"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE [•INSERT THE DATE THAT IS FOUR MONTHS AND
A DAY AFTER THE DISTRIBUTION DATE•]."

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED UNLESS AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IS AVAILABLE, AND, UNLESS
THE HOLDER IS OR IS EXERCISING ON BEHALF OF THE ORIGINAL HOLDER AND IS AN
ACCREDITED INVESTOR AS DEFINED IN RULE 501(a) OF REGULATION D UNDER THE U.S.
SECURITIES ACT, THE HOLDER HAS DELIVERED AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY TO SUCH EFFECT.

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY: (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE U.S. SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 904 OF REGULATIONS UNDER THE U.S. SECURITIES ACT IF AVAILABLE, (D) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE
144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY STATE
SECURITIES LAWS, OR (E) WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, PURSUANT
TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS; PROVIDED THAT, IN CONNECTION WITH A TRANSFER
PURSUANT TO (C), (D) OR (E) ABOVE, AN OPINION OF COUNSEL, OF RECOGNIZED STANDING
REASONABLY SATISFACTORY TO THE COMPANY HAS BEEN PROVIDED TO THE COMPANY TO SUCH
EFFECT.

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-2-

WARRANTS TO PURCHASE COMMON SHARES

OF

U.S. GEOTHERMAL INC.

 

__________________

CERTIFICATE

NUMBER •

___________________

 

___________________

•
WARRANTS

___________________

 

THIS CERTIFIES THAT, for value received, • (the "Holder") is entitled, at any
time during the Exercise Period (as herein defined), to purchase, at the
Exercise Price (as herein defined), one share of common stock (a “Common Share”)
in the capital of U.S. GEOTHERMAL INC., a Delaware corporation (the "Company"),
in respect of each Warrant evidenced by this Warrant certificate, by
surrendering to the Company at its principal office located at 1505 Tyrell Lane,
Boise, Idaho USA, 83706, Attention: Daniel Kunz, this Warrant certificate,
together with a Subscription Form, duly completed and executed, and a bank
draft, certified cheque or wire transfer payable to the order of the Company, in
an amount equal to the product of the Exercise Price multiplied by the number of
Common Shares stipulated in the Subscription Form as being subscribed for
pursuant to the exercise of the Warrants evidenced by this Warrant certificate.

The Warrants may not be exercised unless an exemption from the registration
requirements of the United States Securities Act of 1933, as amended (the “U.S.
Securities Act”) and applicable state securities laws is available to the holder
and the holder has furnished an opinion of counsel of recognized standing in
form and substance satisfactory to the Company to such effect; provided,
however, that the undersigned will not be required to deliver an opinion of
counsel in connection with its exercise of the Warrants on its own behalf, or on
behalf of the original beneficial purchaser for which it is subscribing for
Units hereunder (if any), at a time when it, and such original beneficial
purchaser (if any), are accredited investors as defined under the U.S.
Securities Act.

1.

Definitions

1.1       In this Warrant, including the preamble, unless there is something in
the subject matter or context inconsistent therewith, the following expressions
shall have the following meanings namely:

--------------------------------------------------------------------------------

-3-

 

(a)

"Business Day” means a day which is not a Saturday, Sunday or civic or statutory
holiday in Vancouver, British Columbia or Boise, Idaho;

 

(b)

“Closing Date” means April •, 2008, or such other date as the Company may
designate;

 

(c)

"Common Shares" means the common shares without par value in the capital of the
Company as such shares are constituted on the Closing Date, as the same may be
reorganized, reclassified or redesignated pursuant to any of the events set out
in Part 10 hereof;

 

(d)

“Exercise Period” means at any time during the 24 month period of time
commencing on the Closing Date;

 

(e)

“Exercise Price" means USD$3.00 per Common Share;

 

(f)

"Expiry Time" means 4:00 o'clock in the afternoon, Vancouver time, on the last
day of the Exercise Period;

 

(g)

“person" means an individual, corporation, partnership, unincorporated
syndicate, unincorporated organization, trust, trustee, executor, administrator,
or other legal representative, or any group or combination thereof;

 

(h)

"Subscription Form" means the form of subscription annexed hereto as Appendix
"1";

 

(i)

“Unit” means a unit of the Company consisting of one (1) common share of the
Company and one half of one Warrant; and

 

(j)

“Warrants” means the common share purchase warrants of the Company evidenced by,
and governed by the terms of, this Warrant certificate.

