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SUBSCRIPTION AGREEMENT FOR UNITS

TO:    U.S. Geothermal Inc. (the “Company”)

The undersigned (the “Investor”) hereby subscribes for and agrees to purchase
the number of Units of the Company (the “Units”) set forth below at a price of
US$0.37 per Unit, for the total aggregate subscription price set forth below
(the “Aggregate Subscription Price”), upon and subject to the terms and
conditions set forth in this agreement (the “Subscription Agreement”). Attached
as Annex I and Annex II to this Subscription Agreement is a summary of the terms
and conditions of the sale of the Units and the representations, warranties and
covenants hereby made by the Investor (on its own behalf and, if applicable, on
behalf of the others for whom it is contracting hereunder) and the Company, all
of which Annex I and Annex II forms part of and is hereby incorporated by
reference into this Subscription Agreement (collectively, the “Terms and
Conditions”).

    Number of Units:                        [•]     No. of Warrant
Shares:             [•]      

By:

 

  Aggregate Subscription Price:           US$[•]

(Authorized Signature)  

  Per Unit Subscription Price:               US$0.37        

(Official Capacity or Title – please print)

   The relationship between the Investor and the registered

  holder listed:

(Please print name of individual whose signature appears

   

above)

          (Investor’s Address)               (Name of DTC Participant
(broker-dealer at which the account     or accounts to be credited with the
Shares are maintained)             (Telephone Number)   (DTC Participant Number)
      (E-mail Address)   (Name of Account at DTC Participant being credited with
the     Shares)       Business Identification Number or Social Insurance Number
of   (Account Number at DTC Participant being credited with the the registered
holder (as applicable)   Shares)             Register the Shares and Warrants as
set forth below:   Deliver the Warrants as set forth below:       (Name)  
(Name)       (Account reference, if applicable)   (Account reference, if
applicable)       (Address)   (Contact Name)           (Address)

ACCEPTANCE: U.S. Geothermal Inc. hereby accepts the subscription as set forth
above upon and subject to the terms and conditions contained in this
Subscription Agreement.

__________________, 2012

U.S. GEOTHERMAL INC.           By: ___________________________    

This Signature Page is the first page of a Subscription Agreement comprised of
12 pages (not including Exhibit A).

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ANNEX I

TERMS AND CONDITIONS OF SUBSCRIPTION FOR
UNITS OF U.S. GEOTHERMAL INC.

     The Investor hereby confirms its agreement with U.S. Geothermal Inc., a
Delaware corporation, as follows:

     1. This Subscription Agreement, including the Additional Terms and
Conditions For Purchase of Units attached hereto as Annex II (collectively,
(this “Subscription Agreement”) is made as of the date set forth on the
Signature Page hereto between the Company and the Investor.

     2. The Company has authorized the sale and issuance to certain investors of
up to an aggregate of 11,960,792 units of the Company (the “Units”), subject to
adjustment by the Company’s Board of Directors, or a committee thereof, with
each Unit consisting of (i) one share of common stock of the Company, par value
US$0.001 per share (the “Common Shares”), and (ii) one-half of one common share
purchase warrant (a “Warrant” and, collectively, the “Warrants”). Each whole
Warrant will entitle the holder to purchase one (1) Common Share at an exercise
price of US$0.50 per Common Share (subject to adjustment) and is exercisable for
a period of sixty (60) months from the Closing Date (as defined in Annex II to
this Subscription Agreement). The certificate representing the Warrants shall be
in substantially the form of Exhibit A attached hereto (the “Warrant
Certificate”). The aggregate of up to 11,960,792 Common Shares comprising the
Units proposed to be sold is hereinafter referred to as the “Shares.” The Units
will not be issued or certificated. The Shares and the Warrants are immediately
separable and will be issued separately. The Common Shares issuable upon
exercise of the Warrants are referred to herein as the “Warrant Shares” and,
together with the Units, the Shares and the Warrants, are referred to herein as
the “Securities”).

     3. The offer and sale of the Units (the “Offering”) are being made pursuant
to (1) the Company’s effective Registration Statement including a base
prospectus (the “Base Prospectus”) on Form S-3 (File No. 333-170202) (which,
together with all amendments or supplements thereto is referred to herein as the
“Registration Statement”) filed by the Company with the U.S. Securities and
Exchange Commission (the “Commission”), (2) if applicable, certain “free writing
prospectuses” (as that term is defined in Rule 405 under the U.S. Securities Act
of 1933, as amended (the “Securities Act”)), that have been or will be filed
with the Commission and delivered to the Investor on or prior to the date hereof
(each, an “Issuer Free Writing Prospectus”), and (3) a Prospectus Supplement
(the “Prospectus Supplement” and together with the Base Prospectus, the
“Prospectus”) containing certain supplemental information regarding the Units
and the terms of the Offering that has been or will be filed with the Commission
and delivered to the Investor (or made available to the Investor by the filing
by the Company of an electronic version thereof with the Commission).

     4. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor the Units set
forth on the Signature Page hereto for the aggregate purchase price set forth on
the Signature Page. The Units shall be purchased pursuant to the Additional
Terms and Conditions for Purchase of Units attached hereto as Annex II and
incorporated herein by this reference as if fully set forth herein. The Investor
acknowledges that the Offering is not being underwritten by the placement agent
(the “Placement Agent”) named in the Prospectus Supplement.

     5. The manner of settlement of the Shares included in the Units purchased
by the Investor shall be as follows:

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     Delivery by crediting the account of the Investor’s prime broker (as
specified by such Investor on Exhibit A annexed hereto) with The Depository
Trust Company (“DTC”) through its Deposit/Withdrawal At Custodian (“DWAC”)
system, whereby the Investor’s prime broker shall initiate a DWAC transaction on
the Closing Date using its DTC participant identification number, and released
by Computershare Trust Company, N.A., the Company’s transfer agent (the
“Transfer Agent”), to the Investor at the Company’s direction. No later than one
(1) business day after the execution of this Subscription Agreement by the
Investor and the Company, the Investor shall:

  (I)

DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH
THE SHARES ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE TRANSFER AGENT TO
CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND

        (II)

REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE
FOR THE UNITS BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT:

[Note: Wire instructions will be provided separately.]

IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR
CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR
SETTLEMENT BY WAY OF DWAC IN A TIMELY MANNER. IF THE INVESTOR DOES NOT DELIVER
THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR DOES NOT MAKE PROPER ARRANGEMENTS
FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES AND WARRANTS MAY NOT BE DELIVERED
AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING
ALTOGETHER. IF THE INVESTOR IS EXCLUDED FROM THE CLOSING THEN ALL FUNDS
FORWARDED TO THE COMPANY BY THE INVESTOR WILL BE RETURNED WITHOUT INTEREST
WITHIN ONE WEEK AFTER THE CLOSING.

For purposes of this Subscription Agreement, “business day” means any day which
is not Saturday or Sunday or a legal holiday in the City of New York, New York.

     6. The executed Warrants shall be delivered in accordance with the terms
thereof.

     7. The Investor represents that, except as set forth below, (a) it has had
no position, office or other material relationship within the past three years
with the Company or persons known to it to be affiliates of the Company, (b) it
is not a member of the Financial Industry Regulatory Authority, Inc.

(“FINRA”) or an Associated Person (as such term is defined under the FINRA’s
NASD Membership and Registration Rules Section 1011) as of the Closing, and (c)
neither the Investor nor any group of Investors (as identified in a public
filing made with the Commission) of which the Investor is a part in connection
with the Offering, acquired, or obtained the right to acquire, twenty percent
(20%) or more of the Common Shares (or securities convertible into or
exercisable for Common Shares) or the voting power of the Company on a
post-Closing basis. Exceptions:

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     (If no exceptions, write “none.” If left blank, response will be deemed to
be “none.”)

