Filed by Automated Filing Services Inc. (604) 609-0244 - U.S. Geothermal Inc. - Exhibit 10.1






     BLG DRAFT: June 4,
2007 
FOR DISCUSSION PURPOSES ONLY 

UNDERWRITING AGREEMENT 

Dated as of May 14, 2007 

U.S. Geothermal Inc. 
1509 Tyrell Lane 
Suite B

Boise, Idaho 83706 

Attention:             
Daniel Kunz

                               
Chief Executive Officer, President and Director 

Dear Sirs: 

Re: Placement of Shares of Common Stock

          We
understand that U.S. Geothermal Inc. (the “Corporation”) proposes to
issue and sell 6,818,182 shares of common stock par value US $0.001 (the
“Shares”). 

1.     
Offer to Purchase 

          Based
upon the foregoing and subject to the terms and conditions set out below,
Cormark Securities Inc. (“Cormark”), Dundee Securities Corporation and
Toll Cross Securities Inc. (collectively, the “Underwriters” and,
individually, an “Underwriter”) hereby severally and not jointly offer to
purchase from the Corporation, if, as and when issued by the Corporation, and by
its acceptance hereof the Corporation agrees to sell to the Underwriters, at the
Closing Time (as defined below), the Shares at a price (the “Offering
Price”) of $2.20 per share for an aggregate consideration of $15,000,000.40
(the “Offering”). 

          The
Underwriters shall have the option, exercisable at any time until 48 hours prior
to the Closing Time, to purchase an additional 2,272,718 Common Shares (the
“Optioned Shares”) at the Offering Price, such that the aggregate number
of Shares to be purchased by the Underwriters will be, if this option is
exercised in full, 9,090,900 Shares for an aggregate purchase price of
$19,999,980.00. 

          The
several obligations of the Underwriters to purchase the Shares shall be
allocated to the Underwriters in accordance with the percentages in Section 13
hereof. 

2.      Definitions


          In
this Agreement, unless otherwise defined herein, and in addition to the terms
defined elsewhere herein, the following capitalized terms shall have the
following meanings: 




- 2 - 

“Accredited Investor” means an
“accredited investor” as that term is defined in Rule 501 of Regulation D; 

“Additional Shares” means the
Common Shares issuable to the Purchasers in the circumstances as provided in
paragraph 6(d) of this Agreement; 

“Broker Shares” has the meaning
ascribed thereto in Section 7; 

“Broker Warrants” has the
meaning ascribed thereto in Section 7; 

“business day” means a day that
is not a Saturday, a Sunday or a statutory or civic holiday in Toronto, Ontario
or Boise, Idaho; 

“Closing” means the completion
of the issue and sale by the Corporation and the purchase by the Purchasers of
the Shares; 

“Closing Date” means June 5,
2007 or such other date as the Corporation and the Underwriters may agree; 

“Closing Time” means 10:00 a.m.
(Toronto time) on the Closing Date or such other time on the Closing Date as the
Corporation and the Underwriters may agree; 

“Common Shares” means the shares
of common stock par value US $0.001 in the capital of the Corporation; 

“Corporation’s Auditors” means
Williams & Webster, P.S., the auditors of the Corporation; 

“Corporation’s Counsel” means
the law firms of Dorsey & Whitney LLP insofar as the laws of the United
States are concerned and Goodmans in so far as the laws of Canada are concerned,
each being counsel to the Corporation; 

“Directed Selling Efforts” means
directed selling efforts, as used under Rule 902(c) of Regulation S under the
1933 Act; 

“Disclosure Documents” means
each document (as such term is defined in Section 138.1 of the Securities
Act (Ontario)) released by the Corporation since March 31, 2006; 

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

“Environmental Laws” has the
meaning ascribed thereto in paragraph 5(s); 




- 3 - 

“General Solicitation or General
Advertising” means “general solicitation or general advertising”, as used
under Rule 502(c) under the U.S. Securities Act, including advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar media or broadcast over radio, television, or telecommunications,
including electronic display or the Internet, or any seminar or meeting whose
attendees had been invited by general solicitation or general advertising; 

“Governmental Authority” means
any domestic or foreign government, whether federal, provincial, state,
territorial, local, regional, municipal or other political jurisdiction, and any
agency, authority, instrumentality, court, tribunal, board, commission, bureau,
arbitrator, arbitration tribunal or other tribunal, or any quasi-governmental or
other entity, insofar as it exercises a legislative, judicial, regulatory,
administrative, expropriation or taxing power or function of or pertaining to
government; 

“Hazardous Substances” has
  the meaning ascribed thereto in paragraph 5(s); 

“Indemnified Party”
  has the meaning ascribed thereto in paragraph 11(d); 

“Intellectual Property”
  has the meaning ascribed thereto in paragraph 5(nn); 

“Material Subsidiaries” means
the Subsidiaries whose assets or revenues, calculated on an individual basis,
represent more than 10% of the consolidated assets or revenues of the
Corporation; 

“misrepresentation”,
“material fact” and “material change” have the respective meanings
ascribed thereto in the Securities Act (Ontario); 

“NASD” has the meaning ascribed
thereto in Section 3(e); 

“Neal Hot Springs Project” means
the Neal Hot Springs exploration project located in eastern Oregon as described
in the Disclosure Documents; 

“Offering Jurisdictions” means
the Provinces of Canada, any state of the United States of America and such
other jurisdictions where the Underwriters choose to sell Shares in accordance
with this Agreement; 

“Offering Price” means the price
of $2.20 per common share; 

“Optioned Shares” has the
meaning ascribed thereto in Section 1; 

“Purchasers” means the
purchasers of the Shares under the terms of this Agreement, which term includes
the Underwriters and all Substituted Purchasers as contemplated by Section 3;





- 4 - 

“Raft River Energy I LLC” means
Raft River Energy I LLC, a Delaware limited liability company, the joint venture
entity established to facilitate the financing of Phase 1 of the Raft River
Project; 

“Raft River Project” means Phase
1 of development at Raft River located in Southern Idaho, resulting in the
construction and operation of a 13 megawatt binary cycle geothermal power plant
(Unit 1), as described in the Disclosure Documents; 

“Registration Statement” has the
meaning ascribed thereto in the Subscription Agreements; 

“Regulation D” means Regulation
D adopted by the SEC under the 1933 Act; 

“SEC” means the United States
Securities and Exchange Commission; 

“Securities Laws” means the
applicable securities laws, regulations, rules, policy statements and prescribed
forms, collectively, of each of the Offering Jurisdictions; 

“Securities Regulators” means
the securities commissions or applicable regulatory authorities in each of the
Offering Jurisdictions; 

“Shares” shall have the meaning
ascribed thereto in the first paragraph of this Agreement and shall include the
Optioned Shares; 

“Subscription Agreements”
means the agreements to be executed by each of the Substituted Purchasers in
respect of the Shares to be purchased by them, and accepted by the Corporation,
in the form annexed hereto as Schedule “C” to this Agreement; 

“Subsidiary” means any entity of
which more than 50 percent of the voting securities are directly or indirectly
owned by the Corporation and the financial statements of which are consolidated
with those of the Corporation; 

“Substituted Purchasers” means
each of the Purchasers, other than the Underwriters, whose Subscription
Agreement has been accepted by the Corporation in accordance with Section 3;


“this Agreement” means the
agreement resulting from the acceptance by the Corporation of the offer made by
the Underwriters herein; 

“to the knowledge of” means
(unless otherwise expressly stated), with respect to the Corporation, a
statement of the actual knowledge of the executive officers of the Corporation
of the facts or circumstances to which such phrase relates; 

“Underwriters’ Counsel” means
the law firms of Arnold & Porter LLP insofar as the laws of the United
States are concerned and Borden Ladner Gervais LLP in 




- 5 - 

so far as the laws of Canada are
concerned, each being counsel to the Underwriters; 

“Underwriters’ Personnel” has
the meaning ascribed thereto in Section 11(a); 

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

“U.S. Affiliate” of any
Underwriter means the U.S. registered broker-dealer affiliate of such
Underwriter; 

“U.S. Person” means a U.S.
Person as defined in Rule 902(k) of Regulation S under the 1933 Act; 

“U.S. Securities Laws” means the
applicable blue sky or securities legislation in the United States, together
with the 1934 Act and the 1933 Act and the rules and regulations of the SEC or
state securities authority thereunder;

“1933 Act” means the United
States Securities Act of 1933, as amended; and the rules and regulations
promulgated thereunder, including judicial and administrative interpretations
thereof; and 

“1934 Act” means the United
States Securities and Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder, including judicial and administrative
interpretations thereof. 

          Any
reference in this Agreement to any Section, Subsection, paragraph or
subparagraph shall refer to a Section, Subsection, paragraph or subparagraph of
this Agreement. 