1.2       Reference to "this Warrant certificate", "Warrant", "herein",
"hereby", "hereof", "hereto", "hereunder" and similar expressions mean or refer
to this Warrant certificate and any deed or instrument supplemental or ancillary
thereto and any appendices or schedules hereto or thereto and not to any
particular article, section, subsection, clause, subclause or other portion
hereof.

2.

Exercise Period

2.1

The Warrants shall be exercisable at any time by the Holder during the Exercise
Period.

3.

Expiry Time

3.1       After the Expiry Time, all rights under any Warrants evidenced hereby
which remain unexercised at the Expiry Time shall wholly cease and terminate and
such Warrants shall be null and void and of no value or effect.

4.

Exercise Procedure

 

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-4-

4.1       The Holder may exercise its rights hereunder to purchase Common Shares
during the Exercise Period by delivering to the Company in accordance with Part
24 hereof:

 

(a)

this Warrant certificate, with the Subscription Form duly completed and executed
by the Holder or its legal representative or attorney, duly appointed by an
instrument in writing in form and manner satisfactory to the Company; and

 

(b)

a bank draft or certified cheque payable, or wire transfer confirmation in
writing evidencing payment, to the order of the Company, in an amount equal to
the product of the Exercise Price multiplied by the number of Common Shares
stipulated in the Subscription Form as being subscribed for pursuant to the
exercise of the Warrants evidenced by this Warrant certificate.

5.

Entitlement to Certificate

5.1       Upon delivery and payment as provided in Part 4, the Company shall
cause to be issued to the Holder the Common Shares subscribed for up to the
maximum number that the Holder is entitled to purchase pursuant to this Warrant
certificate and the Holder shall become a shareholder of the Company in respect
of such Common Shares with effect from the date of such delivery and payment and
shall be entitled to delivery of a certificate or certificates evidencing such
Common Shares and the Company shall cause such certificate or certificates to be
delivered to the Holder in accordance with Part 24 hereof within three (3)
Business Days of such delivery and payment.

6.

Partial Exercise

6.1       The Holder may subscribe for and purchase a number of Common Shares
less than the number the Holder is entitled to purchase pursuant to this Warrant
certificate. In the event of any such partial subscription and purchase prior to
the Expiry Time, the Holder shall be entitled to receive, without charge, a new
Warrant certificate in respect of the balance of the Common Shares of which the
Holder was entitled to purchase pursuant to this Warrant certificate and which
were then not purchased.

7.

No Fractional Shares

7.1       Notwithstanding any adjustments provided for in Part 10 hereof or
otherwise, the Company shall not be required upon the exercise of any Warrants
to issue fractional Common Shares in satisfaction of its obligations hereunder.
To the extent that the Holder would be entitled to purchase a fraction of a
Common Share, such right may be exercised in respect of such fraction only in
combination with other rights which, in the aggregate, entitle the Holder to
purchase a whole number of Common Shares. If the number of Common Shares to
which the

Holder would otherwise be entitled upon exercise is not a whole number, then the
number of Common Shares to be issued shall be rounded down to the next whole
number.

8.

Not a Shareholder

8.1       Nothing in this Warrant certificate or in the holding of the Warrants
evidenced hereby shall be construed as conferring upon the Holder any right or
interest whatsoever as a shareholder of the Company.

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-5-

9.

Covenants

9.1

The Company hereby covenants and agrees that:

 

(a)

so long as any Warrants evidenced hereby remain outstanding, it shall reserve
and there shall remain unissued out of its authorized capital a sufficient
number of Common Shares to satisfy the maximum right of purchase provided for
herein; and

 

(b)

all Common Shares which shall be issued upon the exercise of any Warrants
hereunder shall, upon payment therefor of the Exercise Price, be issued as fully
paid and non-assessable Common Shares.

