U.S. Geothermal Inc.: Exhibit 4.1 - Filed by newsfilecorp.com






Exhibit 4.1

THIS PURCHASE WARRANT IS (I) NOT EXERCISABLE PRIOR TO [180
DAYS FOLLOWING ISSUANCE OF THE PURCHASE WARRANT] AND (II) VOID AFTER 5:00 P.M.,
EASTERN TIME, [FIVE YEARS FOLLOWING ISSUANCE OF THE PURCHASE WARRANT].

COMMON STOCK PURCHASE WARRANT 

For the Purchase of [•] Shares of Common Stock 

of 

U.S. GEOTHERMAL INC. 

1.     Purchase Warrant. THIS CERTIFIES THAT, in
consideration of funds duly paid by or on behalf of Kuhns Brothers Securities
Corporation, the registered holder of this Purchase Warrant or its permitted
assigns (“Holder”), to U.S. Geothermal Inc., a Delaware corporation (the
“Company”), Holder is entitled, at any time or from time to time from
[180 DAYS FOLLOWING ISSUANCE OF THE PURCHASE WARRANT] (the “Commencement
Date”), and at or before 5:00 p.m., Eastern time, [FIVE YEARS FOLLOWING
ISSUANCE OF THE PURCHASE WARRANT] (the “Expiration Date”), but not
thereafter, to subscribe for, purchase and receive, in whole or in part, up to
[•] shares of the Company’s common stock, par value $0.001 per share (the
“Shares”), subject to adjustment as provided in Section 6 hereof. If the
Expiration Date is a day on which banking institutions are authorized by law to
close, then this Purchase Warrant may be exercised on the next succeeding day
which is not such a day in accordance with the terms herein. During the period
ending on the Expiration Date, the Company agrees not to take any action that
would terminate the Purchase Warrant. This Purchase Warrant is initially
exercisable at $[•] per Share [PRICE THAT IS EQUAL TO 115% OF THE CLOSING SALE
PRICE OF ONE SHARE OF THE COMPANY’S COMMON STOCK ON THE DAY PRIOR TO ISSUANCE OF
THE PURCHASE WARRANT]; provided, however, that upon the occurrence
of any of the events specified in Section 6 hereof, the terms of this Purchase
Warrant, including the exercise price per Share and the number of Shares to be
received upon such exercise, shall be adjusted as therein specified. The term
“Exercise Price” shall mean the initial exercise price or the adjusted
exercise price, depending on the context.

This Purchase Warrant and any Shares issuable upon exercise
thereof shall be issued pursuant to the Registration Statement. The term
“Registration Statement” shall mean the effective registration statement
on Form S-3 (Commission File No. 333-170202) filed by the Company with the
Securities and Exchange Commission (the “Commission”) pursuant to the
Securities Act of 1933, as amended (the “Securities Act”), for the
registration of shares of the Company’s common stock, including the Shares, and
certain other securities, including the Purchase Warrants, as such Registration
Statement has been or may be amended and supplemented from time to time,
including all documents filed as part thereof or incorporated by reference
therein, and including all information deemed to be a part thereof at the time
of effectiveness pursuant to Rule 430B of the Securities Act, including any
comparable successor registration statement filed by the Company with the
Commission pursuant to the Securities Act for the registration of shares of the
Company’s common stock, including the Shares, and certain other securities,
including the Purchase Warrants. The term “Prospectus” shall mean the
Company’s final base prospectus, dated December 1, 2010, a preliminary form of
which is included in the Registration Statement, including the documents
incorporated by reference therein, as supplemented by any prospectus supplement
to such base prospectus (including the prospectus supplement dated May 22, 2012)
filed with the Commission pursuant to Rule 424(b) under the Securities Act in
connection with the transactions contemplated hereby, including the documents
incorporated by reference therein. 




2.     Exercise. 

2.1     Exercise Form. In order to exercise this Purchase
Warrant, the exercise form attached hereto must be duly executed and completed
and delivered to the Company, together with this Purchase Warrant and payment of
the Exercise Price for the Shares being purchased payable in cash by wire
transfer of immediately available funds to an account designated by the Company
or by check. If the subscription rights represented hereby shall not be
exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this
Purchase Warrant shall become and be void without further force or effect, and
all rights represented hereby shall cease and expire.