3.      Substituted
Purchasers and Compliance with Securities Laws 

	 	(a) 	
      The Underwriters and their U.S. Affiliates will have the
      right to arrange for Substituted Purchasers for the Shares in one or more
      of the Offering Jurisdictions in accordance with the terms of this
      Agreement.

	 	 	 	 
	 	(b) 	
      The Underwriters and their U.S. Affiliates hereby
      severally represent, warrant and covenant with the Corporation that they
      are duly qualified and registered to carry on business as securities
      dealers in each of the Offering Jurisdictions where the sale of the Shares
      requires such qualification and/or registration.

	 	 	 	 
	 	(c) 	
      The Underwriters agree that they shall offer the Shares
      in such manner that, pursuant to the Securities Laws:

	 	 	 	 
	 		(i) 	
      no prospectus or similar document need be delivered or
      filed, other than any prescribed reports of the issue and sale of the
      Shares; and







- 6 - 

	 	(ii) 	
      the Corporation will not be required to register or
      (except for the filings referred to in paragraph 3(c)(i) above) be subject
      to continuous disclosure obligations in a jurisdiction in which it is not
      presently subject to such obligations.




	 	(d) 	
      The Underwriters covenant and agree to hold all
      non-public information concerning the Corporation and its subsidiaries
      obtained in the strictest of confidence and not to disclose such
      information to any other party (except where disclosure is required by
      law) and not to use such information for any purpose other than in
      connection with this Offering.

	 	 	 
	 	(e) 	
      The Underwriters will not offer or sell the Shares in any
      jurisdiction other than the Offering Jurisdictions (unless subsequently
      agreed to by the Corporation) in accordance with the terms of this
      Agreement.

	 	 	 
	 	(f) 	
      The Underwriters represent, warrant and covenant that any
      offers or sales of Shares (i) will be conducted in such a manner so as not
      to require registration thereof or the filing of a prospectus (except as
      required by the Subscription Agreements) or an offering memorandum with
      respect thereto under the applicable securities legislation of the 1933
      Act; (ii) will be conducted through an affiliate of each Underwriter duly
      registered with the SEC and the National Association of Securities
      Dealers, Inc. (the “NASD”) and in compliance with U.S. Securities
      Laws; (iii) shall not be made (1) by any form of General Solicitation or
      General Advertising, or (2) in any manner involving a public offering
      within the meaning of Section 4(2) of the 1933 Act; (iv) at Closing, each
      U.S. Affiliate who sold any Shares together with its Canadian affiliate
      will provide a certificate, substantially in the form of annexed hereto as
      Schedule “B”, relating to the manner of the offer and sale of the
      Shares.

	 	 	 
	 	(g) 	
      The Underwriters shall notify the Corporation with
      respect to the identity of all Purchasers and, subject to the foregoing,
      the Corporation shall use all commercially reasonable efforts to secure
      compliance, prior to the Closing Time, with all applicable regulatory
      requirements of the Offering Jurisdictions whose Securities Laws are
      applicable to the sale of Shares.

	 	 	 
	 	(h) 	
      The Underwriters agree that if they offer to sell or sell
      any of the Shares in jurisdictions other than Canada or the United States,
      such offers or sales shall be effected in accordance and compliance with
      the applicable laws of such jurisdictions and shall be effected in such
      manner so as not to require registration of the Shares, or the filing of a
      prospectus, registration statement or any other notice or document with
      respect to the distribution of the Shares, under the laws of any
      jurisdiction outside the Offering Jurisdictions.

	 	 	 
	 	(i) 	
      during the period in which the Shares are offered for
      sale, none of the Underwriters, their affiliates and any person acting on
      their behalf, has







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taken or will take, directly or
indirectly, any action that would constitute a violation of Regulation M of the
SEC under the 1934 Act. 

4.      Notice
of Material Change 

          During
the period of distribution of the Shares, which shall be the period from the
date hereof to the Closing Time, the Corporation shall promptly notify the
Underwriters in writing of: 

	 	(a) 	
      any material change (actual, anticipated, contemplated or
      threatened, whether financial or otherwise) in the business, affairs,
      operations, assets, liabilities or obligations (contingent or otherwise),
      financial condition or capital of the Corporation; and

	 	 	 
	 	(b) 	
      any material fact that arises or is discovered and which
      was not previously disclosed in the Disclosure
Documents;



which material change or new material
fact is, or may be, of such a nature as: 

	 	(i) 	
      to render any Disclosure Document misleading or
      untrue;

	 	 	 
	 	(ii) 	
      would result in any Disclosure Document not being in
      compliance with any Securities Laws;

	 	 	 
	 	(iii) 	
      would reasonably be expected to have a significant effect
      on the market price or value of the Common Shares; or

	 	 	 
	 	(iv) 	
      would be material to a prospective
  Purchaser.



The Corporation shall in good faith discuss with the
Underwriters any change in circumstances (actual, proposed or prospective) which
is of such a nature that there is reasonable doubt whether notice need be given
to the Underwriters pursuant to this Section 4. 

5.      Representations
and Warranties of the Corporation 

          The
Corporation represents and warrants to each of the Underwriters and acknowledges
that each of the Underwriters is relying upon such representations and
warranties in connection with its execution and delivery of this Agreement that:


	 	(a) 	
      the Corporation and each Subsidiary was duly incorporated
      and is validly existing under the laws of the jurisdiction of
      incorporation and has all requisite power and authority and is duly
      qualified to carry on its business as now conducted and to own, lease and
      operate its property and assets;

	 	 	 
	 	(b) 	
      all necessary corporate action has been taken by the
      Corporation to authorize the execution and delivery of and the performance
      of its obligations under this Agreement;







- 8 - 

	 	(c) 	
      this Agreement and the Subscription Agreements have been
      duly authorized, executed and delivered by the Corporation and (assuming
      due execution and delivery by the other parties thereto) is a legal, valid
      and binding obligation of the Corporation enforceable against the
      Corporation in accordance with its terms, except as that enforcement may
      be limited by bankruptcy, insolvency and other laws affecting the rights
      of creditors generally and except that equitable remedies may be granted
      only in the discretion of a court of competent jurisdiction;

	 	 	 	 
	 	(d) 	
      the authorized and issued capital of the Corporation
      consists of 100 million Common Shares of which 43,956,712 Common Shares
      have been validly issued as at the date hereof, are outstanding as fully
      paid and non- assessable shares and were not issued in violation of any
      pre-emptive rights or other contractual rights to issue securities issued
      by the Corporation or of any applicable law;

	 	 	 	 
	 	(e) 	
      no person has any agreement or option or any right or
      privilege (whether by law, pre-emptive or contractual) capable of becoming
      an agreement, including convertible securities, warrants or convertible
      obligations of any nature, for the purchase, subscription, allotment or
      issuance of any un- issued shares or other securities of the Corporation,
      except for:

	 	 	 	 
	 		(i) 	
      the Shares issuable pursuant to this Agreement;
  and

	 	 	 	 
	 		(ii) 	
      Common Shares issuable by the Corporation pursuant to
      stock options held by directors, officers and employees, and pursuant to
      outstanding warrants as described in note 6 to the financial statements of
      the Corporation for the year ended March 31, 2006;

	 	 	 	 
	 	(f) 	
      the Shares, the Additional Shares, the Broker Warrants
      and the Broker Shares to be issued by the Corporation and/or sold pursuant
      to this Agreement and the Subscription Agreements will be duly authorized
      for that issuance and sale by all necessary action on the part of the
      Corporation and, when issued and delivered by the Corporation against
      payment of the consideration for the Shares, the Broker Warrants and the
      Broker Shares pursuant to this Agreement and the Subscription Agreements,
      will have been validly issued, will be outstanding as fully paid and
      non-assessable and will not have been issued in violation of or subject to
      any pre-emptive rights or other contractual rights to purchase securities
      issued by the Corporation or in violation of any applicable law;

	 	 	 	 
	 	(g) 	
      each of the Corporation and each Subsidiary:

	 	 	 	 
	 		(i) 	
      has complied with, and has conducted and is conducting
      its business in compliance in all material respects with all applicable
      laws, statutes, ordinances, regulations and rules in each jurisdiction in
      which it conducts business;







- 9 - 

	 	(ii) 	
      is duly licensed, registered or qualified in all
      jurisdictions to enable its business to be carried on in all material
      respects as now conducted and its property and assets owned, leased and
      operated, and all such licences, registrations and qualifications are
      valid and subsisting and no such licence, registration or qualification
      contains any term, provision, condition or limitation which has or is
      likely to have any material adverse effect on its business as now
      conducted; and

	 	 	 
	 	(iii) 	
      is not in default in filing any government returns, or
      payment of any licence or registration or qualification fee owing to any
      Governmental Authority under the laws of each jurisdiction in which it
      conducts business which has or is likely to have any material adverse
      effect on its business as now conducted;




