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SUBSCRIPTION INSTRUCTIONS

Please make sure that your subscription includes:

1.

one (1) signed copy of the Subscription Agreement with the information on pages
2 , 3 and 4 completed;

    2.

a certified cheque or bank draft in an amount equal to the aggregate
Subscription Price, payable in Canadian funds to “Cormark Securities Inc.”
unless other acceptable payment arrangements have been made;

    3.

IF THE SUBSCRIBER IS RESIDENT IN CANADA a duly completed and executed (i)
Certificate of Subscribers in the form of Schedule “C”, (ii) a Canadian
Accredited Investor Certificate in the form of Schedule “D”, and (iii) a
Questionnaire in the form of Annex B to Schedule “H”;

    4.

IF THE SUBSCRIBER IS RESIDENT IN THE UNITED STATES, a duly completed and
executed (i) Certificate of Subscribers in the form of Schedule “C”, and (ii) a
Questionnaire in the form of Annex B to Schedule “H”;

    5.

IF THE SUBSCRIBER IS NOT RESIDENT IN CANADA OR THE UNITED STATES, a duly
completed and executed (i) Certificate of Subscribers in the form of Schedule
“C”, (ii) a Certificate of Non-Canadian Subscribers in the form of Schedule “E”,
and (iii) a Questionnaire in the form of Annex B to Schedule “H”; and

    6.

IF APPLICABLE, a duly completed and executed Form 4C – Corporate Placee
Registration Form – in the form of Schedule “F”.

Please deliver your subscription to:

Cormark Securities Inc.
Royal Bank Plaza
South Tower, Suite 2800
200 Bay Street
Toronto, Ontario M5J 2J2
Attention: Susan Samila-Moroz
Fax: 416-943-6496

SUBSCRIPTION AGREEMENT

The securities subscribed for herein have not been and will not be registered
under the United States Securities Act of 1933, as amended, and, subject to
certain exceptions, may not be offered or sold in the United States or to a U.S.
Person. The sale contemplated hereby is being made in reliance on a private
placement exemption to “accredited investors” that satisfy the criteria set
forth in Rule 501(a) of Regulation D under the United States Securities Act of
1933, as amended.

TO:

U.S. GEOTHERMAL INC. (the “Corporation”)

 

AND TO:

CORMARK SECURITIES INC., DUNDEE SECURITIES CORPORATION AND TOLL CROSS SECURITIES
INC. (collectively, the “Underwriters”)

 

AND TO:

CORMARK SECURITIES (U.S.A.) LIMITED, DUNDEE SECURITIES INC., AND TOLL CROSS
SECURITIES USA INC. (the “US Affiliates”)

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The undersigned (hereinafter referred to as the “Subscriber”) hereby irrevocably
subscribes for and agrees to purchase from the Corporation that number of common
shares set forth below (the “Offered Shares”) for the aggregate consideration
set forth below, representing a subscription price of $2.20 (Canadian) per
Share, upon and subject to the terms and conditions set forth in “Terms and
Conditions of the Subscription for Offered Shares” attached hereto as Schedule
“A” and as set forth in the other applicable schedules hereto (the “Offering”).

SUBSCRIPTION AND SUBSCRIBER INFORMATION

Please print all information (other than signatures), as applicable, in the
space provided below

    Number of Offered Shares:_________________________ (Name of Subscriber –
please print)               Aggregate Consideration:    
$_________________________ By:____________________________________________  
(number of Offered Shares x CDN$2.20) (Authorized Signature)                
(Please print name of individual whose signature appears above if different than
the name of the subscriber printed above, and title if applicable.) If the
subscriber is signing as agent for a principal and the subscriber is not a trust
corporation or a person purchasing as trustee or agent for accounts fully
managed by it, in each case satisfying the criteria set forth in National
Instrument 45-106, complete the following:             (Subscriber’s Address)  
(Name of Principal)             (Telephone Number)   (Principal’s Address)      
      (Fax Number)                                                       (E-mail
address)   (Telephone Number)                 (Fax
Number)                                                       (E-mail address)  
          Register the Offered Shares as set forth below:   Deliver the Offered
Shares as set forth below:             (Name)   (Name)             (Account
reference, if applicable)   (Account reference, if applicable)            
(Address)   (Contact Name)                 (Address)                 (Telephone
Number)

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Present Ownership of Securities

The Subscriber either [check appropriate box]:

[   ]

owns directly or indirectly, or exercises control or direction over,
_______________ Common Shares and convertible securities entitling the holder
thereof to acquire an additional _______________ Common Shares; or

 

 

[   ]

does not own directly or indirectly, or exercise control or direction over,
Common Shares of the Corporation or securities convertible into Common Shares.

Insider Status

The Subscriber either [check appropriate box]:

[   ]        is an “Insider” of the Corporation; or

[   ]        is not an “Insider” of the Corporation.

“Insider” means:

  (a)

a director or senior officer of the Corporation;

  (b)

a director or senior officer of a person that is itself an insider or subsidiary
of the Corporation;

  (c)

a person that beneficially owns or controls, directly or indirectly securities
of the Corporation carrying more than 10% of the voting rights attached to all
the Corporation’s outstanding voting securities, or

  (d)

the Corporation itself, if it has purchased, redeemed or otherwise acquired any
securities of its own issue, for so long as it continues to hold those
securities.

Member of “Pro Group”

The Subscriber either [check appropriate box]:

[   ]        is a member of the “Pro Group”; or

[   ]        is not a member of the “Pro Group”.

“Pro Group” means:

  1.

Subject to subparagraphs (2), (3) and (4), “Pro Group” shall include, either
individually or as a group:

        (a)

the member (i.e. a member of the TSX-V under the TSX-V requirements);

  (b)

employees of the member;

  (c)

partners, officers and directors of the member;

  (d)

affiliates of the member; and

  (e)

associates of any parties referred to in subparagraphs (a) through (d).

          2.

The TSX-V may, in its discretion, include a person or party in the Pro Group for
the purposes of a particular calculation where the TSX-V determines that the
person is not acting at arm’s length to the member;

        3.

The TSX-V may, in its discretion, exclude a person from the Pro Group for the
purposes of a particular calculation where the TSX-V determines that the person
is acting at arm’s length of the member;

        4.

The member may deem a person who would otherwise be included in the Pro Group
pursuant to subparagraph (1) to be excluded from the Pro Group where the member
determines that:

  (a)

the person is an affiliate or associate of the member acting at arm’s length of
the member;

  (b)

the associate or affiliate has a separate corporate and reporting structure;

  (c)

there are sufficient controls on information flowing between the member and the
associate or affiliate; and

  (d)

the member maintains a list of such excluded persons.

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Corporate Placee Form

The Subscriber, if not an individual, either [check appropriate box]:

[   ]

subsequent to April 1, 2004 has filed a Corporate Placee Registration Form with
the TSX Venture Exchange and there have been no changes to the information
provided by the Subscriber in the form since such filing; or

 

[   ]

has completed and returned with this Subscription a duly executed Corporate
Placee Registration Form (Schedule “F” to this Subscription Agreement).

* * * * * * *

The following Schedules are attached to and incorporated by reference in this
Subscription Agreement and are deemed to be a part hereof:

  Schedule “A” -

Terms and Conditions of Subscriptions for Offered Shares

  Schedule “B” -

Term Sheet

  Schedule “C” -

Certificate of Subscribers

  Schedule “D” -

Canadian Accredited Investor Certificate

  Schedule “E” -

Certificate of Non-Canadian Subscribers (Other than U.S. Subscribers)

  Schedule “F” -

Form 4C – Corporate Placee Registration Form

  Schedule “G” -

Appendix 6A – Acknowledgment – Personal Information

  Schedule “H” -

Terms and Conditions of Registration Rights

Unless otherwise specified, all dollar amounts referred to in this Subscription
Agreement are in Canadian dollars.

ACCEPTANCE: The Corporation hereby accepts the above subscription this ______
day of ____________ , 2007.

U.S. GEOTHERMAL INC.

Per: ___________________________________________
         Name: 
         Title:

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SCHEDULE “A”

TERMS AND CONDITIONS OF SUBSCRIPTION FOR OFFERED SHARES

ARTICLE 1 - INTERPRETATION

1.1      Definitions

            Whenever used in this Subscription Agreement, unless there is
something in the subject matter or context inconsistent therewith, the following
words and phrases shall have the respective meanings ascribed to them as
follows:

“Accredited Investor” means those “accredited investors” specified in Rule
501(a) of Regulation D;

“Broker Share” means a Common Share issued pursuant to the exercise of a Broker
Warrant.

“Broker Warrants” means the broker warrants exercisable for a period of 18
months following the Closing to purchase Broker Shares at the US dollar
equivalent of the Offered Share Price (calculated as of the Closing Date).

“Business Day” means a day other than a Saturday, Sunday or any other day on
which the principal chartered banks located in Toronto are not open for
business.

“Closing” shall have the meaning ascribed to such term in Section 3.1.

“Closing Date” shall have the meaning ascribed to such term in Section 3.1.

“Closing Time” shall have the meaning ascribed to such term in Section 3.1.

“Common Share” means a common share in the capital of the Corporation as
constituted as at the Closing Date.

“Control Person” means a person, company or combination of persons or companies
described in clause (c) of the definition of “distribution” in subsection 1(1)
of the Securities Act (Ontario).

“Corporation” means U.S. Geothermal Inc. and includes any successor corporation
to or of the Corporation.

“Insider” means (a) a director or senior officer of the Corporation, (b) a
director or senior officer of a company that is an insider or subsidiary of the
Corporation, or (c) any person who beneficially owns, directly or indirectly,
voting securities of the Corporation or who exercises control or direction over
voting securities of the Corporation or a combination of both carrying more than
10% of the voting rights attached to all voting securities of the Corporation
for the time being outstanding.

“Offered Share” means a Common Share offered in the Offering.

“Offered Share Price” means the subscription price per Offered Share under this
Offering.

“Offering” shall have the meaning ascribed to such term on the face page of this
Subscription Agreement.

“person” means any individual (whether acting as an executor, trustee
administrator, legal representative or otherwise), corporation, firm,
partnership, sole proprietorship, syndicate, joint venture, trustee, trust,
unincorporated organization or association, and pronouns have a similar extended
meaning.

“Regulation D” means Regulation D adopted by the SEC under the U.S. Securities
Act;

“Regulation S” means Regulation S adopted by the SEC under the U.S. Securities
Act;

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“Securities” means the Offered Shares.

“Securities Laws” means, as applicable, the securities laws, regulations, rules,
rulings and orders in each of the Selling Jurisdictions, and the notices,
policies and written interpretations issued by the Securities Regulators in each
of the Selling Jurisdictions, and the rules of the TSX-V.

“Securities Regulators” means the securities commissions or other securities
regulatory authorities of all of the Selling Jurisdictions or the relevant
Selling Jurisdiction as the context so requires.

“Selling Jurisdictions” means each of the provinces of Canada and the United
States and such other jurisdictions which are agreed to by the Corporation and
the Underwriters; and “Selling Jurisdiction” means, in the case of any
Subscriber, the jurisdiction in which such Subscriber is resident.

“Subscriber” means the subscriber for the Offered Shares as set out on the face
page of this Subscription Agreement.

“Subscription Agreement” means this subscription agreement (including any
schedules hereto) and any instrument amending this Subscription Agreement;
“hereof”, “hereto”, “hereunder”, “herein” and similar expressions mean and refer
to this Subscription Agreement and not to a particular Article or Section; and
the expression “Article” or “Section” followed by a number means and refers to
the specified Article or Section of this Subscription Agreement.

“Subscription Amount” means an amount equal to the Offered Share Price
multiplied by the number of Offered Shares subscribed for and paid for pursuant
to this Subscription Agreement.

“Term Sheet” means the term sheet delivered to potential purchasers of the
Offered Shares, a copy of which is attached hereto as Schedule “B”.

“TSX-V” means the TSX Venture Exchange.

“Underwriters” shall have the meaning ascribed to such term on the face page of
this Subscription Agreement.

“Underwriting Agreement” means the underwriting agreement to be dated as of the
Closing Date entered into between the Underwriters and the Corporation in
respect of the Offering.

“United States” means the United States of America, its territories and
possessions, any State of the United States of America and the District of
Columbia.

“U.S. Person” shall have the meaning ascribed to such term in Rule 902(k) of
Regulation S under the U.S. Securities Act.

“U.S. Securities Act” means the United States Securities Act of 1933, as
amended.

1.2      Gender and Number

            Words importing the singular number only shall include the plural
and vice versa, words importing the masculine gender shall include the feminine
gender and words importing persons shall include firms and corporations and vice
versa.

1.3      Currency

            Unless otherwise specified, all dollar amounts in this Subscription
Agreement, including the symbol “$”, are expressed in Canadian dollars.

1.4      Subdivisions, Headings and Table of Contents

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          The division of this Subscription Agreement into Articles, Sections,
Schedules and other subdivisions and the inclusion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Subscription Agreement. The headings in this Subscription
Agreement are not intended to be full or precise descriptions of the text to
which they refer. Unless something in the subject matter or context is
inconsistent therewith, references herein to an Article, Section, Subsection,
paragraph, clause or Schedule are to the applicable article, section,
subsection, paragraph, clause or schedule of this Subscription Agreement.

