Document:

UNDERWRITING AGREEMENT

        Dated as
        of April 28, 2008

        U.S.
        Geothermal Inc.

        1505 Tyrell
        Lane

        Boise,
        Idaho 83706

        
            	
                        
                        Attention:

                    	
                        
                        Daniel Kunz

                    

        

        
        Chief Executive Officer, President and Director

        Dear
        Sirs:

        
        Re: Placement of Shares of Units

        
        We understand that U.S. Geothermal Inc. (the
        “Corporation”) proposes to
        issue and sell 4,260,000 Units, each Unit consisting of one share of common stock par value
        US $0.001 (the “Shares”) and
        one-half of one Warrant (as defined below). Each whole common share purchase warrant (a
        “Warrant”) will entitle the
        holder thereof to acquire one share of common stock par value US$0.001 (the
        “Warrant Shares”) at any
        time after the date of issue until 4:00 p.m. (Vancouver time) on the date that is 24 months
        following the Closing Date (as defined below) for US$3.00 per Warrant Share.

        
            	
                        
                        1.

                    	
                        
                        Offer to Purchase

                    

        

        
        Based upon the foregoing and subject to the terms and conditions set out
        below, Clarus Securities Inc.
        (“Clarus”), Toll Cross
        Securities Inc. and Loewen Ondaatje McCutcheon Limited (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 Units at a price (the
        “Offering Price”) of
        CAD$2.35 per Unit for an aggregate consideration of CAD$10,011,000 (the
        “Offering”).

        
        The Underwriters shall have the option, exercisable at any time until 48
        hours prior to the Closing Time, to purchase an additional 2,122,500 Units (the
        “Optioned Units”) at the
        Offering Price, such that the aggregate number of Units to be purchased by the Underwriters
        will be, if this option is exercised in full, 6,382,500 Units for an aggregate purchase
        price of CAD$14,998,875.00.

        
        The several obligations of the Underwriters to purchase the Units 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:

        
        “Accredited
        Investor” means an “accredited investor” as
        that term is defined in Rule 501 of Regulation D and where a subscriber is a Canadian
        resident, National Instrument 45-106;

        
        “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 Vancouver, British Columbia or Boise, Idaho;

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

        
        “Closing
        Date” means April 28, 2008 or such other date as the
        Corporation and the Underwriters may agree;

        
        “Closing
        Time” means 6:00 a.m. (Vancouver 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, 2007;

        
        - 2 -

        
        
        

        
        “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 Delay Period (as such term is defined in Schedule F of
        the Subscription Agreement) prior to the effectiveness of the Registration Statement does
        not modify the Effectiveness Date;

        
        “Empire
        Project” means the assets proposed to be acquired under a
        purchase and sale agreement dated March 31, 2008 (the
        “Empire Acquisition
        Agreement”) between the Corporation, Michael B. Stewart and
        Empire Geothermal Power LLC in connection with a 3.6 megawatt operating geothermal power
        plant and approximately 18,000 acres of geothermal energy leases and certain ground work
        rights all located north of Reno, Nevada, as further described in the Disclosure
        Documents;

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

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

        
        “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 theSecurities
        Act (Ontario);

        
        - 3 -

        
        
        
        
        

        
        “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 Units in accordance with this Agreement;

        
        “Offering Price”
        means the price of CAD$2.35 per Unit;

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

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

        
        “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,
        upon the exercise by the Underwriters of the right to acquire Optioned Units, include the
        Common Shares underlying the Optioned Units;

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

        
        - 4 -

        
        
        
        
        

        
        “Subsidiary”
        means Raft River Energy I LLC andany 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, after having made reasonable
        enquiries or investigations 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 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);

        
        “Units” shall
        have the meaning ascribed thereto in the first paragraph of this Agreement and, upon the
        exercise by the Underwriters of the right to acquire Optioned Units, shall include the
        Optioned Units;

        
        “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;

        
        “Warrants”
        has the meaning ascribed thereto in paragraph 1 of this Agreement and, upon the exercise by
        the Underwriters of the right to acquire Optioned Units, shall include the Warrants
        underlying the Optioned Units and which shall be evidenced by the Warrant
        Certificates;

        
        “Warrant
        Certificates” means the Warrant certificates evidencing the
        Warrants in the form attached hereto as Schedule “D”;

        
        - 5 -

        
        
        
        
        

        
        “Warrant
        Shares” has the meaning ascribed thereto in paragraph 1 of
        this Agreement;

        
        “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 Units 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 Units requires such
                        qualification and/or registration.

                    

        

        
            	
                         

                    	
                        
                        (c)

                    	
                        
                        The Underwriters agree that they shall offer the Units 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
                        Units; and

                    

        

        
            	
                         

                    	
                        
                        (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 Units in any
                        jurisdiction other than the Offering Jurisdictions (unless subsequently
                        agreed to by the Corporation) in accordance with the terms of this
                        Agreement.

                    

        

        
            
            - 6 -

            
            
        

        
        
        

        
            	
                         

                    	
                        
                        (f)

                    	
                        
                        The Underwriters represent, warrant and covenant that any
                        offers or sales of Units: (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 Financial Industry Regulatory Authority
                        Inc. (the
                        “FINRA”) 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 Units 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 Units.

                    

        

        
            	
                         

                    	
                        
                        (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 Units.

                    

        

        
            	
                         

                    	
                        
                        (h)

                    	
                        
                        The Underwriters agree that if they offer to sell or sell
                        any of the Units 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 Units, or the filing of a
                        prospectus, registration statement or any other notice or document with
                        respect to the distribution of the Units, under the laws of any
                        jurisdiction outside the Offering Jurisdictions.

                    

        

        
            	
                         

                    	
                        
                        (i)

                    	
                        
                        The Underwriters represent, warrant and covenant that,
                        during the period in which the Units are offered for sale, neither the
                        Underwriters, nor any of their affiliates, nor any person acting on their
                        behalf 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.

                    

        

        
            	
                        

                        
                        4.

                    	
                        
                        Notice of Material Change

                    

        

        
        During the period of distribution of the Units, 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

                    

        

        
            
            - 7 -

            
            
        

        
        
        

        
            	
                         

                    	
                        
                        (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;

                    

        

        
            	
                         

                    	
                        
                        (c)

                    	
                        
                        this Agreement and the Subscription Agreements have been
                        and, as at the Closing Time, the Warrant Certificates and certificates
                        evidencing the Broker Warrants will be, duly authorized, executed and
                        delivered by the Corporation and (assuming due execution and delivery by
                        the other parties thereto) is, or will be, 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 55,339,253 Common Shares
                        have been

                    

        

        
            
            - 8 -

            
            
        

        
        
        

        
        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, the Warrant Shares, the Additional Shares and
                        the Broker Shares issuable pursuant to this Agreement and the Subscription
                        Agreements;

                    

        

        
            	
                         

                    	
                        
                        (ii)

                    	
                        
                        2,899,878 Common Shares issuable by the Corporation pursuant
                        to stock options held by directors, officers and employees, and 295,454
                        Common Shares issuable pursuant to outstanding warrants; and

                    

        

        
            	
                         

                    	
                        
                        (iii)

                    	
                        
                        the 290,000 common shares issuable to The Kosmos Company
                        pursuant to a letter Agreement dated March 18, 2008 (the
                        “Kosmos
                        Agreement”);

                    

        

        
            	
                         

                    	
                        
                        (f)

                    	
                        
                        the Shares, the Additional Shares, the Warrants, the Warrant
                        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 applicable
                        consideration, the Shares, the Additional Shares, the Warrants, the Warrant
                        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;

                    

        

        
            	
                         

                    	
                        
                        (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,

                    

        

        
            
            - 9 -

            
            
        

        
        
        

        
        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., an
                        Idaho corporation, Raft River Energy 1 LLC and USG Nevada 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, 2007 and 2006, including the notes thereto, and
                        for the 9-month period ending December 31, 2007, including 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 and each Subsidiary 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, and except as previously
                        disclosed, in writing, to the Underwriters, each Subsidiary and the Empire
                        Project 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 and each Subsidiary 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, or, in the case of the Empire Project,
                        will acquire on the closing under the purchase and sale agreement relating
                        to the Empire Project (the “Empire
                        Closing”), all the 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,
                        Empire Project and the Neal Hot Springs Project, and rights and allocation
                        to water, that are necessary to conduct its business as currently conducted
                        and, except for the proposed replacement power plant at the Empire Project,
                        proposed to be conducted as described in the Disclosure Documents, except
                        where the failure to hold such leases easements, rights of way, access
                        rights, and rights and allocation to water would not materially adversely
                        affect the assets, business, results of operations or condition of the
                        Corporation and its Subsidiaries on a consolidated basis.

