligence to determine what, if any, price Ormat might pay for U.S. Geothermal as well as a board approval for any transaction.

In early June, the special committee requested that the remaining active parties, including Party A and Party D/E, submit their final proposals by mid-June.

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On June 8, 2017, the Board met for an update from the special committee. Mr. Hedayat updated the Board on his discussions with Ormat and representatives for Party A as well as the potential proposal from Party D/E. Mr. Glaspey provided an update on another party, but did not know if any proposal would be received. Mr. Pappas provided an update on his call with Party F, but was uncertain if a proposal would be received.

On June 9, 2017, a representative of Party G contacted Mr. Larkin regarding its potential interest. In mid-June, Mr. Hedayat continued to meet with Ormat regarding price, the ability to undertake certain projects under consideration and the length of the exclusivity period being requested.

On June 9, 2017 representatives of U.S. Geothermal sent Ormat proposed terms for a letter of intent for the acquisition of the company by Ormat. Ormat, U.S. Geothermal and their respective counsel began negotiating the terms and conditions for a letter of intent and nondisclosure agreement.

On June 14, 2017, the special committee received a joint proposal from Party D/E for an acquisition of assets for cash consideration of $90 million plus the assumption of outstanding debt. The special committee informed Party D/E that it considered the consideration to be inadequate. The next day, the special committee received a revised offer which increased the cash consideration to $120 million. The special committee noted that this proposal lacked the required financial information to support its consummation, but determined to pursue discussions with D/E for the purpose of increasing shareholder value.

On June 16, 2017, Ormat submitted a proposal to purchase the company’s shares at a range of $5.11 to $5.80 per share. The closing price for the company’s common stock on June 15, 2017 was $4.06. Counsel for the parties continued negotiating a nondisclosure agreement.

Following receipt of the updated proposal from Party D/E, the special committee worked with management and its advisors to analyze the ultimate benefit to stockholders resulting from the asset purchase proposal from Party D/E. In addition, the special committee conducted analysis on where in the range the potential final bids might lie based on the special committee’s views on the contingencies in the proposals, as well as what the impact would be to shareholders if the assets were sold resulting in a microcap public company holding limited exploration assets and cash. Mr. Hedayat spoke to representatives of Party D/E to encourage them to present a proposal to acquire the shares of U.S. Geothermal, rather than its assets. On June 20, 2017, Party D/E submitted a revised proposal to acquire the shares of U.S. Geothermal at a proposed price of $6.00 per share. The closing price for the company’s common stock on July 20, 2017 was $4.51.

Party A did not submit a revised proposal to the special committee by mid-June, but the prior proposal with a range of $5.30 to $5.93 per share had not been withdrawn. Members of the special committee regarded the probability of completion of a transaction with Party A to be lower compared to Ormat or Party D/E.

On June 20, 2017, the Board met for an update from the special committee regarding the status of discussions with Ormat, Party D/E, and Party G and the current proposals received by the special committee. ROTH discussed their analysis of the offers received from Party D/E and Ormat. On a per share basis, the proposal from Ormat included a range of $5.11 to $5.80 as compared to the offer from Party D/E which included a proposed price of $6.00 per share. The ROTH analysis also included the asset acquisition by Party D/E, but this structure was not favored by the Board or the special committee. The Board discussed the transaction process and its fiduciary duties, with input from Dorsey & Whitney.

During June 20-22, 2017, members of the special committee held discussions with each of Ormat, Party D/E and Party G.

On June 22, 2017, the Board met for a further update on discussions with Ormat, Party D/E and Party G. Following the Board meeting, Party D/E submitted a revised proposal with a proposed price of $6.25 per share. The closing price for the company’s common stock on June 21, 2017 was $3.90.

On June 24, 2017, the special committee and the Board met to discuss the proposal from Party D/E, with input from Dorsey & Whitney and ROTH. The special committee unanimously recommended, and the Board approved, moving forward with a sale process with Party D/E and negotiating and entering into an exclusivity agreement.

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On June 25, 2017, Mr. Hedayat spoke with Ormat concerning price and other terms of its proposal. Ormat proposed revising the bid to eliminate the price range in favor of a $5.80 per share price, but did not change other terms proposed by Mr. Hedayat. The closing price for the company’s common stock on June 23, 2017 was $3.97. Mr. Hedayat informed Ormat that U.S. Geothermal planned to continue discussions with another preferred bidder.

In late June, the terms of the exclusivity agreement with Party D/E were being discussed between the parties as well as clarifications to the proposal letter. Mr. Larkin was continuing discussions with Party G.

On July 3, 2017, the special committee received a proposal from Party G with a base price of $6.75 per share and the potential for an additional $0.25 under certain circumstances. The special committee met that day to discuss the proposal. Representatives from management, Dorsey & Whitney and ROTH attended. Mr. Larkin led a discussion of the offer letter terms, including issues relating to CFIUS, the restricted cash balance requirements in the offer letter, and reserve/resource requirements for the various projects. The special committee also discussed the ongoing communications with Party D/E. Later than day, Messrs. Pappas and Truelock, a representative of ROTH, contacted Party D/E to explain that the fiduciary duties of the directors required their consideration of a new offer, but that the special committee was willing to receive additional offers from Party D/E. Mr. Larkin sought additional financial information from Party G due to concerns regarding currency controls and Mr. Gilles provided additional detailed information to Party G regarding the resource levels at each project. Counsel to Party G and U.S. Geothermal began negotiating the exclusivity agreement.

On July 5, 2017, Party G submitted a revised proposal reflecting slightly modified provisions for the potential increase to the purchase price per share of $0.25 per share. Mr. Hedayat spoke with Party D/E to discuss the receipt of a higher competing bid in order to give Party D/E the opportunity to increase the pricing of their bid. The special committee received additional information from Party G regarding its ability to finance the transaction.

On July 5, 2017, the special committee met with representatives of Dorsey and ROTH to discuss Mr. Hedayat’s meeting with Party D/E. The special committee discussed Party D/E and Party G and Party G’s ability to finance a potential transaction.

Exclusivity with Party G

On July 6, 2017, the special committee, along with its legal and financial advisors, and the Board held meetings regarding the Proposal from Party G. Following recommendation by the special committee and approval by the Board, the company entered into the exclusivity agreement with Party G.

On July 14, 2017, Party G informed Mr. Larkin that additional foreign regulatory approvals would be required prior to closing a potential transaction.

On July 16, 2017, members of the special committee, along with its legal and financial advisors, discussed the terms of a draft merger agreement as well as the new information from Party G and its impact on the risks associated with completion of the transaction. Later that day, Messrs. Larkin and Hill spoke with a representative of Party G to request that a reverse break fee be escrowed as a result of the additional regulatory approvals. Party G refused the request for a reverse break fee and postponed further due diligence. Party G later agreed to meet on July 18 ^th to discuss commercial terms, but postponed the site visits.

