U.S. Geothermal Inc. - Exhibit 4.3 - Prepared By TNT Filings Inc.










Exhibit 4.3


SUBSCRIPTION INSTRUCTIONS 

Please make sure that your subscription
includes: 

	 	1. 	one (1) signed copy of the Subscription Agreement with the
      information on pages 2 , 3 and 4 completed; 
	 	 	 
	 	2. 	a certified cheque or bank draft in an amount equal to the aggregate
      Subscription Price, payable in Canadian funds to "Dundee Securities
      Corporation" unless other acceptable payment arrangements have been made;
    
	 	 	 
	 	3. 	IF THE SUBSCRIBER IS RESIDENT IN CANADA a duly completed and
      executed (i) Certificate of Subscribers in the form of Schedule "C", (ii)
      a Canadian Accredited Investor Certificate in the form of Schedule "D",
      and (iii) a Questionnaire in the form of Annex B to Schedule "F"; 
	 	 	 
	 	4. 	IF THE SUBSCRIBER IS RESIDENT IN THE UNITED STATES, a duly
      completed and executed (i) Certificate of Subscribers in the form of
      Schedule "C", and (ii) a Questionnaire in the form of Annex B to Schedule
      "F"; and 
	 	 	 
	 	5. 	IF THE SUBSCRIBER IS NOT RESIDENT IN CANADA OR
      THE UNITED STATES, a duly completed and executed (i) Certificate of
      Subscribers in the form of Schedule "C", (ii) a Certificate of
      Non-Canadian Subscribers in the form of Schedule "E", and (iii) a
      Questionnaire in the form of Annex B to Schedule "F". 


Please deliver your subscription to: 

Dundee Securities Corporation 
Dundee Place - 1 Adelaide
Street East, Suite 2700 
Toronto, Ontario M5C 2V9 
Attention: Amanda
Martin 

Fax: (416) 849-1380 



SUBSCRIPTION AGREEMENT FOR SUBSCRIPTION RECEIPTS 

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

TO:  

U.S. GEOTHERMAL INC. 
(the "Corporation") 

AND TO: 

DUNDEE SECURITIES CORPORATION, CLARUS SECURITIES
INC., and TOLL CROSS SECURITIES INC. (the "Agents") 

AND TO: 

DUNDEE SECURITIES INC. AND TOLL CROSS SECURITIES USA
INC. (the "US Affiliates") 

The undersigned (hereinafter referred to as the "Subscriber")
hereby irrevocably subscribes for and agrees to purchase from the Corporation
that number of subscription receipts set forth below (the "Subscription Receipts") for the aggregate consideration set forth below,
representing a subscription price of $1.35 (Canadian) per 




Subscription Receipt, upon and subject to the terms and
conditions set forth in "Terms and Conditions of the Subscription for
Subscription Receipts" attached hereto as Schedule "A" and as set forth in the
other applicable schedules hereto (the "Offering"). Each Subscription
Receipt will entitled the holder to receive on the Exchange Date (as defined
below), one unit of the Corporation (a "Unit"). Each Unit is comprised of
one common share of the Corporation (a "Common Share") and one-half of
one Common Share purchase warrant (each whole warrant, a "Warrant"). Each
whole Warrant entitles the holder thereof to acquire one Common Share of the
Corporation at a price of US $1.75 at any time from the date of issuance until
4:00 p.m. (Vancouver time) on the date which is 24 months following the Closing
Date (as defined below). 

SUBSCRIPTION AND SUBSCRIBER INFORMATION 

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

	
     
	
    Number of Subscription 

	
    _________________________________
	
    Receipts: __________________

	
    (Name of Subscriber – please print) 
	
     

	
     
	
    Aggregate Consideration: 

	
     
	
    $ _________________________________

	
    By: ______________________________
	
    (number of Subscription Receipts x
      CDN$1.35) 

	
           
      (Authorized Signature) 
	
     

	
     
	
     

	
    _________________________________
	
    _________________________________

	
    (Please print name of individual whose signature
      appears above if different than the name of the subscriber
      printed above, and title if applicable.) 
	
    If the subscriber is signing as agent for a
      principal and the subscriber is not a trust corporation or a person
      purchasing as trustee or agent for accounts fully managed by it, in each
      case satisfying the criteria set forth in National Instrument 45-106,
      complete the following: 

	
     
	
     

	
    _________________________________
	
    _________________________________

	
    (Subscriber’s Address) 
	
    (Name of Principal) 

	
     
	
     

	
    _________________________________
	
    _________________________________

	
    (Telephone Number) 
	
    (Principal’s Address) 

	
     
	
     

	
    _________________________________
	
    _________________________________

	
    (Fax Number)      (E-mail address) 
	
    (Telephone Number) 

	
     
	
     

	
     
	
    _________________________________

	
     
	
    (Fax Number)      (E-mail
      address) 

	
     
	
     

	
     
	
     

	
    Register the Subscription Receipts as set
      forth below: 
	
    Deliver the Subscription Receipts
      as set forth below: 

	
     
	
     

	
    _________________________________
	
    _________________________________

	
    (Name) 
	
    (Name) 

	
     
	
     

	
    _________________________________
	
    _________________________________

	
    (Account reference, if applicable) 
	
    (Account reference, if
      applicable) 

	
     
	
     

	
    _________________________________
	
    _________________________________

	
    (Address) 
	
    (Contact Name) 

	
     
	
     

	
     
	
    _________________________________

	
     
	
    (Address) 

	
     
	
     

	
     
	
    _________________________________

	
     
	
    (Telephone Number)




- 2 - 




 

- 3 - 




Present Ownership of Securities 

The Subscriber either [check appropriate box]:


	
o	owns directly or indirectly, or exercises control or
      direction over, _______Common Shares and convertible securities entitling
      the holder thereof to acquire an additional _______Common Shares; 
	 	 
	 	or 
	 	 
	
o	does not own directly or indirectly, or exercise control or
      direction over, Common Shares of the Corporation or securities convertible
      into Common Shares. 


Insider Status 

The Subscriber either [check appropriate box]:


	
o	is an "Insider" of the Corporation; or 
	 	 
	
o	is not an "Insider" of the Corporation.
  


"Insider" means: 

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

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

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



* * * * * * * 

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


	 	Schedule "A" 	- Terms and Conditions of Subscriptions
      for Subscription Receipts 
	 	Schedule "B" 	- Term Sheet 
	 	Schedule "C" 	- Certificate of Subscribers 
	 	Schedule "D" 	- Canadian Accredited Investor
      Certificate 
	 	Schedule "E" 	- Certificate of Non-Canadian Subscribers
      (Other than U.S. Subscribers) 
	 	Schedule "F" 	- Terms and Conditions of Registration
      Rights 


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

ACCEPTANCE: The Corporation hereby accepts the above
subscription this ______day of ____________, 2009. 

	 	U.S. GEOTHERMAL INC. 
	 	  
	 	  
	 	Per: ________________________
	 	         
         Name: 
	 	         
         Title: 


- 4 - 




SCHEDULE "A" 

TERMS AND CONDITIONS OF SUBSCRIPTION FOR SUBSCRIPTION
RECEIPTS 

ARTICLE 1 - INTERPRETATION 

1.1

Definitions 

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

"Accredited Investor" means those "accredited investors"
specified in Rule 501(a) of Regulation D and, where the Subscriber is a Canadian
resident, National Instrument 45-106 – Prospectus and Registration
Exemptions. 

"Agency Agreement" means the Agency Agreement to be
dated as of the Closing Date entered into between the Agents and the Corporation
in respect of the Offering. 

"Agents" shall have the meaning ascribed to such term on
the face page of this Subscription Agreement. 

"AMEX" means the NYSE Amex LLC. 

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

"Broker Warrants" means the broker warrants exercisable
for a period of 24 months following the Closing to purchase Broker Shares at the
US dollar equivalent of the Subscription Receipt Price (calculated as of the
Closing Date) or such other price as permitted by the TSX. 

"Business Day" means a day other than a Saturday, Sunday
or any other day on which the principal chartered banks located in Vancouver,
B.C. or Boise, Idaho are not open for business. 

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

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

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

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

"Compensation Options" shall have the meaning ascribed
to such term in Section 9.1. 

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


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

"Designated Provinces" means each Province of Canada
other than Quebec, designated by the Agents as a jurisdiction in which a receipt
for the Final Prospectus is to be issued and includes each Province in which a
Purchaser is resident. 

"Exchange Date" means the date that is the earlier of:
(a) the date on which a receipt is issued (or deemed to be issued) for the Final
Prospectus qualifying the distribution of the Common Shares and Warrants to the
holders of the Subscription Receipts in each of the Designated Provinces; and
(b) the date which is four months and one day after the Closing Date. 




"Final Prospectus" means the final version of the
Prospectus. 

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

"Offering" shall have the meaning ascribed to such term
on the page 2 of this Subscription Agreement. 

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

"Preliminary Prospectus" means the preliminary version
of the Prospectus. 

"Prospectus", as the context may require, means the
preliminary and final version of the prospectus to be filed in each Designated
Province relating to the distribution of the Common Shares and Warrants to the
holders of the Subscription Receipts upon exercise thereof and, unless the
context otherwise requires, includes any amendments or supplements thereto, and
"Prospectuses" means both the Preliminary Prospectus and Final Prospectus. 

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

"Regulation S" means Regulation S adopted by the SEC
under the U.S. Securities Act. 

"Securities" means the Subscription Receipts, the Common
Shares and Warrants comprising the Units, and the Warrant Shares. 

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

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

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

"Subscriber" means the subscriber for the Subscription
Receipts as set out on page 2 of this Subscription Agreement. 

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

"Subscription Amount" means an amount equal to the
Subscription Receipt Price multiplied by the number of Subscription Receipts
subscribed for and paid for pursuant to this Subscription Agreement. 

"Subscription Receipt Agreement" shall have the meaning
ascribed to such term in Section 2.2. 

"Subscription Receipts" shall have the meaning ascribed
to such term on page 2 of this Subscription Agreement. 

"Subscription Receipt Price" means the subscription
price per Subscription Receipt under this Offering. 