                    

        

        
            	
                         

                    	
                        
                        (u)

                    	
                        
                        all 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 and each Subsidiary to conduct its
                        business as currently conducted and, except for the proposed replacement
                        power plant at the Empire Project, proposed to be conducted as described in
                        the Disclosure Documents;

                    

        

        
            	
                         

                    	
                        
                        (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 where the failure of such licenses, permits, authorizations and
                        other approvals to be in full force and effect would not materially
                        adversely affect the assets, business, results of operations or condition
                        of the Corporation and its Subsidiaries on a consolidated basis;

                    

        

        
            	
                         

                    	
                        
                        (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, the Empire Project and the Neal Hot Springs Project or any
                        of the assets

                    

        

        
            
            - 13 -

            
            
        

        
        
        

        
        previously acquired under the Empire Acquisition Agreement (the
        “First Empire
        Assets”);

        
            	
                         

                    	
                        
                        (x)

                    	
                        
                        the Corporation has, or, in the case of the Empire Project,
                        will have, on the Empire Closing, such rights of entry and exit to and from
                        the Raft River Project, Empire Project and the Neal Hot Springs Project as
                        are reasonably necessary to carry on its business and operate (or, in the
                        case of the Empire Project, as the Corporation proposes to operate) at the
                        Raft River Project, the Empire Project and the Neal Hot Springs Project and
                        in connection with the First Empire Assets;

                    

        

        
            	
                         

                    	
                        
                        (y)

                    	
                        
                        there are no material restrictions imposed by any applicable
                        law or by agreement which conflict with the proposed acquisition,
                        development, construction, maintenance and operation of the Raft River
                        Project, the Empire Project or the Neal Hot Springs Project and in
                        connection with the first Empire Assets;

                    

        

        
            	
                         

                    	
                        
                        (z)

                    	
                        
                        to the Corporation’s knowledge, the Raft River Project
                        and the Empire Project are 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, the Empire Project (including the First Empire
                        Assets) and the Neal Hot Springs Project other than liens or encumbrances
                        imposed in the ordinary course of business or liens that will be removed at
                        the time of the Empire Closing;

                    

        

        
            	
                         

                    	
                        
                        (bb)

                    	
                        
                        there are no outstanding judgments, writs of execution,
                        seizures, injunctions or directives against the Corporation or any
                        Subsidiary 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, the Empire Project (including the First Empire Assets) 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 and the Empire Project (including the First
                        Empire Assets):

                    

        

        
            	
                         

                    	
                        
                        (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

                    

        

        
            
            - 14 -

            
            
        

        
        
        

        
        River Project and the Empire Project (including the First empire Assets), as
        applicable;

        
            	
                         

                    	
                        
                        (ii)

                    	
                        
                        are sufficient to enable the Raft River Project and the
                        Empire Project (including the First Empire Assets), as applicable, to be
                        located, constructed and operated on the Raft River Project and the Empire
                        Project (including the First Empire Assets), as applicable; and

                    

        

        
            	
                         

                    	
                        
                        (iii)

                    	
                        
                        the easements provide adequate ingress and egress from the
                        Raft River Project, and the Empire Project (including the First empire
                        Assets), as applicable, for any reasonable purpose in connection with the
                        construction and operation of the Raft River Project and the Empire Project
                        (including the first Empire Assets), as applicable;

                    

        

        
            	
                         

                    	
                        
                        (dd)

                    	
                        
                        the Corporation holds all necessary rights for all roads
                        necessary for full utilization of the Raft River Project, and the Empire
                        Project (including the First Empire Assets), as applicable, as each is
                        currently conducted;

                    

        

        
            	
                         

                    	
                        
                        (ee)

                    	
                        
                        all necessary easements, rights of way, licenses, agreements
                        and other rights for the transmission, interconnection and utilization of
                        the interconnection facilities have been acquired for the Raft River
                        Project, or in the case of the Empire Project, will be acquired on the
                        Empire Closing as each project is currently conducted and as each is
                        intended to be developed;

                    

        

        
            	
                         

                    	
                        
                        (ff)

                    	
                        
                        except as disclosed in the Disclosure Documents, the
                        Corporation or its Subsidiary 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 the Subsidiary, as applicable, described in
                        the Disclosure Documents, and no other property or assets are necessary for
                        the conduct of the business of the Corporation and each Subsidiary as
                        currently conducted, or as proposed to be conducted, and none of the
                        Corporation or any of the Subsidiaries has any, or will have any, following
                        the Empire Closing, responsibility or obligation to pay any material
                        commission, royalty, licence fee or similar payment to any person with
                        respect to its property and assets other than under the Kosmos Agreement
                        and all other leases relating to the Empire Closing;

                    

        

        
            	
                         

                    	
                        
                        (gg)

                    	
                        
                        the Corporation has provided to the Underwriters and their
                        counsel full access to all due diligence materials (or accurate summaries
                        of the material elements thereof) and information provided to it in
                        connection with the Empire Project and its counsel or independently
                        compiled by the Corporation or its Subsidiaries and their agents with
                        respect to the Empire Project and is not aware of any material
                        misrepresentations or inaccuracies in such material or
                        information;

                    

        

        
            
            - 15 -

            
            
        

        
        
        

        
         

        
            	
                         

                    	
                        
                        (hh)

                    	
                        
                        the Corporation is not aware of any information relating to
                        the Empire Project which could, upon or after completion of the Empire
                        Closing by the Corporation, reasonably be expected to have a material
                        adverse effect on the business, operations, assets (including information
                        or data related to the estimated value or book value of assets),
                        liabilities, ownership, management, securities, capital, prospects or
                        condition (financial or otherwise) of the Corporation and the Subsidiaries
                        on a consolidated basis;

                    

        

        
         

        
            	
                         

                    	
                        
                        (ii)

                    	
                        
                        the Corporation has a reasonable basis for the disclosure in
                        the Disclosure Documents relating to the ability to replace and expand the
                        production capabilities of the Empire Project and the estimated costs of
                        completing such replacement and expansion and the assumptions in connection
                        therewith are consistent with all material facts known to the Corporation
                        and are reasonable in the circumstances;

                    

        

        
         

        
            	
                         

                    	
                        
                        (jj)

                    	
                        
                        the Corporation is not aware of any existing, pending or
                        threatened fact, event, circumstance or regulatory action that could
                        reasonably be expected to prevent or impede the completion of the Empire
                        Closing;

                    

        

        
            	
                         

                    	
                        
                        (kk)

                    	
                        
                        the Corporation has no reason to believe that the
                        representations and warranties of the vendors in the Empire Acquisition
                        Agreement are not true as at the date hereof or that the vendors are in
                        breach of any covenants therein;

                    

        

        
         

        
            	
                         

                    	
                        
                        (ll)

                    	
                        
                        the Corporation is a reporting issuer under the securities
                        laws of Ontario, 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 Ontrio, Alberta and British Columbia;

                    

        

        
            	
                         

                    	
                        
                        (mm)

                    	
                        
                        the securities underlying the Units 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 Toronto Stock
                        Exchange other than as described in the Subscription Agreement;

                    

        

        
            	
                         

                    	
                        