On July 17, 2017, the special committee had a meeting with representatives of Dorsey & Whitney and ROTH to discuss the recent developments with Party G.

On July 18, 2017, representatives from Party G and members of the special committee and management met in Boise, Idaho to discuss the commercial terms of the transaction.

On July 24, 2017, Dorsey & Whitney distributed an initial draft of the merger agreement to counsel for Party G.

In late July, representatives from Party G resumed their due diligence and conducted site visits.

On August 3, 2017, Party G informed Mr. Larkin of their withdrawal from the process because, in Party G’s view, the company’s development assets were not what Party G desired. Party G indicated that it had concerns regarding San Emidio 2, Geysers and El Ceibillo. Later that day, the special committee met to discuss the withdrawal of Party G. The special committee directed Messrs. Hedayat and Pappas to contact Party F and Party D/E to determine whether those parties had any continued interest in the company. Those contacts were made following the meeting. Party G’s counsel confirmed to Dorsey & Whitney that the exclusivity agreement was terminated. Due to the lack of information from Party F regarding its source of financing or partner in a potential transaction, the special committee had significant concerns relating to the probability of completion of a transaction with Party F and did not pursue discussions further.

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Exclusivity with Party D/E

On August 7, 2017, the special committee recommended, and the Board approved, entering into an exclusivity agreement with Party D/E for a period of 30 days. The exclusivity agreement was entered into and due diligence commenced.

On August 9, 2017, Mr. Hedayat met with the representatives of Party E to discuss valuation of U.S. Geothermal projects, the relationship between Party D and Party E and other matters.

On September 5, 2017, the exclusivity period was extended for an additional 7 days until September 13, 2017. On September 13, 2017, the special committee was informed that Party D/E may be unable to confirm the initially proposed price of $6.25 based on their view of the tax equity/financing and pricing assumptions at San Emidio 2 and Geysers. The special committee sent a notice regarding the termination of the exclusivity period.

On September 21, 2017, the special committee was informed that Party D and Party E had ended their partnership relating to the joint proposal. During discussions with Party E throughout the process, Party E’s interest in U.S. Geothermal related to its operating assets and it expressed no interest in acquiring the entire company absent a partner such as Party D. The special committee had previously determined that a sale of only a portion of the assets of U.S. Geothermal was not the preferred structure or most beneficial to stockholders. For this reason, the special committee did not pursue a separate sale of the operating assets to Party E.

Exclusivity with Ormat

On September 22, 2017, Party D submitted a proposal without Party E which contained a proposed price per share of $5.40 which could be increased by an additional $0.85 per share assuming specified speculative milestones were met prior to closing. The closing price for the company’s common stock on September 22, 2017 was $3.94.

In mid-September 2017, Mr. Hedayat communicated with Ormat to discuss whether it had interest in renewing its proposal.

On September 25, 2017, the special committee, along with its legal and financial advisors, met to discuss the proposal received from Party D and determined that it was inadequate, no longer had the support of a strong financial partner in Party E and was unlikely to trigger an increase in price per share.

On September 28, 2017, the special committee and the Board each met, with representatives of Dorsey & Whitney and ROTH in attendance, to discuss the outstanding bids with Ormat and Party D. The special committee determined to go back to Party D to give them another opportunity to put together an offer that had no financing contingency and a higher price. The special committee discussed the terms of an exclusivity agreement with Ormat. The special committee recommended to the Board, and the Board authorized, that the Company pursue a transaction with Ormat as outlined in their initial proposal with a 45 day exclusivity agreement.

In late September, members of the special committee believed that the process might be winding down and discussed U.S. Geothermal’s operations and future as a stand-alone company. Mr. Hedayat reviewed operations and cash flows for U.S. Geothermal assuming it remained a stand-alone company, the development projects remained undeveloped (although it included a liquidation value of $10 million for the development portfolio in aggregate) as well as a number of other assumptions regarding costs and anticipated cash flow. This review, which was discussed with the members of the executive committee of the Board, placed a potential value (not trading price) of the outstanding shares at the end of 2018 of approximately $5.85 per share. The executive committee consists of Mr. Glaspey (the Interim CEO), as well as Messrs. Hill, Pappas and Hedayat (three of the four members of the special committee).

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From late September through late October, Dorsey & Whitney and Norton Rose Fulbright negotiated the terms of the nondisclosure agreement and exclusivity agreement between Ormat and U.S. Geothermal.

On October 3, 2017, the special committee received (i) a written proposal from Ormat to acquire the company at an indicative price of $5.75 per share of common stock and (ii) written confirmation from Party D of its September 22 proposal ($5.40 which could be increased by an additional $0.85 per share assuming specified speculative milestones were met prior to closing) without any price increase. The closing price for the company’s common stock on October 3, 2017 was $4.06.

On October 4, 2017, the special committee met to discuss the two proposals with input from Dorsey & Whitney.

The Board continued to consider the company’s alternatives and its strategy to best build stockholder value should the company not proceed with a sale transaction. As a result, during October 10-11, members of the executive committee of the Board met in Boise for meetings regarding the company’s strategy going forward as a stand-alone company. A focus of the executive committee was the pricing strategy used by U.S. Geothermal when bidding for PPAs. During mid-October, U.S. Geothermal adopted a revised, more aggressive pricing strategy when submitting bids.

During the first two weeks of October, 2017, Messrs. Pappas and Hedayat held multiple discussions with Ormat regarding its assumptions in the proposal letter and Ormat’s desire for a termination fee and to be reimbursed for expenses during the due diligence period if certain events occurred. On October 13, 2017, Mr. Hedayat sent Ormat proposed forms of a proposal letter and exclusivity agreement that had been prepared by Dorsey & Whitney.

On October 20, 2017, Party D submitted a revised proposal which contained an indicative bid of $5.60 per share with potential to increase the per share price to $6.25 based on the occurrence of specified speculative events prior to close. The closing price for the company’s common stock on October 20, 2017 was $3.91. On October 20 and 21, 2017, the special committee received a revised proposal and draft of the exclusivity agreement for Ormat from Norton Rose Fulbright.

On October 20, 2017, the special committee discussed the receipt and terms of the revised bid from Party D. Dorsey & Whitney reviewed the fiduciary duties of directors in the context of a sale of the company. In determining to proceed with Ormat, the special committee noted that the firm price in the Party D proposal was less than the Ormat proposal. The special committee discussed the events that would trigger the contingent price increase from $5.60 to $6.25 in the Party D offer and determined those events were highly speculative. Ultimately, the special committee concluded that Party D’s bid was economically inferior and less credible than the Ormat offer due to concerns over Party D’s ability to finance payment of the purchase price and Party D’s need to complete due diligence. The special committee also discussed the initial bid received in November 2016 from Party A with a price range of $5.30 to $5.93, as that proposal remained outstanding. The proposal from Party A would have been subject to increased U.S. regulatory requirements to complete the transaction, such as CFIUS, and could have also been subject to foreign currency control regulations. In addition, the midpoint of Party A’s price range was less than Ormat’s offer. As a result, and due to the special committee’s confidence in Ormat’s ability to complete the transaction, the special committee concluded that the Ormat offer remained superior to the offer from Party A.