A-2 




"Term Sheet" means the term sheet delivered to potential
purchasers of the Subscription Receipts, a copy of which is attached hereto as
Schedule "B". 

"TSX" means the Toronto Stock Exchange. 

"Unit" consists of one Common Share and one-half of one
Warrant. 

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

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

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

"Warrant" means a Common Share purchase warrant
entitling the holder to purchase a Common Share at US$1.75 for 24 months
following the closing of the Offering. 

"Warrant Share" means each Common Share issuable upon
exercise of a Warrant. 

1.2 

Gender and Number 

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

1.3 

Currency 

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

1.4 

Subdivisions, Headings and Table of
Contents 

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

ARTICLE 2 - SUBSCRIPTION AND DESCRIPTION OF SUBSCRIPTION
RECEIPTS 

2.1 

Subscription for the Subscription Receipts


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

2.2 

Creation and Issuance of Subscription
Receipts 

     The Subscription Receipts shall be created and issued
pursuant to a subscription receipt agreement (the "Subscription Receipt Agreement") to be entered into between the
Corporation and the Agents to be dated as of the Closing Date. The specific
attributes of the Subscription Receipts shall be set forth in the Subscription
Receipt Agreement. 

A-3 




The Subscription Receipt
Agreement will provide, among other items, that the Subscription Receipts will
automatically convert into Units on the Exchange Date, without any action,
including additional payment, required on the part of the holders thereof. 

The Term Sheet, a copy of which
is attached hereto as Schedule "B", summarizes the terms of the Subscription
Receipts. The description of the Subscription Receipts contained in the Term
Sheet and this Subscription Agreement is a summary only and is qualified in its
entirety by the Subscription Receipt Agreement. The provisions of the
Subscription Receipt Agreement and the attributes and characteristics of the
Subscription Receipts provided for therein shall be substantially as described
herein, with such changes thereto as the Agents and the Corporation may agree,
and otherwise the Subscription Receipt Agreement shall be in such form and
contain such terms and provisions as are reasonably satisfactory to both the
Corporation and the Agents. 

2.3 

Acceptance and Rejection of Subscription
by the Corporation 

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

ARTICLE 3 - CLOSING 

3.1 

Closing 

Delivery and sale of the Subscription
Receipts and payment of the Subscription Amount will be completed (the "Closing") at the offices of the Corporation’s counsel, Goodmans,
355 Burrard Street, Suite 1900, Vancouver, BC V6C 2G8 and 250 Yonge Street,
Suite 2400, Toronto, Ontario, M5B 2M6 at 7 a.m. (Vancouver time) (the "Closing Time")
on August 12, 2009 or such other date or time as the Corporation and the Agents
may decide (the "Closing Date"). 

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

A-4 




3.2 Conditions of Closing 

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

	 	(a) 	unless other arrangements acceptable to the Corporation have been
      made, payment by the Subscriber of the Subscription Amount by certified
      cheque, bank draft or other acceptable means in Canadian dollars payable
      to "Dundee Securities Corporation". 
	 	 	 
	 	(b) 	the Subscriber having properly completed, signed and delivered this
      Subscription Agreement to: 
	 	 	 
	 		Dundee Securities Corporation 
	 	 	 
	 		Dundee Place - 1 Adelaide Street East, Suite 2700 Toronto, Ontario M5C
      2V9 
	 	 	 
	 		Attention: Amanda Martin Fax: (416) 849-1380 
	 	 	 
	 	(c) 	the Subscriber having properly completed, signed and delivered
      Schedule "C", Schedule "D", Schedule "E" and Annex B to Schedule "F", as
      applicable: 



	 	(i) 	ALL SUBSCRIBERS 
	 	 	 
	 		a duly completed and executed Certificate of Subscribers in
      the form attached to the Subscription Agreement as Schedule "C" and Annex
      B to Schedule "F"; 
	 	 	 
	 	(ii) 	ALL CANADIAN SUBSCRIBERS 
	 	 	 
	 		a duly completed and executed Canadian Accredited Investor
      Certificate in the form attached to this Subscription Agreement as
      Schedule "D" (in addition to Schedule "C" and Annex B to Schedule "F");
      and 
	 	 	 
	 	(iii) 	ALL SUBSCRIBERS WHO ARE NOT RESIDENT IN CANADA
      OR THE UNITED STATES 
	 	 	 
			a duly completed and executed Certificate of Non-Canadian
      Subscribers in the form attached to this Subscription Agreement as
      Schedule "E" (in addition to Schedule "C" and Annex B to Schedule "F").
  


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

	 	(a) 	
    all covenants, agreements and conditions contained in this
      Subscription Agreement and in the Agency Agreement to be performed by the
      Corporation on or prior to the Closing shall have been performed or
      complied in all material aspects, including without limitation, obtaining
      conditional approval from the TSX and AMEX for the Offering and to list
      the Common Shares, Warrant Shares and Broker Shares that form part of the
      Securities; and 



A-5 





	 	(b) 	the Corporation shall have delivered to the Agents’ counsel the
      following items: 



	 	(i) 	
    a copy of the certificates representing the Subscription Receipts
      purchased by the Subscriber registered in the name of the Subscriber or
      its nominee; 

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

	 	 	 
	 	(iii) 	
    such other documents relating to the transactions contemplated by this
      Subscription Agreement and the Agency Agreement as the Agents or their
      counsel may reasonably request. 



ARTICLE 4 - REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
CORPORATION 

4.1 

Representations, Warranties and Covenants
of the Corporation 

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

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

	 	(a) 	The Corporation acknowledges and agrees to the terms and conditions
      set out in Schedule "F". 
	 	 	 
	 	(b) 	No form of general solicitation or general advertising (including
      advertisements, articles, notices or other communications published in any
      newspaper, magazine or similar media or broadcast over radio, television
      or electronic display (including the internet) or any seminar or meeting
      whose attendees had been invited by general solicitation or general
      advertising) was used by the Corporation or, to the best of its knowledge,
      any other person acting on behalf of the Corporation (other than the
      Agents and persons acting on their behalf, as to which no representation
      is made), in respect of or in connection with the offer and sale of the
      Subscription Receipts in the United States or elsewhere or to citizens or
      residents of the United States or elsewhere. 
	 	 	 
	 	(c) 	Neither the Corporation nor any person authorized to act on its behalf
      (other than the Agents and persons acting on their behalf, as to which no
      representation is made) has sold or offered for sale any Subscription
      Receipts, or solicited any offers to buy any Subscription Receipts thereby
      so as to cause the issuance or sale of any of the Subscription Receipts to
      be in violation of Section 5 of the U.S. Securities Act, or Canadian or
      other securities laws. 
	 	 	 
	 	(d) 	The Corporation is not an open-end investment company, closed-end
      investment company, unit investment or face-amount certificate company
      that is or is required to be registered under Section 8 of the United
      States Investment Company Act of 1940, as amended. 
	 	 	 
	 	(e) 	The Corporation has not, for a period of six months prior to the date
      hereof sold, offered for sale or solicited any offer to buy any of its
      securities in a manner that would be integrated with the offer and sale of
      the Subscription Receipts and would cause the exemption from registration
      set forth in Rule 506 of Regulation D under the U.S. Securities Act to
      become unavailable with respect to the offer and sale of the Subscription
      Receipts. 


A-6 





	 	(f) 	The Corporation will use commercially reasonable efforts to ensure
      that there is available "adequate current public information" with respect
      to the Corporation within the meaning of Rule 144(c) under the U.S.
      Securities Act commencing six months after the Closing Date and at all
      times thereafter when the registration statement referred to in Section
      4.1(a) is not effective and up to date. 
	 	 	 
	 	(g) 	At any time that the Corporation is neither subject to Section 13 or
      15(d) of the Securities Exchange Act of 1934, as amended, the Corporation
      shall at the request of the Subscriber or any prospective purchaser
      designated by the Subscriber, promptly provide to such person with
      reasonable promptness, the information specified in Rule 144A(d)(4)(i)
      under the U.S. Securities Act. 
	 	 	 
	 	(h) 	The Corporation will cause the Preliminary Prospectus and any other
      documents required to be filed therewith to be prepared and filed with the
      Securities Commission in each of the Designated Provinces in accordance
      with all applicable Securities Laws and as expeditiously as reasonably
      practicable after the Closing Date, in each case in form and substance
      reasonably satisfactory to the Agents. 
	 	 	 
	 	(i) 	The Corporation will use its commercially reasonable efforts to obtain
      receipts for the Final Prospectus and to qualify the Common Shares and
      Warrants for distribution in the Designated Provinces to the holders of
      Subscription Receipts upon the exercise thereof. 
	 	 	 
	 	(j) 	The Corporation will promptly comply with all filing and other
      requirements under all applicable Securities Laws, including where
      required by the Agency Agreement, the filing of amendments to the
      Prospectuses in each of the Designated Provinces. 
	 	 	 
	 	(k) 	Upon or prior to the exercise of the Subscription Receipts, the
      Corporation will cause the Final Prospectus to be delivered to each of the
      registered holders of Subscription Receipts or any transferees thereof.
  


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

5.1 

Representations, Warranties and Covenants
of the Subscriber 

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

	 	(a) 	The matters set forth on page 2, 3 and 4 of this Subscription
      Agreement are true and correct as of the date of execution of this
      Subscription Agreement and will be true and correct as of the Closing
      Time. 
	 	 	 
	 	(b) 	The Subscriber and each beneficial purchaser for whom it is acting is
      a resident in the jurisdiction set out on page 2 of this Subscription
      Agreement. Such address was not created and is not used solely for the
      purpose of acquiring the Subscription Receipts and the Subscriber and any
      beneficial purchaser was solicited to purchase and executed this
      Subscription Agreement in such jurisdiction. 
	 	 	 
	 	(c) 	The Subscriber has properly completed, executed and delivered to the
      Agents within the applicable time periods the certificate(s) set forth in
      Schedule "C" and Annex B to Schedule "F" and Schedule "D", and Schedule
      "E", as applicable, to this Subscription Agreement and the information
      contained therein is true and correct. 