                        (nn)

                    	
                        
                        since March 31, 2007, 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 Toronto
                        Stock Exchange;

                    

        

        
            	
                         

                    	
                        
                        (oo)

                    	
                        
                        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

                    

        

        
            
            - 16 -

            
            
        

        
        
        

        
        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;

        
            	
                         

                    	
                        
                        (pp)

                    	
                        
                        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;

                    

        

        
            	
                         

                    	
                        
                        (qq)

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

                    

        

        
            	
                         

                    	
                        
                        (rr)

                    	
                        
                        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;

                    

        

        
            	
                         

                    	
                        
                        (ss)

                    	
                        
                        during the period in which the Units 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 Units, pursuant to this Agreement;

                    

        

        
            	
                         

                    	
                        
                        (tt)

                    	
                        
                        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

                    

        

        
            
            - 17 -

            
            
        

        
        
        

        
        Solicitation or General Advertising with respect to offers or sales of the
        Units;

        
            	
                         

                    	
                        
                        (uu)

                    	
                        
                        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
                        Units;

                    

        

        
            	
                         

                    	
                        
                        (vv)

                    	
                        
                        during the period in which the Units 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, directly or indirectly, any action that would
                        constitute a violation of Regulation M of the SEC under the 1934
                        Act;

                    

        

        
            	
                         

                    	
                        
                        (ww)

                    	
                        
                        the Corporation shall cause a Form D to be filed with the
                        SEC within 15 days of the first sale of Units 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 Units in such
                        states;

                    

        

        
            	
                         

                    	
                        
                        (xx)

                    	
                        
                        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

                    

        

        
            	
                         

                    	
                        
                        (yy)

                    	
                        
                        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 Units (or any securities underlying
                        the Units) or order modifying or making unavailable any exemption pursuant
                        to which the Units (or any securities underlying the Units) are being
                        offered or sold, or the institution, threatening or contemplation of any
                        proceeding for any

                    

        

        
            
            - 18 -

            
            
        

        
        
        

        
        such purpose or any request made by any Securities Regulator relating to the
        Offering;

        
            	
                         

                    	
                        
                        (b)

                    	
                        
                        for a period commencing on the date of execution of this
                        letter and ending 120 days following the Closing Date, the Corporation
                        agrees that it will not, and will not announce any intention to, a) provide
                        any waivers to accelerate the trading of any Common Shares that are
                        currently restricted from trading without the prior written consent of
                        Clarus, which consent shall not be unreasonably withheld or delayed, or b)
                        directly or indirectly, offer or sell, or negotiate or enter into an
                        agreement to offer or sell any Common Shares or financial instruments
                        convertible or exchangeable into Common Shares, other than pursuant to: (i)
                        the exercise of convertible securities, options or warrants outstanding at
                        the date hereof, (ii) the grant or exercise of options pursuant to the
                        Corporation’s Stock Option Plan, or (iii) one or more arm’s
                        length acquisitions by the Corporation or its subsidiaries without the
                        prior written consent of Clarus, which consent shall not be unreasonably
                        withheld or delayed or (iv) an offer or sale, or a negotiation or entry
                        into an agreement to offer or sell to a strategic investor or investors
                        securities which are “restricted securities” under the US
                        Securities Act and the Corporation takes no action to register the resale
                        of such securities prior to six months from the issuance of such
                        securities, without the prior written consent of Clarus, which consent
                        shall not be unreasonably withheld or delayed.

                    

        

        
            	
                         

                    	
                        
                        (c)

                    	
                        
                        at any time prior to the Closing, 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;

                    

        

        
            	
                         

                    	
                        
                        (d)

                    	
                        
                        if the Registration Statement is not declared effective by
                        the SEC on or before the Effectiveness Date, the Corporation shall issue
                        the Additional Shares, to the persons entitled thereto, in accordance with
                        the provisions of Schedule F of the Subscription Agreement;

                    

        

        
            	
                         

                    	
                        
                        (e)

                    	
                        
                        for the shorter of: (i) the 24-month period following the
                        Closing Date; and (ii) the Effectiveness Period as defined in Schedule
                        “F” to the Subscription Agreement, the Corporation shall comply
                        with the continuous disclosure and periodic filing obligations of the
                        Securities Laws applicable to reporting issuers and registrants;

                    

        

        
            	
                         

                    	
                        
                        (f)

                    	
                        
                        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; and

                    

        

        
            
            - 19 -

            
            
        

        
        
        

        
            	
                         

                    	
                        
                        (g)

                    	
                        
                        it will use commercially reasonable efforts to satisfy the
                        conditions of Closing.

                    

        

        
            	
                        

                        
                        7.

                    	
                        
                        Underwriters’ Fee

                    

        

        
        In consideration for the Underwriters’ services in connection with the
        issue and sale of the Units under the terms of this Agreement, the Corporation agrees to
        pay to Clarus, on behalf of the Underwriters, at Closing Time a cash fee equal to 6.0% of
        the gross proceeds of the offering of Units, less US $45,000.

        
        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 3% of the number of Units
        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 24 months from the Closing Date at an exercise
        price of the U.S. dollar equivalent of CAD$2.37 (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 Clarus 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”.

        
        Such Underwriter’s resale of Broker Shares shall be registered on the
        Registration Statement on the same basis as Substituted Purchasers as further described in
        Schedule “F” to the Subscription Agreement, and the Underwriters shall have the
        benefit of the provisions thereof.

        
        - 20 -

        
        
        
        
        

        
            	
                        

                        
                        8.

                    	
                        
                        Closing Procedures

                    

        

        
        The purchase and sale of the Units shall be completed at the Closing Time at
        the offices of the Corporation’s Counsel in Vancouver
        andToronto or at such other place as the Underwriters and the
        Corporation may agree. At the Closing Time the Corporation shall deliver to Clarus on
        behalf of the Underwriters certificates representing the Shares and Warrants, registered in
        the name of “Clarus Securities
        Inc.” or, if directed in writing
        at least one business day 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 Clarus (or as
        otherwise directed in writing by Clarus 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 Units, 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
                        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 Units payable at Closing) including GST and
                        applicable sales taxes thereon;

                    

        

        
            	
                         

                    	
                        
                        (c)

                    	
                        
                        the Underwriters’ reasonable out-of-pocket expenses,
                        subject to a maximum of $20,000;

                    

        

        
            	
                         

                    	
                        
                        (d)

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

                    

        

        
            	
                         

                    	
                        
                        (e)

                    	
                        
                        all fees payable under Securities Laws and payable to the
                        Toronto Stock Exchange in connection with sales to the Purchasers or in
                        connection with filing the required documents with FINRA.

                    

        

        
            
            - 21 -

            
            
        

        
        
        

        
            	
                        

                        
                        10.

                    	
                        
                        Conditions of the Underwriters’
                        Obligations

                    

        

        
        The obligations of the Underwriters and Substituted Purchasers to purchase
        and pay for any of the Units 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,
                        Underwriters’ Counsel 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 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, Warrants, Warrant
                        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 Common 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, 2007 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;

                    

        

        
            
            - 22 -

            
            
        

        
        
        

        
            	
                         

                    	
                        
                        (iii)

                    	
                        
                        other than as disclosed in the Disclosure Documents, since
                        March 31, 2007 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;

                    

        

        
            	
                         

                    	
                        
                        (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 and Warrants in accordance with Section
                        8;

                    

        

        
            	
                         

                    	
                        
                        (e)

                    	
                        
                        the Corporation shall have delivered certificates
                        representing the Broker Warrants;

                    

        

        
            	
                         

                    	
                        
                        (f)

                    	
                        
                        the Corporation shall have delivered lock-up agreements
                        executed by each director and officer of the Corporation in the form
                        attached hereto as Schedule “E”;

                    

        

        
            	
                         

                    	
                        
                        (g)

                    	
                        
                        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

                    

        

        
            	
                         

                    	
                        
                        (h)

                    	
                        
                        a copy of a letter from the Toronto Stock Exchange
                        confirming that the Shares, Additional Shares, Warrant Shares and Broker
                        Shares have been conditionally accepted for listing on the Toronto Stock
                        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

                    

        

        
            
            - 23 -

            
            
        

        
        
        

        
        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, 2007 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;

                    

        

        
            	
                         

                    	
                        
                        (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).