On October 20, 2017, management informed the special committee that the required capital expenditures for certain expansion projects were increasing. This information, as well as recent maintenance issues, caused the members of the special committee to place less value on the expansion projects and its pricing expectations in any potential offer.

On October 22, 2017, the special committee met to discuss the revised proposal and exclusivity agreement sent by Ormat, with input from its legal advisor. The special committee concluded that aspects of the proposal needed clarity and that the exclusivity agreement was far too restrictive for an agreement of this nature. The special committee requested input from management regarding the terms of the exclusivity agreement.

Over several days in late October, Dorsey & Whitney and Norton Rose Fulbright discussed the language in the proposal letter and negotiated the terms of the exclusivity agreement, particularly with respect to the limited expense reimbursement provisions.

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On October 27, 2017, Dorsey & Whitney received an unsolicited inquiry from counsel to a private equity fund. Following discussions among special committee members, the special committee determined not to engage with a new party due to the current status of discussions with Ormat and the highly preliminary nature of the inquiry. Later that day, copies of the Ormat proposal and exclusivity agreement were distributed to the Board.

On October 30, 2017, Ormat submitted its revised non-binding proposal to acquire U.S. Geothermal at a price per share of $5.75, and Ormat and U.S. Geothermal entered into a nondisclosure agreement and an exclusivity agreement. The exclusivity period was for 40 days, with two automatic extensions for 10 days each under certain circumstances. Following the execution of the nondisclosure and exclusivity agreement, Ormat and its accounting, legal and tax advisors were given access to an electronic document data site and commenced due diligence efforts. Counsel for Ormat and U.S. Geothermal discussed the structure of the transaction, timing and the required regulatory approvals.

Negotiations with Ormat

On November 2, 2017, Dorsey & Whitney provided Norton Rose Fulbright a draft of the merger agreement.

In early November 2017, Mr. Hedayat had discussed with Ormat the commercial terms for the transaction and potential timing of a definitive agreement.

During November 13-16, 2017, representatives of Ormat met in Boise, Idaho with members of the special committee and management of U.S. Geothermal to discuss personnel issues, among other items, to participate in management presentations concerning various financial, operational other matters and to conduct site visits as part of Ormat’s due diligence process.

On November 14, 2017, U.S. Geothermal was notified that a recent PPA bid it had submitted for a PPA relating to Geysers, one of its development projects, was not accepted. For this particular RFP, geothermal and biomass projects were excluded because they were not “zero emission” resources. Due to the inability to enter into a PPA relating to Geysers, development at Geysers would likely be delayed which would result in increased costs related to that development. This delay, combined with increased capital costs at an expansion project and potentially increased transmission costs at San Emidio Phase II, also caused members of the special committee to lower the value it placed on U.S. Geothermal’s expansion and development projects.

On November 29, 2017, the special committee met and with input from Dorsey & Whitney discussed the previously proposed schedule for retention payments for certain non-executive level employees and determined that it would be in the best interests of U.S. Geothermal to establish a retention bonus pool of approximately $0.8 million in order to retain employees during any merger process.

On December 11, 2017, Norton Rose Fulbright distributed a draft of the merger agreement. The members of the special committee and management discussed the terms of the merger agreement among themselves prior to the meetings in New York planned for later that week.

On December 13, 2017, Messrs. Larkin, Pappas and Hedayat met with Mr. Blachar and Ms. Gazit from Ormat for dinner during which they discussed issues relating to pricing. The next day, the parties met again with their respective counsel. The discussion focused on high level commercial terms. Given the recent decline in U.S. Geothermal’s stock price, Ormat was concerned over the level of the premium. The closing price for the company’s common stock on December 12, 2017 was $3.44. In addition to the level of the premium, Ormat raised concerns with a number of working capital items and operational issues that impacted the proposed price per share that Ormat would be willing to pay. Ormat outlined potential pricing adjustments for working capital items (including transaction costs, change of control payments, retention payments and D&O insurance) and operational issues (asset retirement obligations, the value placed on Geysers, environmental concerns, tax equity matters) resulting in a revised range of $4.82 to $5.20. Following further discussion, Mr. Hedayat proposed $5.45 per share plus a special dividend of $0.10 per share under specified circumstances. Both parties agreed to discuss the potential price adjustments with their respective boards. Ormat requested a break fee of 4% plus expenses which was reduced to 3% of the merger consideration following further discussion. Ormat’s comments to the draft merger agreement also included a provision that would not permit U.S. Geothermal to seek specific performance in the event of breach by Ormat, which was rejected by U.S. Geothermal.

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Over the weekend of December 15-16, 2017, Mr. Pappas had further conversations with Mr. Blachar and Isaac Angel, the CEO of Ormat, regarding the size of the premium and the other issues raised by Ormat that impacted pricing. During these calls, Ormat first offered $5.40 in cash with a potential special dividend of up to $0.15 and later offered $5.45 per share.

On December 18, 2017, Messrs. Larkin, Pappas and Hedayat provided the Board with an update of the prior week’s discussions. The Board discussed pricing at length, including the specific issues raised by Ormat. There was a discussion of the trading history of the Company’s stock and its impact on the premium. The members of the special committee disregarded the concerns over the premium as the special committee did not regard the premium as relevant to the discussions regarding price. Dorsey & Whitney again reviewed for the Board its fiduciary duties in the context of a sale of the company. The Board discussed whether to abandon the merger process at this time and focus on the acquisition of additional assets and the long-term growth strategy for the company. At a continuation of the Board meeting later that day, Mr. Truelock of ROTH provided an update on the fairness opinion review and the impact of the expansion projects on the fairness review. Following a discussion on pricing, the Board instructed the special committee to seek a price per share in the range of $5.50 - $5.55.

On December 19, 2017, Messrs. Hedayat and Pappas spoke with Ormat regarding pricing and were informed that Ormat’s Board refused to increase its indicative bid above $5.45 per share.

On December 19, 2017, both the special committee and the Board held meetings to discuss pricing. The special committee recommended to the Board, and the Board approved, the extension of the exclusivity period to January 2, 2018, and the continuation of the merger negotiations with Ormat. The parties executed an extension of the exclusivity period until January 2, 2018.

Between December 22, 2017 and January 5, 2018, counsel to the parties negotiated the merger agreement. Among the points under discussion were the representations and warranties, covenants relating to treatment of employees, as well as the closing conditions in order to decrease the completion risk of the transaction. On December 27, 2017, the exclusivity period was further extended until January 15, 2018.