ARTICLE 2 - SUBSCRIPTION AND DESCRIPTION OF OFFERED SHARES

2.1      Subscription for the Offered Shares

            The Subscriber hereby confirms its irrevocable subscription for and
offer to purchase Offered Shares from the Corporation, on and subject to the
terms and conditions set out in this Subscription Agreement, for the
Subscription Amount which is payable as described in Article 3 hereto.

2.2      Acceptance and Rejection of Subscription by the Corporation

            The Subscriber acknowledges and agrees that the Corporation and the
Underwriters reserve the right, in their absolute discretion, to reject this
subscription for Offered Shares, in whole or in part, at any time prior to the
Closing Time. If this subscription is rejected in whole, any cheques or other
forms of payment delivered to the Underwriters representing the Subscription
Amount will be promptly returned to the Subscriber without interest or
deduction. If this subscription is accepted only in part, a cheque representing
any refund of the Subscription Amount for that portion of the subscription for
Offered Shares which is not accepted, will be promptly delivered to the
Subscriber without interest or deduction.

ARTICLE 3 - CLOSING

3.1      Closing

            Delivery and sale of the Offered Shares and payment of the
Subscription Amount will be completed (the “Closing”) at the offices of the
Corporation’s counsel, Goodmans LLP, 250 Yonge Street, Suite 2400, Toronto,
Ontario M5B 2M6 at 10 a.m. (Toronto time) (the “Closing Time”) on June 5, 2007
or such other date or time as the Corporation and the Underwriters may decide
(the “Closing Date”).

            Certificates representing the Securities will be available for
delivery to the Subscriber following Closing, provided (i) the Subscriber has
satisfied the conditions described in section 3.2 hereof and (ii) the
Corporation has accepted this Subscription Agreement. If payment has not yet
been made for the Offered Shares as described in section 3.2(a) hereof on or
before Closing, Certificates representing the Securities will be released to the
Subscriber against payment to the Corporation of the amount of the Subscription
Amount for the Offered Shares in freely transferable Canadian funds. Such
payment is to be made by bank draft, certified cheque or other form of
immediately available funds payable in favour of “Cormark Securities Inc.” or
such other person as the Corporation shall advise the Subscriber.

3.2      Conditions of Closing

            The Subscriber acknowledges and agrees that the obligations of the
Corporation hereunder are conditional on the accuracy of the representations and
warranties of the Subscriber contained in this Subscription Agreement as of the
date of this Subscription Agreement, and as of the Closing Time as if made at
and as of the Closing Time, and the fulfillment of the following additional
conditions as soon as possible and in any event not later than the Closing Time:

  (a)

unless other arrangements acceptable to the Corporation have been made, payment
by the Subscriber of the Subscription Amount by certified cheque, bank draft or
other acceptable means in Canadian dollars payable to “Cormark Securities Inc.”.

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  (b)

the Subscriber having properly completed, signed and delivered this Subscription
Agreement to:

       

Cormark Securities Inc.

 

Royal Bank Plaza, South Tower
Suite 2800, 200 Bay Street
Toronto, Ontario
M5J 2J2

       

Attention:          Susan Samila-Moroz
Fax:                     (416) 943-6493

        (c)

the Subscriber having properly completed, signed and delivered Schedule “C”,
Schedule “D”, Schedule “E” and Annex B to Schedule “H”, as applicable:

  (i)

ALL SUBSCRIBERS

   

 

a duly completed and executed Certificate of Subscribers in the form attached to
the Subscription Agreement as Schedule “C” and Annex B to Schedule “H”.

   

 

  (ii)

ALL CANADIAN SUBSCRIBERS

   

 

a duly completed and executed Canadian Accredited Investor Certificate in the
form attached to this Subscription Agreement as Schedule “D” (in addition to
Schedule “C” and Annex B to Schedule “H”); and

   

 

  (iii)

ALL SUBSCRIBERS WHO ARE NOT RESIDENT IN CANADA OR THE UNITED STATES

   

 

 

a duly completed and executed Certificate of Non-Canadian Subscribers in the
form attached to this Subscription Agreement as Schedule “E” (in addition to
Schedule “C” and Annex B to Schedule “H”); and

  (d)

if applicable, the Subscriber having properly completed, signed and delivered
Form 4C – Corporate Placee Registration Form, a copy of which is attached hereto
as Schedule “F”;

            The Corporation acknowledges and agrees that the obligations of the
Subscriber hereunder are conditional on the accuracy of the representations and
warranties of the Corporation contained in this Subscription Agreement and in
the Underwriting Agreement as of the date of this Subscription Agreement, and as
of the Closing Time as if made at and as of the Closing Time, and the
fulfillment of the following conditions, amongst others, as soon as possible and
in any event not later than the Closing Time:

  (a)

all covenants, agreements and conditions contained in this Subscription
Agreement and in the Underwriting Agreement to be performed by the Corporation
on or prior to the Closing shall have been performed or complied with in all
material aspects, including without limitation, obtaining conditional approval
from the TSX-V; and

          (b)

the Corporation shall have delivered to the Underwriter’s counsel the following
items:

          (i)

a copy of the certificates representing the Securities purchased by the
Subscriber registered in the name of the Subscriber or its nominee;

          (ii)

a copy of this Subscription Agreement duly executed by the Corporation; and

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  (iii)

such other documents relating to the transactions contemplated by this
Subscription Agreement and the Underwriting Agreement as the Underwriter or its
counsel may reasonably request.

ARTICLE 4 - REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION

4.1      Representations, Warranties and Covenants of the Corporation

            By execution of this Subscription Agreement, the Corporation hereby
agrees with the Subscriber that the Subscriber shall be entitled to rely on the
representations, warranties and covenants made by the Corporation in this
Subscription Agreement (including the schedules hereto) and to the Underwriters
as set forth in the Underwriting Agreement (to the extent that they have not
been varied, amended, altered or waived, in whole or in part, by the
Underwriters). Such representations, warranties and covenants shall form an
integral part of this Subscription Agreement and shall survive the Closing of
the purchase and sale of the Offered Shares and shall continue in full force and
effect for the benefit of the Subscriber in accordance with the terms of this
Subscription Agreement and the Underwriting Agreement.

            The Corporation, hereby represents and warrants to, and covenants
with, the Subscriber and Underwriters as follows and acknowledges that the
Subscriber and the Underwriters are relying on such representations, warranties
and covenants in connection with the transactions contemplated herein:

  (a)

The Corporation acknowledges and agrees to the terms and conditions set out in
Schedule “H”.

        (b)

No form of general solicitation or general advertising (including
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio, television or
electronic display (including the internet) or any seminar or meeting whose
attendees had been invited by general solicitation or general advertising) was
used by the Corporation or, to the best of its knowledge, any other person
acting on behalf of the Corporation (other than the Underwriters and persons
acting on their behalf, as to which no representation is made), in respect of or
in connection with the offer and sale of the Offered Shares in the United States
or elsewhere or to citizens or residents of the United States or elsewhere.

        (c)

Neither the Corporation nor any person authorized to act on its behalf (other
than the Underwriters and persons acting on their behalf, as to which no
representation is made) has sold or offered for sale any Offered Shares, or
solicited any offers to buy any Offered Shares thereby so as to cause the
issuance or sale of any of the Offered Shares to be in violation of Section 5 of
the U.S. Securities Act, Canadian or other securities laws.

        (d)

The Corporation is not an open-end investment company, closed-end investment
company, unit investment or face-amount certificate company that is or is
required to be registered under Section 8 of the United States Investment
Company Act of 1940, as amended.

        (e)

The Corporation has not, for a period of six months prior to the date hereof
sold, offered for sale or solicited any offer to buy any of its securities in a
manner that would be integrated with the offer and sale of the Offered Shares
and would cause the exemption from registration set forth in Rule 506 of
Regulation D under the U.S. Securities Act to become unavailable with respect to
the offer and sale of the Offered Shares.

        (f)

The Corporation will use commercially reasonable efforts to ensure that there is
available “adequate current public information” with respect to the Corporation
within the meaning of Rule 144(c) under the U.S. Securities Act commencing on
the first anniversary of the Closing Date and at all times thereafter when the
registration statement referred to in Section 4.1(a) is not effective and up to
date.

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  (g)

At any time that the Corporation is neither subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, the Corporation shall at the
request of the Subscriber or any prospective purchaser designated by the
Subscriber, promptly provide to such person with reasonable promptness, the
information specified in Rule 144A(d)(4)(i) under the U.S. Securities Act.

ARTICLE 5 - REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS OF THE
SUBSCRIBER

5.1      Representations, Warranties and Covenants of the Subscriber

            The Subscriber, on its own behalf and, if applicable, on behalf of
others for whom it is acting hereunder, hereby represents and warrants to, and
covenants with, the Corporation and Underwriters as follows and acknowledges
that the Corporation and the Underwriters are relying on such representations,
warranties and covenants in connection with the transactions contemplated
herein:

  (a)

The matters set forth on page 2, 3 and 4 of this Subscription Agreement are true
and correct as of the date of execution of this Subscription Agreement and will
be true and correct as of the Closing Time.

        (b)

The Subscriber and each beneficial purchaser for whom it is acting is a resident
in the jurisdiction set out on page 2 of this Subscription Agreement. Such
address was not created and is not used solely for the purpose of acquiring the
Offered Shares and the Subscriber and any beneficial purchaser was solicited to
purchase and executed this agreement in such jurisdiction.

        (c)

The Subscriber has properly completed, executed and delivered to the
Underwriters within the applicable time periods the certificate(s) set forth in
Schedule “C” and Annex B to Schedule “H” and Schedule “D”, Schedule “E” and
Schedule “F”, as applicable, to this Subscription Agreement and the information
contained therein is true and correct.

        (d)

The representations, warranties and covenants contained in the applicable
Schedules to this Subscription Agreement are true and correct as of the date of
execution of this Subscription Agreement and will be true and correct as of the
Closing Time.

        (e)

If the Subscriber, or any beneficial purchaser for whom it is acting, is not a
person resident in Canada, the subscription for the Offered Shares by and the
issuance and delivery of the Offered Shares to the Subscriber, or such
beneficial purchaser, does not contravene any of the applicable securities
legislation in the jurisdiction in which the Subscriber or such beneficial
purchaser resides and does not give rise to any obligation of the Corporation to
prepare and file a prospectus or similar document or to register the Securities
or to be registered with or to file any report or notice with any governmental
or regulatory authority of any kind whatsoever.

        (f)

The execution and delivery of this Subscription Agreement, the performance and
compliance with the terms hereof, the subscription for Offered Shares and the
completion of the transactions described herein by the Subscriber will not
result in any material breach of, or be in conflict with or constitute a
material default under, or create a state of facts which, after notice or lapse
of time, or both, would constitute a material default under any term or
provision of the constating documents, by-laws or resolutions of the Subscriber,
the Securities Laws or any other laws applicable to the Subscriber, any
agreement to which the Subscriber is a party, or any judgment, decree, order,
statute, rule or regulation applicable to the Subscriber.

        (g)

The funds representing the Subscription Amount which will be advanced by the
Subscriber to the Corporation hereunder will not represent proceeds of crime for
the purposes of the Proceeds of Crime (Money Laundering) Act (Canada) (the
“PCMLA”) and the Subscriber acknowledges that the Corporation may in the future
be required by law to disclose the Subscriber’s name and other

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information relating to this Subscription Agreement and the Subscriber’s
subscription hereunder, on a confidential basis, pursuant to the PCMLA. To the
best of its knowledge: none of the subscription funds to be provided by the
Subscriber (i) have been or will be derived from or related to any activity that
is deemed criminal under the law of Canada, the United States of America, or any
other jurisdiction, or (ii) are being tendered on behalf of a person or entity
who has not been identified to the Subscriber, and it shall promptly notify the
Corporation if the Subscriber discovers that any of such representations ceases
to be true and provide the Corporation with appropriate information in
connection therewith.

          (h)

The Subscriber is subscribing for the Offered Shares as principal (within the
meaning of applicable Securities Laws) and not with a view to the resale or
distribution of all or any of the Securities or if it is not subscribing as
principal, it acknowledges that the Corporation may be required by law to
disclose (and if required by law the Subscriber agrees to disclose) to certain
regulatory authorities the identity of each beneficial purchaser of the Offered
Shares for whom it is acting.

          (i)

In the case of a subscription for the Offered Shares by the Subscriber acting as
trustee or agent (including, for greater certainty, a portfolio manager or
comparable adviser) for a principal, the Subscriber is duly authorized to
execute and deliver this Subscription Agreement and all other necessary
documentation in connection with such subscription on behalf of each such
beneficial purchaser, each of whom is subscribing as principal for its own
account, not for the benefit of any other person and not with a view to the
resale or distribution of all or any of the Securities, and this Subscription
Agreement has been duly authorized, executed and delivered by or on behalf of
and constitutes a legal, valid and binding agreement of, such principal, and the
Subscriber acknowledges that the Corporation may be required by law to disclose
(and if required by law the Subscriber agrees to disclose) the identity of each
beneficial purchaser for whom the Subscriber is acting.