A-7 





	 	(d) 	The representations, warranties and covenants contained in this
      Schedule A and in the other applicable Schedules to this Subscription
      Agreement are true and correct as of the date of execution of this
      Subscription Agreement and will be true and correct as of the Closing
      Time. 
	 	 	 
	 	(e) 	If the Subscriber, or any beneficial purchaser for whom it is acting,
      is not a person resident in Canada or the United States, the subscription
      for the Subscription Receipts by and the issuance and delivery of the
      Subscription Receipts to the Subscriber, or such beneficial purchaser,
      does not contravene any of the applicable securities legislation in the
      jurisdiction in which the Subscriber or such beneficial purchaser resides
      and does not give rise to any obligation of the Corporation to prepare and
      file a prospectus or similar document or to register the Securities or to
      be registered with or to file any report or notice with any governmental
      or regulatory authority of any kind whatsoever. 
	 	 	 
	 	(f) 	The execution and delivery of this Subscription Agreement, the
      performance and compliance with the terms hereof, the subscription for
      Subscription Receipts and the completion of the transactions described
      herein by the Subscriber will not result in any material breach of, or be
      in conflict with or constitute a material default under, or create a state
      of facts which, after notice or lapse of time, or both, would constitute a
      material default under any term or provision of the constating documents,
      by-laws or resolutions of the Subscriber, the Securities Laws or any other
      laws applicable to the Subscriber, any agreement to which the Subscriber
      is a party, or any judgment, decree, order, statute, rule or regulation
      applicable to the Subscriber. 
	 	 	 
	 	(g) 	The funds representing the Subscription Amount which will be advanced
      by the Subscriber to the Corporation hereunder will not represent proceeds
      of crime for the purposes of the Proceeds of Crime (Money Laundering)
      Act (Canada) (the "PCMLA") and the Subscriber acknowledges that
      the Corporation may in the future be required by law to disclose the
      Subscriber’s name and other information relating to this Subscription
      Agreement and the Subscriber’s subscription hereunder, on a confidential
      basis, pursuant to the PCMLA. To the best of its knowledge: none of the
      funds comprising the Subscription Amount to be provided by the Subscriber
      (i) have been or will be derived from or related to any activity that is
      deemed criminal under the law of Canada, the United States of America, or
      any other jurisdiction, or (ii) are being tendered on behalf of a person
      or entity who has not been identified to the Subscriber, and it shall
      promptly notify the Corporation if the Subscriber discovers that any of
      such representations ceases to be true and provide the Corporation with
      appropriate information in connection therewith. 
	 	 	 
	 	(h) 	The Subscriber is subscribing for the Subscription Receipts as
      principal (within the meaning of applicable Securities Laws) and not with
      a view to the resale or distribution of all or any of the Securities or if
      it is not subscribing as principal, it acknowledges that the Corporation
      may be required by law to disclose (and if required by law the Subscriber
      agrees to disclose) to certain regulatory authorities the identity of each
      beneficial purchaser of the Subscription Receipts for whom it is acting.
    
	 	 	 
	 	(i) 	In the case of a subscription for the Subscription Receipts by the
      Subscriber acting as trustee or agent (including, for greater certainty, a
      portfolio manager or comparable adviser) for a principal, the Subscriber
      is duly authorized to execute and deliver this Subscription Agreement and
      all other necessary documentation in connection with such subscription on
      behalf of each such beneficial purchaser, each of whom is subscribing as
      principal for its own account, not for the benefit of any other person and
      not with a view to the resale or distribution of all or any of the
      Securities, and this Subscription Agreement has been duly authorized,
      executed and delivered by or on behalf of and constitutes a legal, valid
      and binding agreement of, such principal, and the Subscriber acknowledges
      that the Corporation may be required by law to disclose (and if required
      by law the Subscriber agrees to disclose) the identity of each beneficial
      purchaser for whom the Subscriber is acting. 
	 	 	 
	 	(j) 	If the Subscriber is an "insider" or "affiliate" of the Corporation
      (as such terms are defined under applicable Securities Laws), the
      Subscriber shall, at the time of the sale of Subscription Receipts, have no reasonable grounds to believe that the Corporation is in
      default of any requirement of any applicable Securities Laws to which the
      Corporation is subject.
  


A-8 





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

	 	 	 
	 	(l) 	If the Subscriber is: 



	 	(i) 	a corporation, the Subscriber is duly incorporated and is validly
      subsisting under the laws of its jurisdiction of incorporation and has all
      requisite legal and corporate power and authority to execute and deliver
      this Subscription Agreement, to subscribe for the Subscription Receipts as
      contemplated herein and to carry out and perform its obligations under the
      terms of this Subscription Agreement; 
	 	 	 
	 	(ii) 	a partnership, syndicate or other form of unincorporated organization,
      the Subscriber has the necessary legal capacity and authority to execute
      and deliver this Subscription Agreement and to observe and perform its
      covenants and obligations hereunder and has obtained all necessary
      approvals in respect thereof; or 
	 	 	 
	 	(iii) 	an individual, the Subscriber is of the full age of majority and is
      legally competent to execute this Subscription Agreement and to observe
      and perform his or her covenants and obligations hereunder.




	 	(m) 	Other than the Agents, to the best of the Subscriber’s knowledge,
      there is no person acting or purporting to act in connection with the
      transactions contemplated herein who is entitled to any brokerage or
      finder’s fee. If any person establishes a claim that any fee or other
      compensation is payable in connection with this subscription for the
      Subscription Receipts, the Subscriber covenants to indemnify and hold
      harmless the Corporation and the Agents with respect thereto and with
      respect to all costs reasonably incurred in the defence thereof. 
	 	 	 
	 	(n) 	The Subscriber is not, with respect to the Corporation or any of its
      affiliates, a Control Person and the Subscriber will not become a Control
      Person by purchasing the number of Subscription Receipts subscribed for
      under this Subscription Agreement and does not intend to act jointly or in
      concert with any other person to form a control group in respect of the
      Corporation. 
	 	 	 
	 	(o) 	If required by applicable Securities Laws or the Corporation, the
      Subscriber will execute, deliver and file or assist the Corporation in
      filing such reports, undertakings and other documents with respect to the
      issue of the Subscription Receipts as may be required by any securities
      commission, stock exchange or other regulatory authority. 
	 	 	 
	 	(p) 	The Subscriber, and each beneficial purchaser for whom it is acting
      hereunder, have been advised to consult their own legal advisors with
      respect to trading in any of the Securities with respect to the resale
      restrictions imposed by the Securities Laws of the jurisdiction in which
      the Subscriber resides, other applicable Securities Laws, and the policies
      of the TSX and AMEX, and subject to the registration rights described in
      Schedule "F" acknowledges that no representation has been made respecting
      the applicable hold periods imposed by the Securities Laws or other resale
      restrictions applicable to such securities which restrict the ability of
      the Subscriber (or others for whom it is contracting hereunder) to resell
      such securities, that the Subscriber (or others for whom it is contracting
      hereunder) is solely responsible to find out what these restrictions are
      and the Subscriber is solely responsible (and the Corporation and the
      Agents are not in any way responsible) for compliance with applicable
      resale restrictions and the Subscriber is aware that it (or beneficial
      purchasers for whom it is contracting hereunder) may not be able to resell
      such securities except in accordance with limited exemptions under the
      Securities Laws and other applicable securities laws. 


A-9 





	 	(q) 	The Subscriber has not received nor been provided with, has not
      requested and does not have any need to receive a prospectus or offering
      memorandum, within the meaning of the Securities Laws, or any sales or
      advertising literature in connection with the Offering and the
      Subscriber’s decision to subscribe for the Subscription Receipts was based
      upon the Corporation’s publicly available documents included in the Edgar
      database administered by the SEC and the SEDAR database administered under
      the direction of the Canadian Securities Administrators. The Subscriber’s
      investment decision was not otherwise based upon, and the Subscriber has
      not relied upon, any verbal or written representations as to facts made by
      or on behalf of the Corporation. 
	 	 	 
	 	(r) 	The Subscriber (and, if applicable, others for whom it is contracting
      hereunder) has relied solely upon publicly available information relating
      to the Corporation, this Subscription Agreement and the Agency Agreement
      and not upon any verbal or written representation as to any fact or
      otherwise made by or on behalf of the Corporation, the Agents or any
      employee, agent or affiliate thereof or any other person associated
      therewith. The Agents assumes no responsibility or liability of any nature
      whatsoever for the accuracy or adequacy of the publicly available
      information upon which the Subscriber’s investment decision has been made
      or as to whether all information concerning the Corporation required to be
      disclosed by the Corporation has been disclosed. 
	 	 	 
	 	(s) 	The Subscriber is not purchasing the Subscription Receipts with
      knowledge of material information concerning the Corporation which has not
      been generally or publicly disclosed. 
	 	 	 
	 	(t) 	No person has made any written or oral representations:




	 	(i) 	that any person will resell or repurchase any of the Securities;

	 	 	 
	 	(ii) 	that any person will refund the Subscription Amount; or 
	 	 	 
	 	(iii) 	as to the future price or value of any of the Securities.
  



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



5.2 Acknowledgments of the Subscriber 

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

	 	(a) 	The Subscriber has received and reviewed a copy of the Term Sheet
      setting out the principal terms of the Offering. 
	 	 	 
	 	(b) 	The Subscriber acknowledges that the aggregate gross proceeds of the
      Offering will be up to approximately $10,935,000. 
	 	 	 
	 	(c) 	No securities commission, agency, governmental authority, regulatory
      body, stock exchange or similar regulatory authority has reviewed, passed,
      made any finding or determination, or recommended or endorsed on the
      merits of the Subscription Receipts. 
	 	 	 
	 	(d) 	Subject to the registration rights described in Schedule
    "F", the
      Securities shall be subject to statutory resale restrictions under the
      Securities Laws of the province, territory or jurisdiction in which the
      Subscriber resides and the U.S. Securities Act and under other applicable
      Securities Laws, and the Subscriber covenants that it will not resell any of the
      Securities except in compliance with such laws and the Subscriber
      acknowledges that it is solely responsible (and the Corporation and the
      Agents are not in any way responsible) to find out what those restrictions
      are and to comply with them before selling any of the Securities. 