On January 5, 2018, Party D indicated to Mr. Glaspey that its prior offer revised on October 20 was still valid. Mr. Glaspey provided this information to the special committee. On January 8, 2017, the special committee met with Mr. Glaspey and representatives of Dorsey & Whitney and ROTH. Dorsey & Whitney reminded the special committee of its fiduciary duties in the context of a sale of the company. The special committee reviewed the current status of its negotiations with Ormat, and the increased risk associated with a transaction with Party D as a result of its incomplete due diligence and need to obtain financing. Based on input from Dorsey & Whitney and ROTH, the special committee felt that the 2.75% difference in price between the two offers was not significant enough to overcome the uncertainties of closing a transaction with Party D, as a result of the additional requirements to obtain financing. The special committee discussed seeking a higher price from Ormat in response to the reconfirmation of the offer from Party D. However, based on prior input from Ormat that its board had approved the price of $5.45 per share and would not pay more, the special committee determined that seeking an increased price from Ormat at this stage would be rejected and could put the transaction at risk. The special committee recommended to the Board that the company should continue to work with Ormat and that the credibility of the bid from Ormat and greater certainty of closing offset the slightly higher bid from Party D.

On January 9, 2018, the Board met to receive an update from the special committee. Mr. Larkin reviewed for the Board members the major legal and business issues outstanding with the merger agreement as well as the reconfirmation by Party D of its prior offer revised on October 20. Following a discussion by the Board of Party D’s offer, the concerns of the special committee relating to the higher risk of completion of a transaction with Party D, and the open issues relating to the merger agreement, the Board agreed with the special committee’s recommendation to continue to work toward the completion of a potential transaction with Ormat. The Board approved an extension of the exclusivity period until 5 p.m. MT on January 22, 2018.

Messrs. Larkin and Hill requested a meeting with Ormat to discuss the D&O indemnification and insurance issues and the conduct of the company between signing and closing. Those matters were instead discussed during telephone calls and electronic communications with representatives of Ormat.

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Between January 10th and 14th, counsel for the parties negotiated the merger agreement and revised the disclosure schedules.

In mid-January, the company updated its internal cash projections and 2018 budget. Following questions from Ormat regarding the updated 2018 budget, Mr. Hedayat discussed with Ms. Gazit, Head of Mergers and Acquisitions at Ormat, the reason for the changes in the budget. Ms. Gazit indicated that the impact of the updated budget may result in a reduced price per share in the merger. Mr. Hedayat rejected any reduction in the price.

On January 16, 2018, the special committee met, along with its legal counsel, to discuss the impact of the new budget on the negotiations with Ormat.

From January 17 through January 23, 2018, U.S. Geothermal and its advisors continued to negotiate open points on the draft merger agreement and disclosure schedules with Ormat and its advisors. The primary issues under discussion and review were representations and warranties relating to relating to leases and water rights, definitions relating to takeover proposals, closing conditions, the D&O insurance and indemnification provisions as well as the covenant regarding conduct of the company post-signing. The Board was provided with copies of the merger agreement and disclosure schedules over this period.

On January 18, 2018, the special committee met, along with Mr. Glaspey, Dorsey & Whitney and ROTH, to discuss the revisions to the merger agreement received from Norton Rose Fulbright and the open issues remaining. Among the issues discussed were the revisions to the definition of a Takeover Proposal. The special committee reviewed the revisions in detail to ensure that it would not adversely impact the ability of the Board to accept a superior proposal.

On January 19, 2018, counsel for the parties and a member of the special committee had a conference call to discuss open items in the merger agreement.

On January 23, 2018, upon being informed that the Ormat parent under the merger agreement would be Ormat Nevada, and not Ormat Technologies, the special committee requested and received financial information about Ormat Nevada in order to satisfy itself regarding Ormat Nevada’s ability to finance the transaction and the merger consideration.

On the evening of January 23, 2018, the special committee and the Board met with management, Dorsey & Whitney and ROTH to consider approval of the merger and the merger agreement. Dorsey & Whitney reminded the Board of its fiduciary duties which had been previously discussed with the Board at prior meetings. ROTH confirmed that it had no conflict of interest with respect to Ormat. Representatives of Dorsey & Whitney then reviewed terms of the draft merger agreement, including among other things, the conditions to closing, regulatory approvals, termination, termination fee, non-solicitation, superior proposal and specific performance provisions. Representatives of ROTH reviewed and discussed its financial analyses of the proposed merger. Thereafter, at the request of the special committee, representatives of ROTH rendered its oral opinion (which was subsequently confirmed in writing by delivery of ROTH’s written opinion addressed to the special committee dated as of the same date) that, as of January 23, 2018 and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by ROTH as set forth in the written opinion, the consideration to be received by the holders of shares of U.S. Geothermal’s common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The directors discussed the proposed terms and conditions of the merger agreement, the relative advantages and disadvantages of the merger from the point of view of U.S. Geothermal’s shareholders, compared to other available options, including continuing to operate U.S. Geothermal as a stand-alone, publicly-held entity, the likelihood of obtaining more favorable offers in light of the extensive sale process that had already been conducted and the various factors summarized under the heading “Reasons for the Merger” on page 29. Following further discussion among the directors, the special committee unanimously recommended to the Board that it approve the merger agreement. The Board accepted the special committee’s recommendation and unanimously voted to approve and adopt the merger agreement.

The following morning, prior to the opening of the U.S. stock markets, Ormat approved and executed the merger agreement, the parties exchanged signature pages and each issued a press release announcing the transaction.

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Upon execution of the merger agreement and the announcement of the transaction, any “standstill” provisions contained in the nondisclosure agreements entered into with the various parties, as described in this section, automatically terminated.

On February 23, 2018, ROTH became aware that its present value of cash flow analysis inadvertently omitted certain components of the Company’s cash flow projections, as more fully described in the section entitled “— Opinion of U.S. Geothermal’s Financial Advisor” on page 37 and Annex C. The recalculated present value of cash flow analysis resulted in a lower range of equity values for the Company of $3.56 to $4.25 per share as opposed to a range of $4.28 to $5.01 per share in the prior analysis. On February 28, 2018, the special committee and the Board met with Dorsey & Whitney and ROTH. At this meeting ROTH presented the results of its recalculated present value of cash flow analysis as of January 23, 2018, the date of its opinion, and reviewed the differences in ROTH’s prior analysis that resulted from the computational error. Notwithstanding the computational error, ROTH confirmed to the special committee that, based on the information available to ROTH (other than with respect to the computational error noted above) and the facts and circumstances as they existed as of January 23, 2018, and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations set forth in ROTH’s opinion, dated January 23, 2018, ROTH’s recalculated present value of cash flow analysis did not change ROTH’s opinion that the merger consideration of $5.45 in cash per share to be received by the holders of Company Shares was fair, from a financial point of view, to such holders. Following receipt of ROTH’s confirmation, the special committee and Board members present at the February 28, 2018 meeting unanimously confirmed their view that the merger agreement was in the best interests of the Company and its stockholders.