          (j)

If the Subscriber is an “insider” or “affiliate” of the Corporation (as such
terms are defined in applicable securities laws), the Subscriber shall, at the
time of the sale of Offered Shares, have no reasonable grounds to believe that
the Corporation is in default of any requirement of any applicable Securities
Laws to which the Corporation is subject.

          (k)

In the case of a subscription for the Offered Shares by the Subscriber acting as
principal, this Subscription Agreement has been duly authorized, executed and
delivered by, and constitutes a legal, valid and binding agreement of, the
Subscriber. This Subscription Agreement is enforceable in accordance with its
terms against the Subscriber and any beneficial purchasers on whose behalf the
Subscriber is acting.

          (l)

If the Subscriber is:

          (i)

a corporation, the Subscriber is duly incorporated and is validly subsisting
under the laws of its jurisdiction of incorporation and has all requisite legal
and corporate power and authority to execute and deliver this Subscription
Agreement, to subscribe for the Offered Shares as contemplated herein and to
carry out and perform its obligations under the terms of this Subscription
Agreement;

          (ii)

a partnership, syndicate or other form of unincorporated organization, the
Subscriber has the necessary legal capacity and authority to execute and deliver
this Subscription Agreement and to observe and perform its covenants and
obligations hereunder and has obtained all necessary approvals in respect
thereof; or

          (iii)

an individual, the Subscriber is of the full age of majority and is legally
competent to execute this Subscription Agreement and to observe and perform his
or her covenants and obligations hereunder.

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  (m)

Other than the Underwriters and the US Affiliates, to the best of the
Subscriber’s knowledge, there is no person acting or purporting to act in
connection with the transactions contemplated herein who is entitled to any
brokerage or finder’s fee. If any person establishes a claim that any fee or
other compensation is payable in connection with this subscription for the
Offered Shares, the Subscriber covenants to indemnify and hold harmless the
Corporation and the Underwriters with respect thereto and with respect to all
costs reasonably incurred in the defence thereof.

        (n)

The Subscriber is not, with respect to the Corporation or any of its affiliates,
a Control Person and the Subscriber will not become a Control Person by
purchasing the number of Offered Shares subscribed for under this Subscription
Agreement and does not intend to act jointly or in concert with any other person
to form a control group in respect of the Corporation.

        (o)

If required by applicable Securities Laws or the Corporation, the Subscriber
will execute, deliver and file or assist the Corporation in filing such reports,
undertakings and other documents with respect to the issue of the Offered Shares
as may be required by any securities commission, stock exchange or other
regulatory authority.

        (p)

The Subscriber, and each beneficial purchaser for whom it is acting hereunder,
have been advised to consult their own legal advisors with respect to trading in
the Securities with respect to the resale restrictions imposed by the Securities
Laws of the jurisdiction in which the Subscriber resides, other applicable
securities laws, and the policies of the TSX-V, and subject to the registration
rights described in Schedule “H” acknowledges that no representation has been
made respecting the applicable hold periods imposed by the Securities Laws or
other resale restrictions applicable to such securities which restrict the
ability of the Subscriber (or others for whom it is contracting hereunder) to
resell such securities, that the Subscriber (or others for whom it is
contracting hereunder) is solely responsible to find out what these restrictions
are and the Subscriber is solely responsible (and the Corporation and the
Underwriters are not in any way responsible) for compliance with applicable
resale restrictions and the Subscriber is aware that it (or beneficial
purchasers for whom it is contracting hereunder) may not be able to resell such
securities except in accordance with limited exemptions under the Securities
Laws and other applicable securities laws.

        (q)

The Subscriber has not received nor been provided with, has not requested and
does not have any need to receive a prospectus or offering memorandum, within
the meaning of the Securities Laws, or any sales or advertising literature in
connection with the Offering and the Subscriber’s decision to subscribe for the
Offered Shares was based upon the Corporation’s publicly available documents
included in the Edgar database administered by the SEC and the SEDAR database
administered under the direction of the Canadian Securities Administrators. The
Subscriber’s investment decision was not otherwise based upon, and the
Subscriber has not relied upon, any verbal or written representations as to
facts made by or on behalf of the Corporation.

        (r)

The Subscriber (and, if applicable, others for whom it is contracting hereunder)
has relied solely upon publicly available information relating to the
Corporation, this Subscription Agreement and the Underwriting Agreement and not
upon any verbal or written representation as to any fact or otherwise made by or
on behalf of the Corporation, the Underwriters or any employee, agent or
affiliate thereof or any other person associated therewith. The Underwriter
assumes no responsibility or liability of any nature whatsoever for the accuracy
or adequacy of the publicly available information upon which the Subscriber’s
investment decision has been made or as to whether all information concerning
the Corporation required to be disclosed by the Corporation has been disclosed.
The Subscriber, on its own behalf and on behalf of others for whom the
Subscriber is contracting hereunder, acknowledges that the decision to purchase
the Offered Shares was made on the basis of currently available public
information, this Subscription Agreement and the Underwriting Agreement.

        (s)

The Subscriber is not purchasing the Offered Shares with knowledge of material
information concerning the Corporation which has not been generally or publicly
disclosed.

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  (t)

No person has made any written or oral representations:

          (i)

that any person will resell or repurchase the Offered Shares;

          (ii)

that any person will refund the Subscription Amount; or

          (iii)

as to the future price or value of the Offered Shares.

          (u)

The subscription for the Offered Shares has not been made through or as a result
of, and the offer and sale of the Offered Shares is not being accompanied by any
advertisement, including without limitation in printed public media, radio,
television or telecommunications, including electronic display, or as part of a
general solicitation.

5.2      Acknowledgments of the Subscriber

            The Subscriber, on its own behalf and, if applicable, on behalf of
others for whom it is acting hereunder, acknowledges and agrees as follows:

  (a)

The Subscriber has received and reviewed a copy of the Term Sheet setting out
the principal terms of the Offering.

        (b)

The Subscriber acknowledges that the aggregate gross proceeds of the Offering
will be up to approximately $15,000,000 (subject to the option to increase the
number of Offered Shares by 2,272,718 Offered Shares).

        (c)

No securities commission, agency, governmental authority, regulatory body, stock
exchange or similar regulatory authority has reviewed, passed, made any finding
or determination, or recommended or endorsed on the merits of the Offered
Shares.

        (d)

Subject to the registration rights described in Schedule “H”, the Securities
shall be subject to statutory resale restrictions under the Securities Laws of
the province, territory or jurisdiction in which the Subscriber resides and the
U.S. Securities Act and under other applicable securities laws, and the
Subscriber covenants that it will not resell the Securities except in compliance
with such laws and the Subscriber acknowledges that it is solely responsible
(and the Corporation and the Underwriters are not in any way responsible) to
find out what those restrictions are and to comply with them before selling the
Securities.

        (e)

The Subscriber’s ability to transfer the Offered Shares is limited by, among
other things, applicable Securities Laws.

        (f)

The certificates representing the Offered Shares (and, if issued within four
months after the Closing Date, any certificates representing the Broker Shares)
will bear, as of the Closing Date, a legend substantially in the following form
and with the necessary information inserted:

       

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE. <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1)
DAY AFTER THE CLOSING DATE>.

        (g)

In addition, the certificates representing the Securities (and, if issued within
four months after the Closing Date, any certificates representing the Broker
Shares) will also bear a legend substantially in the following form:

       

WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH
ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD,

A-9

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TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF
THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A
CANADIAN RESIDENT UNTIL <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1) DAY
AFTER THE CLOSING DATE>.

          (h)

The Subscriber, and each beneficial purchaser for whom it is acting hereunder,
shall execute, deliver, file and otherwise assist the Corporation and
Underwriters with filing all documentation required by the applicable Securities
Laws to permit the subscription for the Offered Shares and the issuance of the
Securities.

          (i)

No prospectus or offering memorandum, within the meaning of the Securities Laws,
or other similar disclosure document has been filed by the Corporation with a
securities commission, securities regulatory authority or other governmental or
regulatory authority in the United States, in any province in Canada or any
other jurisdiction in connection with the issuance of the Offered Shares.

          (j)

The Underwriters and/or their directors, officers, employees, agents and
representatives assume no responsibility or liability of any nature whatsoever
for the accuracy or adequacy of any such publicly available information
concerning the Corporation or as to whether all information concerning the
Corporation that is required to be disclosed or filed by the Corporation under
the Securities Laws has been so disclosed or filed.

          (k)

The Corporation and Underwriters are relying on the representations, warranties
and covenants contained herein and in the applicable Schedules attached hereto
to determine the Subscriber’s eligibility to subscribe for the Offered Shares
under applicable Securities Laws and the Subscriber agrees to indemnify each of
the Corporation and the Underwriters, and each of its directors and officers
against all losses, claims, costs, expenses, damages or liabilities which any of
them may suffer or incur as a result of or arising from reliance thereon. The
Subscriber undertakes to immediately notify the Corporation of any change in any
statement or other information relating to the Subscriber set forth in such
applicable Schedules which takes place prior to the Closing Time.

          (l)

The Corporation is relying on an exemption from the requirement to provide the
Subscriber with a prospectus under the Securities Laws of Canada and as a
consequence of acquiring the Offered Shares pursuant to such exemption:

          (i)

certain protections, rights and remedies provided by applicable Securities Laws,
including statutory rights of rescission and certain statutory remedies against
an issuer, underwriters, auditors, directors and officers that are available to
investors who acquire securities offered by a prospectus, will not be available
to the Subscriber and each beneficial person for whom it is contracting
hereunder, or, if applicable, others for whom you are contracting hereunder;

          (ii)

the common law may not provide investors with an adequate remedy in the event
that they suffer investment losses in connection with securities acquired in a
private placement;

          (iii)

the Subscriber and each beneficial person for whom it is contracting hereunder,
may not receive information that would otherwise be required to be given under
applicable Securities Laws; and

          (iv)

the Corporation is relieved from certain obligations that would otherwise apply
under applicable Securities Laws.

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  (m)

The Securities are “restricted securities” as defined in Rule 144(a)(3) under
the U.S. Securities Act and have not been registered under the U.S. Securities
Act or any state securities laws and may not be reoffered or resold in the
United States or to U.S. Persons unless registered under the U.S. Securities Act
and applicable state securities laws, as contemplated in Schedule “H”, or an
exemption from such registration requirements is available. Until resales of the
Securities are registered under the U.S. Securities Act, the Securities may not
practically be able to be offered and sold on the TSX-V pursuant to Rule 904
under the U.S. Securities Act since the securities will remain “restricted
securities” pursuant to Rule 905 of Regulation S under the U.S. Securities Act.
Notwithstanding the registration of the resale of the Securities, the
Corporation does not intend to register or qualify such resales under state
securities or Blue Sky laws, and the subscriber acknowledges that the initial
sale of the securities on the TSX V, or any other trading market, may not be
made to the U.S. Person unless an exemption from such registration or
qualification is then available.

          (n)

The Subscriber agrees that if the Subscriber decides to offer, sell, pledge or
otherwise transfer any of the Offered Shares, the Subscriber will not offer,
sell, pledge or otherwise transfer any of the Offered Shares, directly or
indirectly, unless;

          (i)

the sale is to the Corporation; or

          (ii)

made pursuant to an effective registration statement under the U.S. Securities
Act; or

          (iii)

the sale is made outside the United States in compliance with the requirements
of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with
applicable local laws and regulations; or

          (iv)

the sale is made in compliance with an exemption from registration under the
U.S. Securities Act provided by (A) Rule 144 thereunder or (B) Rule 144A
thereunder, if available, and in accordance with any applicable state securities
law; or

          (v)

the Offered Shares are sold in a transaction that does not require registration
under the U.S. Securities Act or any applicable state securities laws.

          (o)

There is no government insurance or other insurance covering the Securities.

          (p)

AN INVESTMENT IN THE OFFERED SHARES IS NOT WITHOUT RISK AND THE SUBSCRIBER (AND
ANY BENEFICIAL PURCHASER) MAY LOSE HIS, HER OR ITS ENTIRE INVESTMENT.

          (q)

The Corporation may complete additional financings in the future in order to
develop the business of the Corporation and fund its ongoing development, and
such future financings may have a dilutive effect on current securityholders of
the Corporation, including the Subscriber, but there is no assurance that such
financing will be available, on reasonable terms or at all, and if not
available, the Corporation may be unable to fund its ongoing development.

          (r)

The Subscriber has such knowledge, or has received advice, in financial and
business affairs as to be capable of evaluating the merits and risks of the
Subscriber’s investment, and the Subscriber, or where the Subscriber is not
purchasing as principal, each beneficial purchaser, is able to bear the economic
risk of loss of its investment.