     8. The Investor represents that it has received (or otherwise had made
available to it by the filing by the Company of an electronic version thereof
with the Commission) the Base Prospectus contained as part of the Company’s
Registration Statement filed on November 24, 2010 and declared effective on
December 1, 2010, the documents incorporated by reference therein and any Issuer
Free Writing Prospectus (collectively, the “Disclosure Package”), prior to or in
connection with the receipt of this Subscription Agreement.

     9. No offer by the Investor to buy Units will be accepted and no part of
the purchase price will be delivered to the Company until the Investor has
received the Disclosure Package and the Company has accepted such offer by
countersigning a copy of this Subscription Agreement, and any such offer may be
withdrawn or revoked, without obligation or commitment of any kind, at any time
prior to the Company (or the Placement Agent on behalf of the Company) sending
(orally, in writing or by electronic mail) notice of its acceptance of such
offer. An indication of interest will involve no obligation or commitment of any
kind until the Investor has been delivered the Disclosure Package and this
Subscription Agreement is accepted and countersigned by or on behalf of the
Company.

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ANNEX II

ADDITIONAL TERMS AND CONDITIONS FOR PURCHASE OF UNITS

     1. Authorization and Sale of the Units. Subject to the terms and conditions
of this Subscription Agreement, the Company has authorized the sale of the
Units.

     2. Agreement to Sell and Purchase the Units; Placement Agent.

               2.1 At the Closing (as defined in Section 3.1), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the
terms and conditions set forth herein, the number of Units set forth on the
signature page of the Subscription Agreement to which these Additional Terms and
Conditions for Purchase of Units are attached as Annex II (the “Signature Page”)
for the aggregate purchase price therefor set forth on the Signature Page.

               2.2 The Company proposes to enter into substantially this same
form of Subscription Agreement with each investor that was solicited
(collectively, the “Other Investors”) and expects to complete sales of Units to
them. The Investor and the Other Investors are hereinafter sometimes
collectively referred to as the “Investors”.

               2.3 The Investor acknowledges that the Company intends to pay
Kuhns Brothers Securities Corporation (the “Placement Agent”) a cash fee equal
to 6.0% of the gross proceeds received by the Company for the Offering.

               2.4 The Company confirms that neither it nor any other person
acting on its behalf has provided the Investor or their agents or counsel with
any information that constitutes or could reasonably be expected to constitute
material, nonpublic information, except as will be disclosed in the Prospectus
and/or in any Current Report on Form 8-K filed or to be filed by the Company
with the Commission. The Company understands and confirms that the Investor will
rely on the foregoing representations in effecting transactions in securities of
the Company.

     3. Closings and Delivery of the Units and Funds.

               3.1 Closing. The completion of the purchase and sale of the Units
(the “Closing”) will occur at a place and time (the “Closing Date”) to be
specified by the Company and the Placement Agent, and of which the Investors
will be notified in advance by the Placement Agent in accordance with Rule
15c6-l promulgated under the U.S. Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Under Rule 15c6-1 under the Exchange Act, trades in the
secondary market generally are required to settle in three business days, unless
the parties to any such trade expressly agree otherwise. The Closing Date may
not occur within three business days of the execution of this Subscription
Agreement. Accordingly, Investors who wish to trade Shares on any day prior to
three business days before delivery should consult their own advisors and may be
required to specify alternative settlement arrangements to prevent a failed
settlement. At the Closing, (a) the Company shall cause the Transfer Agent to
deliver to the Investor the number of Shares set forth on the Signature Page
registered in the name of the Investor or, if so indicated on the Signature Page
in the name of a nominee designated by the Investor, (b) the Company shall cause
to be delivered to the Investor one Warrant Certificate representing the right
to purchase the number of Warrant Shares set forth on the Signature Page, and
(c) the aggregate purchase price for the Units being purchased by the Investor
will be delivered by or on behalf of the Investor to the Company.

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               3.2 Conditions to the Obligations of the Parties.

                         (a) Conditions to the Company’s Obligations. The
Company’s obligation to issue and sell the Units to the Investor shall be
subject to: (i) the receipt by the Company of the aggregate purchase price for
the Units being purchased hereunder as set forth on the Signature Page; (ii) the
accuracy of the representations and warranties made by the Investor and the
fulfillment of those undertakings of the Investor to be fulfilled prior to the
Closing Date; and (iii) approval of the NYSE MKT LLC and the Toronto Stock
Exchange (the “TSX”) to list the Shares and Warrant Shares.

                         (b) Conditions to the Investor’s Obligations. The
Investor’s obligation to purchase the Units will be subject to the accuracy of
the representations and warranties made by the Company and the fulfillment of
those undertakings of the Company to be fulfilled prior to the Closing Date. The
Investor’s obligations are expressly not conditioned on the purchase by any or
all of the Other Investors of the Units that they have agreed to purchase from
the Company.

               3.3 Delivery of Funds. Delivery by Electronic Book-Entry at The
Depository Trust Company. No later than one (1) business day after the execution
of this Subscription Agreement by the Investor and the Company, the Investor
shall remit by wire transfer the amount of funds equal to the aggregate purchase
price for the Units being purchased by the Investor to the following account
designated by the Company:

                     [Note: Wire instructions will be provided separately.]

               3.4 Delivery of Shares. Delivery by Electronic Book-Entry at The
Depository Trust Company. No later than one (1) business day after the execution
of this Subscription Agreement by the Investor and the Company, the Investor
shall direct the broker-dealer at which the account or accounts to be credited
with the Shares being purchased by such Investor are maintained, which
broker/dealer shall be a DTC participant, to set up a DWAC instructing the
Transfer Agent to credit such account or accounts with the Shares. Such DWAC
instruction shall indicate the settlement date for the deposit of the Shares,
which date shall be provided to the Investor by the Placement Agent. Upon the
closing of the Offering, the Company shall direct the Transfer Agent to credit
the Investor’s account or accounts with the Shares pursuant to the information
contained in the DWAC.

     4. Representations, Warranties and Covenants of the Investor.

          The Investor acknowledges, represents and warrants to, and agrees
with, the Company and the Placement Agent that:

               4.1 The Investor (a) is knowledgeable, sophisticated and
experienced in making, and is qualified to make decisions with respect to,
investments in securities presenting an investment decision like that involved
in the purchase of the Units, including investments in securities issued by the
Company and investments in comparable companies, and has requested, received,
reviewed and considered all information it deemed relevant in making an informed
decision to purchase the Units, (b) the Investor has answered all questions on
the Signature Page and on Page 3 of this Subscription Agreement for use in
preparation of the Prospectus Supplement and the answers thereto are true and
correct as of the date hereof and will be true and correct as of the Closing
Date and (c) the Investor, in connection with its decision to purchase the
number of Units set forth on the Signature Page, is relying only upon the
Disclosure Package and the documents incorporated by reference therein.

               4.2 (a) Other than the Company’s application to the TSX to list
the Shares and Warrant Shares, no action has been or will be taken in any
jurisdiction outside the United States by the Company or the Placement Agent
that would permit an offering of the Securities, or possession or distribution
of offering materials in connection with the issue of the Securities, in any
jurisdiction outside the United States where action for that purpose is
required, (b) the Investor will comply with all applicable laws and regulations
in each jurisdiction in which it purchases, offers, sells or delivers Securities
or has in its possession or distributes any offering material, in all cases at
its own expense, and (c) the Placement Agent is not authorized to make and has
not made any representation, disclosure or use of any information in connection
with the issue, placement, purchase and sale of the Securities, except as set
forth or incorporated by reference in the Prospectus.

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               4.3 (a) The Investor has full right, power, authority and
capacity to enter into this Subscription Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Subscription Agreement, and (b)
this Subscription Agreement constitutes a valid and binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as to the enforceability of any
rights to indemnification or contribution that may be violative of the public
policy underlying any law, rule or regulation (including any federal or state
securities law, rule or regulation).