10.

Adjustment to Exercise Price

10.1     The Exercise Price in effect at any time is subject to adjustment from
time to time in the events and in the manner provided in this Part 10.

10.2

If, and whenever at any time after the date hereof, the Company:

 

(a)

issues Common Shares or securities exchangeable for or convertible into Common
Shares to all or substantially all the holders of the Common Shares as a stock
dividend; or

 

(b)

makes a distribution on its outstanding Common Shares payable in Common Shares
or securities exchangeable for or convertible into Common Shares; or

 

(c)

subdivides its outstanding Common Shares into a greater number of shares; or

 

(d)

consolidates its outstanding Common Shares into a lesser number of shares;

(any of such events being called a "Common Share Reorganization"), then the
Exercise Price will be adjusted effective immediately after the effective date
or record date, whichever is earlier, for the happening of a Common Share
Reorganization at which the holders of Common Shares are determined for the
purpose of the Common Share Reorganization by multiplying the Exercise Price in
effect immediately prior to such effective date or record date by a fraction,
the numerator of which is the number of Common Shares outstanding on such
effective date or record date before giving effect to such Common Share
Reorganization and the denominator of which is the number of Common Shares
outstanding immediately after giving effect to such Common Share Reorganization
(including, in the case where securities exchangeable for or convertible into
Common Shares are distributed, the number of Common Shares that would have been
outstanding had all such securities been exchanged for or converted into Common
Shares on such effective date or record date).

10.3     To the extent that any adjustment in the Exercise Price occurs pursuant
to Section 10.2 as a result of the fixing by the Company of a record date for
the distribution of securities exchangeable for or convertible into Common
Shares, the Exercise Price shall be readjusted immediately after the expiry of
any relevant exchange or conversion right to the Exercise Price which would then
be in effect based upon the number of Common Shares actually issued and
remaining issuable after such expiry and shall be further readjusted in such
manner upon the

--------------------------------------------------------------------------------

-6-

expiry of any further such right. If the Holder has not exercised all of the
Warrants on or prior to the record date of any stock dividend or distribution or
the effective date of any subdivision or consolidation, as the case may be, upon
the exercise of such Warrants thereafter, the Holder shall be entitled to
receive and shall accept in lieu of the number of Common Shares then subscribed
for and purchased by the Holder, at the Exercise Price determined in accordance
with Section 10.2, the aggregate number of Common Shares that the Holder would
have been entitled to receive as a result of such Common Share Reorganization,
if, on such record date or effective date, as the case may be, the Holder had
been the holder of record of the number of Common Shares so subscribed for and
purchased.

10.4     If, and whenever at any time after the date hereof, there is a
reclassification or redesignation of the Common Shares outstanding at any time
or change of the Common Shares into other shares or into other securities (other
than a Common Share Reorganization), or a consolidation, amalgamation or merger
of the Company with or into any other corporation or other entity (other than a
consolidation, amalgamation or merger which does not result in any
reclassification or redesignation of the outstanding Common Shares or a change
of the Common Shares into other shares), or a transfer of the undertaking or
assets of the Company as an entirety or substantially as an entirety to another
corporation or other entity (any of such events being referred to as a "Capital
Reorganization"), the Holder, upon exercising any Warrants after the effective
date of such Capital Reorganization, will be entitled to receive in lieu of the
number of Common Shares to which such Holder was theretofore entitled upon such
exercise, the aggregate number of shares, other securities or other property
which the Holder would have been entitled to receive as a result of such Capital
Reorganization if, on the effective date thereof, the Holder had been the
registered holder of the number of Common Shares to which such Holder was
theretofore entitled upon exercise of such Warrants.