          (s)

The Subscriber, and each beneficial person for whom it is contracting hereunder,
is responsible for obtaining such legal, investment, tax and other professional
advice as it considers appropriate in connection with the execution, delivery
and performance of this Subscription Agreement and the transactions contemplated
under this Subscription Agreement (including the resale and transfer
restrictions referred to herein), and, without limiting the generality of the
foregoing:

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  (i)

the Corporation’s counsel are acting solely as counsel to the Corporation and
not as counsel to the Subscriber;

        (ii)

the Underwriters’ counsel are acting solely as counsel to the Underwriters and
not as counsel to the Subscriber; and

        (iii)

the Underwriters are acting solely as financial advisors to, and underwriters
of, the Corporation and not as financial advisors to the Subscriber, or as
underwriters of, the Subscriber, except insofar as is necessary at the Closing
to deliver payment for the Offered Shares to the Corporation on behalf of the
Subscriber and to accept and deliver the Offered Shares to the Subscriber after
the Closing.

  (t)

The Offered Shares have not been registered under the U.S. Securities Act or any
state securities laws, and the sale contemplated hereby is being made in
reliance on the a private placement exemption to Accredited Investors (as
defined in Rule 506 under the U.S. Securities Act).

        (u)

The Subscriber understands that, until such time as is no longer required under
applicable requirements of the U.S. Securities Act or applicable state
securities laws, all certificates representing the Offered Shares, as well as
all certificates issued in exchange for or in substitution of the foregoing
securities, will bear a legend to the following effect:

       

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
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 CORPORATION, (B) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, (C) OUTSIDE
THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S 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 CORPORATION, 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.

       

if the Offered Shares are being sold pursuant sections (C) through (E) of the
foregoing legend, the legend may be removed by delivery to the Corporation’s
registrar and transfer agent and the Corporation of an opinion of counsel, of
recognized standing in form and substance satisfactory to the Corporation, that
such legend is no longer required under applicable requirements of the U.S.
Securities Act or state securities laws.

        (v)

The Subscriber understands and agrees that there may be material tax
consequences to the Subscriber of an acquisition or disposition of the Offered
Shares, and the Subscriber acknowledges that it is responsible for determining
the tax consequences of its investments. The Corporation gives no opinion and
makes no representation with respect to the tax consequences to the Subscriber
under United States, state, local or Canadian or other foreign tax law of the
Subscriber's acquisition or disposition of such securities.

        (w)

subject to the terms and conditions of the registration rights set forth in
Schedule “H”, it acknowledges that such registration rights may be amended or
waived by holders holding a majority of the Offered Shares, and that the
Corporation’s obligations under Schedule “H” are

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conditioned upon the Subscriber cooperating with the Corporation as reasonably
requested by the Corporation in connection with the preparation and filing of
any Registration Statement hereunder, including but not limited to providing
such information in a timely manner regarding itself, the Offered Shares and
other securities of the Corporation held by it and the intended method of
disposition of the Offered Shares as shall be reasonably required to effect and
maintain the effectiveness of the registration of such Offered Shares.

5.3      Reliance on Representations, Warranties, Covenants and Acknowledgements

            The Subscriber acknowledges and agrees that the representations,
warranties, covenants and acknowledgements made by the Subscriber in this
Subscription Agreement are made with the intention that they may be relied upon
by the Corporation and the Underwriters in determining the Subscriber’s
eligibility (and, if applicable, the eligibility of others for whom the
Subscriber is contracting hereunder) to purchase the Offered Shares under
Securities Laws. The Subscriber undertakes to immediately notify the Corporation
of any change in any statement or other information relating to the Subscriber
set forth in this Subscription Agreement, or in any document furnished by the
Subscriber to the Corporation or the Underwriters in connection with this
Subscription Agreement, which takes place at or prior to the Closing Time.

            The Subscriber further agrees that by accepting the Offered Shares,
the Subscriber shall be representing and warranting that such representations,
warranties, acknowledgements and covenants are true as at the Closing Time with
the same force and effect as if they had been made by the Subscriber at the
Closing Time and that they shall survive the purchase by the Subscriber of the
Offered Shares and shall continue in full force and effect notwithstanding any
subsequent disposition by the Subscriber of any of Offered Shares.

ARTICLE 6 - SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

6.1      Survival of Representations, Warranties and Covenants of the
Corporation

            The representations, warranties and covenants of the Corporation
contained in this Subscription Agreement shall survive the Closing and,
notwithstanding such Closing or any investigation made by or on behalf of the
Subscriber with respect thereto, shall continue in full force and effect for the
benefit of the Subscriber and the Underwriters (as provided herein).

6.2      Survival of Representations, Warranties and Covenants of the Subscriber

            The representations, warranties and covenants of the Subscriber
contained in this Subscription Agreement shall survive the Closing and,
notwithstanding such Closing or any investigation made by or on behalf of the
Corporation or the Underwriters with respect thereto, shall continue in full
force and effect for the benefit of the Corporation and the Underwriters.

ARTICLE 7 - INDEMNITY

7.1      Indemnity

            The Subscriber shall indemnify and hold harmless each of the
Corporation and the Underwriters and each of their respective directors,
officers, employees, underwriters, advisers and shareholders (collectively, the
“Indemnified Parties” and each an “Indemnified Party”) from and against any and
all actual or threatened claims, actions, suits, investigations and proceedings
(collectively, the “Proceedings”) and any and all losses, liabilities, claims,
damages, fees, costs and expenses, all amounts paid to settle any Proceeding or
to satisfy any judgment or award, and all legal fees and disbursements incurred
by an Indemnified Party (including legal fees and disbursements incurred in
enforcing this indemnity), caused or arising, directly or indirectly, by reason
of or in consequence of, any representation or warranty of the Subscriber
contained in this Subscription Agreement or in any document furnished by the
Subscriber to the Corporation or the Underwriters in connection with this
Subscription Agreement being untrue in any material respect or any breach or
failure by the Subscriber to comply with any

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covenant or agreement made by the Subscriber in this Subscription Agreement or
in any document furnished by the Subscriber to the Corporation or the
Underwriters in connection with this Subscription Agreement.

ARTICLE 8 - AUTHORIZATION OF THE UNDERWRITERS

8.1      Authorization of the Underwriters

            The Subscriber irrevocably authorizes the Underwriters in their sole
and absolute discretion, to act as the Subscriber’s representative at the
Closing, and hereby appoints the Underwriters and the US Affiliates, with full
power of substitution, as its true and lawful attorney with full power and
authority in the Subscriber’s place and stead:

  (a)

to receive certificates representing the Securities, to execute in the
Subscriber’s name and on its behalf all closing receipts and required documents,
to complete and correct any errors or omissions in any form or document provided
by the Subscriber in connection with the subscription for the Offered Shares and
to exercise any rights of termination contained in the Underwriting Agreement;

        (b)

to extend such time periods and to waive, in whole or in part, any
representations, warranties, covenants or conditions for the Subscriber’s
benefit contained in this Subscription Agreement and the Underwriting Agreement
or any ancillary or related documents;

        (c)

to terminate this Subscription Agreement if any condition precedent is not
satisfied, in such manger and on such terms and conditions as the Underwriters
in their sole discretion may determine; and

        (d)

without limiting the generality of the foregoing, to negotiate, settle, execute,
deliver and amend the Underwriting Agreement.

ARTICLE 9 - COMMISSION

9.1      Fee to the Underwriters

            The Subscriber understands that in connection with the issue and
sale of the Offered Shares pursuant to the Offering, the Underwriters will
receive from the Corporation on Closing, a cash fee equal to 5.0% of the gross
proceeds of the offering of Offered Shares, and Broker Warrants entitling the
Underwriters to acquire that number of Offered Shares as is equal to 5.0% of the
number of Offered Shares sold pursuant to the Offering at the U.S. dollar
equivalent of the Offered Share Price (calculated at the Closing Date) during
the period ending 18 months from the closing of the Offering. No other fee or
commission is payable by the Corporation in connection with the completion of
the Offering. However, the Corporation will pay certain fees and expenses of the
Underwriters in connection with the Offering as set out in the Underwriting
Agreement.

ARTICLE 10 - COLLECTION OF PERSONAL INFORMATION

10.1     Collection of Personal Information

            The Subscriber acknowledges and consents to the fact that the
Corporation and the Underwriters are collecting the Subscriber’s (and any
beneficial purchaser for which the Subscriber is contracting hereunder) personal
information for the purpose of completing the Subscriber’s subscription. The
Subscriber acknowledges and consents to the Corporation and Underwriters
retaining the personal information for so long as permitted or required by
applicable law or business practices. The Subscriber further acknowledges and
consents to the fact that the Corporation or the Underwriters may be required by
Securities Laws, stock exchange rules and/or Investment Dealers Association of
Canada rules to provide regulatory authorities any personal information provided
by the Subscriber respecting itself (and any beneficial purchaser for which the
Subscriber is contracting hereunder). The Subscriber represents and warrants
that it has the authority to provide the consents and acknowledgements set out
in

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this paragraph on behalf of all beneficial purchasers for which the Subscriber
is contracting. In addition to the foregoing, the Subscriber agrees and
acknowledges that the Corporation or the Underwriters, as the case may be, may
use and disclose its personal information, or that of each beneficial purchaser
for whom it is contracting hereunder, as follows:

  (a)

for internal use with respect to managing the relationships between and
contractual obligations of the Corporation, the Underwriters and the Subscriber
or any beneficial purchaser for whom the Subscriber is contracting hereunder;

        (b)

for use and disclosure for income tax related purposes, including without
limitation, where required by law, disclosure to Canada Revenue Agency;

        (c)

for disclosure to securities regulatory authorities and other regulatory bodies
with jurisdiction with respect to reports of trades and similar regulatory
filings;

        (d)

for disclosure to a governmental or other authority to which the disclosure is
required by court order or subpoena compelling such disclosure and where there
is no reasonable alternative to such disclosure;

        (e)

for disclosure to professional advisers of the Corporation or the Underwriters
in connection with the performance of their professional services;

        (f)

for disclosure to any person where such disclosure is necessary for legitimate
business reasons and is made with the Subscriber’s prior written consent;

        (g)

for disclosure to a court determining the rights of the parties under this
Subscription Agreement; or

        (h)

for use and disclosure as otherwise required or permitted by law.

            The contact information for the officer of the Corporation who can
answer questions about this collection of information is as follows:

Daniel Kunz, President
U.S. Geothermal Inc.
1509 Tyrell Lane, Suite 13
Boise, Idaho 83706

Telephone:      (208) 424-1027
Facsimile:         (208) 424-1030

            By executing this Subscription Agreement, the Subscriber (on its own
behalf and, if applicable, on behalf of each beneficial purchaser on whose
behalf the Subscriber is acting) acknowledges and expressly consents to:

  (a)

the disclosure of Personal Information by the Corporation to the TSX-V (as
described in TSX-V Appendix 6A, a copy of which is attached as Schedule “G”)
pursuant to Form 4B of the TSX-V; and

        (b)

the collection, use and disclosure of Personal Information by the TSX-V for the
purposes described in Appendix 6A or as otherwise identified by the TSX-V, from
time to time.

                For the purposes of this Section 10.1, Personal Information
means any information about the Subscriber, and includes information contained
in Part II Items 8, 9, 10 and Part IV Item 3(a), as applicable, of the TSX-V
Form 4B - Private Placement Notice Form.

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            The Subscriber acknowledges that the Corporation is required to file
with the Ontario Securities Commission (“OSC”) a report setting out the
Subscriber’s name, address and telephone number, the number and type of
securities issued, the date of issuance and the purchase price of the securities
issued to the Subscriber. Such information is collected indirectly by the OSC
under the authority granted to it in securities legislation, for the purposes of
the administration and enforcement of the securities legislation of Ontario. By
submitting this Subscription Agreement, the Subscriber authorizes such indirect
collection of the information by the OSC. The following official can answer
questions about the OSC’s indirect collection of the information:

Administrative Assistant to the Director of Corporate Finance
Suite 903, Box 5520 Queen Street West
Toronto, Ontario M5H 3S8

Telephone:           (416) 593-8086
Facsimile:              (416) 593-8252

ARTICLE 11 - MISCELLANEOUS

11.1     Further Assurances

            Each of the parties hereto upon the request of each of the other
parties hereto, whether before or after the Closing Time, shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be necessary or
desirable to complete the transactions contemplated herein.

11.2     Notices

  (a)

Any notice, direction or other instrument required or permitted to be given to
any party hereto shall be in writing and shall be sufficiently given if
delivered personally, or transmitted by facsimile tested prior to transmission
to such party, as follows:

          (i)

in the case of the Corporation, to:

         

U.S. Geothermal Inc.
1509 Tyrell Lane, Suite 13
Boise, Idaho
83706

         

Attention:           Daniel Kunz, President
Fax:                      (208) 424-1030

         

with a copy to:

         

Goodmans LLP

 

355 Burrard Street, Suite 1900
Vancouver, British Columbia
V6C 2G8

         

Attention:           Bruce Wright
Fax:                       (604) 682-7131

          (ii)

in the case of the Subscriber, at the address specified on the face page hereof,
with a copy to the Underwriters at:

         

Cormark Securities Inc.
Royal Bank Plaza

A-16

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

South Tower, Suite 2800
200 Bay Street
Toronto, Ontario
M5J 2J2

Attention:           Susan Samila-Moroz
Fax:                       (416) 943-6496

  (b)

Any such notice, direction or other instrument, if delivered personally, shall
be deemed to have been given and received on the day on which it was delivered,
provided that if such day is not a Business Day then the notice, direction or
other instrument shall be deemed to have been given and received on the first
Business Day next following such day and if transmitted by fax or electronic
transmission, shall be deemed to have been given and received on the day of its
transmission, provided that if such day is not a Business Day or if it is
transmitted or received after the end of normal business hours then the notice,
direction or other instrument shall be deemed to have been given and received on
the first Business Day next following the day of such transmission.