2.2     Cashless Exercise. If and only if the Registration
Statement covering the Shares issuable upon exercise of this Purchase Warrant is
not effective or available under the Securities Act at the time of any exercise,
then, in lieu of exercising this Purchase Warrant by payment of cash or check
payable to the order of the Company pursuant to Section 2.1 above, Holder may
elect to receive the number of Shares equal to the value of this Purchase
Warrant (or the portion thereof being exercised), by surrender of this Purchase
Warrant to the Company, together with the exercise form attached hereto, in
accordance with the following formula: 

X = Y(A-B)

             A


	Where, 	X 	= 	The number of Shares to be issued to Holder;
  
	  	Y 	= 	The number of Shares for which the Purchase
      Warrant is being exercised; 
	  	A 	= 	The fair market value of one Share; and 
	  	B 	= 	The Exercise Price. 


For purposes of this Section 2.2, the fair market value of a
Share is defined as follows: 

(i)     if the Company’s common stock is traded on a securities
exchange, the fair market value of a Share shall be deemed to be the closing
sale price on such exchange immediately prior to the exercise form being
received by the Company in connection with the exercise of the Purchase Warrant;
or 

(ii)     if the Company’s common stock is actively traded
over-the-counter, the fair market value of a Share shall be deemed to be the
closing bid immediately prior to the exercise form being received by the Company
in connection with the exercise of the Purchase Warrant; if there is no active
public market, the fair market value of a Share shall be the fair market value
thereof, as determined in good faith by the Company’s Board of Directors. 

Notwithstanding anything to the contrary in this Purchase
Warrant, the cashless exercise procedure set forth in this Section 2.2 shall be
available only in the event that the Registration Statement covering the Shares
issuable upon exercise of this Purchase Warrant is not effective or available
under the Securities Act at the time of any exercise of this Purchase Warrant.


2.3     Legend. Each certificate for the securities
purchased under this Purchase Warrant shall bear a legend as follows unless (i)
such securities have been issued pursuant to the Registration Statement and the
Prospectus, or (ii) Holder has furnished to the Company an opinion of counsel,
in form and substance reasonably satisfactory to the Company, that the
certificate for such securities need not bear a legend under the Securities Act
and applicable state securities laws:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
APPLICABLE STATE LAW. NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW WHICH, IN THE OPINION OF
COUNSEL TO THE COMPANY, IS AVAILABLE.”

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3.     Transfer. 

3.1     General Restrictions. The registered Holder of this
Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder
will not: (a) sell, transfer, assign, pledge or hypothecate this Purchase
Warrant for a period of one year following the date of issuance of this Purchase
Warrant (the “Issuance Date”) to anyone other than: (i) Kuhns Brothers
Securities Corporation (“KBSC”) or a selected dealer participating in the
offering covered by the Registration Statement, or (ii) a bona fide officer or
partner of KBSC or of any such selected dealer, in each case in accordance with
FINRA Conduct Rule 5110(g)(1), or (b) cause this Purchase Warrant or the
securities issuable hereunder to be the subject of any hedging, short sale,
derivative, put or call transaction that would result in the effective economic
disposition of this Purchase Warrant or the securities hereunder, except as
provided for in FINRA Rule 5110(g)(2). On and after one year after the Issuance
Date, transfers to others may be made subject to compliance with or exemptions
from the Securities Act and applicable securities laws. In order to make any
permitted assignment, the Holder must deliver to the Company the assignment form
attached hereto duly executed and completed, together with the Purchase Warrant
and payment of all transfer taxes, if any, payable in connection therewith. The
Company shall within five (5) Business Days of receiving all of the materials
described in the preceding sentence transfer this Purchase Warrant on the books
of the Company and shall execute and deliver a new Purchase Warrant or Purchase
Warrants of like tenor to the appropriate assignee(s) expressly evidencing the
right to purchase the aggregate number of Shares purchasable hereunder or such
portion of such number as shall be contemplated by any such assignment.

3.2     Restrictions Imposed by the Securities Act. The
securities evidenced by this Purchase Warrant and the securities issuable upon
exercise thereof shall not be transferred unless: (i) the Registration Statement
and the Prospectus are current and available for issuances and sales of such
securities, or (ii) the Company has received an opinion of counsel for the
Holder that such securities may be transferred pursuant to an exemption from
registration under the Securities Act and applicable state securities laws, the
availability of which is established to the reasonable satisfaction of the
Company (the Company hereby agreeing that the opinion of Sichenzia Ross Friedman
Ference LLP shall be deemed satisfactory evidence of the availability of an
exemption).