               4.4 The Investor understands that nothing in this Subscription
Agreement, the Prospectus, the Disclosure Package or any other materials
presented to the Investor in connection with the purchase and sale of the Units
constitutes legal, tax or investment advice. The Investor has consulted such
legal, tax and investment advisors and made such investigation as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of Units. The Investor also understands that there is no established
public trading market for the Warrants being offered in the Offering, and that
the Company does not expect such a market to develop. In addition, the Company
does not intend to apply for listing of the Warrants on any securities exchange.
The Investor understands that without an active market, the liquidity of the
Warrants will be limited.

               4.5 The Investor will maintain the confidentiality of all
information acquired as a result of the transactions contemplated hereby prior
to the public disclosure of that information by the Company in accordance with
Section 14 of this Annex II.

               4.6 Since the time at which the Placement Agent first contacted
such Investor about the Offering, the Investor has not disclosed any information
regarding the Offering to any third parties (other than its legal, accounting
and other advisors in connection with the Offering) and has not engaged in any
purchases or sales of the securities of the Company (including, without
limitation, any Short Sales (as defined herein) involving the Company’s
securities). The Investor covenants that it will not engage in any purchases or
sales of the securities of the Company (including Short Sales) prior to the time
that the transactions contemplated by this Subscription Agreement are publicly
disclosed. The Investor agrees that it will not use any of the Securities
acquired pursuant to this Subscription Agreement to cover any short position in
the Common Shares if doing so would be in violation of applicable securities
laws. For purposes hereof, “Short Sales” include, without limitation, all “short
sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of direct and
indirect share pledges, forward sales contracts, options, puts, calls, short
sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements (including on a total return basis), and
sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers.

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               4.7 The Investor represents and warrants that it is a resident of
the jurisdiction set out on the Signature Page of this Subscription Agreement,
which address is the residence, registered office or place of business of the
Investor, and that such Investor (i) is not a resident of Canada nor is it
purchasing the Units for the account or benefit of a Canadian resident; (ii) was
not offered the Units in Canada, and (iii) did not execute or deliver this
Subscription Agreement in Canada. In addition, the Investor understands and
acknowledges that (a) no securities commission or similar regulatory authority
in Canada has reviewed or passed on the merits of the Securities, (b) there is
no government or other insurance covering the Securities, (c) there are risks
associated with the purchase of the Securities, (d) there are restrictions on
the Investor’s ability to resell the Securities in Canada and it is the
responsibility of the Investor to find out what those restrictions are and to
comply with them before selling the Securities, and (e) the Securities will not
be freely tradeable in Canada for a period of four (4) months and one (1) day
from Closing, and as a result, the Securities may not be sold, transferred or
otherwise disposed of to a Canadian resident during this period, nor may the
Investor enter into any discussions, negotiations or agreements within Canada
with respect to the sale, transfer or disposition of any of the Securities for a
period of four (4) months and one (1) day from Closing.

               4.8 The Investor agrees that at no time within four (4) months
and one (1) day after the Closing Date will it (i) sell, transfer or otherwise
dispose of any Securities to a Canadian resident or, (ii) enter into any
discussions, negotiations or agreements within Canada with respect to the sale,
transfer or disposition of any Securities.

     5. Representations, Warranties and Covenants of the Company.

         The Company represents and warrants to, and agrees with, the Investor
that:

               5.1 The Company and each of its subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted and as described in the Disclosure
Package. Neither the Company nor any of its subsidiaries is in violation or
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. The Company
and each of its subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

               5.2 Neither the Company nor any of its subsidiaries is a party to
any actions, suits or proceedings which could materially affect its business or
financial condition, and no such actions, suits or proceedings have been
threatened or, to the Company’s knowledge, are pending, except as disclosed in
the Disclosure Package.

               5.3 The Company is the beneficial owner of the properties,
business and assets or the interests in the properties, business and assets
disclosed in the Disclosure Package, all material agreements by which the
Company holds an interest in a property, business or asset are in good standing
according to their terms except as disclosed in the Disclosure Package or where
any such default would not have a material adverse effect on the Company, and
there has not been any breach of the applicable laws of the jurisdictions in
which such properties, business and assets are situated which would have a
material adverse effect on such properties, business and assets.

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               5.4 The Company has the requisite corporate power and authority
to enter into and to consummate the transactions contemplated by this
Subscription Agreement and otherwise to carry out its obligations hereunder. The
execution and delivery of this Subscription Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Company’s Board of Directors or the
Company’s shareholders in connection therewith. This Subscription Agreement has
been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.

               5.5 The execution, delivery and performance by the Company of
this Subscription Agreement, the issuance and sale of the Units to the Investor
and the consummation by it of the transactions contemplated hereby will not (i)
conflict with or violate any provision of the Company’s or any subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) result in the creation of any lien upon any of the
properties or assets of the Company or any subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of or conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, any agreement, credit facility, debt or other instrument (evidencing a
Company or subsidiary debt or otherwise) or other understanding to which the
Company or any subsidiary is a party or by which any property or asset of the
Company or any subsidiary is bound or affected, or (iii) conflict with or result
in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company
or a subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a subsidiary
is bound or affected.

               5.6 The Company has properly prepared and filed all tax returns
and all taxes payable have been paid except where the Company is contesting in
good faith any re-assessments of its taxes payable thereunder.

               5.7 Except as disclosed in the Disclosure Package and except for
options granted in the ordinary course under the Company’s stock option and
incentive plans, there are no outstanding options, warrants or other securities
exercisable to purchase or convertible or exchangeable into Common Shares.

               5.8 The Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or any other person or entity (including, without
limitation, any shareholder of the Company), in connection with the execution,
delivery and performance by the Company of this Subscription Agreement and the
consummation of the transactions contemplated hereby, including the sale and
issuance of the Units to the Investor, other than the approval of the Toronto
Stock Exchange and the NYSE MKT LLC and the filing with the Commission of the
Prospectus Supplement, or such other consents or various waivers which have
already been obtained.

               5.9 The Shares are duly authorized and, when issued and paid for
in accordance with this Subscription Agreement, will be duly and validly issued,
fully paid and non-assessable, free and clear of all liens. Upon the Closing,
the Warrant Shares will have been duly allotted and reserved for issuance and,
when issued upon the due exercise of the Warrants, will be duly issued as fully
paid and non-assessable Common Shares. The Company has reserved from its duly
authorized capital the maximum number of Common Shares issuable pursuant to this
Subscription Agreement. The Registration Statement conforms with the
requirements of the Securities Act, including the Base Prospectus, and such
amendments and supplements thereto as may have been required as of the date of
this Subscription Agreement. The Registration Statement is effective in respect
of the Units under the Securities Act and no stop order preventing or suspending
the effectiveness of the Registration Statement or suspending or preventing the
use of the Prospectus has been issued by the Commission and no proceedings for
that purpose have been instituted or, to the knowledge of the Company, are
threatened by the Commission. The Company has filed or will file the Prospectus
Supplement with the Commission within the time required by the rules and
regulations of the Commission. At the time the Registration Statement and any
amendments thereto became effective and at the date of this Subscription
Agreement, the Registration Statement (including documents incorporated by
reference therein) and any amendments thereto filed as of the applicable time,
conformed and will conform in all material respects to the requirements of the
Securities Act and did not and 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 not misleading; and the Prospectus
(including any documents incorporated by reference therein) and any amendments
or supplements thereto, at the time the Prospectus or any amendment or
supplement thereto was issued and at the Closing Date, conformed and will
conform in all material respects to the requirements of the Securities Act and
did not and will not contain any untrue statement of any material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.

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               5.10 The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by the Company under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, together with the
Prospectus and any Prospectus Supplement, being collectively referred to herein
as the “SEC Reports”). The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except to the extent that unaudited financial statements may not
contain all footnotes required by GAAP, and such statements fairly present in
all material respects the financial position of the Company on a consolidated
basis as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.