        (c)

Any party hereto may change its address for service from time to time by notice
given to each of the other parties hereto in accordance with the foregoing
provisions.

11.3     Time of the Essence

            Time shall be of the essence of this Subscription Agreement and
every part hereof.

11.4     Costs and Expenses

            All costs and expenses (including, without limitation, the fees and
disbursements of legal counsel) incurred in connection with this Subscription
Agreement and the transactions herein contemplated shall be paid and borne by
the party incurring such costs and expenses.

11.5     Applicable Law

            This Subscription Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the province of Ontario and the laws of Canada applicable therein. Any and all
disputes arising under this Subscription Agreement, whether as to
interpretation, performance or otherwise, shall be subject to the non-exclusive
jurisdiction of the courts of the province of Ontario and each of the parties
hereto hereby irrevocably attorns to the jurisdiction of the courts of such
province.

11.6     Entire Agreement

            This Subscription Agreement, including the Schedules hereto,
constitutes the entire agreement between the parties with respect to the
transactions contemplated herein and cancels and supersedes any prior
understandings, agreements, negotiations and discussions between the parties.
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements or understandings, express or implied, between the parties
hereto other than those expressly set forth in this Subscription Agreement or in
any such agreement, certificate, affidavit, statutory declaration or other
document as aforesaid. This Subscription Agreement may not be amended or
modified in any respect except by written instrument executed by each of the
parties hereto.

11.7     Counterparts

            This Subscription Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same Subscription Agreement. Counterparts
may be delivered either in original or faxed form and the parties adopt any
signature received by a receiving fax machine as original signatures of the
parties.

A-17

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

11.8     Electronic Delivery of Subscription

            The Corporation shall be entitled to rely on delivery by fax or
e-mail of an executed copy of this Subscription Agreement, including the
completed Schedules to this Subscription Agreement, and acceptance by the
Corporation of the fax or e-mail copy shall be legally effective to create a
valid and binding agreement between the Subscriber and the Corporation in
accordance with the terms of this Subscription Agreement.

11.9     Amendments

            The provisions of this Subscription Agreement may only be amended
with the written consent of the other parties hereto.

11.10   Assignment

            This Subscription Agreement may not be assigned by either party
except with the prior written consent of the other parties hereto.

11.11   Enurement

            This Subscription Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
successors (including any successor by reason of the amalgamation or merger of
any party), administrators and permitted assigns.

11.12   Language

            Each of the Corporation and the Subscriber hereby acknowledges that
it has consented and requested that all documents evidencing or relating in any
way to the Offered Shares and this Subscription Agreement be drawn up in the
English language only. La Société et le souscripteur reconnaissent par les
présentes avoir consenti et demandé que tous les documents faisant foi ou se
rapportant de quelque manière a la vente d’actions ordinaires de la société et à
la présente convention de souscription soient rédigés en anglais seulement.

A-18

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

SCHEDULE “B”   Term Sheet   U.S. GEOTHERMAL INC.   Terms And Conditions  
Private Placement of Offered Shares  

Issuer:

U.S. Geothermal Inc. (the “Company”).

 

Offer:

Underwritten private placement (the “Offering”) of 6,818,182 common shares
(“Offered Shares”) of the Company.

 

Option:

The Underwriters shall have the option, exercisable at any time until 48 hours
prior to Closing, to increase the size of the Offering by up to 2,272,718
Offered Shares.

 

Offering Price:

CDN$2.20 per Offered Share (the “Offering Price”).

 

Size of Offering:

CDN$15,000,000 (subject to the option to increase the number of Offered Shares
by 2,272,718 Offered Shares).

 

Use of Proceeds:

The net proceeds of the offering will be used for general working capital
purposes.

 

Offering
Jurisdictions:

Each of the provinces of Canada, the United States (pursuant to Regulation D or
rule 144A under the United States Securities Act of 1933, as amended (the “U.S.
Securities Act)) or in such other manner as to not require registration under
the U.S. Securities Act, and jurisdictions other than Canada and the United
States, provided that the Company is not required to file a prospectus or other
disclosure document or become subject to continuing reporting obligations in
such other jurisdictions.

 

Liquidity Provision:

In the event that a Registration Statement registering the Offered Shares under
the U.S. Securities Act has not become effective on or before the date that is 5
months following the Closing Date, purchasers of the Offered Shares will be
entitled to receive an additional 0.1 Offered Shares for every Offered Share
purchased in the Offering in accordance with the terms and conditions set out in
Schedule “H”.

 

Listing:

The Company will make application to list the Offered Shares on the TSX Venture
Exchange for trading on Closing.

 

Closing Date:

On or about June 5, 2007 or such other date as the parties may agree (the
“Closing Date”).

 

Cash Commission:

5% of the gross proceeds of the Offering.

 

Broker Warrants:

In addition to the cash commission, the Company will issue to the Underwriters
broker’s warrants exercisable for a period of 18 months following the Closing to
purchase at the U.S. dollar equivalent of the Offering Price (calculated as of
the Closing Date) that number of shares as is equal to 5% of the aggregate
number of Offered Shares purchased by purchasers other than certain exempt
purchasers agreed upon by the Company and the Underwriters.

 

Standstill:

The Company agrees not to issue nor announce the issuance of any Offered Shares
or financial instruments convertible or exercisable into Offered Shares for a
period

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

commencing on the date hereof and expiring 120 days following Closing without
the prior written consent of the Underwriters, which consent will not be
unreasonably withheld or delayed. This condition shall not apply to the issuance
of securities pursuant to: (i) securities issued in connection with private
placements to existing shareholders or in nonbrokered private placements
arranged by the Company with any existing or potential strategic partners; (ii)
any bonafide acquisition by the Company or one of its affiliates; (iii) the
issuance of securities to directors, officers, employees and consultants under
existing compensation arrangements, including applicable stock option agreements
or plans; (iv) securities issued to holders of rights to acquire any securities
of the Company, including any existing convertible or exchangeable securities of
the Company, that are outstanding on the date hereof; and (v) any securities
issued in relation to any project finance.

    Syndicate: Cormark Securities Inc., Dundee Securities Corporation and Toll
Cross Securities Inc.

B-2

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

SCHEDULE “C”

CERTIFICATE OF SUBSCRIBERS

UNITED STATES ACCREDITED INVESTOR CERTIFICATE

TO:

U.S. GEOTHERMAL INC. (THE “CORPORATION”)

 

 

AND TO:

CORMARK SECURITIES INC., DUNDEE SECURITIES CORPORATION AND TOLL CROSS SECURITIES
INC.

 

 

AND TO:

CORMARK SECURITIES (U.S.A.) LIMITED, DUNDEE SECURITIES INC., AND TOLL CROSS
SECURITIES USA INC.

 

 

RE:

SUBSCRIPTION FOR OFFERED SHARES OF THE CORPORATION

   

Capitalized terms not otherwise defined herein shall have the meanings
attributed thereto in the subscription agreement to which this certificate was
attached.

The undersigned (the “Subscriber”) represents, warrants and covenants to the
Corporation that:

1.     the Subscriber (and if the Subscriber is acting on behalf of a principal,
then also for the principal for whom the Subscriber is acting) satisfies one or
more of the categories of “accredited investor” as that term is defined in Rule
501 of the Securities Act of 1933, as amended (the “U.S. Securities Act”), by
virtue of the Subscriber being:

[please indicate “Sub” for Subscriber, and if acting on behalf of one or more
beneficial purchaser, “BP” for each beneficial purchaser]

___ Category 1.

An organization described in Section 501(c)(3) of the United States Internal
Revenue Code, a corporation, a Massachusetts or similar business trust or
partnership, not formed for the specific purpose of acquiring the Offered
Shares, with total assets in excess of US$5,000,000

   

___ Category 2.

A natural person whose individual net worth or joint net worth with that
person’s spouse, at the date hereof, exceeds US$1,000,000

   

___ Category 3.

A natural person who had an individual income in excess of US$200,000 in each of
the two most recent years or joint income with that person’s spouse in excess of
US$300,000 in each of those years and has a reasonable expectation of reaching
the same income level in the current year

   

___ Category 4.

A trust that: (a) has total assets in excess of US$5,000,000, (b) was not formed
for the specific purpose of acquiring the Offered Shares, and (c) is directed in
its purchases of securities by a person who has such knowledge and experience in
financial and business matters that he/she is capable of evaluating the merits
and risks of an investment in the Offered Shares

   

___ Category 5.

Any bank as defined in Section 3(a)(2) of the U.S. Securities Act or any savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the U.S. Securities Act whether acting in its individual or fiduciary capacity;
any broker dealer registered pursuant to Section 15 of the United States
Securities Exchange Act of 1934; any insurance company as defined in Section
2(13) of the U.S. Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; any Small Business Investment Company licensed by
the U.S. Small Business Administration

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

under Section 301(c) or (d) of the Small Business Investment Act of 1958; any
plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of
US$5,000,000; or any employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either
a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of US$5,000,000, or, if a self-directed plan, with investment decisions made
solely by persons that are Accredited Investors

   

___ Category 6.

Any director or executive officer of the issuer of the securities being offered
or sold.

   

___ Category 7.

A private business development as defined in Section 202(a)(22) of the
Investment Advisors Acts of 1940

   

___ Category 8.

An entity, other than a trust, in which all of the equity owners satisfy the
requirements of one or more of the foregoing categories

2.     (a) if the undersigned is the Subscriber, he or she is making the above
statement based on personal knowledge of his or her financial situation and has
reviewed personal financial documentation with an accountant, financial advisor
or other financial professional, if necessary, to determine that the above
statement is true; or (b) if the undersigned is other than the Subscriber, he or
she is making the above statement based on a review, if necessary, of the
financial statements of the Subscriber for the most recently completed financial
year and any interim financial statements prepared since the end of such
financial year and has undertaken such other review and due diligence necessary
to determine and certify that the Subscriber is an “accredited investor” as that
term is defined in Rule 501(a) or any entity in which all of the equity owners
are “accredited investors” under the U.S. Securities Act; and

3.     the Subscriber understands that the Corporation is relying on this
certificate as evidence of the Subscriber’s status as an institutional
“accredited investor” in accordance with Rule 501(a) of the U.S. Securities Act
and further understands that the Corporation may, in its sole discretion,
require the Subscriber to execute a new and separate certificate each time the
Subscriber subscribes for additional Offered Shares.

DATED at _____________ this ______ day of ____________________________, 200__.

        Signature of Subscriber (if an individual)     Name of Subscriber (if
not an individual)             Per: Name of Subscriber (if an individual)    
(Signature of Authorized Representative)                       Name and Title of
Authorized Representative

B-2

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

SCHEDULE “D”

CANADIAN ACCREDITED INVESTOR CERTIFICATE

The Subscriber or the disclosed principal, as the case may be, hereby
represents, warrants and certifies (by completing and signing this certificate
below) on its own behalf or, if applicable on behalf of those for whom the
Subscriber is contracting hereunder, to the Corporation and its counsel (which
representations, warranties and certifications shall survive Closing) and
acknowledges that the Corporation and its counsel are relying thereon that the
Subscriber, or, if applicable, its disclosed principal, is a resident of or
otherwise subject to the securities legislation of a province or territory of
Canada, the Subscriber or such disclosed principal is an “accredited investor”,
as such term is defined in National Instrument 45-106 – Prospectus and
Registration Exemptions (“NI 45-106”) and, as at the time the subscription is
accepted by the Corporation, the Subscriber or the disclosed principal, as the
case may be, will fall within one or more of the following categories (Please
initial one or more, as applicable):

___ (a)

a Canadian financial institution, or an authorized foreign bank listed in
Schedule III of the Bank Act (Canada);

      ___ (b)

the Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act (Canada);

      ___ (c)

a subsidiary of any person referred to in paragraphs (a) or (b), if the person
owns all of the voting securities of the subsidiary, except the voting
securities required by law to be owned by directors of that subsidiary;

      ___  (d)

a person registered under the securities legislation of a jurisdiction of Canada
as an adviser or dealer, other than a person registered solely as a limited
market dealer registered under one or both of the Securities Act (Ontario) or
the Securities Act (Newfoundland and Labrador);

      ___ (e)

an individual registered or formerly registered under the securities legislation
of a jurisdiction of Canada as a representative of a person referred to in
paragraph (d);

      ___ (f)

the Government of Canada or a jurisdiction of Canada, or any crown corporation,
agency or wholly owned entity of the Government of Canada or a jurisdiction of
Canada;

      ___ (g)

a municipality, public board or commission in Canada and a metropolitan
community, school board, the Comité de gestion de la taxe scolaire de l’île de
Montréal or an intermunicipal management board in Québec;