U.S. Geothermal Without the Merger

If the merger agreement is not approved by our stockholders or if the merger is not consummated for any other reason, our stockholders will not receive any payment for their shares of our common stock. Instead, U.S. Geothermal will remain a public company, our common stock will continue to be listed and traded on the NYSE American and registered under the Exchange Act and we will continue to file periodic reports with the SEC. In addition, if the merger is not completed, we expect that management will operate the business in a manner similar to that in which it is being operated today and that our stockholders will continue to be subject to the same risks and opportunities as they currently are, including, among other things, general industry, economic and market conditions. If the merger is not consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of our common stock. From time to time, if the merger is not consummated, the Board will evaluate and review our business operations, properties, capitalization and, among other things, make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to maximize stockholder value. If the merger agreement is not approved by our stockholders or if the merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to us will be offered or that our business, prospects or results of operations will not be adversely impacted.

If the merger agreement is terminated, under specified circumstances, we may receive from or be required to pay Ormat a termination fee, as described under “The Merger Agreement—Termination Fees and Expenses” on page 71.

The Recommendation of U.S. Geothermal’s Board and U.S. Geothermal’s Reasons for the Merger

Following the unanimous recommendation of the special committee, U.S. Geothermal’s Board, by unanimous vote, has determined that it is advisable and in the best interests of U.S. Geothermal and its stockholders to consummate the merger and the other transactions contemplated by the merger agreement, and unanimously recommends that U.S. Geothermal’s stockholders vote FOR the proposal to adopt and approve the merger agreement and the transactions contemplated by the merger agreement. When you consider the Board’s recommendation, you should be aware that U.S. Geothermal’s directors may have interests in the merger that may be different from, or in addition to, your interests. These interests are described in “—Interests of the Company’s Directors and Executive Officers in the Merger” on page 31.

In determining that the merger and the other transactions contemplated by the merger agreement are advisable and in the best interests of U.S. Geothermal and its stockholders, the Board consulted with management and its financial and legal advisors and considered a number of factors, including the following:

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30

The Board also identified and considered a number of countervailing factors and risks to U.S. Geothermal and its stockholders relating to the merger and the merger agreement, including the following:

The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive but includes the material factors considered by the Board. In view of the complexity and wide variety of factors considered, the Board did not find it useful to and did not attempt to quantify, rank or otherwise assign weights to these factors. In addition, the Board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather the Board conducted an overall analysis of the factors described above, including discussions with U.S. Geothermal’s management and its financial and legal advisors. In considering the factors described above, individual members of the Board may have given different weights to different factors.

Interests of the Company’s Directors and Executive Officers in the Merger

Stockholders should be aware that U.S. Geothermal’s executive officers and directors are subject to agreements or arrangements that may provide them with interests that differ from, or are in addition to, those of stockholders generally. In particular, as further described below, U.S. Geothermal’s executive officers are entitled to certain benefits if they are involuntarily terminated without cause or for good reason within certain periods before or following the consummation of the merger.

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The Board was aware of these agreements and arrangements during its deliberations of the merits of the merger agreement and in determining the recommendation set forth herein.

For purposes of determining Golden Parachute Compensation, our “named executive officers” are:

Consideration Payable for Shares Held Pursuant to the Merger Agreement

The executive officers and directors of U.S. Geothermal who hold shares at the closing of the merger will be eligible to receive the same merger consideration as the other U.S. Geothermal stockholders with respect to each outstanding share held. The executive officers and directors U.S. Geothermal held, in the aggregate, 3,290,869 shares of U.S. Geothermal common stock (or approximately 16.9% of all outstanding shares) as of December 31, 2017, excluding shares issuable upon exercise of options to purchase shares.

The table below sets forth the number of shares held by the executive officers and directors of U.S. Geothermal as of the end of the 2017 fiscal year (December 31, 2017), excluding shares issuable upon exercise of options to purchase shares, and the value (at $5.45 per share) they would receive for those shares upon consummation of the merger.

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The above table does not reflect acquisitions and dispositions of shares by executive officers or directors subsequent to December 31, 2017, including any shares issued upon exercise of options to purchase shares, which are discussed below.

Consideration Payable for Equity Awards Pursuant to the Merger Agreement

As described below under “The Merger Agreement—Treatment of Options” on page 56, the merger agreement provides that, at the effective time, each of U.S. Geothermal’s options, whether or not vested, will be cashed out for an amount equal to the excess, if any, of the merger consideration over the per share exercise price of such option.

The table below sets forth the number U.S. Geothermal stock options held by each executive officer and director as of December 31, 2017, and the corresponding payment to which the holder will be entitled, assuming each such option remains outstanding at or immediately prior to the effective time of the merger.

(1) Each director in the table would receive a cash payment upon resigning from the Board at the time of the change of control. The amount of the payment to a director would equal the fees paid to that director for services as a director during the 12 months prior to the date of resignation.
(2) To the extent that the cost of the “tail” officers’ and directors’ liability policy (as further described in “The Merger—Indemnification and Insurance” on page 36) is greater than 250% of the current aggregate annual premium up to the maximum premium (300%), Mr. Heydayat and Mr. Pappas have agreed to forfeit up to $40,000 each of the directors’ fees to which they would otherwise be entitled.

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Change in Control Severance Benefits for Executive Officers

Pursuant to certain provisions in their employment agreements with the Company, the executive officers of U.S. Geothermal will receive severance benefits upon qualified terminations of employment within 12 months following a change of control of U.S. Geothermal, such as the consummation of the proposed merger. Accordingly, if a U.S. Geothermal executive officer is terminated without “cause”, or resigns for “good reason”, within 12 months following the merger, the executive officer will be entitled to the following benefits:

Under each executive officer employment agreement, “cause” means:

Under each executive officer employment agreement, “good reason” means the occurrence of any of the following conditions set forth below, provided , that the executive officer must provide notice to the Company within 60 days of the existence of such condition and the Company will have 30 days from receipt of such notice to remedy the condition, and the termination of employment occurs no later than two years following the initial existence of such condition. If the condition is not remedied within such 30 day period, the following conditions will constitute “good reason”:

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Compensation Proposal

The following table sets forth the golden parachute compensation potentially payable to or realizable by the named executive officers in connection with the merger based on compensation and benefits in effect as of March 1, 2018 and assuming the triggering event occurred on March 1, 2018. The benefits in the following table reflect the double-trigger benefits that will apply if the termination events described above under “—Change in Control Severance Benefits for Executive Officers” on page 34 apply. Payments will be made by U.S. Geothermal, as the surviving corporation.