        
        - 24 -

        
        
        
        
        

        
            	
                         

                    	
                        
                        (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 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.

                    

        

        
            
            - 25 -

            
            
        

        
        
        

        
            	
                         

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

        
            	
                        

                        
                        13.

                    	
                        
                        Obligations of Underwriters

                    

        

        
        Subject to the terms hereof, the obligations of the Underwriters to purchase
        the Units at the Closing Time or to arrange for the purchase of its Units 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:

        
            	
                         

                    	
                        
                        Clarus Securities Inc.

                    	
                        
                        85%

                    

        

        
            	
                         

                    	
                        
                        Toll Cross Securities Inc.

                    	
                        
                        10%

                    

        

        
            	
                         

                    	
                        
                        Loewen Ondaatje McCutcheon Limited

                    	
                        
                        5%

                    

        

        
         

        
        If one of the Underwriters should default in its obligations to purchase its
        respective percentage of Units or to arrange for the purchase by Substituted Purchasers of
        its respective percentage of Units, the other Underwriters shall have the right, but not
        the obligation, at their option, to purchase all but not less than all of the Units 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 Units 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 Units may be made. Nothing in this Section 13 shall require the
        Corporation to sell less than all of

        
        - 26 -

        
        
        
        
        

        the
        Units 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 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;

                    

        

        
            	
                         

                    	
                        
                        (e)

                    	
                        
                        if the Company is in breach of any material term, condition
                        or covenant of this Underwriting Agreement or any material representation
                        or warranty given by the Company in the Underwriting Agreement becomes or
                        is false; or

                    

        

        
            
                	
                             

                        	
                            
                            (f)

                        	
                            
                            if the Corporation fails to obtain the approval of the
                            Toronto Stock Exchange for the additional listing of the Common Shares
                            to be sold at the

                        

            

            
                
                - 27 -

                
            

        

        
        
        

        
            	
                         

                    	
                        
                         

                    	
                        
                        Closing (including the Shares, the Warrant Shares, the
                        Additional Shares and the Broker Shares).

                    

        

        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 Units 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
        Units.

        
            	
                        

                        
                        15.

                    	
                        
                        Notices

                    

        

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

        
            	
                         

                    	
                        
                        (a)

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

                    

        

        
        U.S. Geothermal Inc.

        
        1505 Tyrell Lane

        
        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

            
            - 28 -

            
            
        

        
        
        

        
        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:

                    

        

        
        Clarus Securities Inc.

        
        Suite 1615

        
        200 Burrard Street

        
        Vancouver, British Columbia

        
        V6C 3L6

        
            	
                        
                         

                    	
                        
                        Attention:

                    	
                        
                        Rod Campbell

                    

        

        
            	
                         

                    	
                        
                        Facsimile:

                    	
                        
                        (604) 605-5704

                    

        

        
        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

                    

        

        
        Loewen Ondaatje McCutcheon

        
        55 Avenue Road, East Tower

        
        Ste. 2250 East Tower

        
        Toronto, ON M5R 3L2

        
         

        
        Attention: Priya Patil

        
            	
                         

                    	
                        
                        Facsimile:

                    	
                        
                        (416) 964-4490

                    

        

        
         

        
        with a copy thereof to:

        
        Borden Ladner Gervais LLP

        
        Suite 1200,

        
        200 Burrard Street,

        
        Vancouver, British Columbia

        
        V7X 1T2

        
         

        
            	
                        
                         

                    	
                        
                        Attention:

                    	
                        
                        Nigel P.H. Cave

                    
	
                    	
                        
                        Facsimile:

                    	
                        
                        (604) 622-5861

                    

        

        
            
            - 29 -

            
            
        

        
        
        

        
        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.

        
            	
                        

                        
                        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 Units 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 Units
        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 British Columbia 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 British
        Columbia and each party hereto hereby irrevocably and unconditionally attorns
        and

        
        - 30 -

        
        
        
        
        

        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 Clarus and the Corporation dated April 9, 2008.

        
            	
                        

                        
                        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 Units shall survive
        the execution, delivery and performance of this Agreement and Closing and shall continue in
        full force and effect unaffected by any subsequent disposition of the Units 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 Clarus Securities Inc.

                    

        

        
        Clarus is hereby authorized by Toll Cross Securities Inc. and Loewen
        Ondaatje McCutcheon Limited 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 Clarus 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.

        
        - 31 -

        
        
        
        
        

        
        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,

        
        - 32 -

        
        
        
        
        

        

        
            	
                        
                        CLARUS SECURITIES INC.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                        By:
                         ____________________________________

                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                        TOLL CROSS SECURITIES INC.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                        By:
                         ____________________________________

                        
                         

                        
                         

                        
                         

                        
                         

                        
                        LOEWEN ONDAATJE McCUTCHEON LIMITED

                        
                         

                        
                        By:
                         ____________________________________

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                        Accepted and agreed as of the ____ day of April,
                        2008

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    

        

         

        
            	
                        
                        U.S. GEOTHERMAL INC.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                        By:
                         ____________________________________ 
                         

                        
                        Daniel Kunz

                        
                        Chief Executive Officer, President and Director

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                        By:
                         ____________________________________

                    	
                        
                         

                    
	
                        
                        Doug Glaspey

                        
                        Chief Operating Officer and Director

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    

        

         

        
        
        

        
        SCHEDULE “A”

         

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

        
            	
                        
                        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, and the
                        due authorization and reservation for issuance of the Additional Shares,
                        Warrant Shares and Broker Shares, all 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;

                    

        

        
            	
                        
                        7.

                    	
                        
                        the approval of the listing of the Shares, the Additional
                        Shares, the Warrant Shares and the Broker Shares on the Toronto Stock
                        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, the Warrant Certificate, the Broker
                        Warrant Certificate 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 Computershare at its office in the City
                        of Vancouver as transfer agent and registrar for the Common
                        Shares;

                    

        

        
            	
                        
                        10.

                    	
                        
                        the form of certificate representing the Common Shares has
                        been duly approved by the Corporation and complies with the laws of the
                        Corporation’s jurisdiction of incorporation, the constating documents
                        of the Corporation and the requirements of the Toronto Stock
                        Exchange;

                    

        

        
            	
                        
                        11.

                    	
                        
                        this Agreement and the issuance and sale of the Shares, the
                        Additional Shares, the Warrants, the Warrant Shares and the Broker Warrants
                        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 Delaware Law, statute, rule or regulation
                        to which the Corporation is subject;

                    

        

        
        
        

        
        - 2 -

        
            	
                        
                        12.

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

                    

        

        
            	
                        
                        13.

                    	
                        
                        the offering, sale and issuance of the Shares, Additional
                        Shares, the Warrants, the Warrant 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;

                    

        

        
            	
                        
                        14.

                    	
                        
                        The first trade, if any, by a Substituted Purchaser or an
                        Underwriter, as applicable, of the Shares, the Additional Shares, the
                        Warrants, the Warrant 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 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).

                    

        

        
            
                	
                            
                            15.

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

                        

            

        

        
        
        

        
            
            - 3 -

        

        
            	
                        
                        16.

                    	
                        
                        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 Offered
        Units (the “Securities”) of U.S. Geothermal Inc. (the
        “Corporation”) pursuant to the Underwriting Agreement dated as of April 28,
        2008, 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 Financial
                        Industry Regulatory Authority 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 __________, 2008.