      ___ (h)

any national, federal, state, provincial, territorial or municipal government of
or in any foreign jurisdiction, or any agency of that government;

      ___ (i)

a pension fund that is regulated by either the Office of the Superintendent of
Financial Institutions (Canada) or a pension commission or similar regulatory
authority of a jurisdiction of Canada;

      ___ (j)

an individual who, either alone or with a spouse, beneficially owns, directly or
indirectly, financial assets having an aggregate realizable value that before
taxes, but net of any related liabilities, exceeds $1,000,000;

      ___ (k)

an individual whose net income before taxes exceeded $200,000 in each of the two
most recent calendar years or whose net income before taxes combined with that
of a spouse exceeded $300,000 in each of the two most recent calendar years and
who, in either case, reasonably expects to exceed that net income level in the
current year;

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

___ (l)

an individual who, either alone or with a spouse, has net assets of at least
$5,000,000;

    ___ (m)

a person, other than an individual or investment fund, that has net assets of at
least $5,000,000 as shown on its most recently prepared financial statements;

      ___ (n)

an investment fund that distributes or has distributed its securities only to
(i) a person that is or was an accredited investor at the time of the
distribution, (ii) a person that acquires or acquired securities in the
circumstances referred to in section 2.10 of NI 45-106 and section 2.19 of NI
45-106, or (iii) a person described in paragraph (i) or (ii) that acquires or
acquired securities under section 2.18 of NI 45-106;

      ___ (o)

an investment fund that distributes or has distributed securities under a
prospectus in a jurisdiction of Canada for which the regulator or, in Québec,
the securities regulatory authority, has issued a receipt;

      ___ (p)

a trust company or trust corporation registered or authorized to carry on
business under the Trust and Loan Companies Act (Canada) or under comparable
legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on
behalf of a fully managed account managed by the trust company or trust
corporation, as the case may be;

      ___ (q)

a person acting on behalf of a fully managed account managed by that person, if
that person(i) is registered or authorized to carry on business as an adviser or
the equivalent under the securities legislation of a jurisdiction of Canada or a
foreign jurisdiction. And (ii) in Ontario, is purchasing a security that is not
a security of an investment fund;

      ___ (r)

a registered charity under the Income Tax Act (Canada) that, in regard to the
trade, has obtained advice from an eligibility adviser or other adviser
registered under the securities legislation of the jurisdiction of the
registered charity to give advice on the securities being traded;

      ___ (s)

an entity organized in a foreign jurisdiction that is analogous to any of the
entities referred to in paragraphs (a) to (d) or paragraph (i) in form and
function;

      ___ (t)

a person in respect of which all of the owners of interests, direct, indirect or
beneficial, except the voting securities required by law to be owned by
directors, are persons that are accredited investors;

      ___ (u)

an investment fund that is advised by a person registered as an advisor or a
person that is exempt from registration as an advisor; or

      ___ (v)

a person that is recognized or designated by the securities regulatory authority
or, except in Ontario and Québec, the regulator as (i) an accredited investor,
or (ii) an exempt purchaser in Alberta or British Columbia after September 14,
2005.

For the purposes of the representation and warranties set out above, the terms
set out below shall have the following meanings:

“bank” means a bank named in Schedule I or II of the Bank Act (Canada);

“Canadian financial institution” means

  (a)

an association governed by the Cooperative Credit Associations Act (Canada) or a
central cooperative credit society for which an order has been made under
section 473(1) of that Act, or

        (b)

a bank, loan corporation, trust company, trust corporation, insurance company,
treasury branch, credit union, caisse populaire, financial services cooperative,
or league that, in each case, is authorized by an enactment of Canada or a
jurisdiction of Canada to carry on business in Canada or a jurisdiction of
Canada;

D-2

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

“director” means

  (a)

a member of the board of directors of a company or an individual who performs
similar functions for a company, and

        (b)

with respect to a person that is not a company, an individual who performs
functions similar to those of a director of a company;

“EVCC” means an employee venture capital corporation that does not have a
restricted constitution, and is registered under Part 2 of the Employee
Investment Act (British Columbia), and whose business objective is making
multiple investments;

“eligibility adviser” means

  (a)

a person that is registered as an investment dealer or in an equivalent category
of registration under the securities legislation of the jurisdiction of a
purchaser and authorized to give advice with respect to the type of security
being distributed, and

        (b)

in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in
good standing with a law society of a jurisdiction of Canada or a public
accountant who is a member in good standing of an institute or association of
chartered accountants, certified general accountants or certified management
accountants in a jurisdiction of Canada provided that the lawyer or public
accountant must not (i) have a professional, business or personal relationship
with the issuer, or any of its directors, executive officers, founders, or
control persons, and (ii) have acted for or been retained personally or
otherwise as an employee, executive officer, director, associate or partner of a
person that has acted for or been retained by the issuer or any of its
directors, executive officers, founders or control persons within the previous
12 months;

“financial assets” means

  (a)

cash,

        (b)

securities, or

        (c)

a contract of insurance, a deposit or an evidence of a deposit that is not a
security for the purposes of securities legislation;

“fully managed account” means an account of a client for which a person makes
the investment decisions if that person has full discretion to trade in
securities for the account without requiring the client’s express consent to a
transaction;

“individual” means a natural person, but does not include a partnership,
unincorporated association, unincorporated organization, trust or a natural
person in his or her capacity as trustee, executor, administrator or other legal
personal representative;

“instrument” means National Instrument 45-106 Prospectus and Registration
Exemptions of the Canadian Securities Administrators;

“investment fund” means a mutual fund or a non-redeemable investment fund, and,
for greater certainty in British Columbia, includes an EVCC and a VCC;

“jurisdiction” means a province or territory of Canada except when used in the
term foreign jurisdiction;

“mutual fund” has the meaning ascribed to such term under the securities
legislation of the applicable jurisdiction;

D-3

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

“non-redeemable investment fund” means an issuer:

  (a)

whose primary purpose is to invest money provided by its securityholders,

          (b)

that does not invest,

          (i)

for the purpose of exercising or seeking to exercise control of an issuer, other
than an issuer that is a mutual fund or a non-redeemable investment fund, or

          (ii)

for the purpose of being actively involved in the management of any issuer in
which it invests, other than an issuer that is a mutual fund or a non-redeemable
investment fund, and

          (c)

that is not a mutual fund;

“officer” means the chair, any vice chair of the board of directors, the
president, any vice president, the secretary, the assistant secretary, the
treasurer, the assistant treasurer, and the general manager of a company, and
any other person designated an officer or a company by law or similar authority,
or any individual acting in a similar capacity on behalf of the issuer;

“person” includes

  (a)

an individual,

        (b)

a corporation,

        (c)

a partnership, trust, fund and an association, syndicate, organization or other
organized group of persons, whether incorporated or not, and

        (d)

an individual or other person in that person’s capacity as a trustee, executor,
administrator or personal or other legal representative;

“related liabilities” means

  (a)

liabilities incurred or assumed for the purpose of financing the acquisition or
ownership of financial assets, or

        (b)

liabilities that are secured by financial assets;

“Schedule III bank” means an authorized foreign bank named in Schedule III of
the Bank Act (Canada);

“spouse” means, an individual who,

  (a)

is married to another individual and is not living separate and apart within the
meaning of the Divorce Act (Canada), from the other individual,

        (b)

is living with another individual in a marriage-like relationship, including a
marriage-like relationship between individuals of the same gender, or

        (c)

in Alberta, is an individual referred to in paragraph (a) or (b), or is an adult
interdependent partner within the meaning of the Adult Interdependent
Relationships Act (Alberta);

“subsidiary” means an issuer that is controlled directly or indirectly by
another issuer and includes a subsidiary of that subsidiary.

D-4

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

“VCC” means a venture capital corporation registered under Part 1 of the Small
Business Venture Capital Act (British Columbia), whose business objective is
making multiple investments.

Control

A person (first person) is considered to control another person (second person)
if

  (a)

the first person, directly or indirectly, beneficially owns or exercises control
or direction over securities of the second person carrying votes which, if
exercised, would entitle the first person to elect a majority of the directors
of the second person, unless that first person holds the voting securities only
to secure an obligation,

        (b)

the second person is a partnership, other than a limited partnership, and the
first person holds more than 50% of the interests of the partnership, or

        (c)

the second person is a limited partnership and the general partner of the
limited partnership is the first person.

* * * * * * * * *

The foregoing representations contained in this certificate are true and
accurate as of the date hereof and will be true and accurate as of the Closing
Date. If any such representations shall not be true and accurate prior to the
Closing Date, the Subscriber shall give immediate notice to the Corporation.

EXECUTED by the Subscriber at _______________ this ______ day of
________________, 200__.

If a corporation, partnership or other entity:   If an individual:            
Print Name of Subscriber   Print Name             Signature of Authorized
Signatory   Signature             Name and Position of Authorized Signatory  
Jurisdiction of Residence             Jurisdiction of Residence   Print Name of
Witness                 Signature of Witness

D-5

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

SCHEDULE “E”

CERTIFICATE OF NON-CANADIAN SUBSCRIBERS
(OTHER THAN U.S. SUBSCRIBERS)

The Subscriber, on its own behalf and (if applicable) on behalf of others for
whom it is contracting hereunder, further represents, warrants and covenants to
and with the Corporation (and acknowledges that the Corporation is relying
thereon) that it is, and (if applicable) any beneficial purchaser for whom it is
contracting hereunder is, a resident of, or otherwise subject to, the securities
legislation of a jurisdiction other than Canada or the United States, and:

  (a)

the Subscriber is, and (if applicable) any other purchaser for whom it is
contracting hereunder, is:

          (i)

a purchaser that is recognized by the securities regulatory authority in the
jurisdiction in which it is, and (if applicable) any other purchaser for whom it
is contracting hereunder is resident or otherwise subject to the securities laws
of such jurisdiction, as an exempt purchaser and is purchasing the Offered
Shares as principal for its, or (if applicable) each such other purchaser’s, own
account, and not for the benefit of any other person; or

          (ii)

a purchaser which is purchasing Offered Shares pursuant to an exemption from any
prospectus or securities registration requirements (particulars of which are
enclosed herewith) available to the Corporation, the Subscriber and any such
other purchaser under applicable securities laws of their jurisdiction of
residence or to which the Subscriber and any such other purchaser are otherwise
subject to, and the Subscriber and any such other purchaser shall deliver to the
Corporation such further particulars of the exemption and their qualification
thereunder as the Corporation may reasonably request;

          (b)

the purchase of Offered Shares by the Subscriber, and (if applicable) each such
other purchaser, does not contravene any of the applicable securities laws in
such jurisdiction and does not trigger: (i) any obligation to prepare and file a
prospectus, an offering memorandum or similar document, or any other ongoing
reporting requirements with respect to such purchase or otherwise; or (ii) any
registration or other obligation on the part of the Corporation;

          (c)

the Subscriber, and (if applicable) any other purchaser for whom we are
contracting hereunder will not sell or otherwise dispose of any Offered Shares,
except in accordance with applicable securities laws in Canada and the United
States, and if the Subscriber, or (if applicable) such beneficial purchaser
sells or otherwise disposes of any Offered Shares to a person other than a
resident of Canada or the United States, as the case may be, the Subscriber, and
(if applicable) such beneficial purchaser, will obtain from such purchaser
representations, warranties and covenants in the same form as provided in this
Schedule D and shall comply with such other requirements as the Corporation may
reasonably require.

Dated at _____________ this ________ day of _______________, 200____.

        Name of Subscriber         By:     Signature                 Title

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SCHEDULE “F”

TSX VENTURE EXCHANGE

FORM 4C

CORPORATE PLACEE REGISTRATION FORM

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  FORM 4C  [tsxblacklogo.jpg]

CORPORATE PLACEE REGISTRATION FORM

Where subscribers to a Private Placement are not individuals, the following
information about the placee must be provided. This Form will remain on file
with the Exchange. The corporation, trust, portfolio manager or other entity
(the “Placee”) need only file it on one time basis, and it will be referenced
for all subsequent Private Placements in which it participates. If any of the
information provided in this Form changes, the Placee must notify the Exchange
prior to participating in further placements with Exchange listed companies. If
as a result of the Private Placement, the Placee becomes an Insider of the
Issuer, Insiders of the Placee are reminded that they must file a Personal
Information Form (2A) or, if applicable, Declarations, with the Exchange.

Placee Information:

  (d)

Name:
_________________________________________________________________________________________________

        (e)

Complete Address:
_______________________________________________________________________________________

   
______________________________________________________________________________________________________
        (f)

Jurisdiction of Incorporation or Creation:
______________________________________________________________________

  (a)

Is the Placee purchasing securities as a portfolio manager (Yes/No)?