(1) Mr. Gilles’s employment agreement was terminated in July 2017. He is entitled to one lump sum payment in the amount equal to 1.5 times the sum of his second year base salary ($410,000) plus annual target bonus (100% of the annual base salary), due to the termination of his employment agreement. In the event of a change of control within 12 months following such termination, he will be entitled to an additional lump sum payment as described in the table above.
(2) Pursuant to Mr. Glaspey’s employment agreement, in the event of a qualified termination within 12 months following a change of control of U.S. Geothermal, he will receive a cash lump sum payment in an amount equal to 24 monthly installments of his base annual salary ($284,180).
(3) Pursuant to Mr. Hawkley’s employment agreement, in the event of a qualified termination within 12 months following a change of control of U.S. Geothermal, he will receive a cash lump sum payment in an amount equal to 18 monthly installments of his base annual salary ($182,962).
(4) Pursuant to Mr. Zurkoff’s employment agreement, in the event of a qualified termination within 12 months following a change of control of U.S. Geothermal, he will receive a cash lump sum payment in an amount equal to 18 monthly installments of his base annual salary ($195,840).
(5) The aggregate dollar value of in-the-money option awards for which vesting will be accelerated in connection with the merger.
(6) In the event of a qualified termination within 12 months following a change of control of U.S. Geothermal (a) Mr. Gilles’ employment agreement entitles him to a lump sum cash payment equal to the Company’s contribution to the monthly cost of the health care benefits to which he was entitled while employed multiplied by 36 (a portion of which will be payable whether or not the merger is completed due to the termination of his employment in July 2017), and (b) Messrs. Glaspey, Hawkley and Zurkoff’s employment agreements entitle each of them to the Company’s contribution to the cost of health care continuation coverage for the number of months to which they are entitled of compensation upon a termination and change of control, as described under “—Change in Control Severance Benefits for Executive Officers” on page 34, with the amounts listed in the table following each of their names representing the aggregate of the Company’s contribution to the estimated health care insurance premiums for the applicable duration.

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The specific circumstances that trigger each of these payments and the manner in which they will be made is summarized in the footnotes above. The payments will be made, if at all, by the company, as the surviving corporation of the merger, except that a portion of the payments to Mr. Gilles will be made by the company without regard to whether the merger occurs as noted in the footnote above. Except for the triggering events summarized in the footnotes above, there are no material conditions or obligations applicable to the receipt of those payments or benefits. The agreements contain provisions relating to non-solicitation for 12 months, non-competition for 12 months and confidentiality, except that Mr. Zurkoff’s agreement does not contain a non-solicitation provision. The company may seek damages or other relief for breach of these provisions. A “qualified termination” consists of a termination of the individual by the company without “cause” or resignation by the individual for “good reason”, which is described in more detail under “—Change of Control Severance Benefits for Executive Officers” on page 34.

U.S. Geothermal Board of Directors Following the Merger

Following the merger, and pursuant to the terms of the merger agreement, the members of the Board will be replaced by the Board of merger sub.

Indemnification and Insurance

The merger agreement provides that for a period of six years after the effective time of the merger, Ormat will cause U.S. Geothermal, as the surviving corporation, to indemnify and hold harmless U.S. Geothermal’s (and its subsidiaries’) present and former officers, directors, employees and agents (“indemnitees”) with respect to acts or omissions occurring at or prior to the effective time of the merger, to the same extent such indemnitees are entitled to indemnification as of the date of the merger agreement by U.S. Geothermal or any of its subsidiaries pursuant to applicable law, U.S. Geothermal’s charter documents, the organizational documents of any applicable subsidiaries or any indemnification agreements in existence on the date of the merger agreement.

In addition, for six years after the effective time of the merger:

The merger agreement further provides that, prior to the effective time, U.S. Geothermal may purchase, for an aggregate amount not to exceed 300% of the current aggregate annual premium (the “maximum premium”), a six-year “tail” officers’ and directors’ liability insurance policy providing coverage for the indemnitees on terms and conditions providing substantially equivalent benefits as the current policies of directors’ and officers’ liability insurance maintained by U.S. Geothermal and its subsidiaries with respect to matters existing or occurring prior to the effective time, covering without limitation the transactions contemplated in the merger agreement; provided , however , that if the premium for such tail policy shall exceed the maximum premium, U.S. Geothermal shall provide or cause to be provided a tail policy for the applicable individuals with the best coverage as shall then be available at an annual premium equal to the maximum premium. After the effective time, U.S. Geothermal, as the surviving corporation, shall cause such policy to be maintained in full force and effect, for its full term, and to honor all of its obligations thereunder and neither Ormat nor U.S. Geothermal, as the surviving corporation, shall have any further obligations pursuant to the applicable provisions in the merger agreement.

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Opinion of U.S. Geothermal’s Financial Advisor

Pursuant to an engagement letter, dated December 27, 2016, the special committee of the Board retained ROTH to act as its financial advisor in connection with the merger and, at the special committee’s request, to render an opinion to the special committee as to the fairness, from a financial point of view, of the consideration to be received in the merger by the U.S. Geothermal stockholders.

On January 23, 2018, ROTH rendered its oral opinion, subsequently confirmed in writing, to the special committee that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth in the opinion, the merger consideration of $5.45 in cash per share to be received by the holders of shares of U.S. Geothermal’s common stock was fair, from a financial point of view, to such holders.

The full text of ROTH’s written opinion, dated January 23, 2018, is attached to this proxy statement as Annex C and is incorporated by reference herein. Stockholders of the Company are urged to read the entire opinion carefully and in its entirety to learn about the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by ROTH in rendering its opinion. The analysis performed by ROTH should be viewed in its entirety; none of the methods of analysis should be viewed in isolation when reaching a conclusion on whether the consideration was fair. The opinion addresses only the fairness of the merger consideration, from a financial point of view, to holders of shares of U.S. Geothermal’s common stock, as of the date of the opinion, and does not address the merits of the Company’s underlying business decision to proceed with or effect the merger or the likelihood of consummation of the merger. ROTH expressed no opinion or recommendation to the special committee whether the Company should proceed with the merger. ROTH’s opinion was directed to the special committee in connection with its consideration of the merger and was not intended to be, and does not constitute, a recommendation to any stockholder as to how such stockholder should vote with respect to the merger or any other matter.

In arriving at its opinion, ROTH:

For purposes of rendering its opinion, ROTH relied upon and assumed, without assuming liability or responsibility for independent verification, the accuracy and completeness of all information that was publicly available or was furnished, or otherwise made available, to ROTH or discussed with or reviewed by or for ROTH. ROTH further assumed that the financial information provided by the Company was prepared on a reasonable basis in accordance with industry practice, and that management of the Company was not aware of any information or facts that would make any information provided to ROTH incomplete or misleading. Without limiting the generality of the foregoing, for the purpose of its opinion, ROTH assumed that with respect to financial forecasts, estimates and other forward-looking information reviewed by it, that such information was reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of the management of the Company as to the expected future results of operations and financial condition of the Company. ROTH did not express any opinion as to any such financial forecasts, estimates or forward-looking information or the assumptions on which they were based. In addition, with respect to such financial forecasts provided to and examined by ROTH, ROTH noted that projecting future results of any company, partnership, venture or asset is inherently subject to uncertainty.