	 	(h) 	
      the only Material Subsidiaries are U.S. Geothermal Inc.
      and U.S. Geothermal Services LLC and the Corporation has not entered into
      any agreement of any nature to acquire any additional Material
      Subsidiary;

	 	 	 
	 	(i) 	
      except as disclosed in the Disclosure Documents, the
      Corporation is the beneficial and registered owner of all of the issued
      and outstanding shares of each of its Subsidiaries, in each case free and
      clear of all mortgages, liens, charges, pledges, hypothecs, security
      interests, encumbrances, claims or other demands whatsoever, and all those
      shares have been validly issued, are issued and outstanding as fully paid
      and non-assessable shares and were not issued in violation of any
      pre-emptive rights or other contractual rights to issue securities issued
      by the Subsidiary or of any applicable law;

	 	 	 
	 	(j) 	
      no person has any agreement or option or any right or
      privilege (whether by law, pre-emptive or contractual) capable of becoming
      an agreement, including convertible securities, warrants or convertible
      obligations of any nature, for the purchase, subscription, allotment or
      issuance of any un- issued shares or other securities of any
      Subsidiary;

	 	 	 
	 	(k) 	
      the consolidated financial statements of the Corporation
      for the years ended March 31, 2006 and 2005, including the notes thereto,
      have been prepared in accordance with United States generally accepted
      accounting principles consistently applied throughout the periods
      indicated and present fairly in all material respects the assets,
      liabilities (whether accrued, absolute, contingent or otherwise) and
      financial condition of the Corporation on a consolidated basis as at the
      respective dates indicated and the sales, earnings and results of
      operations of the Corporation on a consolidated basis throughout the
      periods indicated;

	 	 	 
	 	(l) 	
      the execution, delivery and performance of this Agreement
      and the Subscription Agreements by the Corporation and the completion of
      the







- 10 - 

transactions provided for in this
Agreement will not (whether after the passage of time or notice or both) result
in, any material respect: 

	 	(i) 	
      the breach or violation of any of the provisions of, or
      constitute a default under, or a conflict with or cause the acceleration
      of, any obligation of the Corporation under:

	 	 	 	 
	 		(A) 	
      any indenture, agreement or other instrument to which the
      Corporation or any Subsidiary is a party or by which it or its properties
      are bound or affected;

	 	 	 	 
	 		(B) 	
      any provision of the articles, by-laws or resolutions of
      the board of directors (or any committee thereof) or shareholders of, the
      Corporation or any Subsidiary;

	 	 	 	 
	 		(C) 	
      any judgment, decree, order or award of any Governmental
      Authority having jurisdiction over the Corporation;

	 	 	 	 
	 		(D) 	
      any licence, permit, approval, consent or authorization
      issued to, held by or for the benefit of the Corporation or necessary to
      the operation of its business as now conducted; or

	 	 	 	 
	 		(E) 	
      any applicable law or statute, or any ordinance, rule,
      regulation, policy, order or ruling made thereunder; or

	 	 	 	 
	 	(ii) 	
      the creation or imposition of any mortgage, lien, charge,
      pledge, hypothec, security interest, encumbrance, claim or other demand
      whatsoever on any of the property or assets of the
  Corporation;




	 	(m) 	
      each of the contracts which is material to the
      Corporation is described in the Disclosure Documents and none of the
      Corporation, any of its Subsidiaries or, to the knowledge of the
      Corporation, any other party, is, in any material respect, in default or
      alleged to be in default in the performance of any term or obligation to
      be performed by it under any material contract to which the Corporation or
      any Subsidiary is a party or by which the Corporation or any Subsidiary is
      bound or affected, and no event, condition or occurrence exists that,
      after notice or lapse of time or both, would constitute such a default
      which in any way materially adversely affects or may materially adversely
      affect the business, operations, assets, liabilities, capital, prospects,
      condition (financial or otherwise) or results of operations of the
      Corporation and its Subsidiaries on a consolidated basis;

	 	 	 
	 	(n) 	
      no legal or governmental proceedings are pending to which
      the Corporation and/or any Subsidiary is a party or to which the property
      of the Corporation and/or any Subsidiary is subject that would result
      individually or in the aggregate in a material adverse change in
  the







- 11 - 

	 		
      operation, business or condition of the Corporation and
      its Subsidiaries on a consolidated basis, and no such proceedings have
      been threatened against or, to the knowledge of the Corporation, are
      contemplated with respect to the Corporation and/or any Subsidiary or with
      respect to any of their respective properties which would be material to
      the Corporation and its subsidiaries on a consolidated basis;

	 	 	 
	 	(o) 	
      except as provided herein, there is no person, firm or
      corporation which has been engaged by the Corporation to act for the
      Corporation and which is entitled to any brokerage or finder’s fee in
      connection with this Agreement or the transactions contemplated
      hereunder;

	 	 	 
	 	(p) 	
      the Corporation and each Subsidiary has paid or made
      adequate provision for the payment of all taxes (or payments in lieu of
      taxes) levied on its property or income which are due and payable,
      including interest and penalties, or has accrued such amounts in its
      financial statements for the payment of such taxes except for charges,
      fees or dues which are not material in amount or which are not delinquent
      or if delinquent are being contested, and there is no material action,
      suit, proceeding, investigation, audit or claim no pending, or to its
      knowledge, threatened by any governmental authority regarding any
      taxes;

	 	 	 
	 	(q) 	
      the Corporation is in material compliance with all
      applicable material laws, regulations and statutes (including all
      environmental laws and regulations) in the jurisdictions in which it
      carries on business and for the purposes described in the Disclosure
      Documents; the Corporation has not received a notice of material
      non-compliance, nor knows of, nor has reasonable grounds to know of, any
      facts that could give rise to a notice of non-compliance with any such
      laws, regulations and statutes, and is not aware of any pending change or
      contemplated change to any applicable law or regulation or governmental
      position that would materially adversely affect the business of the
      Corporation or the business or legal environment under which the
      Corporation operates;

	 	 	 
	 	(r) 	
      to its knowledge the Corporation has not caused or
      permitted the release, in any manner whatsoever, of any pollutants,
      contaminants, chemicals or industrial toxic or hazardous waste or
      substances (collectively, the “Hazardous Substances”) on or from
      any of its properties or assets nor has it received any notice that it is
      potentially responsible for a material, on a consolidated basis, clean-up
      site or corrective action under any applicable laws, statutes, ordinances,
      by-laws, regulations, or any orders, directions or decisions rendered by
      any government, ministry, department or administrative regulatory agency
      relating to the protection of the environment (the “Environmental
      Laws”), occupational health and safety or otherwise relating to
      dealing with Hazardous Substances;







- 12 - 

	 	(s) 	
      the Corporation holds all material licences,
      registrations, qualifications, permits and consents necessary or
      appropriate for carrying on its business as currently carried on and for
      the purposes described in the Disclosure Documents, and all such licences,
      registrations, qualifications, permits and consents are valid and
      subsisting and in good standing in all material respects except where the
      failure to hold or the lack of good standing in respect to such licences,
      registrations, qualifications, permits and consents would not materially
      adversely affect the assets, business, results of operations, or condition
      of the Corporation and its Subsidiaries on a consolidated basis;

	 	 	 
	 	(t) 	
      the Corporation has all the material leases, easements,
      rights of way, access rights, including but not limited to any mineral and
      geothermal rights in respect of lands related to the Raft River Project
      and the Neal Hot Springs Project, and rights and allocation to water, that
      are necessary to conduct its business as currently conducted and proposed
      to be conducted as described in the Disclosure Documents.