A-10 





	 	(e) 	The Subscriber’s ability to transfer any of the Securities is limited
      by, among other things, applicable Securities Laws. 
	 	 	 
	 	(f) 	The certificates representing the Subscription Receipts and
      Compensation Options (and, if issued prior to Exchange Date, any
      certificates representing the Common Shares and Warrants comprising the
      Units, the Warrant Shares, Broker Warrants and Broker Shares) will bear,
      as of the Closing Date, a legend substantially in the following form and
      with the necessary information inserted: 
	 	 	 
	 		UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS
      SECURITY MUST NOT TRADE THE SECURITY BEFORE <INSERT DATE THAT IS FOUR
      (4) MONTHS AND ONE (1) DAY AFTER THE CLOSING DATE>. 
	 	 	 
	 	(g) 	In addition, the certificates representing the Subscription Receipts
      and Compensation Options (and, if issued prior to the Exchange Date, the
      certificates representing the Common Shares and Warrants comprising the
      Units, the Warrant Shares, Broker Warrants and Broker Shares) will also
      bear a legend substantially in the following form: 
	 	 	 
	 		"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
    LISTED ON THE TORONTO STOCK EXCHANGE ("TSX"); HOWEVER, THE SAID SECURITIES CANNOT BE
      TRADED THROUGH THE FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY
      TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH
      SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON THE TSX." 
	 	 	 
	 	(h) 	The Subscriber, and each beneficial purchaser for whom it is acting
      hereunder, shall execute, deliver, file and otherwise assist the
      Corporation and Agents with filing all documentation required by the
      applicable Securities Laws to permit the subscription for the Subscription
      Receipts and the issuance of the Securities. 
	 	 	 
	 	(i) 	No prospectus or offering memorandum, within the meaning of the
      Securities Laws, or other similar disclosure document has been filed by
      the Corporation with a securities commission, securities regulatory
      authority or other governmental or regulatory authority in the United
      States, in any province in Canada or any other jurisdiction in connection
      with the issuance of the Subscription Receipts. 
	 	 	 
	 	(j) 	The Agents and/or their directors, officers, employees, agents and
      representatives assume no responsibility or liability of any nature
      whatsoever for the accuracy or adequacy of any such publicly available
      information concerning the Corporation or as to whether all information
      concerning the Corporation that is required to be disclosed or filed by
      the Corporation under the Securities Laws has been so disclosed or filed.
    
	 	 	 
	 	(k) 	The Corporation and Agents are relying on the representations,
      warranties and covenants contained herein and in the applicable Schedules
      attached hereto to determine the Subscriber’s eligibility to subscribe for
      the Subscription Receipts under applicable Securities Laws and the
      Subscriber agrees to indemnify each of the Corporation and the Agents, and
      each of its directors and officers against all losses, claims, costs,
      expenses, damages or liabilities which any of them may suffer or incur as
      a result of or arising from reliance thereon. The Subscriber undertakes to
      immediately notify the Corporation of any change in any statement or other
      information relating to the Subscriber set forth in such applicable
      Schedules which takes place prior to the Closing Time.



A-11 





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




	 	(i) 	in the event that a receipt for a Final Prospectus is not obtained by
      the Corporation by the Exchange Date, certain protections, rights and
      remedies provided by applicable Securities Laws, including statutory
      rights of rescission and certain statutory remedies against an issuer,
      Agents, auditors, directors and officers that are available to investors
      who acquire securities offered by a prospectus, will not be available to
      the Subscriber and each beneficial person for whom it is contracting
      hereunder, or, if applicable, others for whom you are contracting
      hereunder; 
	 	 	 
	 	(ii) 	the common law may not provide investors with an adequate remedy in
      the event that they suffer investment losses in connection with securities
      acquired in a private placement; 
	 	 	 
	 	(iii) 	the Subscriber and each beneficial person for whom it is contracting
      hereunder, may not receive information that would otherwise be required to
      be given under applicable Securities Laws; and 
	 	 	 
	 	(iv) 	the Corporation is relieved from certain obligations that would
      otherwise apply under applicable Securities Laws. 



	 	(m) 	
    The Securities are "restricted securities" as defined in Rule
      144(a)(3) under the U.S. Securities Act and have not been registered under
      the U.S. Securities Act or any state securities laws and may not be
      reoffered or resold in the United States or to U.S. Persons unless
      registered under the U.S. Securities Act and applicable state securities
      laws, as contemplated in Schedule "F", or an exemption from such
      registration requirements is available. Until resales of the Securities
      are registered under the U.S. Securities Act, the Securities may not
      practically be able to be offered and sold on the TSX pursuant to Rule 904
      under the U.S. Securities Act since the Securities will remain "restricted
      securities" pursuant to Rule 905 of Regulation S under the U.S. Securities
      Act. 

	 	 	 
	 	(n) 	
    The Subscriber agrees that if the Subscriber decides to offer, sell,
      pledge or otherwise transfer any of the Securities, the Subscriber will
      not offer, sell, pledge or otherwise transfer any of the Securities,
      directly or indirectly, unless; 




	 	(i) 	the sale is to the Corporation; or 
	 	 	 
	 	(ii) 	made pursuant to an effective registration statement under the U.S.
      Securities Act; or 
	 	 	 
	 	(iii) 	the sale is made outside the United States in compliance with the
      requirements of Rule 904 of Regulation S under the U.S. Securities Act and
      in compliance with applicable local laws and regulations; or 
	 	 	 
	 	(iv) 	the sale is made in compliance with an exemption from registration
      under the U.S. Securities Act provided by Rule 144 thereunder, if
      available, and in accordance with any applicable state securities law; or
    
	 	 	 
	 	(v) 	the Securities are sold in a transaction that does not require
      registration under the U.S. Securities Act or any applicable state
      securities laws. 



	 	(o) 	There is no government insurance or other insurance covering the
      Securities. 


A-12 





	 	(p) 	AN INVESTMENT IN THE SUBSCRIPTION RECEIPTS AND UNDERLYING
      SECURITIES IS NOT WITHOUT RISK AND THE SUBSCRIBER (AND ANY BENEFICIAL
      PURCHASER) MAY LOSE HIS, HER OR ITS ENTIRE INVESTMENT. 
	 	 	 
	 	(q) 	The Corporation may complete additional financings in the future in
      order to develop the business of the Corporation and fund its ongoing
      development, and such future financings may have a dilutive effect on
      current securityholders of the Corporation, including the Subscriber, but
      there is no assurance that such financing will be available, on reasonable
      terms or at all, and if not available, the Corporation may be unable to
      fund its ongoing development. 
	 	 	 
	 	(r) 	The Subscriber has such knowledge, or has received advice, in
      financial and business affairs as to be capable of evaluating the merits
      and risks of the Subscriber’s investment, and the Subscriber, or where the
      Subscriber is not purchasing as principal, each beneficial purchaser, is
      able to bear the economic risk of loss of its investment. 
	 	 	 
	 	(s) 	The Subscriber, and each beneficial person for whom it is contracting
      hereunder, is responsible for obtaining such legal, investment, tax and
      other professional advice as it considers appropriate in connection with
      the execution, delivery and performance of this Subscription Agreement and
      the transactions contemplated under this Subscription Agreement (including
      the resale and transfer restrictions referred to herein), and, without
      limiting the generality of the foregoing: 



	 	(i) 	the Corporation’s counsel are acting solely as counsel to the
      Corporation and not as counsel to the Subscriber; 
	 	 	 
	 	(ii) 	the Agents’ counsel are acting solely as counsel to the Agents and not
      as counsel to the Subscriber; and 
	 	 	 
	 	(iii) 	the Agents are acting solely as financial advisors to, and Agents of,
      the Corporation and not as financial advisors to the Subscriber, or as
      Agents of, the Subscriber, except insofar as is necessary at the Closing
      to deliver payment for the Subscription Receipts to the Corporation on
      behalf of the Subscriber and to accept and deliver the Subscription
      Receipts to the Subscriber after the Closing. 



	 	(t) 	The Subscription Receipts have not been registered under the U.S.
      Securities Act or any state securities laws, and the sale contemplated
      hereby is being made in reliance on the a private placement exemption to
      Accredited Investors (as defined in Rule 506 under the U.S. Securities
      Act). 
	 	 	 
	 	(u) 	The Subscriber understands that, until such time as is no longer
      required under applicable requirements of the U.S. Securities Act or
      applicable state securities laws, all certificates representing the
      Securities, as well as all certificates issued in exchange for or in
      substitution of the foregoing securities, will bear a legend to the
      following effect: 
	 	 	 
	 		THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
      THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
      ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH
      SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES
      MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY: (A) TO THE
      CORPORATION, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      U.S. SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
      904 OF REGULATION S UNDER THE U.S. SECURITIES ACT IF AVAILABLE, (D)
      PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT
      PROVIDED BY RULE 144, IF AVAILABLE, AND IN COMPLIANCE WITH ANY STATE
      SECURITIES LAWS, OR (E) WITH THE PRIOR WRITTEN CONSENT OF THE CORPORATION, PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER
      THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS; PROVIDED
      THAT, IN CONNECTION WITH A TRANSFER PURSUANT TO (C), (D) OR (E) ABOVE, AN
      OPINION OF COUNSEL, OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE
      CORPORATION HAS BEEN PROVIDED TO THE CORPORATION TO SUCH EFFECT.
  


A-13 





	 		if the Securities are being sold pursuant sections (C) through (E) of
      the foregoing legend, the legend may be removed by delivery to the
      Corporation’s registrar and transfer agent and the Corporation of an
      opinion of counsel, of recognized standing in form and substance
      satisfactory to the Corporation, that such legend is no longer required
      under applicable requirements of the U.S. Securities Act or state
      securities laws. 
	 	 	 