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In connection with its opinion, ROTH assumed and relied upon, without independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by ROTH. ROTH’s opinion did not address any legal, regulatory, tax or accounting issues. In arriving at its opinion, ROTH assumed that the executed merger agreement would be in all material respects identical to the draft merger agreement reviewed by ROTH. ROTH relied upon and assumed, without independent verification, that (i) the representations and warranties of all parties set forth in the merger agreement and all related documents and instruments that were referred to therein were true and correct, (ii) each party to the merger agreement would fully and timely perform all of the covenants and agreements required to be performed by such party, (iii) the merger would be consummated pursuant to the terms of the merger agreement without amendments thereto, and (iv) all conditions to the consummation of the merger would be satisfied without waiver by any party of any conditions or obligations thereunder. Additionally, ROTH assumed that all the necessary regulatory approvals and consents required for the merger would be obtained in a manner that would not adversely affect the Company or the contemplated benefits of the merger.

In arriving at its opinion, ROTH did not perform any appraisals or valuations of any specific assets or liabilities (fixed, contingent or other) of the Company and was not furnished or provided with any such appraisals or valuations. Without limiting the generality of the foregoing, ROTH undertook no independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities to which the Company was a party or may be subject, and at the direction of the special committee and with its consent, ROTH’s opinion made no assumption concerning, and therefore did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters (other than to the extent set forth in the merger agreement or the financial information provided to ROTH by or on behalf of the Company).

ROTH’s opinion was based upon the information available to it and facts and circumstances as they existed and were subject to evaluation on the date thereof; events occurring after the date thereof could materially affect the assumptions used in preparing ROTH’s opinion. ROTH did not express any opinion as to the price at which the Company’s shares may trade following announcement of the merger or at any future time. ROTH did not undertake to reaffirm or revise its opinion or otherwise comment upon any events occurring after the date thereof and expressly disclaimed any such obligation to update, revise or reaffirm its opinion subsequent to the date thereof.

ROTH’s opinion addressed only the fairness, from a financial point of view and as of the date thereof, of the merger consideration of $5.45 in cash per share to be received by the holders of the Company’s common stock in the merger. ROTH’s opinion did not express any view on any other aspect of the merger, including, without limitation, the fairness of the merger to the holders of any other class of securities, creditors or other constituencies of the Company. In addition, ROTH did not express an opinion about the fairness of the amount or nature of any compensation payable or to be paid to any of the officers, directors or employees of the Company, whether or not relative to the merger. The issuance of ROTH’s opinion was approved by a fairness opinion committee of ROTH.

On February 23, 2018, ROTH became aware that its present value of cash flow analysis inadvertently omitted certain components of the Company’s cash flow projections. Specifically, ROTH’s analysis omitted the Company’s projections for (i) debt and interest payments of Idaho USG Holdings and (ii) the release of restricted cash for Neil Hot Springs in 2035, which resulted in a computational error in its analysis. At the special committee’s request, ROTH recalculated its present value of cash flow analysis to correct such computational error. On February 28, 2018, ROTH presented to the special committee the results of its recalculated present value of cash flow analysis as of January 23, 2018, the date of its opinion, and reviewed the differences in ROTH’s prior analysis that resulted from the computational error. ROTH noted that its recalculated present value of cash flow analysis resulted in a lower range of equity values for the Company of $3.56 to $4.25 per share as opposed to a range of $4.28 to $5.01 per share in its prior analysis. Notwithstanding the computational error, ROTH confirmed to the special committee that, based on the information available to ROTH (other than with respect to the computational error noted above) and the facts and circumstances as they existed as of January 23, 2018, and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations set forth in ROTH’s opinion, dated January 23, 2018, ROTH’s recalculated present value of cash flow analysis did not change ROTH’s opinion that the merger consideration of $5.45 in cash per share to be received by the holders of Company Shares was fair, from a financial point of view, to such holders. The summary set forth below under “Present Value of Cash Flow Analysis” includes ROTH’s analysis of the present value of cash flows as recalculated and presented to the special committee on February 28, 2018. The computational error did not affect any other part of ROTH’s financial analysis.

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Summary of Material Financial Analysis

The following is a summary of the material financial analyses performed by ROTH and reviewed by the special committee in connection with ROTH’s opinion relating to the merger and does not purport to be a complete description of the financial analyses performed by ROTH. The rendering of an opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, this summary does not purport to be a complete description of the analyses performed by ROTH or of its presentation to the special committee on January 23, 2018 or February 28, 2018. The order of analyses described below does not represent the relative importance or weight given to those analyses by ROTH. Some of the summaries of the financial analyses include information presented in tabular format. In order to fully understand ROTH’s financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of ROTH’s financial analyses.

In performing its analyses, ROTH made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company or any other parties to the merger agreement. ROTH does not assume any responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below.

Selected Publicly Traded Comparable Companies Analysis. In order to assess how the public market values shares of publicly traded companies similar to the Company, ROTH reviewed and compared certain financial information relating to the Company with selected companies, which, in the exercise of its professional judgment and based on its knowledge of the industry, ROTH deemed similar to the Company. Although none of the selected companies is identical to the Company, ROTH selected these companies because they had publicly traded equity securities and were deemed to be similar to the Company in one or more respects, including the nature of their business, size, financial performance, geographic concentration and listing jurisdiction. The selected comparable companies are:

For the Company and each of the selected companies, ROTH calculated and compared various financial multiples and ratios of the Company and the selected comparable companies based on each respective company’s public filings for historical information and third-party research estimates for forecasted information.

In its review of the selected companies, ROTH considered, among other things, (i) market capitalizations (computed using closing share prices as of January 23, 2018), (ii) enterprise values (“EV”), (iii) EV as a multiple of reported earnings before interest, tax, depreciation and amortization (“EBITDA”) for the latest twelve-month period (“LTM”) as of September 30, 2017 and estimated EBITDA for calendar years 2017 and 2018, (iv) price to LTM and estimated calendar year 2017 and 2018 earnings, (v) projected growth rates for calendar years 2015 to 2016 and 2016 to 2017, and (vi) LTM gross margins, EBITDA margins and net income margins. This information and the results of these analyses are summarized in the following table:

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Notes to the table:

ROTH noted that, although the selected companies were used for comparison purposes, no business of any selected company was either identical or directly comparable to the Company’s business. Accordingly, ROTH’s comparison of selected companies to the Company and analyses of the results of such comparisons was not purely mathematical, but instead necessarily involved complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the relative values of the selected companies and the Company.