4.     Effective Registration Statement; Current Prospectus.
The Company shall use its reasonable best efforts to keep the Registration
Statement effective pursuant to Rule 415 promulgated under the Securities Act,
and to keep the Registration Statement and the Prospectus current and available
for issuances and sales of the Shares by the Company to Holder upon exercise of
this Purchase Warrant at all times until the earlier of (i) the date on which
all Shares issuable pursuant to this Purchase Warrant have been validly issued
by the Company to Holder and (ii) the Expiration Date (the “Registration
Period”). Without limiting the generality of the foregoing, during the
Registration Period, the Company shall (a) take all action necessary to cause
its common stock to continue to be registered as a class of securities under
Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), shall comply with its reporting and filing obligations
under the Exchange Act, and shall not take any action or file any document
(whether or not permitted by the Exchange Act) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under the Exchange Act, and (b) prepare and file with the Commission, at the
Company’s expense, such amendments (including, without limitation,
post-effective amendments) to the Registration Statement and such prospectus
supplements to the base prospectus contained therein pursuant to Rule 424(b)
under the Securities Act, in each case, as may be necessary to keep the
Registration Statement effective pursuant to Rule 415 promulgated under the
Securities Act, and to keep the Registration Statement and the Prospectus
current and available for issuances and sales of the Shares by the Company to
Holder in accordance with the Purchase Warrant at all times during the
Registration Period (it being hereby acknowledged and agreed that the Company
shall prepare and file with the Commission, at the Company’s expense,
immediately prior to the third anniversary of the initial effective date of the
Registration Statement (the “Renewal Date”), a new Registration Statement
relating to the Shares issuable by the Company to Holder in accordance with this
Purchase Warrant and, if such Registration Statement is not an automatic shelf
registration statement on Form S-3ASR, use its reasonable best efforts to cause
such Registration Statement to be declared effective within 180 days after the
Renewal Date). Holder shall furnish to the Company such information regarding
itself, the Shares and Purchase Warrants held by it and the intended method of
distribution thereof, if applicable, as shall be reasonably requested by the
Company in connection with the preparation and filing of any such amendment to
the Registration Statement (or new Registration Statement) or any such
prospectus supplement, and shall otherwise cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of any such amendment to the Registration Statement (or new Registration
Statement) or any such prospectus supplement.

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5.     New Purchase Warrants to be Issued. 

5.1     Partial Exercise or Transfer. Subject to the
restrictions in Section 3 hereof, this Purchase Warrant may be exercised or
assigned in whole or in part. In the event of the exercise or assignment hereof
in part only, upon surrender of this Purchase Warrant for cancellation, together
with the duly completed and executed exercise or assignment form and funds
sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant
to Section 2.1 hereto, the Company shall cause to be delivered to the Holder
without charge a new Purchase Warrant of like tenor to this Purchase Warrant in
the name of the Holder evidencing the right of the Holder to purchase the number
of Shares purchasable hereunder as to which this Purchase Warrant has not been
exercised or assigned.

5.2     Lost Certificate. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Purchase Warrant and of reasonably satisfactory indemnification or the
posting of a bond, the Company shall execute and deliver a new Purchase Warrant
of like tenor and date. Any such new Purchase Warrant executed and delivered as
a result of such loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.

6.     Adjustments. 

6.1     Adjustments to Exercise Price and Number of
Securities. The Exercise Price and the number of Shares underlying the
Purchase Warrant shall be subject to adjustment from time to time as hereinafter
set forth:

6.1.1     Share Dividends; Split Ups. If, after the Issuance
Date, and subject to the provisions of Section 6.3 below, the number of
outstanding Shares is increased by a stock dividend payable in Shares or by a
split up of Shares or other similar event, then, on the effective day thereof,
the number of Shares purchasable hereunder shall be increased in proportion to
such increase in outstanding Shares, and the Exercise Price shall be
proportionately decreased.

6.1.2     Aggregation of Shares. If, after the date hereof,
and subject to the provisions of Section 6.3 below, the number of outstanding
Shares is decreased by a consolidation, combination or reclassification of
Shares or other similar event, then, on the effective date thereof, the number
of Shares purchasable hereunder shall be decreased in proportion to such
decrease in outstanding Shares, and the Exercise Price shall be proportionately
increased.