	 	(v) 	The Subscriber acknowledges and agrees that the Warrants may not be
      exercised unless an exemption from the registration requirements of the
      U.S. Securities Act and applicable state securities laws is available to
      the holder and the holder has furnished an opinion of counsel of
      recognized standing in form and substance satisfactory to the Corporation
      to such effect; provided, however, that the undersigned will not be
      required to deliver an opinion of counsel in connection with its exercise
      of the Warrants on its own behalf, or on behalf of the original beneficial
      purchaser for which it is subscribing for Subscription Receipts hereunder
      (if any), at a time when it, and such original beneficial purchaser (if
      any), are accredited investors as defined under the U.S. Securities Act.
    
	 	 	 
	 	(w) 	The Subscriber acknowledges and agrees that upon the original issuance
      of the Warrants, and until such time as it is no longer required under
      applicable requirements of the U.S. Securities Act or applicable state
      securities laws, all certificates representing the Warrants and all
      certificates issued in exchange therefor or in substitution thereof, shall
      bear the following legend: 
	 	 	 
	 		"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE
      NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
      OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF
    ANY STATE OF THE UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED UNLESS AN
    EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IS
    AVAILABLE, AND, UNLESS THE HOLDER IS OR IS EXERCISING ON BEHALF OF THE
    ORIGINAL HOLDER AND IS AN ACCREDITED INVESTOR AS DEFINED IN RULE 501(a) OF
    REGULATION D UNDER THE U.S. SECURITIES ACT, THE HOLDER HAS DELIVERED AN
    OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO
    SUCH EFFECT." 
	 	 	 
	 	(x) 	The Subscriber understands and agrees that there may be material tax
      consequences to the Subscriber of an acquisition or disposition of the
      Securities, and the Subscriber acknowledges that it is responsible for
      determining the tax consequences of its investments. The Corporation gives
      no opinion and makes no representation with respect to the tax
      consequences to the Subscriber under United States, state, local or
      Canadian or other foreign tax law of the Subscriber’s acquisition or
      disposition of such securities. 
	 	 	 
	 	(y) 	Subject to the terms and conditions of the registration rights set
      forth in Schedule "F", it acknowledges that such registration rights may
      be amended or waived by holders holding a majority of the Registrable
      Securities (as defined in Schedule "F") pursuant to Section 7(d) thereof,
      and that the Corporation’s obligations under Schedule "F" are conditioned
      upon the Subscriber cooperating with the Corporation as reasonably
      requested by the Corporation in connection with the preparation and filing
      of any Registration Statement hereunder, including but not limited to
      providing such information in a timely manner regarding itself, the
      Subscription Receipts and other securities of the Corporation held by it
      and the intended method of disposition
    of the Subscription Receipts as shall
    be reasonably required to effect and maintain the effectiveness of the
    registration of such Subscription Receipts.  


A-14 





5.3 

Reliance on Representations, Warranties,
Covenants and Acknowledgements 

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


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

ARTICLE 6 - SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS 

6.1 

Survival of Representations, Warranties
and Covenants of the Corporation 

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

6.2 

Survival of Representations, Warranties
and Covenants of the Subscriber 

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

ARTICLE 7 - INDEMNITY 

7.1 

Indemnity 

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

A-15 




ARTICLE 8 - AUTHORIZATION OF THE AGENTS 

8.1 

Authorization of the Agents 

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

	 	(a) 	to receive certificates representing the Subscription Receipts, to
      execute in the Subscriber’s name and on its behalf all closing receipts
      and required documents, to complete and correct any errors or omissions in
      any form or document provided by the Subscriber in connection with the
      subscription for the Subscription Receipts and to exercise any rights of
      termination contained in the Agency Agreement; 
	 	 	 
	 	(b) 	to extend such time periods and to waive, in whole or in part, any
      representations, warranties, covenants or conditions for the Subscriber’s
      benefit contained in this Subscription Agreement and the Agency Agreement
      or any ancillary or related documents; 
	 	 	 
	 	(c) 	to terminate this Subscription Agreement if any condition precedent is
      not satisfied, in such manger and on such terms and conditions as the
      Agents in their sole discretion may determine; and 
	 	 	 
	 	(d) 	without limiting the generality of the foregoing, to negotiate,
      settle, execute, deliver and amend the Agency Agreement, the Subscription
      Receipt Agreement and the Warrants. 


ARTICLE 9 - COMMISSION 

9.1 

Fee to the Agents 

The Subscriber understands that in
connection with the issue and sale of the Subscription Receipts pursuant to the
Offering, the Agents will receive from the Corporation on Closing, a cash fee
equal to 6.0% of the gross proceeds of the Offering of Subscription Receipts.
The Corporation will also issue to the Agents compensation options (the "Compensation Options") that will be automatically exchanged,
without payment of additional consideration, on the Exchange Date, for Broker
Warrants entitling the Agents to acquire that number of Common Shares as is
equal, in the aggregate, to 3.0% of the total number of Subscription Receipts
issued on Closing pursuant to the Offering at the U.S. dollar equivalent of the
Subscription Receipt Price (calculated at the Closing Date), or such other price
as permitted by the TSX, exercisable during the period ending 24 months from the
closing of the Offering. No other fee or commission is payable by the
Corporation in connection with the completion of the Offering. However, the
Corporation will pay certain fees and expenses of the Agents in connection with
the Offering as set out in the Agency Agreement. 

ARTICLE 10 - COLLECTION OF PERSONAL INFORMATION 

10.1 

Collection of Personal Information


The Subscriber acknowledges and
consents to the fact that the Corporation and the Agents are collecting the
Subscriber’s (and any beneficial purchaser for which the Subscriber is
contracting hereunder) personal information for the purpose of completing the
Subscriber’s subscription. The Subscriber acknowledges and consents to the
Corporation and Agents retaining the personal information for so long as
permitted or required by applicable law or business practices. The Subscriber
further acknowledges and consents to the fact that the Corporation or the Agents
may be required by Securities Laws, stock exchange rules and/or Investment
Industry Regulatory Organization of Canada rules to provide regulatory
authorities any personal information provided by the Subscriber respecting
itself (and any beneficial purchaser for which the Subscriber is contracting
hereunder). The Subscriber represents and warrants that it has the authority to
provide the consents and acknowledgements set out in this paragraph on behalf of
all beneficial purchasers for which the Subscriber is contracting. In addition
to the foregoing, the Subscriber agrees and acknowledges that the
Corporation or the Agents, as the case may be, may use and disclose its personal
information, or that of each beneficial purchaser for whom it is contracting
hereunder, as follows: 

A-16 




	 	(a) 	for internal use with respect to managing the relationships between
      and contractual obligations of the Corporation, the Agents and the
      Subscriber or any beneficial purchaser for whom the Subscriber is
      contracting hereunder; 
	 	 	 
	 	(b) 	for use and disclosure for income tax related purposes, including
      without limitation, where required by law, disclosure to Canada Revenue
      Agency; 
	 	 	 
	 	(c) 	for disclosure to securities regulatory authorities and other
      regulatory bodies with jurisdiction with respect to reports of trades and
      similar regulatory filings; 
	 	 	 
	 	(d) 	for disclosure to a governmental or other authority to which the
      disclosure is required by court order or subpoena compelling such
      disclosure and where there is no reasonable alternative to such
      disclosure; 
	 	 	 
	 	(e) 	for disclosure to professional advisers of the Corporation or the
      Agents in connection with the performance of their professional services;
    
	 	 	 
	 	(f) 	for disclosure to any person where such disclosure is necessary for
      legitimate business reasons and is made with the Subscriber’s prior
      written consent; 
	 	 	 
	 	(g) 	for disclosure to a court determining the rights of the parties under
      this Subscription Agreement; or 
	 	 	 
	 	(h) 	for use and disclosure as otherwise required or permitted by law.
  


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


	 	Daniel Kunz, President 
U.S. Geothermal Inc.
      
1505 Tyrell Lane 
Boise, Idaho 
83706 
Telephone: (208)
      424-1027 
Facsimile: (208) 424-1030 




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


	 	Administrative Assistant to the Director of
      Corporate Finance 
Suite 903, Box 5520 Queen Street West 
Toronto,
      Ontario M5H 3S8 
Telephone: (416) 593-8086 
Facsimile: (416)
      593-8252 




A-17 




ARTICLE 11 - MISCELLANEOUS 

11.1 

Further Assurances 

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

11.2 

Notices 

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




	 	(i) 	in the case of the Corporation, to: 
	 	 	 
	 		U.S. Geothermal Inc. 1505 Tyrell Lane Boise, Idaho 83706 
	 	 	 
	 		Attention: Daniel Kunz, President Fax: (208) 424-1030 
	 	 	 
	 		with a copy to: 
	 	 	 
	 		Goodmans 
	 	 	 
	 		355 Burrard Street, Suite 1900 Vancouver, British Columbia V6C 2G8
  
	 	 	 
	 		Attention: Bruce Wright Fax: (604) 682-7131 
	 	 	 
	 	(ii) 	in the case of the Subscriber, at the address specified on the face
      page hereof, with a copy to the Agents at: 
	 	 	 
	 		Dundee Securities Corporation 
	 	 	 
	 		Dundee Place - 1 Adelaide Street East, Suite 2700 Toronto, Ontario M5C
      2V9 
	 	 	 
	 		Attention: Clarke Herring Fax: (416) 350-3312 



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




A-18 





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



11.3 

Time of the Essence 

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

11.4 

Costs and Expenses 

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

11.5 

Applicable Law 

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

11.6 

Entire Agreement 

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

11.7 

Counterparts 

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

11.8 

Electronic Delivery of Subscription


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

11.9 

Amendments 

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

11.10 

Assignment 

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

A-19 




11.11 

Enurement 

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


11.12 

Language 

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

11.13 

Contractual Right of Action for
Rescission.