10.5     If, and whenever at any time after the date hereof, there is a Common
Share Reorganization, that results in an adjustment pursuant to Section 10.2 or
a readjustment pursuant to Section 10.3, in the Exercise Price, then the number
of Common Shares acquirable upon the subsequent exercise of the Warrants shall
be simultaneously adjusted or readjusted, as the case may be, by multiplying the
number of Common Shares acquirable upon the exercise of the Warrants immediately
prior to such adjustment or readjustment by a fraction which shall be the
reciprocal of the fraction used in the adjustment or readjustment of the
Exercise Price.

11.

Rules Regarding Calculation of Adjustment of Exercise Price

11.1     The adjustments provided for in Part 10 are cumulative and will, in the
case of adjustments to the Exercise Price, be computed to the nearest one-tenth
of one cent and will be made successively whenever an event referred to therein
occurs, subject to the following provisions of this Part 11.

11.2     No adjustment in the Exercise Price is required to be made unless such
adjustment would result in a change of at least 1% in the Exercise Price;
provided, however, that any adjustments which, except for the provisions of this
Section 11.2, would otherwise have been required to be made, will be carried
forward and taken into account in any subsequent adjustments.

11.3     No adjustment in the Exercise Price will be made in respect of any
event described in Part 10, other than the events referred to in subsections
10.2 (c) and (d), if the Holder is entitled

--------------------------------------------------------------------------------

-7-

to participate in such event on the same terms, mutatis mutandis, as if the
Holder had exercised its Warrants prior to or on the effective date or record
date of such event, or if the Company makes adequate provision for the Holder to
participate in such event on the same terms or with the same effect, mutatis
mutandis, upon the subsequent exercise of the Warrants (the adequacy of such
provisions to be determined by the Holder in its sole discretion, acting
reasonably).

11.4     No adjustment in the Exercise Price will be made under Part 10 in
respect of the issue from time to time of Common Shares as dividends paid in the
ordinary course to holders of Common Shares who exercise an option or election
to receive substantially equivalent dividends in Common Shares in lieu of
receiving a cash dividend, and any such issue will be deemed not to be a Common
Share Reorganization.

11.5     If at any time a dispute arises with respect to adjustments provided
for in Part 10, such dispute will be conclusively determined by the auditors of
the Company or if they are unable or unwilling to act, by such other firm of
independent chartered accountants as may be selected by the board of directors
of the Company, acting reasonably and in good faith, and any such determination
will be binding upon the Company, the Holder and the shareholders of the
Company.

11.6     If, and whenever at any time after the date hereof, the Company takes
any action affecting the Common Shares, other than action described in Part 10,
which in the opinion of the board of directors of the Company, acting reasonably
and in good faith, would materially affect the rights of the Holder, but subject
to first receiving all necessary stock exchange and regulatory approvals, the
Exercise Price will be adjusted in such manner, if any, and at such time, by
action of the board of directors of the Company, acting reasonably and in good
faith.

11.7     If the Company sets a record date to determine the holders of the
Common Shares for the purpose of entitling them to receive any dividend or
distribution or sets a record date to take any other action and, thereafter and
before the distribution to such shareholders of any such dividend or
distribution or the taking of any other action, decides not to implement its
plan to pay or deliver such dividend or distribution or take such other action,
then no adjustment in the Exercise Price will be required by reason of the
setting of such record date.

11.8     As a condition precedent to the taking of any action which would
require any adjustment to the Warrants, including the Exercise Price, the
Company must take any corporate action which may be necessary in order that the
Company have unissued and reserved in its authorized capital, and may validly
and legally issue as fully paid and non-assessable, all the shares or other
securities which the Holder is entitled to receive on the full exercise thereof
in accordance with the provisions hereof.

11.9     The Company will from time to time, immediately after the occurrence of
any event which requires an adjustment or readjustment as provided in Part 10,
forthwith give notice to the Holder specifying the event requiring such
adjustment or readjustment and the results thereof, including the resulting
Exercise Price.