  (b)

Is the Placee carrying on business as a portfolio manager outside of Canada
(Yes/No)? __________

If the answer to 2(b) above was “Yes”, the undersigned certifies that:

  (g)

It is purchasing securities of an Issuer on behalf of managed accounts for which
it is making the investment decision to purchase the securities and has full
discretion to purchase or sell securities for such accounts without requiring
the client’s express consent to a transaction;

        (h)

it carries on the business of managing the investment portfolios of clients
through discretionary authority granted by those clients (a “portfolio manager”
business) in ____________________ [jurisdiction], and it is permitted by law to
carry on a portfolio manager business in that jurisdiction;

        (i)

it was not created solely or primarily for the purpose of purchasing securities
of the Issuer;

        (j)

the total asset value of the investment portfolios it manages on behalf of
clients is not less than $20,000,000; and

        (k)

it has no reasonable grounds to believe, that any of the directors, senior
officers and other insiders of the Issuer, and the persons that carry on
investor relations activities for the Issuer has a beneficial interest in any of
the managed accounts for which it is purchasing

If the answer to 2(a). above was “No”, please provide the names and addresses of
control persons of the Placee:

FORM 4C CORPORATE PLACEE REGISTRATION FORM Page 1 (as at March 11, 2004)    

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Name City Province or State Country                                

The undersigned acknowledges that it is bound by the provisions of applicable
Securities Law, including provisions concerning the filing of insider reports
and reports of acquisitions (See for example, sections 87 and 111 of the
Securities Act (British Columbia) and sections 176 and 182 of the Securities Act
(Alberta).

FORM 4C CORPORATE PLACEE REGISTRATION FORM Page 2 (as at March 11, 2004)    

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Acknowledgement - Personal Information

“Personal Information” means any information about an identifiable individual,
and includes information contained in sections 1, 2 and 4, as applicable, of
this Form.

The undersigned hereby acknowledges and agrees that it has obtained the express
written consent of each individual to:

(a)

the disclosure of Personal Information by the undersigned to the Exchange (as
defined in Appendix 6B) pursuant to this Form; and

    (b)

the collection, use and disclosure of Personal Information by the Exchange for
the purposes described in Appendix 6B or as otherwise identified by the
Exchange, from time to time.

Dated at ________________________________________ on
____________________________________

 

      (Name of Purchaser - please print)           (Authorized Signature)      
    (Official Capacity - please print)           (please print name of
individual whose signature appears above)

THIS IS NOT A PUBLIC DOCUMENT

FORM 4C CORPORATE PLACEE REGISTRATION FORM Page 3 (as at March 11, 2004)    

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SCHEDULE “G”

 

TSX VENTURE EXCHANGE

 

APPENDIX 6A

ACKNOWLEDGMENT – PERSONAL INFORMATION

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[tsxblacklogo.jpg]

APPENDIX 6A
ACKNOWLEDGEMENT – PERSONAL INFORMATION

TSX Venture Exchange Inc. and its affiliates, authorized agents, subsidiaries
and divisions, including the TSX Venture Exchange (collectively referred to as
“the Exchange”) collect Personal Information in certain Forms that are submitted
by the individual and/or by an Issuer or Applicant and use it for the following
purposes:

 * to conduct background checks,
 * to verify the Personal Information that has been provided about each
   individual,
 * to consider the suitability of the individual to act as an officer, director,
   insider, promoter, investor relations provider or, as applicable, an employee
   or consultant, of the Issuer or Applicant,
 * to consider the eligibility of the Issuer or Applicant to list on the
   Exchange,
 * to provide disclosure to market participants as to the security holdings of
   directors, officers, other insiders and promoters of the Issuer, or its
   associates or affiliates,
 * to conduct enforcement proceedings, and
 * to perform other investigations as required by and to ensure compliance with
   all applicable rules, policies, rulings and regulations of the Exchange,
   securities legislation and other legal and regulatory requirements governing
   the conduct and protection of the public markets in Canada.

As part of this process, the Exchange also collects additional Personal
Information from other sources, including but not limited to, securities
regulatory authorities in Canada or elsewhere, investigative, law enforcement or
self-regulatory organizations, regulations services providers and each of their
subsidiaries, affiliates, regulators and authorized agents, to ensure that the
purposes set out above can be accomplished.

The Personal Information the Exchange collects may also be disclosed:

(a)

to the agencies and organizations in the preceding paragraph, or as otherwise
permitted or required by law, and they may use it in their own investigations
for the purposes described above; and

    (b)

on the Exchange’s website or through printed materials published by or pursuant
to the directions of the Exchange.

The Exchange may from time to time use third parties to process information
and/or provide other administrative services. In this regard, the Exchange may
share the information with such third party service providers.

APPENDIX 6A ACKNOWLEDGEMENT – PERSONAL INFORMATION Page 1 (as at March 11, 2004)
 

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SCHEDULE “H”

REGISTRATION RIGHTS

Capitalized terms not otherwise defined herein shall have the meanings
attributed thereto in the subscription agreement to which this schedule is
attached. The terms of this Schedule “H” are incorporated by reference into the
subscription agreement to which it is attached.

                    Section 1.           Definitions. Capitalized terms used and
not otherwise defined herein that are defined in the Purchase Agreement will
have the meanings given such terms in the Purchase Agreement. As used in this
Schedule, the following terms have the respective meanings set forth in this
Section 1:

                    “Advice” has the meaning set forth in Section 7(c).

                    “Effective Date” means the date on which the Registration
Statement is first declared effective by the Commission.

                    “Effectiveness Date” means with respect to the Registration
Statement required to be filed hereunder, the day that is the five months
following the Closing Date. For purposes of clarification, the declaration of a
Suspension Period prior to the effectiveness of the Registration Statement does
not modify the Effectiveness Date.

                    “Effectiveness Period” has the meaning set forth in Section
2(a).

                    “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

                    “Filing Date” means with respect to the Registration
Statement required to be filed hereunder, July 30, 2007.

                    “Holder” or “Holders” means the Investors and other holder
or holders, as the case may be, from time to time of Registerable Securities.

                    “Indemnified Party” has the meaning set forth in Section
6(c).

                    “Indemnifying Party” has the meaning set forth in Section
6(c).

                    “Investor” means the Subscriber pursuant to the Subscription
Agreement to which this Schedule is attached;

                    “Losses” has the meaning set forth in Section 6(a).

                    “Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                    “Prospectus” means the final prospectus included in the
Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                    “Registrable Securities” means: (i) the Shares, (ii) the
Additional Shares (as defined in Section 2(b)), and (iii) any securities issued
or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event. Such securities will cease to be Registrable
Securities upon transfer pursuant to the Registration Statement or Rule 144
under the Securities Act.

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                    “Registration Statement” means the registration statement
required to be filed hereunder, including the Prospectus, amendments and
supplements to such registration statements or Prospectus, including pre and
post effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference therein.

                    “Rule 144” means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                    “Rule 415” means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                    “Rule 424” means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                    “Securities Act” means the Securities Act of 1933, as
amended.

                    “Shares” means the shares of Common Stock issued or issuable
to the Investors pursuant to the Purchase Agreement.

                    “Trading Day” means any day on which the TSX Venture
Exchange (the “TSX-V”) is open for trading.

Section 2.           Registration.

  (a)

On or prior to the Filing Date, the Company shall prepare and file with the
Securities and Exchange Commission (the “Commission”) the Registration Statement
covering the resale of all Registrable Securities for an offering to be made on
a continuous basis pursuant to Rule 415, on Form S-1 (or on such other form
appropriate for such purpose). Such Registration Statement shall contain (except
if otherwise required pursuant to written comments received from the Commission
upon a review of the Registration Statement) the “Plan of Distribution” attached
hereto as Annex A. The Company shall use commercially reasonable efforts to
cause the Registration Statement to be declared effective under the Securities
Act as soon as possible but, in any event, no later than its Effectiveness Date,
and shall use its commercially reasonable efforts to keep the Registration
Statement continuously effective and available for use by Holders under the
Securities Act until the date which is the earlier of (i) two years after the
Closing Date or (ii) such time as all of the Registrable Securities covered by
the Registration Statement have been publicly sold by the Holders (the
“Effectiveness Period”).

        (b)

If the Registration Statement is not declared effective by the Commission on or
prior to its required Effectiveness Date, then the Company shall issue to each
Holder, as its sole and exclusive remedy for the failure of the Registration
Statement to become effective and as liquidated damages and not as a penalty, an
additional 0.1 Common Shares for every Common Share purchased pursuant to the
Subscription Agreement to which this Schedule is attached (the “Additional
Shares”). No fractions of a share of Additional Shares shall be issued, but in
lieu thereof each Holder otherwise entitled to a fraction of an Additional Share
shall be entitled to receive an amount of cash (without interest) determined by
multiplying the average closing price for Common Shares as reported on the TSX-V
on the required Effectiveness Date by the fractional share interest to which
such holder would otherwise be entitled. The parties acknowledge that payment of
the cash consideration in lieu of issuing fractional shares was not separately
bargained for consideration, but merely represents a mechanical rounding off for
purposes of simplifying the corporate and accounting complexities that would
otherwise be caused by the issuance of fractional shares.

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  (c)

Within three business days following the date on which the Registration
Statement is declared effective by the Commission, and assuming no stop-order
has been issued with respect to the Registration Statement, the Company shall
furnish to each Holder a letter, dated such date, of outside counsel
representing the Company addressed to such Holder, confirming such effectiveness
and, to the knowledge of such counsel, the absence of any stop order.

        (d)

Each Holder agrees to furnish to the Company a completed Questionnaire in the
form attached to this Schedule as Annex B (a “Selling Holder Questionnaire”) no
later than July 2, 2007. The Company shall not be required to include the
Registrable Securities of a Holder in the Registration Statement and shall not
be required to pay any liquidated or other damages under Section 2(b) to any
Holder who fails to furnish to the Company a fully completed Selling Holder
Questionnaire by the later of (i) July 2, 2007 or (ii) at least five Trading
Days prior to the date of filing of the Registration Statement or pre-effective
amendment to the Registration Statement (in no event is the Company required to
delay filing the Registration Statement or any pre-effective amendment thereto).
Each Holder also agrees to provide the Company with such other information as
may be reasonably requested by the Company in connection with the preparation
and filing of any Registration Statement hereunder, including but not limited to
providing such information in a timely manner regarding itself, the Registrable
Securities and other securities of the Company held by it and the intended
method of disposition of the Registrable Securities as shall be reasonably
required to effect and maintain the effectiveness of the registration of such
Registrable Securities. The Company shall not be required to include the
Registrable Securities of a Holder or pay any liquidated or other damages under
Section 2(b) to any Holder who fails to provide such reasonably requested
information or who objects to the inclusion of required disclosure in the
Registration Statement regarding such Holder, the Registrable Securities and
other securities of the Company held by it and the intended method of
disposition of the Registrable Securities.

        (e)

Notwithstanding Section 2(a) hereof, the Company may delay or suspend the
effectiveness of the Registration Statement (each such period, a “Suspension
Period”) if the board of directors of the Company determines in good faith that
the disclosure of material non-public information (“Pending Developments”) at
such time would be detrimental to the Company and its subsidiaries, taken as a
whole.

       

The aggregate Suspension Period for all Pending Developments shall not exceed 90
calendar days in any 360-day period. Notwithstanding the foregoing , the Company
shall use its commercially reasonable efforts to ensure that the Registration
Statement is declared effective and its permitted use is resumed following a
suspension as promptly as practicable. The Company shall not be required to
specify in the written notice to the Holders the nature of the event giving rise
to the Suspension Period. The notice of the existence of a Pending Development
shall remain confidential to such Holder until such information otherwise
becomes public, unless disclosure by the Holder is required by law and provided
that notwithstanding such Holder’s agreement to keep such information
confidential, each such Holder makes no acknowledgment that any such information
is material, non-public information.

Section 3.           Registration Procedures.

 

In connection with the Company's registration obligations hereunder, the Company
shall:

        (a)

Not less than five Trading Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, the
Company shall (i) furnish to each Holder copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders, and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to each Holder, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file a Registration Statement or any Prospectus or any amendments or supplements
thereto to which a majority of the Holders of Registrable Securities object in
good faith, provided that the Company is notified of such objection in writing
no later than five Trading

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Days after the Holders have been so furnished copies of a Registration Statement
or any Prospectus or amendments or supplements thereto. The Company and the
Holders agree to act in good faith to resolve such objections of the Holders.
The Effectiveness Date shall be extended by the number of days such objection
remains unresolved (calculated commencing on the sixth Trading Day after the
Holders were furnished copies of the applicable filing and ending on the date
the Company is notified of the lifting of such objection in writing).

        (b)

(i) prepare and file with reasonable promptness with the Commission such
amendments, including post effective amendments, to the Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the Registrable Securities
for the Effectiveness Period; (ii) cause the Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect to
the Registration Statement or any amendment thereto; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the Registration Statement and the disposition of all
Registrable Securities covered by the Registration Statement.

        (c)

Notify the Holders as promptly as reasonably possible (and, in the case of
(i)(A) and (iv) below, not less than three Trading Days prior to such filing
and, in the case of (v) below, not less than three Trading Days prior to the
financial statements in any Registration Statement becoming ineligible for
inclusion therein) and (if requested by any such Person) confirm such notice in
writing no later than one Trading Day following the day (i)(A) when a Prospectus
or any Prospectus supplement or post effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a “review” of the Registration Statement and whenever the
Commission comments in writing on the Registration Statement (the Company shall
provide true and complete copies thereof and all written responses thereto to
each of the Holders that pertain to the Holders as a Selling Stockholder or to
the Plan of Distribution, but not information which the Company believes would
constitute material and non- public information); and (C) with respect to the
Registration Statement or any post effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission or any other Federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (vi) the occurrence of a Suspension Period.