         

        
            	
                        UNDERWRITER

                    	
                         

                    	
                        U.S.
                        AFFILIATE

                    
	
                         

                    	
                         

                    	
                         

                    	
                         

                    	
                         

                    
	
                         

                    	
                         

                    	
                         

                    	
                         

                    	
                         

                    
	
                        
                        By:

                    	
                         

                    	
                         

                    	
                        
                        By:

                    	
                         

                    
	
                        Name:

                    	
                         

                    	
                         

                    	
                        Name:

                    	
                         

                    
	
                        Title:

                    	
                         

                    	
                         

                    	
                        Title

                    	
                         

                    
	
                         

                    	
                         

                    	
                         

                    	
                         

                    	
                         

                    
	
                         

                    	
                         

                    	
                         

                    	
                         

                    	
                         

                    
	
                         

                    	
                         

                    	
                         

                    	
                         

                    	
                         

                    
	
                         

                    	
                         

                    	
                         

                    	
                         

                    	
                         

                    

        

         

        
        
        

        
        SCHEDULE “C”

         

        
        SUBSCRIPTION AGREEMENT

        
        
        

        
        SCHEDULE E

         

        
        LOCK-UP AGREEMENT

        
        •, 2008

        
        Clarus Securities Inc.

        
        1615, 200 Burrard Street

        
        Vancouver, British Columbia

        
        V6C 3L6

        
        Toll Cross Securities Inc.

        
        TD Centre, Royal Trust Tower

        
        77 King Street West, Suite 3120

        
        Toronto, ON M5K 1H1

        
         

        
        Loewen Ondaatje McCutcheon

        
        55 Avenue Road, East Tower

        
        Ste. 2250 East Tower

        
        Toronto, ON M5R 3L2

        
         

        
        U.S. Geothermal Inc.

        
        1509 Tyrell Lane

        
        Suite B

        
        Boise, Idaho 83706

        
        Ladies and Gentlemen:

        
        The undersigned director or officer of U.S. Geothermal Inc. (the
        “Company”) understands that
        Clarus Securities Inc., Toll Cross Securities Inc. and Loewen Ondaatje McCutcheon
        (together, the
        “Underwriters”) have entered
        into an underwriting agreement with the Company dated April
        •, 2008 (the
        “Underwriting Agreement”)
        providing for the public offering (the
        “Offering”) of
        • common shares in the capital of the
        Company. This Lock-Up Agreement is being entered into in accordance with Section 10(f) of
        the Underwriting Agreement.

        
        In consideration for the benefit that the Offering will confer upon the
        undersigned as a shareholder of the Company, and for other good and valuable consideration,
        the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees with
        the Company and the Underwriters that the undersigned will not,
        directly or indirectly, without the prior written consent of Clarus
        Securities Inc. (which consent may not be unreasonably withheld):

        
            	
                        
                         

                    	
                        
                        (i)

                    	
                        
                        offer, pledge, sell, contract to sell, sell any option or
                        contract to purchase, purchase any option or contract to sell, announce any
                        intention to sell, grant any option, right or warrant for the sale of, or
                        otherwise dispose of or transfer any common shares in the capital of the
                        Company (“Common
                        Shares”) or any securities convertible into
                        or exchangeable or exercisable for Common Shares, whether now owned or
                        hereafter acquired by the undersigned or with respect to which the
                        undersigned has or

                    

        

        
        
        

         

        
            	
                    	
                    	
                     hereafter acquires the power of disposition, or file a
                    registration statement or prospectus with respect to any of the foregoing;
                    or
	
                        
                         

                    	
                        
                        (ii)

                    	
                        
                        enter into any swap or any other agreement or any
                        transaction that transfers, in whole or in part, directly or indirectly,
                        the economic consequence of ownership of the Common Shares, whether any
                        such swap or transaction is to be settled by delivery of Common Shares or
                        other securities, in cash or otherwise,

                    

        

        in each
        case, during the period of 120 days from April
        •, 2008 (the date of closing of the
        Offering), other than pursuant to a bona fide offer by a third party
        to acquire Common Shares or securities exchangeable or convertible into Common Shares made
        to all holders of such securities.

        
        The undersigned hereby represents and warrants that the undersigned has full
        power and authority to enter into this Lock-Up Agreement and that, upon request, the
        undersigned will execute any additional documents necessary or desirable in connection with
        the enforcement hereof. Any obligations of the undersigned shall be binding upon the
        successors and assigns of the undersigned.

        
        The undersigned understands that the Company and the Underwriters will
        proceed with the Offering in reliance on this Lock-Up Agreement and the representation and
        warranties contained herein.

        
        Very truly yours,

        
        By: _________________________

                 Name:

                 Title: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 “Clarus Securities Inc.” 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
                        dulycompleted 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:

                        Clarus Securities Inc.

                        Exchange Tower

                        130 King Street West, Suite 3640

                        Toronto, Ontario M5X 1A9

                        Attention: April Cuadra

                        Fax: 416-343-2799

                        
                         

                    

        

         

        
        SUBSCRIPTION AGREEMENT

        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:

                    	
                        
                        CLARUS SECURITIES INC., TOLL CROSS SECURITIES INC. and
                        LOEWEN ONDAATJE McCUTCHEON LIMITED (the
                        “Underwriters”)

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                        AND TO:

                    	
                        
                        TOLL CROSS SECURITIES USA INC.
                        (the “US
                        Affiliate”)

                    

        

         

        The
        undersigned (hereinafter referred to as the
        “Subscriber”) hereby
        irrevocably subscribes for and agrees to purchase from the Corporation that number of Units
        set forth below (the “Offered
        Units”) for the aggregate consideration set forth below,
        representing a subscription price of $2.35 (Canadian) per Unit, upon
        and subject to the

         

        
        
        

        terms
        and conditions set forth in “Terms and Conditions of the Subscription for Offered
        Units” attached hereto as Schedule “A” and as set forth in the other
        applicable schedules hereto (the
        “Offering”). 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 $3.00 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 Offered
                        Units:__________________________

                    
	
                        
                        (Name of Subscriber – please print)

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                        Aggregate Consideration:
                        $________________________

                    
	
                        
                        By:____________________________________________

                    	
                        
                         

                    	
                        
                        (number of Offered Units x CDN$2.35)

                    
	
                        
                        (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 Offered Units as set forth
                        below:

                    	
                        
                         

                    	
                        
                        Deliver the Offered Units as set forth
                        below:

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                        (Name)

                    	
                        
                         

                    	
                        
                        (Name)

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                        (Account reference, if applicable)

                    	
                        
                         

                    	
                        
                        (Account reference, if applicable)

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                        (Address)

                    	
                        
                         

                    	
                        
                        (Contact Name)

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                        (Address)

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                        (Telephone Number)

                    
	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    

        

         

         

        
            	
                        
                         

                    	
                        
                        - 2 -

                    

        

        
        
        

        
        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 Offered
                        Units

                    
	
                        
                        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 ____________, 2008.

         

        
            	
                        
                        U.S. GEOTHERMAL INC.

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                         

                    
	
                        
                        Per:

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Name:

                    
	
                        
                         

                    	
                        
                        Title:

                    

        

         

         

        
            	
                        
                         

                    	
                        
                        - 3 -

                    

        

        
        
        

        
        SCHEDULE "A"

        TERMS
        AND CONDITIONS OF SUBSCRIPTION FOR OFFERED UNITS

        
        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.

        
        “Additional
        Shares” means the 0.10 Common Share per Unit issuable by
        the Corporation in certain circumstances as specified in Schedule “F”
        hereof.

        
        “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 Offered Unit Price (calculated as of the Closing Date).

        
        “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.

        
        “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.

        
        “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.

        
        “Offered
        Unit” means a Unit offered in the Offering.

        
        “Offered Unit Price” means the
        subscription price per Offered Unit under this Offering.

        
        “Offering”
        shall have the meaning ascribed to such term on the face page 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.

        

        
        “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 Common Shares and Warrants comprising the Units, the Additional Shares 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.

        
        “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 and
        the United States and such other jurisdictions which are agreed to by the Corporation and
        the Underwriters; and “Selling
        Jurisdiction” means, in the case of any Subscriber, the
        jurisdiction in which such Subscriber is resident.