By its acceptance and
acknowledgement of this offer, the Corporation hereby agrees to provide a right
of rescission as hereinafter set forth, which right shall be exercisable by the
Subscriber and any subsequent holders from time to time of the Subscription
Receipts: 

In the event that a holder of a
Subscription Receipts, who acquires a Common Share and a half of one Warrant
upon exercise of a Subscription Receipt, is or becomes entitled under applicable
securities legislation to the remedy of rescission by reason of the Prospectus
relating to the issue of Common Shares and Warrants on exercise thereof or any
amendment thereto containing a misrepresentation, such holder shall be entitled
to rescission not only of the holder's exercise of its Subscription Receipts but
also of the private placement transaction pursuant to which the Subscription
Receipts were initially acquired, and shall be entitled in connection with such
rescission to a full refund of all consideration paid to the Agents or the
Corporation, as the case may be, on the acquisition of the Subscription
Receipts. In the event such holder is a permitted assignee of the interest of
the original Subscription Receipts subscriber, such permitted assignee shall be
entitled to exercise the rights of rescission and refund granted hereunder as if
such permitted assignee was such original subscriber. The foregoing is in
addition to any other right or remedy available to a holder of the Subscription
Receipts under section 114 of the Securities Act (British Columbia), section 130
of the Securities Act (Ontario) or otherwise at law. 

A-20 




SCHEDULE "B" 

Final Terms 


 

Private Placement of Subscription Receipts 

July 31, 2009 

	Issuer: 	U.S. Geothermal Inc. (the "Company").
  
	 	  
	Offering: 	
    8,100,000 Subscription Receipts (the
      "Subscription Receipts"). On the Exchange Date (as defined below), each
      Subscription Receipt will, subject to adjustment, be automatically
      exchanged, without additional consideration, for one Unit (a "Unit")
      consisting of one common share (a "Share") of the Company and one half of
      one common share purchase warrant (a "Warrant"). 

	 	  
	Size of Offering: 	CAD$10,935,000 
	 	  
	Price: 	CAD $1.35 per Subscription Receipt

	 	  
	Use of Proceeds: 	
    The net proceeds of the offering will be used
      for drilling and exploration at Neal Hot Springs and general working
      capital. Upon closing of the offering, the proceeds of the offering will
      be immediately available to the Company and will not be subject to escrow.
    

	 	  
	Terms of Warrants: 	
    Each whole Warrant will entitle the holder
      thereof to acquire one Share (the "Warrant Shares") of the Company for a
      period of 24 months following Closing at a price of US$1.75 per Share.
  

	 	  
		
    Each Warrant shall contain net, or cashless,
      exercise provisions (payable in Shares) which may be utilized by the
      holder at any time commencing 6 months following the closing of the
      offering, in the event that a resale registration statement covering the
      Warrant Shares filed with the Commission is not effective and usable.
  

	 	  
	Filing of Canadian
      Prospectus: 	
    The Company will, as soon as practicable
      following the closing of the offering, file a prospectus (the "Canadian
      Prospectus") in each of the Offering Jurisdictions qualifying the
      distribution of the Units upon exchange of the Subscription Receipts. The
      Company will use commercially reasonable efforts to obtain a receipt for
      the final Canadian Prospectus in each of the Offering Jurisdictions as
      soon as practicable thereafter. 

	 	  
	Exchange Date: 	
    The Exchange Date will be the date which is the
      earlier of: (a) the date on which a receipt is issued (or is deemed to be
      issued) for the final Canadian Prospectus in each of the Offering
      Jurisdictions; and (b) the date which is four months and one day after the
      closing of the offering. 

	 	  
	Hold Periods 	
    Transfer of the Subscription Receipts and the
      underlying securities are subject to all applicable securities laws and
      the Subscription Receipts may not be transferred to insiders of the
      Company. As described in more detail below, for those investors who are
      not "affiliates" of the Company, as defined under the US Securities Act,
      the securities sold under the offering will be subject to a "hold period"
      that will expire on the earlier of: 

	 	  


	 	a)	
    for all securities including the Warrant
    Shares, upon obtaining both a receipt for a final prospectus in Canada and
    effectiveness of a resale registration statement in the United States; and
    

	 	 	 
	 	b)	
    for all securities other than the Warrant
    Shares, 6 months after Closing and, in the case of the Warrant Shares, 6
    months after the date of exercise. 







	 	  
	Resale Restrictions and
      Filing of U.S. Registration Statement: 	
    The securities issued in the offering, and
      issuable upon exchange or exercise, are "restricted securities" as defined
      in Rule 144 under the U.S. Securities Act, and may not be resold without
      registration under the U.S. Securities Act and applicable state securities
      laws unless an exemption from registration is available. The Company
      agrees to file a registration statement with the U.S. Securities and
      Exchange Commission (the "Commission") for resale of the Common Shares and
      the Common Shares underlying the Warrants and the Broker Warrants (as
      defined below) under the US Securities Act as soon as practicable after
      Closing, and, to use commercially reasonable efforts to cause the
      registration statement to become effective and to remain effective until
      two years after Closing. Subject to the foregoing, pursuant to National
      Instrument 45-102, the Subscription Receipts (and underlying securities)
      issuable on the Closing Date and the Common Shares issuable on exercise of
      the Warrants and the Broker Warrants will be subject to a four month hold
      period in all of the provinces of Canada, commencing on the Closing Date.
      A "legend" in the form prescribed by National Instrument 45-102 or other
      applicable securities legislation, including US securities laws, or stock
      exchange rules will appear on the securities certificates, together with
      such additional legends as may be appropriate in the circumstances.
      Notwithstanding the Company’s agreement to file a resale registration
      statement, the Company may delay or suspend the effectiveness of the
      Registration Statement (a "Delay Period") if the board of directors of the
      Company determines in good faith that the disclosure of material
      non-public information at such time would be detrimental to the Company
      and its subsidiaries, taken as a whole; provided that the term of any
      Delay Period and any period(s) during which the registration statement is
      not available to enable holders to effect resales thereunder, shall extend
      the period the registration statement is required to be effective. The
      aggregate Delay Period for all pending developments shall not exceed 45
      calendar days in any 180- day period. Notwithstanding the foregoing, the
      Company shall use its commercially reasonable efforts to ensure that the
      registration statement is declared effective and its permitted use is
      resumed following a suspension as promptly as practicable and that in no
      event will a Delay Period be in effect or the ability of holders to effect
      resales under such registration statement be impaired during any period in
      which the Company is effecting a primary public offering of its securities
      in the United States or Canada, thus giving effect to the intention that
      purchasers in this offering shall have the ability to effect public
      resales of their securities at the same time and on the same basis as
      purchasers in any such primary public offering. 

	  	  
	Offering Jurisdictions: 	
    Private placement to "accredited investors" in
      all provinces of Canada, other than Québec (collectively, the "Offering
      Jurisdictions"), and into the United States pursuant to Regulation D under
      the United States Securities Act of 1933, as amended or in such
      other manner as to not require registration under the U.S. Securities Act,
      and jurisdictions other than Canada and the United States, provided that
      the Company is not required to file a prospectus or other disclosure
      document or become subject to continuing reporting obligations in such
      other jurisdictions. 

	  	  
	Form of Offering: 	
    Marketed, subject to an agency agreement
      containing "disaster out", "due diligence", "regulatory out" and "material
      adverse change out" clauses running to Closing. 

	  	  
	Listing and Regulatory
      Approval: 	
    The Shares trade on the Toronto Stock Exchange under the
    symbol "GTH" and on the NYSE Amex under the symbol "HTM".
  



B-2 





	  	The Warrants will not be listed for
      trading. 
	  	  
		
    The closing of the offering is subject to
      approval of the Toronto Stock Exchange and the NYSE Amex. 

	  	  
	Eligibility for Investment: 	
    Subject to standard qualifications, the
      Subscription Receipts and underlying securities will be eligible for
      investment for RRSPs, RESPs, RRIFs, DPSPs and TFSAs under the Income Tax
      Act (Canada). 

	  	  
	Agents: 	Dundee Securities Corporation, Clarus
      Securities Inc. and Toll Cross Securities Inc. 
	  	  
	Agency Fee: 	6.0% 
	  	  
	Broker Warrants: 	
    In addition to the Agency Fee, the Corporation
      will issue to the Agents Special Warrants. On the Exchange Date, the
      Agents Special Warrants will be automatically exchanged, without
      additional consideration, into Broker Warrants exercisable for a period of
      24 months following the Closing to purchase at the Offering Price that
      number of shares as is equal to 3.0% of the aggregate number of
      Subscription Receipts purchased under the offering. The Canadian
      Prospectus will also qualify the distribution of the Broker Warrants upon
      the exchange of the Agents Special Warrants. 

	  	  
	Pricing: 	July 31, 2009 
	  	  
	Closing: 	August 12, 2009 


B-3 




SCHEDULE "C" 

CERTIFICATE OF SUBSCRIBERS 

UNITED STATES ACCREDITED INVESTOR CERTIFICATE 

TO: 

U.S.
GEOTHERMAL INC. (THE "CORPORATION") 

AND TO: 

DUNDEE SECURITIES CORPORATION, CLARUS SECURITIES
INC., and TOLL CROSS SECURITIES INC. (the "Agents") 

AND TO: 

DUNDEE
SECURITIES INC. AND TOLL CROSS SECURITIES USA INC. 