               5.11 The Common Shares are registered pursuant to Section 12(b)
of the Exchange Act, and the Company has taken no action designed to, or that to
its knowledge is likely to have the effect of, terminating the registration of
the Common Shares under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration.
The Common Shares are listed on the Toronto Stock Exchange under the symbol
“GTH” and NYSE MKT LLC under the symbol “HTM”.

               5.12 The Company and the Company’s Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its
jurisdiction of incorporation that is or could become applicable to the Investor
as a result of the transactions contemplated hereby and the Company and the
Investor fulfilling their obligations or exercising their rights under this
Subscription Agreement, including, without limitation, as a result of the
Company’s issuance of the Units and the Investor’s ownership of the Units.

               5.13 The Company acknowledges and agrees that the Investor is
acting solely in the capacity of an arm’s length purchaser with respect to this
Subscription Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Investor is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Subscription Agreement and the transactions contemplated hereby and any advice
given by the Investor or any of its representatives or agents in connection with
this Subscription Agreement and the transactions contemplated hereby is merely
incidental to the Investor’s purchase of the Units. The Company further
represents to the Investor that the Company’s decision to enter into this
Subscription Agreement has been based solely on the independent evaluation of
the transactions contemplated hereby by the Company and its representatives.

10

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               5.14 The Company has not, and to its knowledge no one acting on
its behalf has, taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Shares.

     6. Survival of Representations, Warranties and Agreements. Notwithstanding
any investigation made by any party to this Subscription Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Investor herein will survive the execution of this
Subscription Agreement, the delivery to the Investor of the Shares and Warrants
being purchased and the payment therefor. The Placement Agent shall be a third
party beneficiary with respect to the representations, warranties and agreements
of the Investor in Section 4 hereof.

     7. Notices. All notices, requests, consents and other communications
hereunder will be in writing, will be mailed (a) if within the domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile or (b) if delivered
from outside the United States, by International Federal Express or facsimile,
and will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed, (iii)
if delivered by International Federal Express, two business days after so mailed
and (iv) if delivered by facsimile, upon electronic confirmation of receipt and
will be delivered and addressed as follows:

if to the Company, to:

U.S. Geothermal Inc.
1505 Tyrell Lane
Boise, Idaho 83706
Attention: Daniel J Kunz, Chief Executive Officer
Facsimile: (208) 424-1030

with copies to:

Dorsey & Whitney LLP
Columbia Center
701 Fifth Avenue, Suite 6100
Seattle, Washington 98104
Attention: Christopher J. Barry
                   Kimberley R. Anderson
Facsimile: (206) 903-8820

if to the Investor, at its address on the Signature Page hereto, or at such
other address or addresses as may have been furnished to the Company in writing.

     8. Changes. This Subscription Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Investor.

11

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     9. Headings. The headings of the various sections of this Subscription
Agreement have been inserted for convenience of reference only and will not be
deemed to be part of this Subscription Agreement.

     10. Severability. In case any provision contained in this Subscription
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby.

     11. Governing Law. This Subscription Agreement will be governed by, and
construed in accordance with, the internal laws of the State of New York,
without giving effect to the principles of conflicts of law that would require
the application of the laws of any other jurisdiction.

     12. Counterparts. This Subscription Agreement may be executed in two or
more counterparts, each of which will constitute an original, but all of which,
when taken together, will constitute but one instrument, and will become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties. The Company and the Investor acknowledge and
agree that the Company shall deliver its counterpart to the Investor along with
the Prospectus Supplement (or the filing by the Company of an electronic version
thereof with the Commission).

     13. Confirmation of Sale. The Investor acknowledges and agrees that such
Investor’s receipt of the Company’s signed counterpart to this Subscription
Agreement, together with the Prospectus Supplement (or the filing by the Company
of an electronic version thereof with the Commission) shall constitute written
confirmation of the Company’s sale of Units to such Investor.

     14. Press Release. The Company and the Investor agree that the Company
shall (a) prior to the opening of the financial markets in New York City on the
business day immediately after the date hereof or as soon thereafter as possible
issue a press release announcing the Offering and disclosing all material
information regarding the Offering and (b) as promptly as practicable
thereafter, file a Current Report on Form 8-K with the Commission including, but
not limited to, a form of this Subscription Agreement and a form of the Warrant
Certificate.

12

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EXHIBIT A

U.S. GEOTHERMAL INC.

FORM OF WARRANT CERTIFICATE

(See attached)

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U.S. GEOTHERMAL INC.

NO. • • WARRANTS

Date of Issuance: December [•], 2012 (the “Issuance Date”)

COMMON SHARE PURCHASE WARRANTS

THIS IS TO CERTIFY THAT for value received [•], the registered holder hereof or
its permitted assigns (the “Holder”), is entitled, subject to the terms set
forth below, for each whole warrant represented by this certificate (this
“Warrant Certificate”) to purchase, at any time or times on or after the
Issuance Date up to and including 5:00 p.m. (New York time) on December [•],
2017 (the “Time of Expiry”), one fully paid and non-assessable common share
(“Common Share”) in the capital of U.S. Geothermal Inc. (the “Company”) (such
common share, a “Warrant Share” and collectively, the “Warrant Shares”) at a
price per share of US$0.50 (the “Exercise Price”), subject to adjustment as
hereinafter referred to. The warrants represented by this Warrant Certificate
are the warrants to purchase Common Shares (the “Warrants”) issued pursuant to
(i) that certain Subscription Agreement, dated as of December [•], 2012, by and
between the Company and the Holder (the “Subscription Agreement”) and (ii) the
Company’s Registration Statement on Form S-3 (File number 333-170202) including
the exhibits thereto, as amended at the date of this Warrant Certificate, the
Prospectus contained therein filed with the Securities and Exchange Commission
(the “Commission”), effective December 1, 2010, and a Prospectus Supplement
containing certain supplemental information regarding the securities sold
pursuant to the Subscription Agreement that has been or will be filed with the
Commission.

1.   Exercise of Warrants.

1.1 Election to Purchase.

     The rights evidenced by this Warrant Certificate may be exercised by the
Holder on any day on or after the Issuance Date, in whole or in part, up to and
including the Time of Expiry in accordance with the provisions hereof. The
exercise may be effected by providing to the Company at 1505 Tyrell Lane, Boise,
Idaho 83706 (or such other address as may be notified in writing by the Company)
(i) this Warrant Certificate and a duly completed and executed Subscription Form
in substantially the form attached as Exhibit “1” hereto (“Subscription Form”)
and (ii) (A) payment of the Exercise Price by a certified cheque, bank draft or
money order payable at par to the order of the Company, or by wire or electronic
funds transfer to an account designated by the Company, in each case in the
amount of the aggregate Exercise Price for the number of Warrant Shares
specified in the Subscription Form (the “Aggregate Exercise Price”) or (B)
provided the conditions for cashless exercise set forth in Section 1.5 are
satisfied, by notifying the Company that the Warrants are being exercised
pursuant to a Cashless Exercise (as defined in Section 1.5) . A duly completed
and executed Subscription Form shall be deemed to be delivered only upon
personal delivery thereof to, or if sent by mail or other means of transmission
upon actual receipt thereof by, the Company. If the Holder subscribes for a
lesser number of Common Shares than may be subscribed for pursuant to this
Warrant Certificate, the Holder shall be entitled to receive, without charge to
the Holder, a new warrant certificate in respect of the balance of the Warrants
referred to in any surrendered warrant certificate but not exercised pursuant to
the Subscription Form. On or before the first (1st) business day following the
date on which the Company has received each of this Warrant Certificate, the
duly completed and executed Subscription Form and the Aggregate Exercise Price
(or notice of a Cashless Exercise) (collectively, the “Exercise Delivery
Documents”), the Company shall transmit by facsimile or electronic mail an
acknowledgment of confirmation of receipt of the Exercise Delivery Documents to
the Holder and to the Company’s transfer agent (the “Transfer Agent”). For
purposes of this Warrant Certificate, “business day” means any day which is not
Saturday or Sunday or a legal holiday in the City of New York, New York.