6.1.3     Replacement of Securities upon Reorganization,
etc. In case of any reclassification or reorganization of the outstanding
Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that
solely affects the par value of such Shares, or in the case of any share
reconstruction or amalgamation or consolidation of the Company with or into
another corporation (other than a consolidation or share reconstruction or
amalgamation in which the Company is the continuing corporation and that does
not result in any reclassification or reorganization of the outstanding Shares),
or in the case of any sale or conveyance to another corporation or entity of the
property of the Company as an entirety or substantially as an entirety in
connection with which the Company is dissolved, the Holder of this Purchase
Warrant shall have the right thereafter (until the expiration of the right of
exercise of this Purchase Warrant) to receive upon the exercise hereof, for the
same aggregate Exercise Price payable hereunder immediately prior to such event,
the kind and amount of shares of stock or other securities or property
(including cash) receivable upon such reclassification, reorganization, share
reconstruction or amalgamation, or consolidation, or upon a dissolution
following any such sale or transfer, by a holder of the number of Shares of the
Company obtainable upon exercise of this Purchase Warrant immediately prior to
such event; and if any reclassification also results in a change in Shares
covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant
to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section
6.1.3 shall similarly apply to successive reclassifications, reorganizations,
share reconstructions or amalgamations, or consolidations, sales or other
transfers.

6.1.4     Changes in Purchase Warrant. This Purchase Warrant
need not be changed because of any change pursuant to this Section 6.1, and any
Purchase Warrants issued after such change may state the same Exercise Price and
the same number of Shares as are stated in this Purchase Warrant. The acceptance
by any Holder of the issuance of new Purchase Warrants reflecting a required or
permissive change shall not be deemed to waive any rights to an adjustment occurring after the Issuance Date
or the computation thereof.

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6.2     Substitute Purchase Warrant. In case of any
consolidation of the Company with, or share reconstruction or amalgamation of
the Company with or into, another corporation (other than a consolidation or
share reconstruction or amalgamation which does not result in any
reclassification or change of the outstanding Shares), the corporation formed by
such consolidation or share reconstruction or amalgamation shall execute and
deliver to the Holder a supplemental Purchase Warrant providing that the holder
of each Purchase Warrant then outstanding or to be outstanding shall have the
right thereafter (until the stated expiration of such Purchase Warrant) to
receive, upon exercise of such Purchase Warrant, the kind and amount of shares
of stock and other securities and property receivable upon such consolidation or
share reconstruction or amalgamation, by a holder of the number of Shares of the
Company for which such Purchase Warrant might have been exercised immediately
prior to such consolidation, share reconstruction or amalgamation, sale or
transfer. Such supplemental Purchase Warrant shall provide for adjustments which
shall be identical to the adjustments provided for in this Section 6. The above
provision of this Section shall similarly apply to successive consolidations or
share reconstructions or amalgamations.

6.3     Elimination of Fractional Interests. The Company
shall not be required to issue certificates representing fractions of Shares
upon the exercise of the Purchase Warrant, nor shall it be required to issue
scrip or pay cash in lieu of any fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated by rounding any
fraction up or down, as the case may be, to the nearest whole number of Shares
or other securities, properties or rights.

7.     Reservation and Listing. The Company shall at all
times reserve and keep available out of its authorized Shares, solely for the
purpose of issuance upon exercise of the Purchase Warrants, such number of
Shares or other securities, properties or rights as shall be issuable upon the
exercise thereof. The Company covenants and agrees that, upon exercise of the
Purchase Warrants and payment of the Exercise Price therefor, in accordance with
the terms hereby, all Shares and other securities issuable upon such exercise
shall be duly and validly issued, fully paid and non-assessable and not subject
to preemptive rights of any shareholder. The Company further covenants and
agrees that upon exercise of the Purchase Warrants and payment of the exercise
price therefor, all Shares and other securities issuable upon such exercise
shall be duly and validly issued, fully paid and non-assessable and not subject
to preemptive rights of any shareholder. As long as the Purchase Warrants shall
be outstanding, the Company shall use its commercially reasonable efforts to
cause all Shares issuable upon exercise of the Purchase Warrants to be listed
(subject to official notice of issuance) on all national securities exchanges
(or, if applicable, on the OTC Bulletin Board or any successor trading market)
on which the Shares issued to the public in the offering covered by the
Registration Statement may then be listed and/or quoted. 