	 	 	 
	 	(u) 	
      all material licenses, permits, authorizations and other
      approvals required under applicable law in connection with the leases,
      easements, rights of way and access rights are in full force and effect
      and are sufficient to permit the Corporation to conduct its business as
      currently conducted and proposed to be conducted as described in the
      Disclosure Documents, except any such event or default which would not
      materially adversely affect the business of the Corporation;

	 	 	 
	 	(v) 	
      no event exists which, but for the passing of time or the
      giving of notice, or both, would constitute a default by any party to any
      of the leases, easements, rights of way or access rights and no party to
      any lease, easement, right of way or access right is claiming any such
      default or taking any action purportedly based upon any such default,
      except any such event or default which would not materially adversely
      affect the business of the Corporation;

	 	 	 
	 	(w) 	
      the Corporation has not received any, nor to the
      Corporation’s knowledge are there any pending or threatened, notices of
      violation or alleged violation of any applicable laws affecting the Raft
      River Project and the Neal Hot Springs Project;

	 	 	 
	 	(x) 	
      the Corporation has such rights of entry and exit to and
      from the Raft River Project and the Neal Hot Springs Project as are
      reasonably necessary to carry on its business and operate at the Raft
      River Project and the Neal Hot Springs Project;

	 	 	 
	 	(y) 	
      there are no material restrictions imposed by any
      applicable law or by agreement which conflict with the proposed
      acquisition, development,







- 13 - 

	 		
      construction, maintenance and operation of the Raft River
      Project or the Neal Hot Springs Project;

	 	 	 	 
	 	(z) 	
      to the Corporation’s knowledge, the Raft River Project is
      now zoned and otherwise regulated and serviced so as to permit the use of
      the sites for their intended uses and in accordance with applicable
      law;

	 	 	 	 
	 	(aa) 	
      neither the Corporation nor any Subsidiary has received
      written notice of any claims for construction liens or other liens,
      charges, encumbrances, security interests or adverse claims with respect
      to work or services performed or materials supplied to, on or in
      connection with the Raft River Project and the Neal Hot Springs Project
      other than liens or encumbrances imposed in the ordinary course of
      business;

	 	 	 	 
	 	(bb) 	
      there are no outstanding judgments, writs of execution,
      seizures, injunctions or directives against the Corporation nor any work
      orders or directives or notices of deficiency capable of resulting in work
      orders or directives with respect to the Raft River Project and the Neal
      Hot Springs Project;

	 	 	 	 
	 	(cc) 	
      to the Corporation's knowledge, the services to be
      performed, the materials to be supplied and the real property interests,
      leases, easements, rights of way, access rights and other rights relating
      to the Raft River Project:

	 	 	 	 
	 		(i) 	
      comprise all of the property interests necessary to
      secure any right material to the acquisition, leasing, development,
      construction, installation, completion, operation and maintenance of the
      Raft River Project;

	 	 	 	 
	 		(ii) 	
      are sufficient to enable the Raft River Project to be
      located, constructed and operated on the Raft River Project; and

	 	 	 	 
	 		(iii) 	
      the easements provide adequate ingress and egress from
      the Raft River Project for any reasonable purpose in connection with the
      construction and operation of the Raft River Project;

	 	 	 	 
	 	(dd) 	
      to the Corporation’s knowledge, the services to be
      performed, the materials to be supplied and the real property interests,
      leases, easements, rights of way, access rights and other rights relating
      to the Neal Hot Springs Project comprise all of the property interests
      necessary to secure any right material to the exploration of the Neal Hot
      Springs Project;

	 	 	 	 
	 	(ee) 	
      all roads necessary for the construction and full
      utilization of the Raft River Project for their intended purposes have
      either been completed or the necessary rights of way therefore have been
      acquired;







- 14 - 

	 	(ff) 	
      all necessary easements, rights of way, licenses,
      agreements and other rights for the construction, interconnection and
      utilization of the interconnection facilities have been acquired for the
      Raft River Project;

	 	 	 
	 	(gg) 	
      except as disclosed in the Disclosure Documents, the
      Corporation or Raft River Energy I LLC is the absolute legal and
      beneficial owner, and has good and marketable title to, all of the
      material property or assets of the Corporation or Raft River Energy I LLC
      described in the Disclosure Documents, and no other property or assets are
      necessary for the conduct of the business of the Corporation as currently
      conducted, and none of the Corporation or any of the Subsidiaries or Raft
      River Energy I LLC has any responsibility or obligation to pay any
      material commission, royalty, licence fee or similar payment to any person
      with respect to its property and assets;

	 	 	 
	 	(hh) 	
      the Corporation is a reporting issuer under the
      securities laws of Alberta and British Columbia and a registrant under the
      1934 Act, is not in default in any material respect of any requirement of
      such Securities Laws and the Corporation is not included on a list of
      defaulting reporting issuers maintained by the Securities Regulators of
      the Provinces of Alberta and British Columbia;

	 	 	 
	 	(ii) 	
      the Shares will not be subject to a restricted period or
      to a statutory hold period under the Securities Laws or to any resale
      restriction under the policies of the TSX Venture Exchange other than as
      described in the Subscription Agreement;

	 	 	 
	 	(jj) 	
      since March 31, 2006, the Corporation has been in
      compliance in all material respects with its continuous disclosure
      obligations under the Securities Laws and the policies, rules and
      regulations of the TSX Venture Exchange;

	 	 	 
	 	(kk) 	
      all the statements set forth in the Disclosure Documents
      were true, correct, and complete in all material respects and did not
      contain any misrepresentation as of the date of such statements and the
      Corporation has not filed any confidential material change reports under
      the laws of Canada since the date of such statements which remain
      confidential as at the date hereof;

	 	 	 
	 	(ll) 	
      other than as disclosed in the Disclosure Documents, no
      material fact or material change has arisen or has been discovered which
      would have been required to have been stated in the Disclosure Documents
      had the fact arisen or been discovered on, or prior to, the date of such
      Disclosure Documents;

	 	 	 
	 	(mm) 	
      the Corporation’s Auditors are independent public
      accountants as required under applicable Securities Laws, are qualified to
      act as auditors of the







- 15 - 

	 		
      Corporation under the applicable Securities Laws, and
      there has never been a reportable disagreement (within the meaning of
      National Instrument 51-102) between the Corporation and the Corporation’s
      Auditors;

	 	 	 
	 	(nn) 	
      the Corporation has all licenses, leases, permits,
      authorizations and other approvals, all proprietary rights to all patents
      and patent applications, all copyrights, registered and unregistered, and
      all rights, claims and privileges pertaining thereto, software and
      documentation therefor, object code, source code (including all
      programmers’ notes), procedures, methods, works of authorship, and other
      documentation, data and information, inventions (whether or not
      patentable), formulas, processes, invention disclosures, technology,
      technical data or information, and all rights, claims and privileges
      pertaining thereto, all industrial designs, trade secrets, know-how,
      concepts, information and all other intellectual and industrial property
      and other proprietary rights information and other intellectual and
      industrial property (collectively, “Intellectual Property”)
      necessary to permit the Corporation, in all material respects, to conduct
      its business as currently conducted; the Corporation has not received any
      notice nor is it aware of any material infringement of or conflict with
      asserted rights of others with respect to any Intellectual Property or of
      any facts or circumstances that would render any Intellectual Property
      invalid or inadequate to protect the interests of the Corporation
      therein;

	 	 	 
	 	(oo) 	
      during the period in which the Shares are offered for
      sale, neither the Corporation nor any of its affiliates, nor any person
      acting on its or their behalf (other than the Underwriters, their
      affiliates and any person acting on their behalf, as to which no
      representation is made) has taken or will take any action that would cause
      the exemption afforded by Section 4(2) of the U.S. Securities Act to be
      unavailable for offers and sales of the Shares, pursuant to this
      Agreement;

	 	 	 
	 	(pp) 	
      none of the Corporation, any of its affiliates or any
      person acting on its or their behalf have engaged or will engage in any
      form of General Solicitation or General Advertising with respect to offers
      or sales of the Shares;

	 	 	 
	 	(qq) 	
      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 the United States in a manner that would be
      “integrated” with the Offering and that would cause the exemption afforded
      by Section 4(2) of the 1933 Act and Rule 506 of Regulation D to be
      unavailable for offers and sales of the Shares;

	 	 	 
	 	(rr) 	
      during the period in which the Shares are offered for
      sale, neither the Corporation nor any of its affiliates, nor any person
      acting on its or their behalf (other than the Underwriters, their
      affiliates and any person acting







- 16 - 

	 		
      on their behalf, as to which no representation is made)
      has taken or will take, directly or indirectly, any action that would
      constitute a violation of Regulation M of the SEC under the 1934
    Act;

	 	 	 
	 	(ss) 	
      the Corporation shall cause a Form D to be filed with the
      SEC within 15 days of the first sale of Shares and shall, unless directed
      to the contrary by the Underwriter with regard to any jurisdiction in
      which a U.S. Affiliate is relying on a state institutional exemption that
      does not require the making of any filing, make such other filings as
      shall be required by applicable state securities laws to secure exemption
      from registration under such securities laws for the sale of the Shares in
      such states;

	 	 	 
	 	(tt) 	
      neither the Corporation nor any of the predecessors or
      affiliates thereof has been subject to any order, judgment or decree of
      any court of competent jurisdiction temporarily, preliminarily or
      permanently enjoining such person for failure to comply with Rule 503 of
      Regulation D concerning the filing of notice of sales on Form D;
  and

	 	 	 
	 	(uu) 	
      the Corporation is not now and, as a result of the
      transactions contemplated by this Agreement and the Subscription
      Agreements, will not be an “investment company” (as defined in the United
      States Investment Company Act of 1940) that is or will be required to be
      registered under Section 8 of that Act;



6.      Covenants
of the Corporation 

          The
Corporation agrees with the Underwriters that: 