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1.2 Exercise.

      The Company shall, as soon as possible following the date of receipt of
the Exercise Delivery Documents (the “Exercise Date”) and in accordance with
Section 1.3, issue as of the Exercise Date that number of Warrant Shares
specified in the Subscription Form as fully paid and non-assessable Common
Shares in the capital of the Company. The Company shall pay any and all transfer
taxes which may be payable with respect to the issuance and delivery of Warrant
Shares upon exercise of the Warrants.

1.3 Share Delivery.

      As promptly as practicable after the Exercise Date and, in any event,
within three (3) business days of the Exercise Date (the “Share Delivery Date”),
the Company shall, (i) credit such aggregate number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with The Depository Trust Company (“DTC”) through its
Deposit/Withdrawal At Custodian system, or (ii) issue and dispatch by overnight
courier to the address as specified in the Subscription Form, or, if not so
specified in the Subscription Form, cause to be held for collection by the
Holder at the address of the Company as set out in subsection 1.1 (or at such
additional place as may be decided by the Company from time to time and notified
to the Holder), certificates, registered in the Company’s share register in the
name of the Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise. Subject to applicable laws,
upon delivery of the Exercise Delivery Documents, the Holder or its designee, as
applicable, shall be deemed for all corporate purposes to have become the holder
of record of the Warrant Shares with respect to which the Warrants have been
exercised, irrespective of the date such Warrant Shares are credited to the
Holder’s or its designee’s DTC account or the date of delivery of the
certificates evidencing such Warrant Shares, as the case may be.

1.4 Company’s Failure to Timely Deliver Securities.

       If, upon the Holder’s exercise of the Warrants, the Company shall fail
for any reason or for no reason, within three (3) trading days of receipt of the
Exercise Delivery Documents in compliance with the terms of this Section 1, to
issue to the Holder a certificate for the number of Warrant Shares to which the
Holder is entitled and register such Warrant Shares on the Company’s share
register, or to credit the Holder’s balance account with DTC for such number of
Warrant Shares to which the Holder is entitled, and if on or after such third
(3rd) business day the Holder purchases (in an open market transaction or
otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of
Warrant Shares issuable upon such exercise that the Holder anticipated receiving
from the Company (a “Buy-In”), then the Company shall, within three (3) business
days after the Holder’s written request and in the Holder’s discretion, either
(i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions, if any) for the Common Shares so
purchased (the “Buy-In Price”), at which point the Company’s obligation to
deliver such certificate or to credit such balance account (and to issue such
Warrant Shares) shall terminate, or (ii) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing such Warrant
Shares, or to credit the Holder’s balance account with DTC for such Warrant
Shares, and pay cash to the Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of Common Shares, times (B)
the Closing Bid Price (as defined below) on the date of exercise.

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- 3 -

     As used in this Warrant Certificate, “Closing Bid Price” means, for any
security as of any date, the last closing bid price for such security on the
Principal Market (as defined in Section 2.1), as reported by Bloomberg, or, if
the Principal Market begins to operate on an extended hours basis and does not
designate the closing bid price, then the last bid price of such security prior
to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the last closing bid price or last trade price, respectively, of such
security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the “pink sheets” by OTC Pink
(formerly the National Quotation Bureau, Inc.). If the Closing Bid Price cannot
be calculated for a security on a particular date on any of the foregoing bases,
the Closing Bid Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. All such
determinations to be appropriately adjusted for any share dividend, share split,
share combination or other similar transaction during the applicable calculation
period.

1.5 Cashless Exercise Under Certain Circumstances.

      Notwithstanding anything contained herein to the contrary, if, at any time
following the Issuance Date, a registration statement under the United States
Securities Act of 1933, as amended, including any amendments or supplements
thereto, registering the Warrant Shares (a “Registration Statement”) is not
effective thereunder, prior to the Time of Expiry, and for so long as a
Registration Statement is not effective, any holder of any Warrant must exercise
the Warrants in whole or in part on a “cashless basis” and, in lieu of making
the cash payment otherwise contemplated to be made to the Company upon such
exercise in payment of the Aggregate Exercise Price, receive upon such exercise
the “Net Number” of Warrant Shares determined according to the following formula
(a “Cashless Exercise”):

Net Number = (A x B) - (A x C) 
                                      B

For purposes of the foregoing formula:

A = the total number of Warrant Shares with respect to which the Warrants are
then being exercised.

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- 4 -

B = the Weighted Average Price (as defined below) of the Common Shares (as
reported by Bloomberg) for the five consecutive trading days ending on the date
immediately preceding the Exercise Date.

C = the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

     As used in this Warrant Certificate, “Weighted Average Price” means, for
any security as of any date, the dollar volume-weighted average price for such
security on the Principal Market during the period beginning at 9:30:01 a.m.,
New York City time, and ending at 4:00:00 p.m., New York City time, as reported
by Bloomberg through its “Volume at Price” function or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York City time, and ending at
4:00:00 p.m., New York City time, as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg for
such hours, the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported in the “pink
sheets” by OTC Pink. If the Weighted Average Price cannot be calculated for such
security on such date on any of the foregoing bases, the Weighted Average Price
of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. All such determinations shall be
appropriately adjusted for any share dividend, share split or other similar
transaction during such period.

     For the avoidance of doubt, in the event that these Warrants may not be
exercised for cash pursuant to Section 1.1 hereof due to the lack of a then
effective and current Registration Statement registering the Warrant Shares with
the Commission and an exemption from registration or qualification under
applicable federal and state securities laws is not otherwise available for such
exercise, the sole method of exercise available to a Holder shall be a “cashless
exercise” pursuant to Section 1.5 hereof. Notwithstanding anything contained
herein to the contrary, in no event shall the Holder be entitled to demand a
“net cash settlement” of these Warrants.

1.6 Beneficial Ownership.

      The Company shall not effect the exercise of the Warrants, and the Holder
shall not have the right to exercise the Warrants, to the extent that after
giving effect to such exercise, such person (together with such person’s
affiliates (as such term is defined in the Securities Exchange Act of 1934, as
amended (the “Exchange Act”))) would beneficially own in excess of 9.99% of the
Common Shares outstanding immediately after giving effect to such exercise. For
purposes of the foregoing sentence, the aggregate number of Common Shares
beneficially owned by such person and its affiliates shall include the number of
Warrant Shares issuable upon exercise of the Warrants with respect to which the
determination of such sentence is being made, but shall exclude Warrant Shares
which would be issuable upon (i) exercise of the remaining, unexercised portion
of the Warrants beneficially owned by such person and its affiliates and (ii)
exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company beneficially owned by such person and its affiliates
(including, without limitation, any convertible notes or convertible preferred
shares or warrants) subject to a limitation on conversion or exercise analogous
to the limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act. For purposes of
this Warrant Certificate, in determining the number of outstanding Common
Shares, the Holder may rely on the number of outstanding Common Shares as
reflected in the most recent of (1) the Company’s most recent Annual Report on
Form 10-K, the Company’s most recent Quarterly Report on Form 10-Q, or other
public filing by the Company with the Commission, as the case may be, (2) a more
recent public announcement by the Company, or (3) any other notice by the
Company or the Transfer Agent setting forth the number of Common Shares
outstanding. In any case, the number of outstanding Common Shares shall be
determined after giving effect to the conversion or exercise of securities of
the Company, including the Warrants, by the Holder and its affiliates since the
date as of which such number of outstanding Common Shares was reported. The
provisions of this paragraph shall be construed, corrected and implemented in a
manner so as to effectuate the intended beneficial ownership limitation herein
contained.