11.10   The Company covenants to and in favour of the Holder that so long as any
Warrants remain outstanding, it will give notice to the Holder of its intention
to fix a record date for any Common Share Reorganization (other than the
subdivision or consolidation of the Common

 

--------------------------------------------------------------------------------

-8-

Shares), which may give rise to an adjustment in the Exercise Price, and, such
notice must specify the particulars of such event and the record date and the
effective date for such event; provided that the Company is only required to
specify in such notice such particulars of such event as have been fixed and
determined on the date on which such notice is given. Such notice must be given
not less than fourteen (14) days in each case prior to such applicable record
date or effective date.

12.

Consolidation and Amalgamation

12.1     The Company shall not enter into any transaction whereby all or
substantially all of its undertaking, property and assets would become the
property of any other corporation (herein called a "successor corporation")
whether by way of reorganization, reconstruction, consolidation, amalgamation,
merger, transfer, sale, disposition or otherwise, unless prior to or
contemporaneously with the consummation of such transaction the Company and the
successor corporation shall have executed such instruments and done such things
as, in the opinion of counsel to the Holder, are necessary or advisable to
establish that upon the consummation of such transaction:

 

(a)

the successor corporation will have assumed all the covenants and obligations of
the Company under this Warrant certificate; and

 

(b)

this Warrant certificate will be a valid and binding obligation of the successor
corporation entitling the Holder, as against the successor corporation, to all
the rights of the Holder under this Warrant certificate.

12.2     Whenever the conditions of Section 12.1 shall have been duly observed
and performed the successor corporation shall possess, and from time to time may
exercise, each and every right and power of the Company under this Warrant
certificate in the name of the Company or otherwise and any act or proceeding by
any provision hereof required to be done or performed by any director or officer
of the Company may be done and performed with like force and effect by the like
directors or officers of the successor corporation.

13.

Representation and Warranty

13.1     The Company hereby represents and warrants with and to the Holder that
the Company is duly authorized and has the corporate and lawful power and
authority to create and issue the Warrants represented hereby and the Common
Shares issuable upon the exercise hereof and to perform its obligations
hereunder and that this Warrant certificate represents a valid, legal and
binding obligation of the Company enforceable in accordance with its terms.

14.

If Share Transfer Books Closed

14.1     The Company shall not be required to deliver certificates for Common
Shares while the share transfer books of the Company are properly closed, prior
to any meeting of shareholders or for the payment of dividends or for any other
purpose and, in the event of the exercise of any Warrants in accordance with the
provisions hereof and the making of any subscription and payment for the Common
Shares pursuant thereto during any such period, delivery of certificates for
Common Shares may be postponed for a period not exceeding three (3) Business
Days after

--------------------------------------------------------------------------------

-9-

the date of the re-opening of said share transfer books. Provided however that
any such postponement of delivery of certificates shall be without prejudice to
the right of the Holder, if the Holder has exercised any Warrants and made
payment during such period, to receive such certificates for the Common Shares
subscribed for after the share transfer books shall have been re-opened.

15.

Protection of Shareholders, Officers and Directors

15.1     Subject as herein provided, all or any of the rights conferred upon the
Holder may be enforced by the Holder by appropriate legal proceedings. No
recourse under or upon any obligation, covenant or agreement herein contained or
in any of the Warrants represented hereby shall be taken against any
shareholder, officer or director of the Company, either directly or through the
Company, it being expressly agreed and declared that the obligations under the
Warrants evidenced hereby, are solely corporate obligations of the Company and
that no personal liability whatever shall attach to or be incurred by the
shareholders, officers, or directors of the Company or any of them in respect
thereof, any and all rights and claims against every such shareholder, officer
or director being hereby expressly waived as a condition of and as a
consideration for the issue of the Warrants evidenced hereby.

16.

Lost Certificate

16.1     If the Warrant certificate evidencing the Warrants represented hereby
becomes stolen, lost, mutilated or destroyed, the Company may, upon delivery to
it by the Holder of an appropriate indemnity, issue and countersign a new
Warrant certificate of like denomination, tenor and date as the certificate so
stolen, lost mutilated or destroyed.

17.