        (d)

Use its commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

        (e)

Furnish to each Holder, without charge, at least one conformed copy of the
Registration Statement and each amendment thereto and all exhibits to the extent
requested by such Person (including those previously furnished) promptly after
the filing of such documents with the Commission.

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  (f)

Promptly deliver to each Holder, without charge, copies of each Prospectus or
Prospectuses and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

        (g)

The Company shall, at its own expense, cooperate with the Underwriters and the
U.S. Affiliates with respect to any filing made by any of them with the National
Association of Securities Dealers Inc. (the “NASD”) Corporate Financing
Department pursuant to NASD Rule 2710(b)(4)(a)(i) so as to permit such filing
and any amendments thereto to be made on a timely basis.

        (h)

Cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Holders may request.

        (i)

Upon the occurrence of any event contemplated by Section 3(c)(v), use its
commercially reasonable efforts to ensure that the use of the Registration
Statement or Prospectus may be resumed as promptly as practicable and shall
promptly prepare a supplement or amendment, including a post effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, no Registration Statement nor any Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall be
entitled to exercise its right under this section 3(h) to suspend the
availability of a Registration Statement or Prospectus for an aggregate period,
including any Suspension Period, not to exceed 90 calendar days in any 360-day
period.

        (j)

Comply with all applicable rules and regulations of the Commission.

Section 4.           Obligations of Each Holder. In connection with the
registration of Registrable Securities pursuant to the Registration Statement,
each Holder shall:

  (a)

in the event of an underwritten offering of such Registrable Securities in which
such Holder participates, enter into a customary and reasonable underwriting
agreement and execute such other documents as the Company and the managing
underwriter for such offering may reasonably request; and

        (b)

notify the Company when it has sold all of the Registrable Securities held by
it.

Section 5.           Registration Expenses. All fees and expenses incident to
the performance of or compliance with this Schedule by the Company shall be
borne by the Company whether or not any Registrable Securities are sold pursuant
to the Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses of the Company’s
counsel and auditors, and other reasonable counsel fees and expenses, and
including, without limitation, fees and expenses (A) with respect to filings
made with the Commission, (B) with respect to filings required to be made with
any trading market or exchange on which the Common Stock is then listed for
trading, (C) with respect to filing fees of the NASD pursuant to NASD Rule 2710,
and (D) with respect to fees relating to compliance with applicable state
securities or Blue Sky laws in connection with Blue Sky qualifications or
exemptions of the Registerable Securities, (ii) messenger, telephone and
delivery expenses, (iii) fees and disbursements of counsel for the Company, (iv)
Securities Act liability insurance, if the Company so desires such insurance,
and (v) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Schedule. In addition, the Company shall be responsible for all of its

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internal expenses incurred in connection with the consummation of the
transactions contemplated by this Schedule (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.

Section 6.           Indemnification.

  (a)

Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement or Schedule, indemnify and hold harmless each
Holder, the officers, directors, agents, investment advisors, brokers (including
brokers who offer to sell Registrable Securities as principal as a result of a
pledge or any failure to perform under a margin call effected on a Holder),
partners, members and employees of each of them (and any other persons with a
functionally equivalent role of a person holding such titles or performing such
functions, notwithstanding a lack of such title or any other title), each Person
who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating (1) to any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, and (2) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act or any state securities law,
or any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement and Schedule, except to the extent, but only to
the extent, that (1) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates
to such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
the Holder has approved Annex A hereto for this purpose) or (2) in the case of
an occurrence of an event of the type specified in Section 3(c)(ii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission
giving rise to such Loss would have been corrected. The Company shall notify the
Holders promptly in writing of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Schedule.

        (b)

Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, arising
solely out of or based solely upon: (x) such Holder's failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue
statement of a material fact contained in the Registration Statement, the
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent that, (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder's

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proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement (it being understood that the Holder has approved Annex A
hereto for this purpose), such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (2) in the case of an occurrence of an event
of the type specified in Section 3(c)(ii)-(vi), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt by
such Holder of an Advice or an amended or supplemented Prospectus, but only if
and to the extent that following the receipt of the Advice or the amended or
supplemented Prospectus the misstatement or omission giving rise to such Loss
would have been corrected. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

        (c)

Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees and
expenses incurred in connection with defense thereof; provided, that the failure
of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement and Schedule,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.

       

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel to the Indemnified Party that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

       

All fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Section) shall be
paid to the Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

        (d)

Contribution. If a claim for indemnification under Section 6(a) or 6(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses (by reason of public policy or otherwise), then each
Indemnifying Party shall contribute to the amount paid or

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payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.

The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

Section 7.           Miscellaneous.

  (a)

Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement.

        (b)

Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c)(iii) through (vi),
such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or
until it is advised in writing (the “Advice”) by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop transfer orders to enforce the provisions
of this paragraph. The Company will use its commercially reasonable efforts to
ensure that the use of the prospectus may be resumed as promptly as is
practicable. The Company agrees and acknowledges that any periods during which
the Holder is required to discontinue the disposition of Registrable Securities
pursuant to Section 3(c)(v) and (vi) hereunder shall be subject to the
limitations set forth in the last sentence of Section 3(h).

        (c)

Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Schedule.

        (d)

Amendments and Waivers. The provisions of this Schedule, including the
provisions of this Section 7(d), may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of no less than a majority interest of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the

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provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates.

        (e)

Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be provided in accordance with the
terms of the Subscription Agreement to which this Schedule is attached; provided
however, that all written notices or copies of documents required to be provided
pursuant to this Schedule may be electronic copies transmitted electronically to
the Holder’s email address as set forth on the Selling Shareholder
Questionnaire, or at set other email address as provided to the Company by the
Holder.

        (f)

Successors and Assigns. The Company may not assign its rights or obligations
hereunder without the prior written consent of each Holder. The rights under
this Schedule shall be automatically assignable by the Investors to any
transferee of 1,000 (one thousand) Registerable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned; (iii) the
transfer of assignment is completed prior to the effectiveness of the
Registration Statement or immediately following such transfer or assignment if
the further disposition of the securities is restricted under the Securities Act
and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Subscription Agreement.

        (g)

Severability. If any term, provision, covenant or restriction of this Schedule
is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

        (h)

Headings. The headings in this Schedule are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

        (i)

Independent Nature of Holders' Obligations and Rights. The obligations of each
Holder under this Schedule are several and not joint with the obligations of
each other Holder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder under this Schedule. Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Holder pursuant thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Schedule. Each Holder acknowledges that no
other Holder will be acting as agent of such Holder in enforcing its rights
under this Schedule. Each Holder shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Schedule, and it shall not be necessary for any other Holder to be joined as an
additional party in any Proceeding for such purpose. The Company acknowledges
that each of the Holders has been provided with the same Schedule for the
purpose of closing a transaction with multiple Holders and not because it was
required or requested to do so by any Holder.

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ANNEX A

Plan of Distribution

          Each Selling Stockholder (the “Selling Stockholders”) of the common
stock (“Common Stock”) of U.S. Geothermal Inc., a corporation incorporated
pursuant to the laws of the State of Delaware (the “Company”) and any of their
pledgees, donees, transferees, assignees and successors-in-interest may, from
time to time, sell any or all of their shares of Common Stock on the Trading
Market or any other stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling shares:

 * ordinary brokerage transactions and transactions in which the broker dealer
   solicits purchasers;

 * block trades in which the broker dealer will attempt to sell the shares as
   agent but may position and resell a portion of the block as principal to
   facilitate the transaction;

 * purchases by a broker dealer as principal and resale by the broker dealer for
   its account;

 * an exchange distribution in accordance with the rules of the applicable
   exchange;

 * privately negotiated transactions;

 * settlement of short sales entered into after the effective date of the
   registration statement of which this prospectus is a part;

 * broker dealers may agree with the Selling Stockholders to sell a specified
   number of such shares at a stipulated price per share;

 * a combination of any such methods of sale;

 * through the writing or settlement of options or other hedging transactions,
   whether through an options exchange or otherwise; or

 * any other method permitted pursuant to applicable law.

          The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”), if available, rather
than under this prospectus.

          Broker dealers engaged by the Selling Stockholders may arrange for
other brokers dealers to participate in sales. Broker dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASD Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASD IM-2440.

          In connection with the sale of the Common Stock or interests therein,
the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the Common Stock short and deliver these
securities to close out their short positions, or loan or pledge the Common
Stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

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          The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any underwriter or other person to
distribute the Common Stock. In no event shall any broker-dealer receive fees,
commissions and markups which, in the aggregate, would not exceed customary fees
and commissions.

          The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus after we have filed an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933 amending the list of Selling Stockholders to include the pledgee,
transferee or other successors in interest as Selling Stockholders under this
prospectus.

          The Selling Stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus and may sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of Selling Stockholders to include the pledgee, transferee or other
successors in interest as Selling Stockholders under this prospectus.

          The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares, but the Company will not
receive any proceeds from the sale of the common stock by the Selling
Stockholders. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

          Because Selling Stockholders may be deemed to be “underwriters” within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
Each Selling Stockholder has advised us that they have not entered into any
written or oral agreements, understandings or arrangements with any underwriter
or broker-dealer regarding the sale of the resale shares. There is no
underwriter or coordinating broker acting in connection with the proposed sale
of the resale shares by the Selling Stockholders.

          We agreed to keep this prospectus effective until the earlier of (i)
June 5, 2009, or (ii) such time as all shares covered by the registration
statement have been sold publicly. The resale shares will be sold only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale shares may not be
sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with.

          Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the resale shares may not simultaneously
engage in market making activities with respect to the Common Stock for the
applicable restricted period, as defined in Regulation M, prior to the
commencement of the distribution. We have advised each Selling Stockholder that
it may not use shares registered under this Registration Statement to cover
short sales of common stock made prior to the date on which this Registration
Statement shall have been declared effective by the Securities and Exchange
Commission. In addition, the Selling Stockholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including Regulation M, which may limit the timing of purchases and sales of
shares of the Common Stock by the Selling Stockholders or any other person. We
will make copies of this prospectus available to the Selling Stockholders and
have informed them of the need to deliver a copy of this prospectus to each
purchaser at or prior to the time of the sale.

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ANNEX B

SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

          The undersigned beneficial owner of common stock (the “Registrable
Securities”) of U.S. Geothermal Inc., a Delaware corporation (the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) a registration statement (the
“Registration Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of the Registrable
Securities, in accordance with the terms of the Registration Rights (the
“Registration Rights Agreement”) to which this document is annexed. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

          Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

NOTICE

          The undersigned beneficial owner (the “Selling Securityholder”) of
Registrable Securities hereby elects to include the Registrable Securities owned
by it in the Registration Statement.

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          The undersigned hereby provides the following information to the
Company and represents and warrants that such information is accurate:

QUESTIONNAIRE

1.

NAME.

      (a)

_________________________________________________________________
Full Legal Name of Selling Securityholder

      (b)

Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable

     

_________________________________________________________________
Securities are held:

      (c)

Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the

     

_________________________________________________________________
questionnaire):

      2.

ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________

Telephone:   ___________________________________________________________________

Fax :   
________________________________________________________________________

Email:   
_______________________________________________________________________

Contact Person:   
_______________________________________________________________

3.

BROKER-DEALER STATUS:

      (a)

Are you a broker-dealer?

     

          Yes ___ No ___

      (b)

If “yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company.

     

          Yes ___ No ___

Note: If no, the Commission’s staff has indicated that you should be identified
as an underwriter in the Registration Statement.

  (c)

Are you an affiliate of a broker-dealer?

       

          Yes ___ No ___

        (d)

If you are an affiliate of a broker-dealer. do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of
the purchase of the Registrable Securities to

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be resold, you had no agreements or understandings, directly or indirectly, with
any person to distribute the Registrable Securities?

          Yes ___ No ___

Note: If no, the Commission’s staff has indicated that you should be identified
as an underwriter in the Registration Statement.

4.

BENEFICIAL OWNERSHIP OF SECURITIES OF THE COMPANY OWNED BY THE SELLING
SECURITYHOLDER.

   

Except as set forth below in this Item 4, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.

   

(a) Type and Amount of other securities beneficially owned by the Selling
Securityholder:
__________________________________________________________________

__________________________________________________________________

    5.

RELATIONSHIPS WITH THE COMPANY:

   

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

   

State any exceptions here:
__________________________________________________________________

__________________________________________________________________

          The undersigned agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement
remains effective.

          By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 5 and the
inclusion of such information in the Registration Statement and the related
prospectus and any amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of the Registration Statement and
the related prospectus.

          IN WITNESS WHEREOF the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.

Dated: _________________________________ Beneficial Owner:
________________________       By:      _________________________________      
Name: _________________________________       Title: 
 _________________________________

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

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