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1.7 Fractional Warrant Share.

      Fractional Warrant Shares shall not be issued upon the exercise of any
Warrants. As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such exercise, the Company shall, at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up to the next
whole Warrant Share.

2.   Anti-Dilution Protection.

2.1 Definitions.

      For the purposes of Section 2 the words and terms defined below shall have
the respective meanings specified therefor in this subsection 2.1:

  (i)

“Adjustment Period” means the period commencing on the Issuance Date and ending
at the Time of Expiry;

        (ii)

“Current Market Price per Common Share”, at any date, means the volume weighted
average price per Common Share at which the Common Shares have traded (each, a
“Trading Day”) on the NYSE MKT LLC (or if the Common Shares are not then listed
on the NYSE MKT LLC, the recognized stock exchange on which the Common Shares
are listed on which the greatest volume of Common Shares were traded during the
period referenced below or, if the Common Shares are not so listed on any
recognized stock exchange, then on the over-the-counter market on which the
Common Shares are traded as selected by action of the directors acting
reasonably for such purpose) (the “Principal Market”), during the five (5) most
recent Trading Days ending on the third Trading Day before such date on which
there has occurred at least one trade of at least one board lot of Common Shares
prior to such date, such weighted average price to be determined by dividing the
aggregate sale price of all Common Shares sold in board lots on such exchange or
market, as the case may be, during the said five (5) Trading Days, by the number
of Common Shares so sold;

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  (iii)

“Dividends Paid in the Ordinary Course” means any dividend declared payable on
the Common Shares (whether in cash, securities, property or assets) in any
fiscal year of the Company to the extent that such dividends do not exceed, in
the aggregate, the greater of: (i) the aggregate value of dividends declared
payable by the Company on the Common Shares in its immediately preceding fiscal
year; (ii) the arithmetic mean of the aggregate value of dividends declared
payable by the Company on the Common Shares in its three immediately preceding
fiscal years; and (iii) 100% of the aggregate consolidated net income of the
Company, before extraordinary items, for its immediately preceding fiscal year
(such consolidated net income to be computed in accordance with United States
generally accepted accounting principles);

        (iv)

“director” means a director of the Company for the time being and reference
herein to an “action by the directors” means an action by the directors of the
Company as a board or, whenever duly empowered, an action by a committee of
directors;

        (v)

“recognized stock exchange” means a stock exchange or quotation system
recognized by the Commission; and

        (vi)

“TSX” means the Toronto Stock Exchange.

2.2 Adjustments.

      The Exercise Price and the number of Warrant Shares shall, while any
Warrants are still outstanding and unexercised, be subject to adjustment from
time to time upon the occurrence of any of the events and in the manner provided
as follows:

  (a)

If and whenever during the Adjustment Period, the Company shall:

          (i)

declare a dividend or make a distribution on its Common Shares payable in Common
Shares (or securities exchangeable for or convertible into Common Shares), other
than Dividends Paid in the Ordinary Course; or

          (ii)

subdivide or change its outstanding Common Shares into a greater number of
Common Shares; or

          (iii)

reduce, combine or consolidate its outstanding Common Shares into a lesser
number or Common Shares,

(any of such events in paragraphs (i), (ii) or (iii) above being called a “Share
Reorganization”), then effective immediately after the record date or effective
date, as the case may be, at which the holders of Common Shares are determined
for the purposes of the Share Reorganization, the Exercise Price shall be
adjusted to a price determined by multiplying the applicable Exercise Price in
effect on such effective date or record date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such effective date or
record date before giving effect to such Share Reorganization and the
denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such Share Reorganization (including, in the
case where securities exchangeable for or convertible into Common Shares are
distributed, the number of additional Common Shares that would have been
outstanding had such securities been exchanged for or converted into Common
Shares immediately after giving effect to such Share Reorganization).

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  (b)

If and whenever during the Adjustment Period the Company shall fix a record date
for the payment, issue or distribution to all or substantially all of the
holders of the Common Shares of (i) a dividend, (ii) cash or assets (including
evidences of the Company’s indebtedness), or (iii) rights or other securities
(including without limitation, securities convertible into or exchangeable for
Common Shares), and such payment, issue or distribution does not constitute a
Dividend Paid in the Ordinary Course or a Share Reorganization (any of such
non-excluded events being herein called a “Special Distribution”), the Exercise
Price shall be adjusted as determined by action of the directors (whose
determination shall be conclusive) effective immediately after such record date
by an amount that is no greater than the difference between (x) the volume
weighted average trading price of the Common Shares on the Principal Market for
the five (5) most recent Trading Days ending immediately prior to the Trading
Day the Common Shares begin trading on an “ex-distribution” basis, and (y) the
volume weighted average trading price of the Common Shares on the Principal
Market for the five (5) most recent Trading Days beginning immediately after the
Trading Day the Common Shares commence trading on an “ex-distribution” basis.

       

Such adjustment shall be made successively whenever such a record date is fixed.
To the extent that such payment, issuance or distribution is not so made or any
rights, options or warrants so distributed are not exercised, the Exercise Price
shall be readjusted effective immediately to the Exercise Price which would then
be in effect based upon such payment, issuance or distribution actually made, or
based on the Common Shares or securities exchangeable or convertible for Common
Shares actually delivered upon the exercise of any rights, options or warrants
as the case may be but subject to any other adjustment required hereunder by
reason of any event arising after the record date.

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  (c)

If and whenever at any time during the Adjustment Period there shall be a
reorganization, reclassification or other change of Common Shares at any time
outstanding or change of the Common Shares into other shares or into other
securities (other than a Share Reorganization), or a consolidation,
amalgamation, arrangement or merger of the Company with or into any other
company or other entity, or a transfer of all or substantially all of the
undertaking or assets of the Company to another company or entity, in each case
in which the holders of Common Shares are entitled to receive shares, other
securities or property, including cash, (any of such events being herein called
a “Capital Reorganization”), any Holder who exercises his right to subscribe for
and purchase Warrant Shares pursuant to the exercise of the Warrants after the
effective date of such Capital Reorganization shall be entitled to receive, and
shall accept for the same aggregate consideration in lieu of the number of
Warrant Shares to which such Holder was theretofore entitled upon such exercise,
the aggregate number of shares, other securities or other property, including
cash, which such Holder would have received as a result of such Capital
Reorganization had he exercised his right to acquire Warrant Shares immediately
prior to the effective date or record date, as the case may be, of the Capital
Reorganization and had he been the holder of such Warrant Shares on such
effective date or record date, as the case may be, subject to adjustment
thereafter in accordance with provisions the same, as nearly as may be possible,
as those contained in subsection 2.2(b). If determined appropriate by the
directors, acting reasonably, and subject to any required prior approval of the
NYSE MKT LLC, TSX and any other stock exchange or market on which the Common
Shares may be listed or traded, appropriate adjustments shall be made as a
result of any such Capital Reorganization in the application of the provisions
set forth in this subsection 2.2, with respect to the rights and interests
thereafter of a Holder to the end that the provisions set forth in this
subsection 2.2 shall thereafter correspondingly be made applicable as nearly as
may reasonably be in relation to any shares, other securities or other property,
including cash, thereafter deliverable upon the exercise of any Warrant. Any
such adjustments shall be made by and set forth in an agreement supplemental
hereto approved by action by the directors, acting reasonably, and shall for all
purposes be conclusively deemed to be appropriate adjustments.

  (d)

If and whenever at any time during the Adjustment Period there shall occur a
Share Reorganization which results in an adjustment to the Exercise Price
pursuant to subsection 2.2(a), the number of Warrants Shares purchaseable (at
the adjusted Exercise Price) shall be adjusted contemporaneously with the
adjustment of the Exercise Price by multiplying the number of Warrant Shares
theretofore purchaseable on the exercise thereof by a fraction, the numerator of
which shall be the applicable Exercise Price in effect immediately prior to such
adjustment and the denominator of which shall be the applicable Exercise Price
resulting from such adjustment.