	 	(a) 	
      it will advise the Underwriters, promptly after receiving
      notice or obtaining knowledge thereof, of the imposition of any cease
      trading or similar order affecting the Shares or order modifying or making
      unavailable any exemption pursuant to which the Shares are being offered
      or sold, or the institution, threatening or contemplation of any
      proceeding for any such purpose or any request made by any Securities
      Regulator relating to the Offering;

	 	 	 
	 	(b) 	
      it shall not issue nor announce the issuance of any
      Common Shares or financial instruments convertible or excercisable into
      Common Shares for a period commencing on the effective date of this
      Agreement and expiring 120 days following the Closing Date without the
      prior written consent of Cormark, which consent will not be unreasonably
      withheld or delayed, other than in respect of the issuance of securities
      pursuant to: (i) securities issued in connection with private placements
      to existing shareholders or in nonbrokered private placements arranged by
      the Corporation with any existing or potential strategic partners; (ii)
      any bona fide acquisition by the Corporation or one of its affiliates;
      (iii) the issuance of securities to directors, officers, employees and
      consultants under existing







- 17 - 

	 		
      compensation arrangements, including applicable stock
      option agreements or plans; (iv) securities issued to holders of rights to
      acquire any securities of the Corporation, including any existing
      convertible or exchangeable securities of the Corporation, that are
      outstanding on the date hereof; and (v) any securities issued in relation
      to any project finance;

	 	 	 
	 	(c) 	
      it will permit the Underwriters and their counsel to
      conduct any due diligence investigations which are considered by the
      Underwriters and their counsel to be appropriate in the circumstances;
      and

	 	 	 
	 	(d) 	
      if the Registration Statement is not declared effective
      by the SEC on or the representations, warranties, covenants and agreements
      of the Corporation included in the Subscription Agreements are made for
      the benefit of, and intended to be relied upon by, the Underwriters, as
      well as for the benefit of the Purchasers, and are incorporated by
      reference herein.



7.      Underwriters’
Fee 

          In
consideration for the Underwriters’ services in connection with the issue and
sale of the Shares under the terms of this Agreement, the Corporation agrees to
pay to Cormark, on behalf of the Underwriters, at Closing Time a cash fee equal
to 5.0% of the gross proceeds of the offering of Shares. 

          The
Corporation will also grant to the Underwriters broker warrants (the “Broker
Warrants”) to purchase that number of Common Shares of the Corporation equal
to 5% of the number of Shares sold under the terms of this Agreement. The Broker
Warrants will be exercisable, in whole or in part, during the currency thereof,
at any time during the period commencing on the Closing Date and ending on the
date that is 18 months from the Closing Date at an exercise price of the U.S.
dollar equivalent of the Offering Price (calculated as of the Closing Date),
subject to the terms and conditions of the Broker Warrants. At the Closing Time,
the Corporation shall deliver to the Underwriters certificates evidencing the
terms of the Broker Warrants to which the Underwriters are entitled
substantially in form and substance as will be agreed upon by the Corporation
and the Underwriters acting reasonably hereto issued in such denominations and
in such names as Cormark may direct. The Common Shares of the Corporation which
may be acquired upon exercise of the Broker Warrants are referred to herein as
“Broker Shares”. 

          Upon
the request of any of the Underwriters, such Underwriter’s resale of Broker
Shares shall be registered on the Registration Statement on the same basis as
Substituted Purchasers. 

8.      Closing
Procedures 

          The
purchase and sale of the Shares shall be completed at the Closing Time at the
offices of the Corporation’s Counsel in Toronto or at such other place as the
Underwriters and the Corporation may agree. At the Closing Time the Corporation
shall deliver to Cormark on behalf of the Underwriters certificates representing
the Shares, registered in 




- 18 - 

the name of “Cormark Securities Inc.” or, if directed in
writing at least two business days prior to the Closing Date (in sufficient time
prior to the closing to enable the Corporation to prepare the required
certificates for closing), in the name of Substituted Purchasers in accordance
with a written direction from Cormark (or as otherwise directed in writing by
Cormark not less than one business day before the Closing Time), against payment
by the Underwriters to the Corporation of the aggregate purchase price for the
Shares, net of the Underwriters’ fee and expenses of the Offering, by wire
transfer or a certified cheque. 

9.      Expenses


          Except
as otherwise provided herein, the Corporation agrees to pay all costs, fees, and
expenses incidental to the performance of the obligations set out in this
Agreement, whether incurred by the Corporation or the Underwriters and whether
or not the transactions contemplated herein are consummated, including, without
limitation, all costs and expenses incidental to: 

	 	(a) 	
      the fees and disbursements of the Corporation’s Counsel,
      the Corporation’s Auditors and any other experts, advisors or consultants
      retained by the Corporation;

	 	 	 
	 	(b) 	
      the fees and disbursements of counsel to the Underwriters
      and other out- of-pocket expenses, subject to a maximum of $75,000, (which
      fees and disbursements incurred to the Closing Date shall be paid by way
      of set off against the aggregate purchase price of the Shares payable at
      Closing);

	 	 	 
	 	(c) 	
      the preparation, issuance and delivery to the
      Underwriters or the Substituted Purchasers as the case may be of any
      certificates evidencing the Shares, including all fees in connection with
      the services of the registrar and transfer agent; and

	 	 	 
	 	(d) 	
      all fees payable under Securities Laws and payable to the
      TSX Venture Exchange in connection with sales to the Purchasers or in
      connection with filing the required documents with the
  NASD.



10.    
Conditions of the Underwriters’ Obligations 

          The
obligations of the Underwriters and Substituted Purchasers to purchase and pay
for any of the Shares shall be subject to the performance by the Corporation of
its covenants and agreements hereunder and to the satisfaction of the following
additional conditions at the Closing Time: 

	 	(a) 	
      the Underwriters shall have received favourable legal
      opinions dated the Closing Date from the Corporation’s Canadian and U.S.
      Counsel as applicable, addressed to the Underwriters and the Substituted
      Purchasers substantially in the form annexed hereto as Schedule “A”. In
      giving its opinion, each of the Corporation’s Counsel may rely (i)
      exclusively upon opinions of local counsel as to the matters mentioned
      therein relating to jurisdictions where Corporation’s Counsel does not
      practice law and (ii) as







- 19 - 

	 		
      to matters of fact, upon certificates of officers of the
      Corporation, and of public officials;

	 	 	 	 
	 	(b) 	
      the Underwriters shall have received certified copies of
      the articles and by-laws of the Corporation, and all resolutions and
      by-laws of or in respect of the Corporation passed in connection with the
      transactions, actions, events and conditions contemplated by this
      Agreement and the Subscription Agreements including, without limitation,
      resolutions authorizing this Agreement and the Subscription Agreements
      and, the issuance and sale of the Shares, Additional Shares, Broker
      Warrants and Broker Shares and the transactions, actions, events and
      conditions contemplated hereby or such other authorizing documents
      acceptable to the Underwriters;

	 	 	 	 
	 	(c) 	
      the Underwriters shall have received a certificate, or
      certificates, dated the Closing Date and executed by the President and
      Chief Executive Officer and the Chief Financial Officer of the Corporation
      (or such other officers of the Corporation as may be acceptable to the
      Underwriters), on behalf of the Corporation, without personal liability,
      to the effect that:

	 	 	 	 
	 		(i) 	
      no order, ruling or determination suspending or cease
      trading the Shares has been issued, and no proceedings for that purpose
      have been instituted or, to the knowledge of such officers, contemplated
      or threatened by any Securities Regulator;

	 	 	 	 
	 		(ii) 	
      other than as disclosed in the Disclosure Documents,
      since March 31, 2006 there has not been any material change (actual,
      anticipated, contemplated or threatened, whether financial or otherwise)
      in the condition, business, affairs, results, operations, assets or
      liabilities of the Corporation and its Subsidiaries on a consolidated
      basis;

	 	 	 	 
	 		(iii) 	
      other than as disclosed in the Disclosure Documents,
      since March 31, 2006 no material fact has arisen or has been discovered
      which would have been required to have been stated in the Disclosure
      Documents had the fact arisen or been discovered on, or prior to the date
      of such Disclosure Documents;

	 	 	 	 
	 		(iv) 	
      the representations and warranties of the Corporation
      contained in this Agreement are true and correct in all material respects
      as of the Closing Time with the same force and effect as if made at and as
      of the Closing Time;

	 	 	 	 
	 		(v) 	
      the Corporation has complied in all material respects
      with all the terms and conditions of this Agreement on its part to be
      complied with at or before the Closing Time;







- 20 - 

	 	(vi) 	
      as to such other matters of a factual nature as are
      appropriate and usual in the circumstances and as the Underwriters or the
      Underwriters’ Counsel may reasonably request;




	 	(d) 	
      the Corporation shall have delivered the certificates
      representing the Shares in accordance with Section 8;

	 	 	 
	 	(e) 	
      the Corporation shall have delivered certificates
      representing the Broker Warrants;

	 	 	 
	 	(f) 	
      the Underwriters shall have received their fee and
      reimbursement for expenses incurred to the Closing Date in the manner
      specified in Sections 7 and 9; and

	 	 	 
	 	(g) 	
      a copy of a letter from the TSX Venture Exchange
      confirming that the Shares have been conditionally accepted for listing on
      the TSX Venture Exchange.