Governing Law

17.1     This Warrant shall be governed by, and construed in accordance with,
the laws of the Province of British Columbia and the laws of Canada applicable
therein but the reference to such laws shall not, by conflict of laws rules or
otherwise, require the application of the law of any jurisdiction other than the
Province of British Columbia.

18.

Severability

18.1     If any one or more of the provisions or parts thereof contained in this
Warrant certificate should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, the remaining provisions or parts thereof contained
herein shall be and shall be conclusively deemed to be, as to such jurisdiction,
severable therefrom and:

 

(a)

the validity, legality or enforceability of such remaining provisions or parts
thereof shall not in any way be affected or impaired by the severance of the
provisions or parts thereof severed; and

 

(b)

the invalidity, illegality or unenforceability of any provision or part thereof
contained in this Warrant certificate in any jurisdiction shall not affect or
impair such provision or part thereof or any other provisions of this Warrant
certificate in any other jurisdiction.

 

--------------------------------------------------------------------------------

-10-

19.

Headings

19.1     The headings of the Parts of this Warrant certificate have been
inserted for convenience and reference only and do not define, limit, alter or
enlarge the meaning of any provision of this Warrant certificate.

20.

Gender

20.1     Whenever used in this Warrant, words importing the singular number only
shall include the plural, and vice versa, and words importing the masculine
gender shall include the feminine gender.

21.

Day not a Business Day

21.1     In the event that any day on or before which any action is required to
be taken hereunder is not a Business Day, then such action shall be required to
be taken on or before the requisite time on the next succeeding day that is a
Business Day. If the payment of any amount is deferred for any period, then such
period shall be included for purposes of the computation of any interest payable
hereunder.

22.

Computation of Time Period

22.1     Except to the extent otherwise provided herein, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding".

23.

Binding Effect

23.1     This Warrant and all of its provisions shall enure to the benefit of
the Holder, and their respective heirs, executors, administrators, successors,
legal representatives and assigns and shall be binding upon the Company and its
successors and permitted assigns. The expression the "Holder" as used herein
shall include the Holder's assigns whether immediate or derivative.

24.

Notice

24.1     Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by facsimile or other means of
electronic communication or by delivery as hereafter provided. Any such notice
or other communication, if sent by facsimile or other means of electronic
communication, shall be deemed to have been received on the business day
following the sending, or, if delivered by hand, shall be deemed to have been
received at the time it is delivered to the applicable address noted below
either to the individual designated below or to an individual at such address
having apparent authority to accept deliveries on behalf of the addressee.
Notice of change of address shall also be governed by this section. Notices and
other communications shall be addressed as follows:

 

(a)

if to the Company:

U.S. Geothermal Inc.

1505 Tyrell Lane

 

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-11-

Boise, Idaho USA

83706

Attention: Daniel Kunz, Chief Executive Officer

Facsimile: 208-424-1030

 

(b)

if to the Holder:

To the Holder whose name and address appears on the front page of this Warrant
certificate.

25.

Time of Essence

25.1       Time shall be of the essence hereof.

26.

Transferability of Warrants

26.1     The Warrants represented by this Warrant certificate are may be
transferred and assigned by the Holder thereof on notice to the Corporation and
subject to compliance by the Holder (which compliance shall be to the
satisfaction of the Corporation and its counsel, acting reasonably, including
any applicable legal opinions required by the Corporation in connection with
such transfer) with the legend requirements on the front page this Warrant
certificate and applicable laws. Any expenses incurred in effecting the transfer
of any Warrants will be borne solely by the transferee of such Warrants and in
no event shall the Corporation be responsible for such expenses.

27.

Legends

27.1     Any certificate representing Common Shares issued upon the exercise of
this Warrant prior to the date which is four months and one day after the date
hereof will bear the following legends:

 

(i)

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE •, 2008.”

 

(ii)

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE BUT CANNOT BE TRADED THROUGH THE FACILITIES OF THE EXCHANGE SINCE THEY
ARE NOT FREELY TRANSFERABLE AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH
SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO
STOCK EXCHANGE.”