8.     Certain Notice Requirements. 

8.1     Holder’s Right to Receive Notice. Nothing herein
shall be construed as conferring upon the Holder the right to vote or consent or
to receive notice as a shareholder for the election of directors or any other
matter, or as having any rights whatsoever as a shareholder of the Company. If,
however, at any time prior to the expiration of the Purchase Warrants and their
exercise, any of the events described in Section 8.2 shall occur, then, in one
or more of said events, the Company shall give written notice of such event at
least fifteen days prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the shareholders entitled to
such dividend, distribution, conversion or exchange of securities or
subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of the closing of the transfer books, as the case may be.
Notwithstanding the foregoing, the Company shall deliver to each Holder a copy
of each notice given to the other shareholders of the Company at the same time
and in the same manner that such notice is given to the shareholders.

8.2     Events Requiring Notice. The Company shall be
required to give the notice described in this Section 8 upon one or more of the
following events: (i) if the Company shall take a record of the holders of its
Shares for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable
otherwise than out of retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company, (ii) the
Company shall offer to all the holders of its Shares any additional shares of
capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any
option, right or warrant to subscribe therefor, or (iii) a dissolution,
liquidation or winding up of the Company (other than in connection with a
consolidation or share reconstruction or amalgamation) or a sale of all or
substantially all of its property, assets and business shall be proposed.

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8.3     Notice of Change in Exercise Price. The Company
shall, promptly after an event requiring a change in the Exercise Price pursuant
to Section 6 hereof, send notice to the Holder of such event and change
(“Price Notice”). The Price Notice shall describe the event causing the
change and the method of calculating same and shall be certified as being true
and accurate by the Company’s Chief Financial Officer.

8.4     Transmittal of Notices. All notices, requests,
consents and other communications under this Purchase Warrant shall be in
writing and shall be deemed to have been duly made when hand delivered, or
mailed by express mail or private courier service: (i) if to the registered
Holder of the Purchase Warrant, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, to the following address or to
such other address as the Company may designate by notice to the Holder:

If to the Holder: 

Kuhns Brothers Securities Corporation

The Farmhouse 
558 Lime Rock Road 
Lime Rock, CT 06039 
Attention:
Jason Diamond, Head of Investment Banking 

with a copy (which shall not
constitute notice) to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor, New York, NY 10006 
Attention: Thomas
Rose, Esq.
Facsimile: (212) 930-9725 

If to the Company: 

U.S. Geothermal Inc. 
1505 Tyrell
Lane 
Boise, ID 83706 
Attention: Jonathan Zurkoff, Executive Vice
President and Treasurer 

with a copy (which shall not
constitute notice) to:

Dorsey & Whitney LLP 
Columbia
Center 
701 Fifth Avenue, Suite 6100 
Seattle, WA 98104-7043

Attention: Kimberley Anderson, Esq.

9.     Miscellaneous. 

9.1     Amendments. The Company and KBSC may from time to
time supplement or amend this Purchase Warrant without the approval of any
subsequent Holder in order to cure any ambiguity, to correct or supplement any
provision contained herein that may be defective or inconsistent with any other
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder that the Company and KBSC may deem necessary or
desirable and that the Company and KBSC deem shall not adversely affect the
interest of such subsequent Holder. All other modifications or amendments shall
require the written consent of and be signed by the party against whom
enforcement of the modification or amendment is sought.

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9.2     Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Purchase Warrant.

9.3.     Entire Agreement. This Purchase Warrant constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.

9.4     Binding Effect. This Purchase Warrant shall inure
solely to the benefit of and shall be binding upon, the Holder and the Company
and their permitted assignees, respective successors, legal representative and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Purchase Warrant or any provisions herein contained.

9.5     Governing Law; Submission to Jurisdiction. This
Purchase Warrant shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflict of
laws principles thereof. The Company hereby agrees that any action, proceeding
or claim against it arising out of, or relating in any way to this Purchase
Warrant shall be brought and enforced in the New York Supreme Court, County of
New York, or in the United States District Court for the Southern District of
New York, and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum. Any process
or summons to be served upon the Company may be served by transmitting a copy
thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company and the Holder agree
that the prevailing party(ies) in any such action shall be entitled to recover
from the other party(ies) all of its reasonable attorneys’ fees and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.