11.    
Indemnification and Contribution 

	 	(a) 	
      The Corporation covenants and agrees to indemnify and
      save harmless the Underwriters and their U.S. Affiliates and their
      respective directors, officers, employees, shareholders and agents
      (collectively, “Underwriters’ Personnel”), against all losses
      (other than loss of profits), claims, damages, liabilities, costs or
      expenses, whether joint or several, caused or incurred by reason of or in
      connection with:




	 	(i) 	
      any statement (other than a statement contained in and
      included in reliance upon and in conformity with written information
      furnished to the Corporation by the Underwriters relating to the
      Underwriters specifically for use therein) in any document filed by the
      Corporation with the relevant securities regulatory authorities in Canada
      since December 31, 2006 including all press releases filed on SEDAR, which
      at the time and in the light of the circumstances under which it was made
      contains or is alleged to contain a misrepresentation;

	 	 	 
	 	(ii) 	
      the omission or alleged omission to state in any
      certificate of the Corporation or of any officers of the Corporation
      delivered hereunder or pursuant hereto any material fact (other than a
      material fact omitted in reliance upon and in conformity with written
      information furnished to the Corporation by the Underwriters relating to
      the Underwriters specifically for use therein) required to be stated
      therein where such omission or alleged omission constitutes or is alleged
      to constitute a misrepresentation;







- 21 - 

	 	(iii) 	
      any order made or any inquiry, investigation or
      proceeding commenced or threatened by any securities regulatory authority,
      stock exchange or by any other competent authority based upon any failure
      or alleged failure to comply with applicable securities laws (other than
      any failure or alleged failure to comply by the Underwriters) preventing
      and restricting the trading in or the sale of the Common Shares in the
      provinces of Canada;

	 	 	 
	 	(iv) 	
      the non-compliance or alleged non-compliance by the
      Corporation with any requirement of Securities Laws, including the
      Corporation’s non-compliance with any statutory requirement to make any
      document available for inspection; or

	 	 	 
	 	(v) 	
      any breach of any representation, warranty or covenant of
      the Corporation contained herein or the failure of the Corporation to
      comply with any of its obligations hereunder;




	 		
      and will reimburse the Underwriters promptly upon demand
      for any legal or other expenses reasonably incurred by it in connection
      with investigating or defending any such losses, claims, damages,
      liabilities or actions in respect thereof, as incurred.

	 	 	 
	 		
      Notwithstanding the foregoing, the Corporation will not
      be liable to indemnify or reimburse an indemnified party in respect of any
      losses, claims, damages, liabilities, costs or expenses that have been
      determined, by a court of competent jurisdiction in a decision that has
      become final and is not appealable, to have been caused by the willful
      misconduct, fraud or gross negligence of an Indemnified Party (as defined
      below).

	 	 	 
	 	(b) 	
      The Corporation shall not, without the prior written
      consent of the Underwriters, which consent shall not be unreasonably
      withheld, settle or compromise or consent to the entry of any judgment in
      any pending or threatened claim, action, suit or proceeding in respect of
      which indemnification may be sought hereunder (whether or not the
      Underwriters or any Underwriters’ Personnel are a party to such claim,
      action, suit or proceeding), unless such settlement, compromise or consent
      includes an unconditional release of the Underwriters and all
      Underwriters’ Personnel from all liability arising out of such claim,
      action, suit or proceeding.

	 	 	 
	 	(c) 	
      Notwithstanding the foregoing, an indemnifying party
      shall not be liable for the settlement of any claim or action in respect
      of which indemnity may be sought hereunder effected without its written
      consent, which consent shall not be unreasonably withheld.

	 	 	 
	 	(d) 	
      If any claim, action suit or proceeding shall be asserted
      against any person in respect of which indemnification is or might
      reasonably be considered







- 22 - 

	 		
      to be provided, such person (the “Indemnified
      Party”) will notify the Corporation as soon as possible and in any
      event on a timely basis, of the nature of such claim and the Corporation
      shall be entitled (but not required) to assume the defence of any suit
      brought to enforce such claim; provided, however, that the defence shall
      be through legal counsel selected by the Corporation and acceptable to the
      Indemnified Party, acting reasonably, and that no settlement may be made
      by the Corporation or the Indemnified Party without the prior written
      consent of the other, acting reasonably.

	 	 	 
	 	(e) 	
      In any such claim, the Indemnified Party shall have the
      right to retain other counsel (only one in each jurisdiction) to act on
      the Indemnified Party’s behalf, provided that the fees and disbursements
      of such other counsel shall be paid by the Indemnified Party, unless (i)
      the Corporation and the Indemnified Party mutually agree to retain such
      other counsel or (ii) the named parties to any such claim (including any
      third or implicated party) include both the Indemnified Party on the one
      hand and the Corporation, on the other hand, and the Indemnified Party has
      been advised by counsel that the representation of the Corporation and the
      Indemnified Party by the same counsel would be inappropriate due to actual
      or potential conflicting interests, in which event such fees and
      disbursements shall be paid by the Corporation to the extent that they
      have been reasonably incurred.

	 	 	 
	 	(f) 	
      To the extent that any Indemnified Party is not a party
      to this agreement, the Underwriters shall obtain and hold the right and
      benefit of the indemnity provisions hereunder in trust for and on behalf
      of such Indemnified Party.

	 	 	 
	 	(g) 	
      The Corporation hereby waives all rights which it may
      have by statute or common law to recover contribution from Underwriters or
      any other Indemnified Party in respect of losses, claims, costs, damages,
      expenses or liabilities which it may suffer or incur directly or
      indirectly (in this paragraph, “losses”) by reason of or in consequence of
      a document of the Corporation containing a misrepresentation; provided,
      however, that such waiver shall not apply in respect of losses by reason
      of or in consequence of any misrepresentation which is based upon or
      results from information or statements furnished by or relating solely to
      the Underwriters or another member of the underwriting
  syndicate.



12.     Survival


          The
respective representations, warranties, agreements, covenants, indemnities and
contribution obligations of the Corporation and the Underwriters set forth in
this Agreement shall survive the Closing Date and remain in full force and
effect for a period of three years regardless of: (i) any investigation made by
or on behalf of the Corporation, the Underwriters or any of their respective
officers or directors; (ii) delivery 




- 23 - 

of and payment for the Shares; and (iii) any subsequent
disposition by the Substituted Purchasers of the Shares. 

13.    
Obligations of Underwriters 

          Subject
to the terms hereof, the obligations of the Underwriters to purchase the Shares
at the Closing Time or to arrange for the purchase of its Shares by Substituted
Purchasers shall be several and not joint and several and their respective
obligations and rights in this regard shall be in the following percentages:



	Cormark Securities Inc. 	35% 
	Dundee Securities Corporation 	35% 
	Toll Cross Securities Inc. 	30% 



          If
one of the Underwriters should default in its obligations to purchase its
respective percentage of Shares or to arrange for the purchase by Substituted
Purchasers of its respective percentage of Shares, the other Underwriters shall
have the right, but not the obligation, at their option, to purchase all but not
less than all of the Shares which the defaulting Underwriter failed or refused
to purchase. If the non-defaulting Underwriter(s) elects not to exercise such
right, they shall be entitled, by notice to the Corporation, to terminate this
Agreement without liability on the part of the non-defaulting Underwriter or the
Corporation (on submission of reasonable evidence of its own ability to purchase
its own percentage of the Shares unless the termination is in accordance with
any other termination provision in this Agreement). In the event of any default
by an Underwriter as described in this Section 13, the non-defaulting
Underwriter(s) shall have the right to postpone the Closing Date for not more
than three business days in order that any changes in the arrangements or
documents for the purchase and delivery of the Shares may be made. Nothing in
this Section 13 shall require the Corporation to sell less than all of the
Shares or relieve a defaulting Underwriter from liability in respect of its
default hereunder to the Corporation and to any non-defaulting Underwriter. 