RE: 

SUBSCRIPTION
FOR SUBSCRIPTION RECEIPTS OF THE CORPORATION 

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

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

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

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


	___	Category 1. 	
    An organization described in Section 501(c)(3)
      of the United States Internal Revenue Code, a corporation, a Massachusetts
      or similar business trust or partnership, not formed for the specific
      purpose of acquiring the Subscription Receipts, with total assets in
      excess of US$5,000,000 

	 	  	  
	___	Category 2. 	
    A natural person whose individual net worth or
      joint net worth with that person’s spouse, at the date hereof, exceeds
      US$1,000,000 

	 	  	  
	___	Category 3. 	
    A natural person who had an individual income
      in excess of US$200,000 in each of the two most recent years or joint
      income with that person’s spouse in excess of US$300,000 in each of those
      years and has a reasonable expectation of reaching the same income level
      in the current year 

	 	  	  
	___	Category 4. 	
    A trust that: (a) has total assets in excess of
      US$5,000,000, (b) was not formed for the specific purpose of acquiring the
      Subscription Receipts, and (c) is directed in its purchases of securities
      by a person who has such knowledge and experience in financial and
      business matters that he/she is capable of evaluating the merits and risks
      of an investment in the Subscription Receipts 

	 	  	  
	___	Category 5. 	
    Any bank as defined in Section 3(a)(2) of the U.S.
    Securities Act or any savings and loan association or other institution as
    defined in Section 3(a)(5)(A) of the U.S. Securities Act whether acting in
    its individual or fiduciary capacity; any broker dealer registered pursuant
    to Section 15 of the United States Securities Exchange Act of 1934; any
    insurance company as defined in Section 2(13) of the U.S. Securities Act;
    any investment company registered under the Investment Company Act of 1940
    or a business development company as defined in Section 2(a)(48) of that
    Act; any Small Business Investment Company licensed by the U.S. Small
    Business Administration under Section 301(c) or (d) of the Small Business
    Investment Act of 1958; any plan established and maintained by a state, its
    political subdivisions, or any agency or instrumentality of a state or its
    political subdivisions, for the benefit of its employees, if such plan has
    total assets in excess of US$5,000,000; or any employee benefit plan within
    the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"), if the investment decision is made by a plan fiduciary,
      as defined in Section 3(21) of ERISA, which is either a bank, savings and
      loan association, insurance company, or registered investment adviser, or
      if the employee benefit plan has total assets in excess of US$5,000,000,
      or, if a self-directed plan, with investment decisions made solely by
      persons that are Accredited Investors









	___	Category 6. 	Any director or executive officer of the
      issuer of the securities being offered or sold. 
	 	  	  
	___	Category 7. 	A private business development as defined in
      Section 202(a)(22) of the Investment Advisors Acts of 1940 
	 	  	  
	___	Category 8. 	An entity, other than a trust, in which all of
      the equity owners satisfy the requirements of one or more of the foregoing
      categories 


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

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

DATED at _____________this ______day of
____________________________, 200__. 

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


B-2 




SCHEDULE "D" 

CANADIAN ACCREDITED INVESTOR CERTIFICATE 

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

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

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

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

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

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

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

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

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

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

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

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








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

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

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

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

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

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

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

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

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

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

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



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

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

"Canadian financial institution" means 

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

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



D-2 




"director" means 

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

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



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

"eligibility adviser" means 

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

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




"financial assets" means 

	 	(a) 	cash, 
	 	 	 
	 	(b) 	securities, or 
	 	 	 
	 	(c) 	a contract of insurance, a deposit or an evidence of a deposit that is
      not a security for the purposes of securities legislation;



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

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

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

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

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

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

D-3 




"non-redeemable investment fund" means an issuer: 

	 	(a) 	whose primary purpose is to invest money provided by its
      securityholders, 
	 	 	 
	 	(b) 	that does not invest, 



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

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




	 	(c) 	that is not a mutual fund; 


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

"person" includes 

	 	(a) 	an individual, 
	 	 	 
	 	(b) 	a corporation, 
	 	 	 
	 	(c) 	
    a partnership, trust, fund and an association, syndicate, organization
      or other organized group of persons, whether incorporated or not, and
  

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



"related liabilities" means 

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

	 	 	 
	 	(b) 	
    liabilities that are secured by financial assets; 



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

"spouse" means, an individual who, 

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

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

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



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


D-4 




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

Control 

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

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

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

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



* * * * * * * * * 

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

EXECUTED by the Subscriber at _______________this ______day of
________________, 200__. 

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


D-5 




SCHEDULE "E" 

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

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

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



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

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




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

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



Dated at _____________this ________day of _______________,
200____. 

	 	Name of Subscriber 
	 	By: _________________________________
	 	      Signature 
	 	 
	 	     
    _________________________________  
	 	      Title 






SCHEDULE "F" 

REGISTRATION RIGHTS 

Capitalized terms not otherwise defined herein shall have
the meanings attributed thereto in the Subscription Agreement to which this
schedule is attached. The terms of this Schedule "F" are incorporated by
reference into the Subscription Agreement to which it is attached. 

Section 1.     Definitions. As
used in this Schedule, the following terms have the respective meanings set
forth in this Section 1: 

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

"Brokers Shares" means the shares of Common Stock
issued or issuable upon exercise of the Broker Warrants issued pursuant to the
terms of the Agency Agreement. 

"Commission" means the U.S. Securities and Exchange
Commission. 

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

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

"Exchange Act" means the Securities Exchange Act of
1934, as amended. 

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

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

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

"Investor" means the Subscriber pursuant to the
Subscription Agreement to which this Schedule is attached. 

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

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

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

"Registrable Securities" means: (i) the Shares, (ii) the
Warrant Shares, (ii) the Brokers Shares, and (iii) any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event. Such securities will cease to be Registrable Securities upon
transfer pursuant to the Registration Statement or Rule 144 under the Securities
Act or at such time as such securities become transferable without any
restrictions or limitations in accordance with Rule 144(b) (or any successor
provision). 

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




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

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

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

"Securities Act" means the United States Securities Act
of 1933, as amended. 

"Shares" means the shares of Common Stock issued or
issuable to the Investors pursuant to the Subscription Agreement. 

"Trading Day" means any day on which the TSX or the AMEX
is open for trading. 

"Warrant Shares" means the shares of Common Stock issued
or issuable upon exercise of the Warrants issued pursuant to the Subscription
Agreement. 

Section 2. Registration. 

	 	(a) 	
    The Company shall prepare and file with the Commission the
      Registration Statement covering the resale of all Registrable Securities
      for an offering to be made on a continuous basis pursuant to Rule 415, on
      Form S-3 (or on such other form appropriate for such purpose or necessary
      if the Company does not qualify for the use of Form S-3). Such
      Registration Statement shall contain (except if otherwise required
      pursuant to written comments received from the Commission upon a review of
      the Registration Statement) the "Plan of Distribution" attached hereto as
      Annex A. The Company shall use commercially reasonable efforts to cause
      the Registration Statement to be declared effective under the Securities
      Act as soon as possible and shall use its commercially reasonable efforts
      to keep the Registration Statement continuously effective and available
      for use by Holders under the Securities Act until the date which is the
      earlier of (i) two years after the Closing Date or (ii) such time as all
      of the Registrable Securities covered by the Registration Statement have
      been publicly sold by the Holders or (iii) at such time as all of the
      Registrable Securities become transferable without any restrictions or
      limitations in accordance with Rule 144(b)(1) (or any successor provision)
      (the "Effectiveness Period"). 

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

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








	 	(d) 	
    Notwithstanding Section 2(a) hereof, the Company may delay or suspend
      the effectiveness of the Registration Statement (a "Delay Period") if the
      board of directors of the Company determines in good faith that the
      disclosure of material non-public information ("Pending Developments") at
      such time would be detrimental to the Company and its subsidiaries, taken
      as a whole; provided that if a Delay Period occurs or if, for any other
      reason, after effectiveness the Registration Statement is not available to
      enable Holders to effect resales thereunder, the term of any Delay
      Period(s) and period(s) during which the Registration Statement is
      otherwise unavailable for use in effecting such resales, the period during
      which the Registration Statement shall be required to remain effective
      specified in clause (i) of Section 2(a) of this Schedule "F" shall be
      extended by the aggregate of the term(s) of any Delay Period(s) or other
      period(s) during which the Registration Statement may not be used by
      Holders to effect resales thereunder. Notwithstanding the foregoing, in no
      event will a Delay Period be in effect or the ability of the holders of
      the Securities, the Compensation Options, the Broker Warrants or the
      common shares underlying these securities to effect resales under such
      registration statement be impaired during any period in which the Company
      is effecting a primary public offering of its securities in the United
      States or Canada so that holders of the Securities, the Compensation
      Options, the Broker Warrants and the common shares underlying these
      securities shall have the ability to effect public resales of their
      securities at the same time and on the same basis as purchasers in any
      such primary public offering. 

	 	 	 
	 		
    The aggregate Delay Period for all Pending Developments shall not
      exceed 45 calendar days in any 180-day period. Notwithstanding the
      foregoing , the Company shall use its commercially reasonable efforts to
      ensure that the Registration Statement is declared effective and its
      permitted use is resumed following a suspension as promptly as
      practicable. The Company shall not be required to specify in the written
      notice to the Holders the nature of the event giving rise to the Delay
      Period. The notice of the existence of a Pending Development shall remain
      confidential to such Holder until such information otherwise becomes
      public, unless disclosure by the Holder is required by law and provided
      that notwithstanding such Holder’s agreement to keep such information
      confidential, each such Holder makes no acknowledgment that any such
      information is material, non-public information. 

	 	 	 
	 		Section 3. Registration Procedures. 
	 	 	 
	 		
    In connection with the Company's registration obligations hereunder,
      the Company shall: 

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








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

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

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

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

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








	 	(g) 	
    The Company shall, at its own expense, cooperate with the
    Agents and U.S. broker-dealers who, in connection with any resale, may
    reasonably be considered to be acting as underwriters, with respect to any
    filing made by any of them with the Financial Industry Regulatory Authority
    Inc. ("FINRA") Corporate Financing Department pursuant to NASD
      Rule 2710(b)(4)(a)(i) so as to permit such filing and any amendments
      thereto to be made on a timely basis, if required. 

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

	 	 	 	 
	 	(i) 	
    Upon the occurrence of any event contemplated by Section
      3(c)(v), use its commercially reasonable efforts to ensure that the use of
      the Registration Statement or Prospectus may be resumed as promptly as
      practicable and shall promptly prepare a supplement or amendment,
      including a post effective amendment, to the Registration Statement or a
      supplement to the related Prospectus or any document incorporated or
      deemed to be incorporated therein by reference, and file any other
      required document so that, as thereafter delivered, no Registration
      Statement nor any Prospectus will contain an untrue statement of a
      material fact or omit to state a material fact required to be stated
      therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading. The Company
      shall be entitled to exercise its right under this section 3(i) to suspend
      the availability of a Registration Statement or Prospectus for an
      aggregate period, including any Delay Period, not to exceed 45 calendar
      days in any 180-day period. Notwithstanding the foregoing, in no event
      will such a suspension be in effect during any period in which the Company
      is effecting a primary public offering of its securities in the United
      States or Canada, so that holders of the Securities, the Compensation
      Options, the Broker Warrants and the common shares underlying these
      securities shall have the ability to effect public resales of their
      securities at the same time and on the same basis as purchasers in any
      such primary public offering. 