        (e)

In case the Company during the Adjustment Period shall take any action affecting
the Common Shares, other than action described above in this subsection 2.2
which in the opinion of the directors, acting reasonably, would materially
adversely affect the rights of the Holder, the Exercise Price or the number of
Warrant Shares shall be adjusted in such manner, if any, and at such time, by
action by the directors, acting reasonably, as they may determine to be
equitable in the circumstances, but subject in all cases to any necessary
regulatory approval.

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2.3 Rules.

      For the purposes of subsection 2.2 hereof, any adjustment shall be made
successively whenever an event referred to therein shall occur, subject to the
following provisions:

  (a)

subject to subsection 2.3(b), as to any fraction of a Common Share which the
Holder would otherwise be entitled upon the occurrence of the adjustment(s)
described above, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the then applicable Exercise Price or round up to the next whole
share;

          (b)

no adjustment to an Exercise Price shall be required unless such adjustment
would result in a change of at least 1% in the prevailing Exercise Price and no
adjustment in the number of Warrant Shares will be required to be made unless
the cumulative effect of such adjustment or adjustments would change the number
of Warrant Shares by at least one Warrant Share and, for greater clarity, any
adjustment which, except for the qualification of this section, would otherwise
have been required to be made shall be carried forward and taken into account in
any subsequent adjustment; provided, however, that in no event shall the Company
be obligated to issue fractional Warrant Shares or fractional interests in
Warrant Shares upon exercise of a Warrant;

          (c)

if a dispute shall at any time arise with respect to adjustments to the Exercise
Price or the number of Warrant Shares purchasable pursuant to the exercise
rights represented by a Warrant, such disputes shall be conclusively determined
by the Company’s auditors or, if they are unable or unwilling to act, by such
other firm of independent chartered accountants as may be selected by action by
the directors and any such determination, shall be conclusive evidence of the
correctness of any adjustments made;

          (d)

if the Company shall set a record date to determine the holders of its Common
Shares for the purpose of entitling them to receive any dividend or distribution
or any subscription or purchase rights, options or warrants and shall thereafter
and before the distribution to such shareholders of any such dividend,
distribution or subscription or purchase rights legally abandon its plan to pay
or deliver such dividend, distribution or subscription or purchase rights, then
no adjustment in the Exercise Price or the number of Warrant Shares shall be
required by reason of the setting of such record date; and

          (e)

in any case in which this Warrant Certificate requires that an adjustment become
effective immediately after a record date for an event referred to in subsection
2.2 hereof, the Company may defer, until the occurrence of such event:

          (i)

issuing to the Holder, to the extent that the Warrants are exercised after such
record date and before the occurrence of such event, the additional Warrant
Shares issuable upon such exercise by reason of the adjustment required by such
event; and

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    (ii)

delivering to the Holder any distribution declared with respect to such
additional Warrant Shares after such record date and before such event;

provided, however, that the Company delivers to the Holder an appropriate
instrument evidencing the right of the Holder, upon the occurrence of the event
requiring the adjustment, to an adjustment in the Exercise Price and/or the
number of Warrant Shares.

2.4 Taking of Actions.

      As a condition precedent to the taking of any action which would require
an adjustment pursuant to Section 2.2 hereof, the Company shall take any action
that may, in the opinion of counsel, be necessary in order that the Company may
validly and legally issue as fully paid and non-assessable all of the Common
Shares which the Holder is entitled to receive in accordance with the provisions
of this Warrant Certificate.

2.5 Notice.

      At least seven days prior to the effective date or record date, as the
case may be, of any event that requires or that may require an adjustment in any
of the exercise rights of the Holder under this Warrant Certificate, including
the number of Warrant Shares, the Company shall deliver to the Holder a
certificate of the Company specifying the particulars of such event and, if
determinable, the required adjustment and the computation of such adjustment. In
case any adjustment for which a certificate has been given is not then
determinable, the Company shall promptly after such adjustment is determinable
deliver to the Holder hereof a certificate of the Company showing how such
adjustment was computed. The Company hereby covenants and agrees that the
register of transfers and share transfer books for the Common Shares shall be
open during normal business hours for inspection by the Holder, and that the
Company will not take any action which might deprive the Holder of the
opportunity of exercising the rights of subscription contained in this Warrant
Certificate, during such seven day period.

3.  Shares to be Reserved.

     The Company will at all times take all action necessary to reserve and keep
available out of its authorized Common Shares, solely for the purpose of issue
upon the exercise of the Warrants, 100% of the number of Warrant Shares as are
then issuable upon the exercise of the Warrants (without regard to any
limitations on exercise). The Company covenants and agrees that all Warrant
Shares that are so issuable will, upon issuance in accordance with the terms of
this Warrant Certificate and applicable laws, be duly authorized, fully paid and
non-assessable. The Company will take such actions as may be reasonably
necessary and as are within its power to ensure that all such Warrant Shares may
be so issued without violation of any applicable laws or the applicable
requirements of any stock exchange upon which the Common Shares of the Company
may be listed.

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4.  Noncircumvention.

     The Company hereby covenants and agrees that the Company will not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant
Certificate, and will at all times in good faith comply with all the provisions
of this Warrant Certificate and take all actions consistent with effectuating
the purposes of this Warrant Certificate. Without limiting the generality of the
foregoing, the Company shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Common Shares upon the exercise of the Warrants.

5.  Warrant Holder Not Deemed a Shareholder.

     Except as otherwise specifically provided herein, the Holder, solely in
such person’s capacity as a holder of the Warrants, shall not be entitled to
vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant
Certificate be construed to confer upon the Holder, solely in such person’s
capacity as the Holder of the Warrants, any of the rights of a shareholder of
the Company or any right to vote, give or withhold consent to any corporate
action (whether any reorganization, issue of shares, reclassification of share
capital, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such person is then entitled
to receive upon the due exercise of a Warrant. In addition, nothing contained in
this Warrant Certificate shall be construed as imposing any liabilities on the
Holder to purchase any securities (upon exercise of a Warrant or otherwise) or
as a shareholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.

6.  The Register.

     The Company shall keep:

  (a)

at the principal office of the Company, a register of holders of the Warrants
represented by this Warrant Certificate or any portion thereof in which shall be
entered in alphabetical order the names and addresses of the holders and
particulars of the Warrants held by them; and

        (b)

at the principal office of the Company, a register of transfers in which all
transfers of the Warrants represented by this Warrant Certificate or any portion
thereof and the date and other particulars of each transfer shall be entered.

7.  Transfer of Warrants.

     Subject to the following provisions of this Section 7 and applicable laws,
the Warrants evidenced hereby and/or any portion of the rights to subscribe for
and purchase Warrant Shares hereunder may be transferred by the Holder. No
transfer of the Warrants evidenced hereby or any portion of the rights hereunder
will be valid unless duly entered on the appropriate register of transfers, upon
the surrender to the Company of this Warrant Certificate accompanied by a duly
completed Transfer Form in substantially the form attached as Exhibit “2” hereto
executed by the registered Holder or its executors, administrators or other
legal representatives or its attorney duly appointed by an instrument in writing
in form and execution satisfactory to the Company, and, upon compliance with all
applicable securities laws and such other reasonable requirements as the Company
may prescribe, such transfer will be duly recorded by the Company on the
applicable registers. If less than all of the Warrants represented by this
Warrant Certificate are transferred, the Holder shall receive a new Warrant
Certificate representing the portion of such Warrants that were not transferred,
registered in the name of the Holder.