14.    
Termination 

          In
addition to any other remedies which may be available to the Underwriters, any
Underwriter shall be entitled, without liability, at such Underwriter’s sole
discretion, to terminate and cancel such Underwriter’s obligations under this
Agreement by notice to the Corporation given prior to the Closing Time if, at or
prior to the Closing Time: 

	 	(a) 	
      there shall have occurred any adverse material change or
      the Underwriters shall discover any previously undisclosed adverse
      material fact (determined by the Underwriters, acting reasonably) in
      relation to the Corporation that has or could reasonably be expected to
      have a significant adverse effect on the market price or value of the
      Common Shares; or

	 	 	 
	 	(b) 	
      there shall have occurred any change in the applicable
      securities laws of any province of Canada or any inquiry, investigation or
      other proceeding is made or any order is issued under or pursuant to any
      statute of Canada or any province thereof or any statute of the United
      States or any state







- 24 - 

	 		
      thereof or any stock exchange in relation to the
      Corporation or any of its securities (except for any inquiry,
      investigation or other proceeding based upon activities of the
      Underwriters and not upon activities of the Corporation) which, in the
      opinion of the Underwriters, acting reasonably, prevents or restricts
      trading in or the distribution of the Common Shares or adversely affects
      or might reasonably be expected to adversely affect the market price or
      value of the Common Shares; or

	 	 	 
	 	(c) 	
      if there should develop, occur or come into effect or
      existence any event, action, state, condition or major financial
      occurrence or catastrophe, war or act of terrorism of national or
      international consequence or any law or regulation which, in the
      reasonable opinion of the Underwriters, seriously adversely affects or
      involves, or will seriously adversely affect or involve, the financial
      markets or the business, operations or affairs of the Corporation and its
      subsidiaries, on a consolidated basis; or

	 	 	 
	 	(d) 	
      a cease trading order is made by any securities
      commission or other competent authority by reason of the fault of the
      Corporation or its directors, officers or agents and such cease trading
      order is not rescinded prior to Closing; or

	 	 	 
	 	(e) 	
      if the Corporation fails to obtain the approval of the
      TSX Venture Exchange for the additional listing of the Common Shares to be
      sold at the Closing;



The Underwriters shall be entitled, to terminate and cancel its
obligations to the Corporation under this Agreement by written notice to that
effect given to the Corporation prior to the Closing. 

The rights of termination contained in this Section 14 may be
exercised by any or all of the Underwriters and are in addition to the right of
any of the Underwriters to terminate as a result of any of the conditions set
out in Section 10 not having been satisfied in or prior to the Closing time and
to any other rights or remedies the Underwriters or any of them may have in
respect of any default, act or failure to act or non-compliance by the
Corporation in respect of any of the matters contemplated by this Agreement or
otherwise. A notice of termination given by an Underwriter under this Section 14
shall not be binding upon the other Underwriter. If one but not all of the
Underwriters shall exercise the right of termination herein, the others shall
have the right, but shall not be obligated, to purchase all of the Shares which
would otherwise have been purchased by the Underwriter which has so terminated.
Nothing in this Section 14 shall oblige the Corporation to sell to the
Underwriters, or either of them, less than all of the aggregate principal amount
of the Shares. 

15.     Notices


          All
communications hereunder shall be in writing and shall be telecopied or
delivered, and shall: 




- 25 - 

	 	(a) 	
      in the case of notice the Corporation, be addressed and
      sent to:

	 	 	 
	 		
      U.S. Geothermal Inc. 
1509 Tyrell Lane 
Suite
    B

	 		
      Boise, Idaho 83706

	 	 	 
	 		
      Attention:      Daniel Kunz
      
Facsimile:       208-424-1030

	 	 	 
	 		
      and

	 	 	 
	 		
      with a copy thereof to (which shall not constitute notice
      to the Corporation for purposes of this Agreement):

	 	 	 
	 		
      Goodmans

	 		
      355 Burrard Street, Suite 1900 
Vancouver, BC V6C
      2G8

	 	 	 
	 		
      Attention:      Bruce
      Wright 
Facsimile:      
    604-682-7131

	 	 	 
	 		
      and

	 	 	 
	 		
      Dorsey & Whitney LLP

	 		
      1420 Fifth Avenue, Suite 3400 
Seattle, WA
  98006

	 	 	 
	 		
      Attention:      Chris Barry
      
Facsimile:      
      206-903-8820

	 	 	 
	 	(b) 	
      and in the case of notice to the Underwriters, be
      addressed and sent to:

	 	 	 
	 		
      Cormark Securities Inc. 
Royal Bank Plaza 
South
      Tower, Suite 2800 
200 Bay St.

	 		
      Toronto, Ontario M5J 2J2

	 	 	 
	 		
      Attention:      Susan
      Samila-Moroz 
Facsimile:      
      416-943-6496

	 	 	 
	 		
      and

	 	 	 
	 		
      Dundee Securities Corporation 
1 Adelaide Street East,
      Suite 2700 
Toronto, Ontario 
M5C 2V9







- 26 - 

Attention:      David G. Anderson

Facsimilie:      416-350-3312 

and 

Toll Cross Securities Inc. 
TD
Centre, Royal Trust Tower 
77 King Street West, Suite 3120 
Toronto, ON
M5K 1H1 

Attention:      Arlene Ferguson

Facsimile:       416-365-6182 

with a copy thereof to: 

Borden Ladner Gervais LLP 
Scotia
Plaza 
Suite 4100 
40 King Street West 
Toronto, Ontario M5H 3Y4 

Attention:      Philippe Tardif

Facsimile:       416-361-2669 

          The
parties may change their respective addresses and telecopy numbers for notice,
by notice given in the manner aforesaid. Any such notification shall be deemed
to be effective when telecopied or, delivered, if telecopied, or delivered to
the recipient on a business day and before 3:00 p.m. (local time) on such
business day, and otherwise shall be deemed to be given at 9:00 a.m. (local
time) on the next following business day. 

16.     Successors


          This
Agreement shall enure to the benefit of, and shall be binding upon, the
Underwriters and the Corporation and their respective successors and legal
representatives and nothing expressed or mentioned in this Agreement is intended
or shall be construed to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person. 




- 27 - 

17.     Severability


          If
any provision of this Agreement is determined to be void or unenforceable, in
whole or in part, it shall be deemed not to affect or impair the validity of any
other provision of this Agreement and such void or unenforceable provision shall
be severable from this Agreement. 

18.     Advertisements


          The
Corporation acknowledges that the Underwriters shall have the right, at their
own expense, to place such advertisement or advertisements relating to the
completion of the sale of the Shares contemplated herein as the Underwriters may
consider desirable or appropriate and as may be permitted by applicable law
(subject to the Corporation retaining the right, acting reasonably, to approve
the use of the Corporation’s name and logo) and the Underwriters shall be solely
responsible for such advertisement or advertisements. The Corporation and
Underwriters each agree that they will not make or publish any advertisement in
any media whatsoever relating to or otherwise publicize the transaction provided
for herein so as to result in any exemption from the prospectus and registration
requirements of any Securities Laws being unavailable in respect of the sale of
the Shares to Substituted Purchasers. Furthermore, the Corporation shall not
issue any press releases relating to or referring to this transaction without
the prior written consent of the Underwriters, acting reasonably and in a timely
manner, except as may be required by law or the requirements of any Securities
Regulator. 

19.     Applicable
Law 

          The
validity and interpretation of this Agreement, and the terms and conditions set
forth herein, shall be governed by and construed in accordance with the laws of
the Province of Ontario and the federal laws of Canada applicable therein. Any
suit, action or proceeding against any party hereto or any of its assets arising
out of or relating to this Agreement may be brought in a competent court of the
Province of Ontario and each party hereto hereby irrevocably and unconditionally
attorns and submits to the non-exclusive jurisdiction of such court over the
subject matter of any such suit, action or proceeding. 

20.     Entire
Agreement 

          This
Agreement and the Subscription Agreements constitutes the entire agreement
between the Parties pertaining to the subject matter of this Agreement and the
Subscription Agreements and supersedes all prior correspondence, agreements,
negotiations, discussions and understandings, written or oral, including without
limitation the offer letter between Cormark and the Corporation dated May 11,
2007. 

21.    Non-Merger


          All
provisions of this Agreement and of any certificate delivered pursuant to this
Agreement or in connection with the purchase and sale of the Shares shall
survive the execution, delivery and performance of this Agreement and Closing
and shall continue in 




- 28 - 

full force and effect unaffected by any subsequent disposition
of the Shares by the Underwriters or its Substituted Purchasers or the
termination of the Underwriters' obligations and shall not be limited or
prejudiced by any investigation made by or on behalf of the Underwriters in the
course of the distribution of the Shares. 

22.     Counterparts


          This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. 

23.     Time
of Essence 

          Time
shall be of the essence of this Agreement. 

24.     Currency


          All
references in this Agreement to dollar amounts or “$” are to lawful money of
Canada. 