        
        “Subscriber”
        means the subscriber for the Offered Units as set out on the face page 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 Offered Unit Price
        multiplied by the number of Offered Units subscribed for and paid for pursuant to this
        Subscription Agreement.

        
        “Term Sheet”
        means the term sheet delivered to potential purchasers of the Offered Units, a copy of
        which is attached hereto as Schedule “B”.

        
        “TSX” means
        the Toronto Stock Exchange.

        
        “Underwriters”
        shall have the meaning ascribed to such term on the face page of this Subscription
        Agreement.

        
        “Underwriting
        Agreement” means the underwriting agreement to be dated as
        of the Closing Date entered into between the Underwriters and the Corporation in respect of
        the Offering.

        
        “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$3.00 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

                

        

        

         

        
            	
                        
                         

                    	
                        
                        A-2

                    

        

        
        
        

        
            
            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 OFFERED UNITS

        
            	
                        

                        
                        2.1

                    	
                        
                        Subscription for the Offered Units

                    

        

        
        The Subscriber hereby confirms its irrevocable subscription for and offer to
        purchase Offered Units 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

                    	
                        
                        Acceptance and Rejection of Subscription by the
                        Corporation

                    

        

        
        The Subscriber acknowledges and agrees that the Corporation and the
        Underwriters reserve the right, in their absolute discretion, to reject this subscription
        for Offered Units, 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
        Underwriters 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 Offered Units 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 Offered Units 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 April 24, 2008 or such other date or time as the Corporation and the Underwriters may
        decide (the “Closing
        Date”).

        
        Certificates representing the Common Shares and Warrants comprising the
        Units 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 Offered Units as described in section 3.2(a) hereof on or before
        Closing, Certificates representing the Common Shares and Warrants comprising the Units will
        be released to the Subscriber against payment to the Corporation of the amount of the
        Subscription Amount for the Offered Units 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 “Clarus Securities Inc.” or such other
        person as the Corporation shall advise the Subscriber.

         

        
            	
                        
                         

                    	
                        
                        A-3

                    

        

        
        
        

        
        

        
            	
                        

                        
                        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 “Clarus Securities Inc.”.

                    

        

        
            	
                         

                    	
                        
                        (b)

                    	
                        
                        the Subscriber having properly completed, signed and
                        delivered this Subscription Agreement to:

                    

        

        
        Clarus Securities Inc.

        
        Exchange Tower

        
        130 King Street West, Suite 3640

        
        P. O. Box 38

        
        Toronto, ON M5X 1A9

        
            	
                         

                    	
                        
                        Attention:

                    	
                        
                        April Cuadra

                    

        

        
            	
                         

                    	
                        
                        Fax:

                    	
                        
                        416-343-2799

                    

        

        
            	
                         

                    	
                        
                        (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 Underwriting
        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 Underwriting 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 for the Offering and to list the Common
                        Shares that form part of the Securities; and

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-4

                    

        

        
        
        

        
            	
                         

                    	
                        
                        (b)

                    	
                        
                        the Corporation shall have delivered to the
                        Underwriter’s counsel the following items:

                    

        

        
            	
                         

                    	
                        
                        (i)

                    	
                        
                        a copy of the certificates representing the Common Shares
                        and the Warrants comprising the Units 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 Underwriting Agreement
                        as the Underwriters 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 Underwriters as set forth in the Underwriting Agreement
        (to the extent that they have not been varied, amended, altered or waived, in whole or in
        part, by the Underwriters). 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 Offered Units 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
        Underwriting Agreement.

        
        The Corporation, hereby represents and warrants to, and covenants with, the
        Subscriber and Underwriters as follows and acknowledges that the Subscriber and the
        Underwriters 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 Underwriters and persons acting on its behalf, as to which no
                        representation is made), in respect of or in connection with the offer and
                        sale of the Offered Units 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 Underwriters and persons acting on their behalf,
                        as to which no representation is made) has sold or offered for sale any
                        Offered Units, or solicited any offers to buy any Offered Units thereby so
                        as to cause the issuance or sale of any of the Offered Units 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.

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-5

                    

        

        
        
        

        
            
                 
            

            
                	
                             

                        	
                            
                            (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 Offered Units 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 Offered Units.

                        

            

        

        
            	
                         

                    	
                        
                        (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.

                    

        

        
        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 Underwriters as follows and acknowledges that the Corporation and the
        Underwriters 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 Offered Units and the Subscriber and any
                        beneficial purchaser was solicited to purchase and executed this agreement
                        in such jurisdiction.

                    

        

        
            	
                         

                    	
                        
                        (c)

                    	
                        
                        The Subscriber has properly completed, executed and
                        delivered to the Underwriters 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.

                    

        

        
            	
                         

                    	
                        
                        (d)

                    	
                        
                        The representations, warranties and covenants contained in
                        the 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 Offered Units by and the issuance and delivery of the
                        Offered Units 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.

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-6

                    

        

        
        
        

        
            
                 
            

            
                	
                             

                        	
                            
                            (f)

                        	
                            
                            The execution and delivery of this Subscription
                            Agreement, the performance and compliance with the terms hereof, the
                            subscription for Offered Units 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
                        subscription funds 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 Offered Units 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 Offered Units for whom it is acting.

                    

        

        
            	
                         

                    	
                        
                        (i)

                    	
                        
                        In the case of a subscription for the Offered Units 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 in
                        applicable securities laws), the Subscriber shall, at the time of the sale
                        of Offered Units, 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.

                    

        

        
            	
                         

                    	
                        
                        (k)

                    	
                        
                        In the case of a subscription for the Offered Units 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
                        Offered

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-7

                    

        

         

         

        
        
        

        
            
                 
            

            
                	
                             

                        	
                            
                             

                        	
                            
                            Units 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 Underwriters, 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 Offered Units, the Subscriber covenants to indemnify
                        and hold harmless the Corporation and the Underwriters 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 Offered Units 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 Offered Units 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 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 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 Underwriters 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.

                    

        

        
            	
                         

                    	
                        
                        (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 Offered Units 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 Underwriting Agreement and not upon any verbal or written
                        representation as to any fact or

                    

        

         

         

        
            	
                        
                         

                    	
                        
                        A-8

                    

        

        
        
        

        
            
                 
            

            
                	
                             

                        	
                            
                             

                        	
                            
                            otherwise made by or on behalf of the Corporation, the
                            Underwriters or any employee, agent or affiliate thereof or any other
                            person associated therewith. The Underwriters 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 Offered Units 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 the
                        Securities;

                    

        

        
            	
                         

                    	
                        
                        (ii)

                    	
                        
                        that any person will refund the Subscription Amount;
                        or

                    

        

        
            	
                         

                    	
                        
                        (iii)

                    	
                        
                        as to the future price or value of the
                        Securities.

                    

        

        
            	
                         

                    	
                        
                        (u)

                    	
                        
                        The subscription for the Offered Units has not been made
                        through or as a result of, and the offer and sale of the Offered Units 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 $10,011,000 (subject
                        to the option to increase the total Offering size up to a maximum of
                        $14,998,875).

                    

        

        
            	
                         

                    	
                        
                        (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 Offered Units.

                    

        

        
            	
                         

                    	
                        
                        (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 the Securities except in compliance with such laws
                        and the Subscriber acknowledges that it is solely responsible (and the
                        Corporation and the Underwriters are not in any way responsible) to find
                        out what those restrictions are and to comply with them before selling the
                        Securities.

                    

        

        
            	
                         

                    	
                        
                        (e)

                    	
                        
                        The Subscriber’s ability to transfer the Securities is
                        limited by, among other things, applicable Securities Laws.