And

 

(iii)

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY

 

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-12-

 

 

STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES
FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY: (A) TO THE COMPANY, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, (C) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATIONS UNDER THE U.S.
SECURITIES ACT IF AVAILABLE, (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF
AVAILABLE, NAD IN COMPLIANCE WITH ANY STATE SECURITIES ALWS, OR (E) WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY, PURSUANT TO ANOTHER EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS; PROVIDED THAT, IN CONNECTION WITH A TRANSFER PURSUANT TO (C), (D), OR (E)
ABOVE, AN OPINION OF COUNSEL, OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO
THE COMPANY HAS BEEN PROVIDED TO THE COMPANY TO SUCH EFFECT.

provided that at any time subsequent to the date which is four months and one
day after the date hereof any certificate representing such Common Shares may be
exchanged for a certificate or certificates bearing neither legend in paragraphs
(i) and (ii) above. The Company hereby covenants and agrees that it will use the
best efforts thereof to deliver or to cause to be delivered a certificate or
certificates representing such Common Shares bearing no such legends as soon as
practicable, but in any event, within five business days after receipt of the
legended certificate or certificates.

 

[Remainder of page intentionally left blank]

 

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-13-

IN WITNESS WHEREOF the Company has caused this Warrant certificate to be signed
by its duly authorized officer as of this ___ day of _____________, 2008.

 

 

U.S. GEOTHERMAL INC.

 

Per:__________________________
        Authorized Signatory

 

 

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-14-

APPENDIX "1"

SUBSCRIPTION FORM

TO:

U.S. GEOTHERMAL INC.

The undersigned holder of the attached Warrant certificate hereby irrevocably
subscribes for _______________ Common Shares of U.S. Geothermal Inc. (the
"Company") pursuant to the attached Warrant certificate at the Exercise Price
per share specified in the said Warrant certificate and encloses herewith
payment of the subscription price therefor in accordance with the terms of the
Warrant certificate.

The Warrants may not be exercised unless an exemption from the registration
requirements of the United States Securities Act of 1933, as amended (the “U.S.
Securities Act”) and applicable state securities laws is available to the holder
and the holder has furnished an opinion of counsel of recognized standing in
form and substance satisfactory to the Company to such effect; provided,
however, that the undersigned will not be required to deliver an opinion of
counsel in connection with its exercise of the Warrants on its own behalf, or on
behalf of the original beneficial purchaser for which it is subscribing for
Units hereunder (if any), at a time when it, and such original beneficial
purchaser (if any), are accredited investors as defined under the U.S.
Securities Act.

By executing this subscription form the undersigned represents and warrants to
the Company that the undersigned (Please check the ONE box applicable):

□

1.             is tendering with this subscription form a written opinion of
counsel satisfactory to the Company to the effect that the securities to be
delivered upon exercise of the Warrants have been registered under the U.S.
Securities Act and the securities laws of all applicable states of the United
States or are exempt from registration thereunder; or

□

2.             the undersigned purchased the Warrants from the Company pursuant
to a subscription agreement, including a U.S. accredited investor certificate
and (i) is exercising the Warrants on its own behalf at a time when it is an
“accredited investor”, as defined in Rule 501(a) under the U.S. Securities Act,
(ii) has had access to such current public information concerning the Company as
it considered necessary in connection with its investment decision, (iii)
understands that the Common Shares are “restricted securities” as defined under
the U.S. Securities Act, and (iv) agrees to the restrictions on transfer and
resale as set forth in the legend included on the certificate(s) representing
the Common Shares subscribed for hereby.

If any Warrants represented by the attached Warrant certificate are not being
exercised, a new Warrant certificate will be issued and delivered with the
Common Share certificates.

 

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-15-

Please issue a certificate for the shares being purchased as follows in the name
of the undersigned:

 

NAME:         _____________________________________________

 

                       (please print)

 

ADDRESS:  _____________________________________________

 

                 _____________________________________________

 

                      _____________________________________________

 

                  

DATED this ____ day of _________________, ____________.

 

 

 

______________________________

(Signature)

 

 

 

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