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     The Warrants may not be sold, transferred or otherwise disposed of to a
Canadian resident for a period of four (4) months and one (1) day from the
Issuance Date, nor may the Holder enter into any discussions, negotiations or
agreements within Canada with respect to the sale, transfer or disposition of
any of the Warrants for a period of four (4) months and one (1) day from the
Issuance Date.

8.  Replacement.

     Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant Certificate and, if requested by the
Company, upon delivery of an indemnity and/or surety bond in amount and form
satisfactory to the Company (or, in the case of mutilation, upon surrender of
this Warrant Certificate), the Company shall issue and deliver to the Holder a
replacement certificate containing the same legends, terms and conditions as
this Warrant Certificate.

9.  Expiry Date.

     The Warrants shall expire and all rights to purchase Warrant Shares
hereunder shall cease and become null and void at 5:00 p.m. (New York time) on
December [•], 2017.

10. Time.

      Time shall be of the essence of this Warrant Certificate.

11. Business Day.

      In the event that any day on or before which any action is required or
permitted to be taken hereunder is not a business day, such action shall be
required or permitted to be taken on or before the requisite time on the next
succeeding day that is a business day.

12. Notices.

      Whenever notice is required or permitted to be given under this Warrant
Certificate, unless otherwise provided herein, such notice will be in writing,
will be mailed (a) if within the domestic United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile or (b) if delivered from outside the
United States, by International Federal Express or facsimile, and will be deemed
given (i) if delivered by first-class registered or certified mail domestic,
three business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express, two business days after so mailed and (iv) if
delivered by facsimile, upon electronic confirmation of receipt and will be
delivered and addressed as follows:

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- 13 -

if to the Company, to:

  U.S. Geothermal Inc.   1505 Tyrell Lane   Boise, Idaho 83706   Attention:
Daniel J. Kunz, Chief Executive Officer   Facsimile: (208) 424-1030

with copies to:

  Dorsey & Whitney LLP   Columbia Center   701 Fifth Avenue, Suite 6100  
Seattle, Washington 98104   Attention: Christopher J. Barry                    
         Kimberley R. Anderson   Facsimile: (206) 903-8820

if to the Holder, at its address appearing on the register hereinbefore
mentioned, or at such other address or addresses as may have been furnished to
the Company in writing.

13. Amendment and Waiver.

      These Warrants are part of a series of warrants to purchase Common Shares
of the Company issued on the Issuance Date (collectively, the “2012 Warrants”).
Except as otherwise provided herein, the provisions of these Warrants may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the holders of a majority of the 2012 Warrants
then outstanding.

14. Governing Law.

      This Warrant Certificate shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without giving
effect to the principles of conflicts of law that would require the application
of the laws of any other jurisdiction.

15. Successor.

      The Company shall not enter into any transaction whereby all or
substantially all of its undertaking, property and assets would become the
property of any other company (herein called a “Successor Company”) whether by
way of reorganization, reconstruction, consolidation, amalgamation, merger,
transfer, sale, disposition or otherwise, unless prior to or contemporaneously
with the consummation of such transaction the Company and the Successor Company
shall have executed such instruments and done such things as the Company, acting
reasonably, considers to be necessary or advisable to establish that upon the
consummation of such transaction:

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- 14 -

  (a)

the Successor Company will have assumed all the covenants and obligations of the
Company under this Warrant Certificate, and

        (b)

this Warrant Certificate will be a valid and binding obligation of the Successor
Company entitling the Holder, as against the Successor Company, to all the
rights of the Holder under this Warrant Certificate (without limitation
reflecting any adjustments to which the Holder may be entitled as a result of
such transaction pursuant to Sections 2.2 and 2.3).

     Whenever the conditions of this Section 15 shall have been duly observed
and performed, the Successor Company shall possess, and from time to time may
exercise, each and every right and power of the Company under this Warrant
Certificate in the name of the Company or otherwise and any act or proceeding by
any provision hereof required to be done or performed by any director or officer
of the Company may be done and performed with like force and effect by the like
directors or officers of the Successor Company.

16. General.

      This Warrant Certificate is not valid for any purpose whatsoever unless
and until it has been signed by or on behalf of the Company. The holding of the
Warrants evidenced by this Warrant Certificate shall not be construed as
conferring upon the Holder any right or interest whatsoever as a shareholder of
the Company nor entitle the holder hereof to any right or interest in respect
thereof except as expressly provided in this Warrant Certificate.

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- 15 -

     IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be
executed by its duly authorized officer.

     DATED as of the ___ day of ________________, 2012.

  U.S. GEOTHERMAL INC.           Name:   Title:

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EXHIBIT 1

Subscription Form

     The undersigned Holder hereby irrevocably elects to exercise the number of
Warrants of U.S. Geothermal Inc. (the “Company”) set out below for the number of
Warrant Shares as set forth below, evidenced by the attached certificate
representing Warrants issued by the Company (the “Warrant Certificate”).
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant Certificate:

     1. Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:

(A)

________     a “Cash Exercise” with respect to:

      (i)

Number of Warrants to be exercised: ______________________________

      (ii)

Number of Warrant Shares to be acquired:______________________________

      (iii)

Exercise Price per Warrant:______________________________

     

; and/or

      (B)

________     a “Cashless Exercise” with respect to:

      (i)

Number of Warrants to be exercised:______________________________

      (ii)

Number of Warrant Shares to be acquired:______________________________

     2. Payment of Exercise Price. In the event that the Holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of
US$ ___________________[1(A)(ii) multiplied by 1(A)(iii) above)] to the Company
in accordance with the terms of the Warrant Certificate.

     3. Delivery of Warrant Shares. The Holder directs Warrant Shares to be
registered and issued as directed below and the Company shall deliver to the
Holder such Warrant Shares in accordance with the terms of the Warrant
Certificate.

     4. The Holder acknowledges that the Warrants are exercisable only in
accordance with applicable laws.

Please check one of the following options and complete the Required Information
below:

Option 1

[ ]

Please deliver the Warrant Shares by crediting the account of the Holder’s
broker (as specified by such Holder below) with The Depository Trust Company
(“DTC”) through its Deposit/Withdrawal At Custodian (“DWAC”) system, whereby the
Holder’s broker will initiate a DWAC transaction using its DTC participant
identification number.

OR

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Option 2

[ ]

Please deliver a stock certificate evidencing the Warrant Shares registered in
the name of the registered holder specified by the Holder below to the address
specified by the Holder below.

Required Information:

1. The exact name that your Warrant Shares are to     be registered in. You may
use a nominee name if     appropriate:         2. The relationship between the
Holder and the     registered holder listed in response to item 1       above:  
      3. The mailing address of the registered holder listed     in response to
item 1 above:         4. The Social Security Number or Tax Identification    
Number of the registered holder listed in response     to item 1 above:    

  5.

Name of DTC Participant (broker-dealer at which

 

 the account or accounts to be credited with the  

   

Warrant Shares are maintained) (Option 1 only):

   

  6.

DTC Participant Number (Option 1 only):

   

  7.

Name of Account(s) at DTC Participant being

   

credited with the Warrant Shares (Option 1 only):

   

  8.

Account Number(s) at DTC Participant being

    credited with the Warrant Shares (Option 1 only):  

DATED this_______ day of____________ , 20_____.

      (Signature of registered Holder)           (Name of registered Holder)

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EXHIBIT 2

Transfer Form

FOR VALUE RECEIVED, the undersigned hereby sells, transfers and assigns
to___________________ , whose address is
________________________________________Warrants represented by the within
Warrant Certificate and appoints U.S. Geothermal Inc. attorney to transfer the
said Warrants on its books with full power of substitution in the premises.

DATED this______ day of___________ , 20_____.

 In the presence of: Signature of Holder guaranteed by:

          (Signature of registered Holder hereof)                 (Name of
registered Holder hereof)

NOTICE:

The signature to this Transfer Form must correspond with the name as it appears
on the face of the Warrant Certificate, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrants.

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