                    

        

        
            	
                         

                    	
                        
                        (f)

                    	
                        
                        The certificates representing the Common Shares and Warrants
                        comprising the Units and Broker Warrants (and, if issued within four months
                        after the Closing Date, any certificates representing the Warrant Shares
                        and Broker Shares) will bear, as of the Closing Date, a legend
                        substantially in the following form and with the necessary information
                        inserted:

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-9

                    

        

        
        
        

        
        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)

                    	
                        
                        The certificates representing the Additional Shares will
                        bear, as of the date of issuance, 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
        DATE OF ISSUANCE].

        
            	
                         

                    	
                        
                        (h)

                    	
                        
                        In addition, the certificates representing the Common Shares
                        and Warrants comprising the Units and Broker Warrants (and, if issued
                        within four months after the Closing Date, any certificates representing
                        the Warrant Shares 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."

        
            	
                         

                    	
                        
                        (i)

                    	
                        
                        In addition, the certificates representing the Additional
                        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."

        
            	
                         

                    	
                        
                        (j)

                    	
                        
                        The Subscriber, and each beneficial purchaser for whom it is
                        acting hereunder, shall execute, deliver, file and otherwise assist the
                        Corporation and Underwriters with filing all documentation required by the
                        applicable Securities Laws to permit the subscription for the Offered Units
                        and the issuance of the Securities.

                    

        

        
            	
                         

                    	
                        
                        (k)

                    	
                        
                        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 Offered Units.

                    

        

        
            	
                         

                    	
                        
                        (l)

                    	
                        
                        The Underwriters 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.

                    

        

        
            	
                         

                    	
                        
                        (m)

                    	
                        
                        The Corporation and Underwriters 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 Offered Units under applicable Securities
                        Laws and the Subscriber agrees to indemnify each of the Corporation and the
                        Underwriters, and each of its directors and officers against all losses,
                        claims, costs, expenses, damages or liabilities which any of them
                        may

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-10

                    

        

        
        
        

        
            	
                         

                    	
                        
                         

                    	
                        
                        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.

                    

            
                	
                             

                        	
                            
                            (n)

                        	
                            
                            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 Offered
                            Units pursuant to such exemption:

                        

            

        

        
            	
                         

                    	
                        
                        (i)

                    	
                        
                        certain protections, rights and remedies provided by
                        applicable Securities Laws, including statutory rights of rescission and
                        certain statutory remedies against an issuer, underwriters, 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.

                    

        

        
            	
                         

                    	
                        
                        (o)

                    	
                        
                        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. Notwithstanding the
                        registration of the resale of the Securities, the Corporation does not
                        intend to register or qualify such resales under state securities or Blue
                        Sky laws, and the subscriber acknowledges that the initial sale of the
                        securities on the TSX, or any other trading market, may not be made to a
                        U.S. Person unless an exemption from such registration or qualification is
                        then available.

                    

        

        
            	
                         

                    	
                        
                        (p)

                    	
                        
                        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 (A) Rule 144
                        thereunder or (B) Rule 144A thereunder, if available, and in accordance
                        with any applicable state securities law; or

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-11

                    

        

        
        
        

        
            
                 
            

            
                	
                             

                        	
                            
                            (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.

                        

            

            
                	
                             

                        	
                            
                            (q)

                        	
                            
                            There is no government insurance or other insurance
                            covering the Securities.

                        

            

            
                	
                             

                        	
                            
                            (r)

                        	
                            
                            AN INVESTMENT IN THE OFFERED UNITS IS NOT WITHOUT
                            RISK AND THE SUBSCRIBER (AND ANY BENEFICIAL PURCHASER) MAY LOSE HIS,
                            HER OR ITS ENTIRE INVESTMENT.

                        

            

        

        
            	
                         

                         

                    	
                        
                        (s)

                    	
                        
                        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.

                    

        

        
            	
                         

                    	
                        
                        (t)

                    	
                        
                        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.

                    

        

        
            	
                         

                    	
                        
                        (u)

                    	
                        
                        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 Underwriters’ counsel are acting solely as counsel
                        to the Underwriters and not as counsel to the Subscriber; and

                    

        

        
            	
                         

                    	
                        
                        (iii)

                    	
                        
                        the Underwriters are acting solely as financial advisors to,
                        and Underwriters of, the Corporation and not as financial advisors to the
                        Subscriber, or as Underwriters of, the Subscriber, except insofar as is
                        necessary at the Closing to deliver payment for the Offered Units to the
                        Corporation on behalf of the Subscriber and to accept and deliver the
                        Offered Units to the Subscriber after the Closing.

                    

        

        
            	
                         

                    	
                        
                        (v)

                    	
                        
                        The Offered Units 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).

                    

        

        
            	
                         

                    	
                        
                        (w)

                    	
                        
                        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

         

        
            	
                        
                         

                    	
                        
                        A-12

                    

        

        
        
        

        
        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 OR
        RULE  144A THEREUNDER, 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.

        
        if the Offered Units 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.

        
            	
                         

                    	
                        
                        (x)

                    	
                        
                        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 Units 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.

                    

        

        
            	
                         

                    	
                        
                        (y)

                    	
                        
                        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.”

        
            	
                         

                    	
                        
                        (z)

                    	
                        
                        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.

                    

        

        
             
        

        
            	
                         

                    	
                        
                        (aa)

                    	
                        
                        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 Offered Units, 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,

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-13

                    

        

        
        
        

        
            
                 
            

            
                	
                             

                        	
                            
                             

                        	
                            
                            including but not limited to providing such information
                            in a timely manner regarding itself, the Offered Units and other
                            securities of the Corporation held by it and the intended method of
                            disposition of the Offered Units as shall be reasonably required to
                            effect and maintain the effectiveness of the registration of such
                            Offered Units.

                        

            

        

        
            	
                        
                        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
        Underwriters in determining the Subscriber’s eligibility (and, if applicable, the
        eligibility of others for whom the Subscriber is contracting hereunder) to purchase the
        Offered Units 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 Underwriters in connection with this Subscription Agreement, which
        takes place at or prior to the Closing Time.

        
        The Subscriber further agrees that by accepting the Offered Units, 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 Offered Units and shall continue in full
        force and effect notwithstanding any subsequent disposition by the Subscriber of any of
        Offered Units.

        
        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 Underwriters
        (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 Underwriters with respect
        thereto, shall continue in full force and effect for the benefit of the Corporation and the
        Underwriters.

        
        ARTICLE 7 - INDEMNITY

        
            	
                        

                        
                        7.1

                    	
                        
                        Indemnity

                    

        

        
        The Subscriber shall indemnify and hold harmless each of the Corporation and
        the Underwriters and each of their respective directors, officers, employees, underwriters,
        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 Underwriters 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 Underwriters in connection with this
        Subscription Agreement.

         

        
            	
                        
                         

                    	
                        
                        A-14

                    

        

        
        
        

        
        ARTICLE 8 - AUTHORIZATION OF THE
        UNDERWRITERS

        
            	
                        

                        
                        8.1

                    	
                        
                        Authorization of the
                        Underwriters

                    

        

        
        The Subscriber irrevocably authorizes the Underwriters in their sole and
        absolute discretion, to act as the Subscriber’s representative at the Closing, and
        hereby appoints the Underwriters and the US Affiliate, 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 Common Shares and
                        Warrants comprising the Units, 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 Offered Units and to
                        exercise any rights of termination contained in the Underwriting
                        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
                        Underwriting 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 Underwriters in their sole discretion may determine; and

                    

        

        
            	
                         

                    	
                        
                        (d)

                    	
                        
                        without limiting the generality of the foregoing, to
                        negotiate, settle, execute, deliver and amend the Underwriting
                        Agreement.