	 	 	 	 
	 	(j) 	
    Comply with all applicable rules and regulations of the
      Commission. 

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

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

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

	 	 	 	 
			
      Section 5. Registration Expenses.  All fees and expenses
      incident to the performance of or compliance with this Schedule by the
      Company shall be borne by the Company whether or not any Registrable
      Securities are sold pursuant to the Registration Statement. The fees and
      expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without
      limitation, fees and expenses of the Company’s counsel and auditors, and
      other reasonable counsel fees and expenses, and including, without
      limitation, fees and expenses (A) with respect to filings made with the
      Commission, (B) with respect to filings required to be made with any
      trading market or exchange on which the Common Stock is then listed for
      trading, (C) with respect to filing fees of FINRA pursuant to FINRA Rule
      5110, and (D) with respect to fees relating to compliance with applicable
      state securities or Blue Sky laws in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities, (ii)
      messenger, telephone and delivery expenses, (iii) fees and disbursements
      of counsel for the Company, (iv) Securities Act liability insurance, if the Company so desires such insurance, and (v)
      fees and expenses of all other Persons retained by the Company in
      connection with the consummation of the transactions contemplated by this
      Schedule. In addition, the Company shall be responsible for all of its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Schedule (including, without limitation,
      all salaries and expenses of its officers and employees performing legal
      or accounting duties), the expense of any annual audit and the fees and
      expenses incurred in connection with the listing of the Registrable
      Securities on any securities exchange as required hereunder.









	 		Section 6. Indemnification. 
	 	 	 
	 	(a) 	
    Indemnification by the Company. The Company shall,
      notwithstanding any termination of this Agreement or Schedule, indemnify
      and hold harmless each Holder, the officers, directors, agents, investment
      advisors, brokers (including brokers who offer to sell Registrable
      Securities as principal as a result of a pledge or any failure to perform
      under a margin call effected on a Holder), partners, members and employees
      of each of them (and any other persons with a functionally equivalent role
      of a person holding such titles or performing such functions,
      notwithstanding a lack of such title or any other title), each Person who
      controls any such Holder (within the meaning of Section 15 of the
      Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the
      fullest extent permitted by applicable law, from and against any and all
      losses, claims, damages, liabilities, costs (including, without
      limitation, reasonable costs of preparation and reasonable attorneys'
      fees) and expenses (collectively, "Losses"), as incurred, arising out of
      or relating (1) to any untrue or alleged untrue statement of a material
      fact contained in any Registration Statement, any Prospectus or any form
      of prospectus or in any amendment or supplement thereto or in any
      preliminary prospectus, or arising out of or relating to any omission or
      alleged omission of a material fact required to be stated therein or
      necessary to make the statements therein (in the case of any Prospectus or
      form of prospectus or supplement thereto, in light of the circumstances
      under which they were made) not misleading, and (2) any violation or
      alleged violation by the Company of the Securities Act, the Exchange Act
      or any state securities law, or any rule or regulation thereunder, in
      connection with the performance of its obligations under this Agreement
      and Schedule, except to the extent, but only to the extent, that (1) such
      untrue statements or omissions are based solely upon information regarding
      such Holder furnished in writing to the Company by such Holder expressly
      for use therein, or to the extent that such information relates to such
      Holder or such Holder's proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such
      Holder expressly for use in the Registration Statement, such Prospectus or
      such form of Prospectus or in any amendment or supplement thereto (it
      being understood that the Holder has approved Annex A hereto for this
      purpose) or (2) in the case of an occurrence of an event of the type
      specified in Section 3(c)(ii)-(vi), the use by such Holder of an outdated
      or defective Prospectus after the Company has notified such Holder in
      writing that the Prospectus is outdated or defective and prior to the
      receipt by such Holder of an Advice or an amended or supplemented
      Prospectus, but only if and to the extent that following the receipt of
      the Advice or the amended or supplemented Prospectus the misstatement or
      omission giving rise to such Loss would have been corrected. The Company
      shall notify the Holders promptly in writing of the institution, threat or
      assertion of any Proceeding of which the Company is aware in connection
      with the transactions contemplated by this Schedule. 

	 	 	 
	 	(b) 	
    Indemnification by Holders. Each Holder shall, severally and
      not jointly, indemnify and hold harmless the Company, its directors,
      officers, agents and employees, each Person who controls the Company
      (within the meaning of Section 15 of the Securities Act and Section 20 of
      the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable
      law, from and against all Losses, as incurred, arising solely out of or
      based solely upon: (x) such Holder's failure to comply with the prospectus
      delivery requirements of the Securities Act or (y) any untrue statement of
      a material fact contained in the Registration Statement, the Prospectus,
      or any form of prospectus, or in any amendment or supplement thereto, or
      arising solely out of or based solely upon any omission of a material fact
      required to be stated therein or necessary to make the statements therein
      not misleading to the extent, but only to the extent that, (1) such untrue statements or
      omissions are based solely upon information regarding such Holder
      furnished in writing to the Company by such Holder expressly for use
      therein, or to the extent that such information relates to such Holder or
      such Holder's proposed method of distribution of Registrable Securities
      and was reviewed and expressly approved in writing by such Holder
      expressly for use in the Registration Statement (it being understood that
      the Holder has approved Annex A hereto for this purpose), such Prospectus
      or such form of Prospectus or in any amendment or supplement thereto or
      (2) in the case of an occurrence of an event of the type specified in
      Section 3(c)(ii)-(vi), the use by such Holder of an outdated or defective
      Prospectus after the Company has notified such Holder in writing that the
      Prospectus is outdated or defective and prior to the receipt by such
      Holder of an Advice or an amended or supplemented Prospectus, but only if
      and to the extent that following the receipt of the Advice or the amended
      or supplemented Prospectus the misstatement or omission giving rise to
      such Loss would have been corrected. In no event shall the liability of
      any selling Holder hereunder be greater in amount than the dollar amount
      of the net proceeds received by such Holder upon the sale of the
      Registrable Securities giving rise to such indemnification obligation. 








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

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

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








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

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

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

	 	 	 
	 		Section 7. Miscellaneous. 
	 	 	 
	 	(a) 	
    Compliance. Each Holder covenants and agrees that it will
      comply with the prospectus delivery requirements of the Securities Act as
      applicable to it in connection with sales of Registrable Securities
      pursuant to the Registration Statement. 

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

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

	 	 	 
	 	(d) 	
    Amendments and Waivers. The provisions of this Schedule,
      including the provisions of this Section 7(d), may not be amended,
      modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the
      same shall be in writing and signed by the Company and the Holders of no
      less than a majority interest of the Registrable Securities (treated
      together as a single class). Notwithstanding the foregoing, a waiver or
      consent to depart from the provisions hereof with respect to a matter that
      relates exclusively to the rights of certain Holders and that does not
      directly or indirectly affect the rights of other Holders may be given by
      Holders of at least a majority of the Registrable Securities to which such
      waiver or consent relates.









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

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

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

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

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








ANNEX A 

Plan of Distribution 

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

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

 

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

 

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

 

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

 

	
  privately negotiated transactions;
  

 

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

 

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

 

	
  a combination of any such methods of sale;
  

 

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

 

	
  any other method permitted pursuant to applicable law. 



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

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

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




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

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

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

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

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

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

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




ANNEX B 

SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE 

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

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

IF NOT DELIVERED TO THE
UNDERWRITERS PRIOR TO CLOSING OF THE OFFERING, PLEASE FAX OR EMAIL A COPY OF THE
COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO: 

Kimberley R. Anderson 
Dorsey & Whitney LLP 
1420
Fifth Avenue, Seattle WA 98101 
Fax: 206.260.8917 
Email:
anderson.kimberley@dorsey.com 

NOTICE 

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




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

QUESTIONNAIRE 

	1. 	NAME. 



	 	(a) 	Full Legal Name of Selling Securityholder 
	 	 	_____________________________
	 	 	 
	 	(b) 	Full Legal Name of Registered Holder (if not the same as (a) above)
      through which Registrable Securities
      are held: 
	 	 	_____________________________
	 		 
	 	 	 
	 	(c) 	
    Full Legal Name of Natural Control Person (which means a natural
      person who directly or indirectly alone or with others has power to vote
      or dispose of the securities covered by the questionnaire – ENTITIES MUST
      COMPLETE THIS QUESTION): 




	2. 	ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:




	
    Telephone: ________________

	
    Fax :  _____________________

	
    Email:  ____________________

	
    Contact Person:  ____________




	3. 	BROKER-DEALER STATUS: 



	 	(a) 	Are you a broker-dealer? 
	 	 	 
	 		Yes ___ No ___ 
	 	 	 
	 	(b) 	If "yes" to Section 3(a), did you receive your Registrable Securities
      as compensation for investment banking services to the Company. 
	 	 	 
	 		Yes ___ No ___ 


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

	 	(c) 	Are you an affiliate of a broker-dealer? 
	 	 	 
	 		Yes ___ No ___ 
	 	 	 
	 	(d) 	
    If you are an affiliate of a broker-dealer. do you certify that you
      bought the Registrable Securities in the ordinary course of business, and
      at the time of the purchase of the Registrable Securities to be resold, you had no agreements or
      understandings, directly or indirectly, with any person to distribute the
      Registrable Securities?


	 	 	 
	 	 	Yes ___ No ___

	 	 	 







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

	 	 
	4. 	BENEFICIAL OWNERSHIP OF SECURITIES OF THE COMPANY OWNED BY THE SELLING
      SECURITYHOLDER. 
	 	 
		
    Except as set forth below in this Item 4, the undersigned is not the
      beneficial or registered owner of any securities of the Company other than
      the securities issuable pursuant to the Subscription Agreement.
  




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

	 	 	 
	 	 	_______________________________



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

	 	 
		State any exceptions here: 
	 	 
	 	____________________________________
	 	 


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

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

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

	Dated: ____________________	Beneficial Owner: ____________
	  	By: _______________________
	  	Name: _____________________
	  	Title: ______________________


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