ROTH noted that the resulting multiples for the Company at the merger consideration of $5.45 per share was either at or above the high end of the various selected publicly traded comparable company multiples.

Selected Precedent Transaction Analysis. ROTH reviewed and compared the purchase prices and financial multiples paid in selected other transactions, primarily in the geothermal electricity project management and generation space, from January 1, 2014 to January 22, 2018 that had publicly available data and that ROTH, in the exercise of its professional judgment, determined to be relevant. For each of the selected transactions, ROTH calculated and compared the resulting enterprise value in the transaction as a multiple of LTM EBITDA. Such multiples for the selected transactions were based on publicly available information at the time of the relevant transaction. The selected transactions analyzed are set out in the following table:

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ROTH noted that, although the selected transactions were used for comparison purposes, no business of any selected company was either identical or directly comparable to the Company’s business. Accordingly, ROTH’s comparison of selected companies to the Company and analyses of the results of such comparisons was not purely mathematical, but instead necessarily involved complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the relative values of the selected companies and the Company.

ROTH noted that the EV to LTM EBITDA multiple for the merger at the merger consideration of $5.45 per share was above the high end of the EV to LTM EBITDA multiples for the comparable transactions.

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Premium Paid Analysis . ROTH reviewed the premia paid or offered in public acquisitions in the utilities, mining and industrials space from January 1, 2017 to January 22, 2018, excluding acquisitions under $10 million in transaction value. The selected transactions analyzed are set out in the following table.

For each transaction above, ROTH calculated the premium per share paid or offered in the transaction by comparing the announced transaction value per share to the target company’s closing share price one day prior to the announcement of the transaction, one week prior to the announcement of the transaction and four weeks prior to the announcement of the transaction.

ROTH noted that the Company’s premium based on the merger consideration of $5.45 per share was above the median for the premium to the one day closing price and at the high end of the range of the selected premia to the one week and four week closing prices.

52-Week High and Low. ROTH reviewed the trading prices of the Company’s shares over the 52-week period prior to the announcement of the merger. The following is the Company’s 52-week share price and volume chart:

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In ROTH’s professional opinion, the 52-week high and low share price are more relevant to investors’ decisions than prior periods. ROTH noted that the merger consideration of $5.45 per share was above the highest closing price of the Company’s shares over the prior 52 weeks.

Present Value of Cash Flow Analysis . ROTH performed an analysis of the net present value of cash flows of the Company by calculating ranges of the estimated net present value of the unlevered, after-tax free cash flows attributable to stockholders of the Company that the Company forecasted to generate from January 1, 2018 through fiscal year 2047. All of the information used in ROTH’s analysis was based on publicly available sources and the financial projections provided by the Company’s management, which internal financial projections can be found under the caption “—Company Financial Projections” on page 45. The following tables set forth the free cash flows and calculations used in ROTH’s analysis:

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In performing its net present value of cash flow analysis, ROTH calculated ranges of the estimated present values of the Company’s unlevered, after-tax free cash flows attributable to stockholders of the Company that the Company forecasted to generate from January 1, 2018 through fiscal year 2047 by applying discount rates ranging from 8.0% to 10.0% for the Company’s operating and expansion projects and 14.0% to 16.0% for the Company’s development projects, reflecting ROTH’s estimates of the Company’s cost of capital for such projects. The tables above are based on the midpoint of the discount ranges.

ROTH then deducted outstanding debt and added outstanding cash and cash equivalents from the Company’s balance sheet as of December 31, 2017 to determine a range of implied equity values of the Company. The net present value of cash flow analysis implied a range of equity values for the Company of $3.56 per share to $4.25 per share.

ROTH noted that the merger consideration of $5.45 per share was above the high end of the range of the implied equity value per share of the Company based on the net present value cash flow analysis.

General.

The summary set forth above does not contain a complete description of the analyses performed by ROTH, but does summarize the material analyses performed by ROTH in rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. ROTH believes that its analyses and the summary set forth above must be considered as a whole and that selecting portions of its analyses or of the summary, without considering the analyses as a whole or all of the factors included in its analyses, would create an incomplete view of the processes underlying the analyses set forth in the ROTH opinion. In arriving at its opinion, ROTH considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Instead, ROTH made its determination as to fairness on the basis of its experience and financial judgment after considering the results of all of its analyses. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that this analysis was given greater weight than any other analysis. In addition, the ranges of valuations resulting from any particular analysis described above should not be taken to be ROTH’s view of the actual value of the Company.

As described above, ROTH’s opinion was only one of many factors considered by the special committee and the Board in making its determination to approve the merger. ROTH was not requested to and did not solicit any expressions of interest from any other parties with respect to any business combination with the Company.

ROTH is a full service securities firm engaged in securities trading and brokerage activities, as well as providing investment banking and other financial services. In the past two years, no material relationship existed between the Company and/or its affiliates and ROTH and/or its affiliates pursuant to which compensation, other than a $75,000 fee for general financial advisory services, was received by ROTH or its affiliates as a result of such relationship. In the ordinary course of business, ROTH and its affiliates may acquire, hold or sell, for it and its affiliates’ own accounts and for the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of the Company and the other parties to the merger, and, accordingly, may at any time hold a long or a short position in such securities. In addition, ROTH and its affiliates may in the future provide investment banking and other financial services to the parties of the merger for which ROTH would expect to receive compensation.

ROTH is acting as financial advisor to the special committee of the Company’s Board in connection with the merger. Pursuant to its engagement letter with ROTH, the Company has agreed to pay ROTH (i) a fixed fee upon the initial delivery of its fairness opinion to the special committee of $350,000, (ii) an additional fee of $100,000 if, at the Company’s request, ROTH delivers a bring down fairness opinion, as well as (iii) a cash advisory fee of $500,000 upon the closing of the merger, which shall be reduced by the fees paid to ROTH for the initial fairness opinion and any bring down fairness opinion. The fees paid for the initial fairness opinion and any bring down fairness opinion are not contingent upon the merger closing. These fees were determined by ROTH and proposed to the special committee. In addition, the Company has agreed to indemnify ROTH for certain liabilities that may arise out of its engagement by the special committee and the rendering of ROTH’s opinion.

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Company Financial Projections

Although U.S. Geothermal periodically may issue limited financial guidance, it does not, as a matter of course, develop or publicly disclose long-term projections or internal projections of our future financial performance, revenues, earnings, financial condition or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, in connection with the evaluation of the merger by the special committee and the Board, the special committee and the Board considered certain non-public unaudited prospective financial information provided by our management relating to U.S. Geothermal for the fiscal years ending 2018 through 2047. These projections were also provided to ROTH for its use and reliance in connection with its financial analyses and opinion summarized under “The Merger—Opinion of U.S. Geothermal’s Financial Advisor ” on page 37.

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