25.     Authority
of Cormark Securities Inc. 

          Cormark
is hereby authorized by Dundee Securities Corporation and Toll Cross Securities
Inc. to act on their behalf and the Corporation shall be entitled to and shall
act on any notice given in accordance with this Agreement or any agreement
entered into by or on behalf of the Underwriters by Cormark which represents and
warrants that it has irrevocable authority to bind the Underwriters, except in
respect of any consent to a settlement pursuant to Section 11 which consent
shall be given by the Indemnified Party or a notice of termination pursuant to
Section 14 which notice may be given by any of the Underwriters. 

          If
the foregoing is in accordance with your understanding and agreed to by you,
please signify your acceptance by signing in the space provided therefor below
and return this letter to us whereupon this letter as so accepted shall
constitute a binding agreement among us in accordance with the foregoing. 

Yours very truly, 




CORMARK SECURITIES INC. 

By: ________________________________________________




DUNDEE SECURITIES CORPORATION 

By: ________________________________________________

TOLL CROSS SECURITIES INC. 

By: ________________________________________________

Accepted and agreed as of the 14th day of May, 2007


U.S. GEOTHERMAL INC. 

By:
________________________________________________
      
Daniel Kunz 

         Chief Executive Officer, President and
  Director

By:
________________________________________________
      
Kerry D. Hawkley 
       Chief
Financial Officer 




SCHEDULE “A” 

OPINION OF CORPORATION'S COUNSEL TO THE UNDERWRITERS AND THE
SUBSTITUTED PURCHASERS 

U.S. Counsel Opinion 

	1. 	
      the due incorporation of the Corporation and its Material
      Subsidiaries and that each of the Corporation and its Material
      Subsidiaries has not been dissolved;

	 	 
	2. 	
      the qualification of the Corporation and each of its
      Material Subsidiaries to carry on its business under the laws of each
      jurisdiction in which it carries on its business;

	 	 
	3. 	
      the corporate power of each of the Corporation and
      Material Subsidiaries to own its property and carry on its
  business;

	 	 
	4. 	
      the authorized and issued capital of the
    Corporation;

	 	 
	5. 	
      the due authorization and issuance of the Shares as fully
      paid and non-assessable shares;

	 	 
	6. 	
      based solely on a review of the shareholders’ register of
      the Material Subsidiaries, the Corporation is the sole registered holder
      of all of its outstanding shares in its capital of each Material
      Subsidiary;



Canadian Counsel Opinion

	7. 	
      the approval of the listing of the Shares, the Additional
      Shares and the Broker Shares on the TSX Venture Exchange subject to filing
      of required documentation and payment of fees within applicable time
      periods;

	 	 
	8. 	
      the authorization, execution, delivery, binding effect
      and enforceability of this Agreement and the Subscription Agreements by,
      on and against the Corporation, subject to bankruptcy laws, the
      availability of equitable remedies and except with respect to rights to
      indemnity, contribution and waiver of contribution which may be subject to
      applicable laws;

	 	 
	9. 	
      the appointment of the Pacific Corporate Trust at its
      office in the City of Vancouver as transfer agent and registrar for the
      Common Shares;

	 	 
	10. 	
      this Agreement and the issuance and sale of the Shares
      not conflicting with or resulting in a breach of or a default under, in
      any material respect, (i) any of the terms, conditions or provisions of
      the constating documents of the Corporation, (ii) any of the resolutions
      of the directors or shareholders of the Corporation, (iii) the provisions
      of any U.S. federal or New York law, statute, rule or regulation to which
      the Corporation is subject;

	 	 
	11. 	
      the Corporation is a reporting issuer not in default
      under the Securities Laws of the Provinces of Alberta and British
      Columbia;







- 2 - 

	12. 	
      the offering, sale and issuance of the Shares, Additional
      Shares, Broker Warrants and Broker Shares in accordance with the terms of
      this Agreement are exempt from the prospectus requirements of the Canadian
      Securities Laws, and the only filing, proceeding, approval, permit,
      consent or authorization required to be made, taken or obtained under the
      Securities Laws is the filing with the applicable provincial securities
      regulatory authority within the prescribed time periods, of a report in
      Form 45-106FI (as prescribed by National Instrument 45-106 of the Canadian
      Securities Administrators) prepared and executed in accordance with
      applicable Securities Laws, together with the requisite filing
  fees;

	 	 	 
	13. 	
      The first trade, if any, by a Substituted Purchaser or an
      Underwriter, as applicable, of the Shares, the Additional Shares, the
      Broker Warrants and the Broker Shares, other than a trade which is
      otherwise exempt under Securities Laws, will be a distribution subject to
      the prospectus and registration requirements of Securities Laws
    unless:

	 	 	 
		(a) 	
      the Corporation is and has been a reporting issuer in one
      of the jurisdictions in Canada for the four months immediately preceding
      the trade;

	 	 	 
		(b) 	
      at least four months have elapsed form the Closing
      Date;

	 	 	 
		(c) 	
      the certificates representing the Shares, the Additional
      Shares, the Broker Warrants and the Broker Shares (if such Broker Shares
      are issued within four months of the Closing Date) bear a legend in the
      form prescribed by National Instrument 45-102;

	 	 	 
		(d) 	
      the first trade is not a “control distribution” (within
      the meaning of National Instrument 45-102);

	 	 	 
		(e) 	
      no unusual effort is made to prepare the market or to
      create a demand for the security that is subject of the trade;

	 	 	 
		(f) 	
      no extraordinary commission or consideration is paid to a
      person in respect of the trade;

	 	 	 
		(g) 	
      if the Substituted Purchaser is an insider or officer of
      the Corporation, such Substituted Purchaser has no reasonable grounds to
      believe the Corporation is in default of securities legislation (as such
      term is defined in National Instrument 14-101).

	 	 	 
	14. 	
      The offer and sale of the Shares to the Substituted
      Purchasers in the manner described in the Underwriting Agreement and
      Subscription Agreements are exempt from the registration provisions of the
      1933 Act.

	 	 	 
	15. 	
      The Corporation is not an “investment company” (as
      defined in the Investment Company Act of 1940) that is required to be
      registered under such Act.







SCHEDULE “B” 

UNDERWRITERS’ CERTIFICATE 

          In
connection with the private placement in the United States of Common Shares (the
“Securities”) of U.S. Geothermal Inc. (the “Corporation”) pursuant to the
Underwriting Agreement dated as of May 14, 2007, among the Corporation, and the
Underwriters named therein (the “Underwriting Agreement”), the undersigned does
hereby certify as follows: 

	 	(A) 	
      each U.S. affiliate of the undersigned Underwriter (a
      “U.S. Affiliate”) who offered or sold Securities in the United States, or
      to, or for the account or benefit of, a U.S. Person, is a duly registered
      broker or dealer with the United States Securities and Exchange Commission
      and is a member of and is in good standing with the National Association
      of Securities Dealers, Inc. on the date hereof and on the dates of such
      offers and sales;

	 	 	 
	 	(B) 	
      all offers and sales of Securities in the United States,
      or to, or for the account or benefit of, a U.S. Person, have been effected
      in accordance with U.S. broker-dealer requirements in all material
      respects;

	 	 	 
	 	(C) 	
      immediately prior to contacting any offeree, we had
      reasonable grounds to believe and did believe that each offeree was an
      “accredited investor” as specified in Rule 501(a) of Regulation D (an
      “Accredited Investor”) under the Securities Act of 1933, as amended (the
      “U.S. Securities Act”) and, on the date hereof, we continue to believe
      that each person purchasing Securities is an Accredited
Investor;

	 	 	 
	 	(D) 	
      no form of general solicitation or general advertising
      (as those terms are used in Regulation D under the U.S. Securities Act)
      was used by us, including advertisements, articles, notices or other
      communications published in any newspaper, magazine or similar media or
      broadcast over radio, television, or telecommunications, including
      electronic display or the Internet or any seminar or meeting whose
      attendees had been invited by general solicitation or general advertising,
      in connection with the offer or sale of the Securities in the United
      States or to U.S. persons;

	 	 	 
	 	(E) 	
      the offering of the Securities in the United States, or
      to, or for the account or benefit of, a U.S. Person, has been conducted by
      us through our U.S. affiliates in accordance with the terms of the
      Underwriting Agreement; and







- 2 - 

	 	(F) 	
      prior to any sale of Securities in the United States, or
      to, or for the account or benefit of, a U.S. Person, we obtained properly
      completed and executed Subscription Agreements from all
  purchasers.



Terms used in this certificate have the meanings given to them
in the Underwriting Agreement unless otherwise defined herein. 

Dated this __ day of __________, 2007. 

	UNDERWRITER 	U.S. AFFILIATE 
	  	  
	  	  
	By: _______________________________________________	By:_______________________________________________
	Name: 	Name: 
	Title: 	Title 






SCHEDULE “C” 

SUBSCRIPTION AGREEMENT 

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