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






Exhibit 4.1

U.S. GEOTHERMAL INC. 

	NO. • 	• WARRANTS 



Date of Issuance: [  ], 2011 (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 [ ], 2012 (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$1.075 (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 [ ], 2011, 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 “Registration Statement”), 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 that 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, U.S.A. (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 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 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 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 Company’s exercise of the Warrants, the Company
shall fail for any reason or for no reason to issue to the Holder within three
(3) trading days of receipt of the Exercise Delivery Documents in compliance
with the terms of this Section 1, 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) trading 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 (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 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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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 (the “U.S. Securities
Act”), including any amendments or supplements thereto, registering the
Warrant Shares (a “U.S. Registration Statement”) is not effective
thereunder, prior to the Time of Expiry, and for so long as the U.S.
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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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 date of
the Exercise Notice. 

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 4.99%
(the “Maximum Percentage”) 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, as
applicable, Quarterly Report on Form 10-Q, or other public filing by the Company
with the Securities and Exchange 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. By
written notice to the Company, the Holder may from time to time increase or
decrease the Maximum Percentage to any other percentage not in excess of 9.99%
specified in such notice; provided that (i) any such increase will not be
effective until the sixty-first (61st) day after such notice is
delivered to the Company, and (ii) any such increase or decrease will apply only
to the Holder. 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
      Amex (or if the Common Shares are not then listed on the NYSE Amex, 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
      Canadian 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 







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	 	(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). 

	 	 	
       

	 	(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 Amex,
      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. 







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	 	(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.
  




	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 







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	 	(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 

	 	 	
       

	 	(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.








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	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. 

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 [ ], 2012.

	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. 




- 13 - 

	12. 	Notices. 


Whenever notice is required 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: 

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
“2011 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 2011 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. 




- 14 - 

	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: 

	 	(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. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 




- 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 ________________, 2011. 

U.S. GEOTHERMAL INC.

______________________________
Name: 
Title: 




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 

	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 Shares and Warrants
      are to be registered in. You may use a nominee name if appropriate: 		
	  	  	 	 
	2. 	The relationship between the Investor 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 the response to
      item 1 above: 		
	  	  	 	 
	5. 	Name of DTC Participant (broker-dealer at which
      the account or accounts to be credited with the Shares are maintained)
      (Option 1 only): 		
	  	  	 	 
	6. 	DTC Participant Number (Option 1 only):
    	 	 
	  	  	 	 
	7. 	Name of Account at DTC Participant being
      credited with the Shares (Option 1 only): 		
	  	  	 	 
	8. 	Account Number at DTC Participant being
      credited with the Shares (Option 1 only): 		


[Signature Page Follows] 




DATED this _____ day of _____, 20_____.


 

______________________________
 (Signature of registered
holder) 

______________________________
 (Name of registered
holder) 




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,
      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 Warrant.