9.6     Waiver, etc. The failure of the Company or the
Holder to at any time enforce any of the provisions of this Purchase Warrant
shall not be deemed or construed to be a waiver of any such provision, nor to in
any way affect the validity of this Purchase Warrant or any provision hereof or
the right of the Company or any Holder to thereafter enforce each and every
provision of this Purchase Warrant. No waiver of any breach, non-compliance or
non-fulfillment of any of the provisions of this Purchase Warrant shall be
effective unless set forth in a written instrument executed by the party or
parties against whom or which enforcement of such waiver is sought; and no
waiver of any such breach, non-compliance or non-fulfillment shall be construed
or deemed to be a waiver of any other or subsequent breach, non-compliance or
non-fulfillment.

9.7     Execution in Counterparts. This Purchase Warrant may
be executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an original, but all
of which taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts has been signed by each of the
parties hereto and delivered to each of the other parties hereto. Such
counterparts may be delivered by facsimile transmission or other electronic
transmission.

9.8     Exchange Agreement. As a condition of the Holder’s
receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time
prior to the complete exercise of this Purchase Warrant by Holder, if the
Company and KBSC enter into an agreement (“Exchange Agreement”) pursuant
to which they agree that all outstanding Purchase Warrants will be exchanged for
securities or cash or a combination of both, then Holder shall agree to such
exchange and become a party to the Exchange Agreement.

[Remainder of page intentionally left blank.] 

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IN WITNESS WHEREOF, the Company has caused this Purchase
Warrant to be signed by its duly authorized officer as of the ____ day of
__________, 20__.

U.S. GEOTHERMAL INC. 

By:
_________________________________
       Name:

       Title:

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Form to be used to exercise Purchase Warrant:

Date: __________, 20___ 

The undersigned hereby elects irrevocably to exercise the
Purchase Warrant for ______ Shares of U.S. Geothermal Inc., a Delaware
corporation (the “Company”) and hereby makes payment of $____ (at the
rate of $____ per Share) in payment of the Exercise Price pursuant thereto.
Please issue the Shares as to which this Purchase Warrant is exercised in
accordance with the instructions given below and, if applicable, a new Purchase
Warrant representing the number of Shares for which this Purchase Warrant has
not been exercised.

or 

The undersigned hereby elects irrevocably to convert its right
to purchase ___ Shares under the Purchase Warrant for ______ Shares, as
determined in accordance with the following formula:

X =
Y(A-B) 
             A


	Where, 	X 	= 	The number of Shares to be issued to Holder;
  
	  	Y 	= 	The number of Shares for which the Purchase
      Warrant is being exercised; 
	  	A 	= 	The fair market value of one Share which is
      equal to $_____; and 
	  	B 	= 	The Exercise Price which is equal to $______per
      Share. 


The undersigned agrees and acknowledges that the calculation
set forth above is subject to confirmation by the Company and any disagreement
with respect to the calculation shall be resolved by the Company in its sole
discretion.

Please issue the Shares as to which this Purchase Warrant is
exercised in accordance with the instructions given below and, if applicable, a
new Purchase Warrant representing the number of Shares for which this Purchase
Warrant has not been converted.

Signature 

 

Signature Guaranteed

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INSTRUCTIONS FOR REGISTRATION OF
SECURITIES 

Name: 
(Print in Block Letters) 
Address:

NOTICE: The signature to this form must correspond with the
name as written upon the face of the Purchase Warrant without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank, other
than a savings bank, or by a trust company or by a firm having membership on a
registered national securities exchange. 

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Form to be used to assign Purchase Warrant: 
ASSIGNMENT 

(To be executed by the registered Holder to effect a transfer
of the within Purchase Warrant):

 

FOR VALUE RECEIVED, the undersigned does hereby sell, assign
and transfer unto __________________, whose address is __________________, the
right to purchase shares of U.S. Geothermal Inc., a Delaware corporation (the
“Company”), evidenced by the Purchase Warrant and does hereby authorize
the Company to transfer such right on the books of the Company.

Dated: __________, 20__ 

 

Signature 

 

Signature Guaranteed

NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Purchase Warrant without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank, other
than a savings bank, or by a trust company or by a firm having membership on a
registered national securities exchange. 

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