                    

        

        
        ARTICLE 9 - COMMISSION

        
            	
                        

                        
                        9.1

                    	
                        
                        Fee to the Underwriters

                    

        

        
        The Subscriber understands that in connection with the issue and sale of the
        Offered Units pursuant to the Offering, the Underwriters will receive from the Corporation
        on Closing, a cash fee equal to 6.0% of the gross proceeds of the offering of Offered
        Units, less US$45,000, and Broker Warrants entitling the Underwriters to acquire that
        number of Common Shares as is equal to 3.0% of the total number of Common Shares issued on
        Closing pursuant to the Offering at the U.S. dollar equivalent of the Offered Unit Price
        (calculated at the Closing Date) 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 Underwriters in connection with the Offering as set out in the Underwriting
        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 Underwriters 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 Underwriters 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 Underwriters may be
        required by Securities Laws, stock exchange rules and/or Investment Dealers Association 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 Underwriters,
        as the case may be,

        
            	
                        
                         

                    	
                        
                        A-15

                    

        

        
        
        

        
             may use and disclose its personal information, or that of each
            beneficial purchaser for whom it is contracting hereunder, as follows:
        

        
             
        

        
            	
                         

                    	
                        
                        (a)

                    	
                        
                        for internal use with respect to managing the relationships
                        between and contractual obligations of the Corporation, the Underwriters
                        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 Underwriters 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-16

                    

        

        
        
        

        
            
            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 Underwriters at:

                    

        

        
        Clarus Securities Inc.

        
        200 Burrard Street, Suite 1615

        
        Vancouver, British Columbia

        
        V6C 3L6

        
         

        
        Attention: Rod Campbell

        
        Fax: (604) 605-5704

        
         

        
            	
                         

                    	
                        
                        (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

                    

        

         

        
            	
                        
                         

                    	
                        
                        A-17

                    

        

         

         

        
        
        

        
            
             

            
                	
                             

                        	
                            
                             

                        	
                            
                            have been given and received on the first Business Day
                            next following the day of such transmission.

                        

            

            
                	
                             

                        	
                            
                            (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.

        
         

        
            	
                        
                         

                    	
                        
                        A-18

                    

        

        
        
        

        
        

        
            	
                        

                        
                        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.

        
            	
                        

                        
                        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 Offered
        Units 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.

        
         

        
            	
                        
                         

                    	
                        
                        A-19

                    

        

        
        
        

         

        
            	
                        
                        SCHEDULE "B"

                        
                         

                        
                        TERM SHEET

                    
	
                        
                         

                    
	
                        
                         

                    
	
                        
                         

                    	
                        
                        Issuer:

                    	
                        
                        U.S. Geothermal Inc. (“U.S.
                        Geothermal” or the
                        “Company”).

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Offering:

                    	
                        
                        Private placement of 4,260,000 Units (the
                        “Units”).

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Amount:

                    	
                        
                        CAD$10,011,000

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Issue Price:

                    	
                        
                        CAD$2.35 per Unit.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Unit:

                    	
                        
                        Each Unit consists of one Common Share in the capital of the
                        Company and one half of one Warrant (as defined below).

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Warrants:

                    	
                        
                        Each whole Common Share purchase warrant (a
                        “Warrant”)
                        entitles the holder thereof to acquire one Common Share in the capital of
                        the Company for a period of 24 months following the Closing Date at an
                        exercise price of US$3.00.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Underwriter’s Option:

                    	
                        
                        The Underwriters has the right, exercisable at any time up
                        to 48 hours prior to the Closing Date, to increase the size of the Offering
                        by any amount such that the total Offering size may be up to a maximum of
                        CAD$15,000,000.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Type of Transaction:

                    	
                        
                        Underwritten, private placement issue subject to a formal
                        underwriting agreement, including standard industry indemnities and terms,
                        and termination provisions including “disaster out”,
                        “regulatory proceeding out” and “material change
                        out”. The Units will be sold by private placement without an offering
                        memorandum.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Use of Proceeds:

                    	
                        
                        The net proceeds of the offering will be used by the Company
                        to complete the acquisition of assets from Empire Geothermal Power LLC and
                        for working capital and general corporate purposes.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Jurisdictions:

                    	
                        
                        The jurisdictions for this offering will be the provinces of
                        British Columbia, Alberta, Manitoba, Ontario and Quebec in Canada and those
                        jurisdictions outside of Canada that are agreed to by the Company and the
                        Underwriters. The Units may be sold on a private placement basis pursuant
                        to an exemption from the registration requirements in Regulation D of the
                        United States Securities Act of 1933, as amended.

                    	
                        
                         

                    
	
                        
                         

                    	
                        
                        Resale and Hold Period:

                    	
                        
                        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” of not
                        more than six months from the Closing Date pursuant to US securities laws.
                        The securities issued in the Offering, and issuable upon 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 for resale of the Common Shares and the Common Shares underlying
                        the Warrants and the Compensation Options (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. In
                        the event that the registration statement has not become effective on or
                        before the date that is 5 months following the closing, purchasers of the
                        Units will be entitled to receive an additional 0.10 Common Shares for
                        every Unit purchased in the Offering. Pursuant to National Instrument
                        45-102, the Units (and underlying securities) issuable on the Closing Date
                        and the Common Shares issuable on exercise of the 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.

                    	
                        
                         

                    
	
                    	
                    	
                    	
                    

        

         

        

         

        
            	
                        
                        TSX Listing:

                    	
                        
                        The Company shall obtain the necessary approvals to list the
                        Common Shares issuable on the Closing Date and the Common Shares issuable
                        on exercise of the Warrants and Compensation Options (defined below) on the
                        Toronto Stock Exchange (the
                        “TSX”).

                    
	
                        
                        Underwriting Commission:

                    	
                        
                        6.0% of the gross proceeds of the Offering, payable at
                        closing, less US$45,000. In addition, the Company has agreed to grant the
                        Underwriters compensation options (the
                        “Compensation
                        Options”) entitling the Underwriters to
                        purchase Common Shares equal to 3.0% of the total number of Common Shares
                        issued at closing pursuant to the Offering, exercisable at the Issue Price
                        (as converted to US dollars on the Closing Date) for a period of 24 months
                        from the Closing Date.

                    
	
                        
                        Expenses:

                    	
                        
                        The Company will be responsible for all expenses of the
                        Offering, including the Underwriter’s reasonable out-of-pocket
                        expenses and the reasonable fees and disbursements of legal counsel to the
                        Underwriters, up to an aggregate of $75,000.

                    
	
                        
                        Closing Date:

                    	
                        
                        On or before April 25, 2008, or such other date(s) as
                        mutually agreed upon by the Company and Clarus Securities Inc.

                    
	
                        
                        Underwriters:

                    	
                        
                        Clarus Securities Inc., Toll Cross Securities Inc. and
                        Loewen Ondaatje McCutcheon Limited

                    

        

         

         

        
            	
                        
                         

                    	
                        
                        B-2

                    

        

        
        
        

        
        Schedule “C”

        
        CERTIFICATE OF SUBSCRIBERS

        
        UNITED STATES ACCREDITED INVESTOR CERTIFICATE

        
            	
                        TO:

                    	
                        U.S. Geothermal Inc. (THE
                        “CORPORATION”)

                        

                    
	
                        AND TO:

                    	
                        CLARUS SECURITIES INC., TOLL CROSS SECURITIES INC.
                        and LOEWEN ONDAATJE McCUTCHEON LIMITED

                        

                    
	
                        AND TO:

                    	
                        TOLL CROSS SECURITIES USA INC.

                        

                    
	
                        RE:

                    	
                        SUBSCRIPTION FOR OFFERED UNITS 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 Offered Units, 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 Offered Units, 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
                        Offered Units

                    
	
                        _____ 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 Offered Units.

        
        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 Offered Units 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 Offered Units 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 Offered Units 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
                        Offered Units, 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 Offered Units
                        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. Capitalized terms used and not
        otherwise defined herein that are defined in the Subscription Agreement will have the
        meanings given such terms in the Subscription Agreement. 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
        Underwriting Agreement.

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

        
        “Effectiveness Date” means with
        respect to the Registration Statement required to be filed hereunder, the day that is five
        months following the Closing Date. For purposes of clarification, the declaration of a
        Delay Period prior to the effectiveness of the Registration Statement does not modify the
        Effectiveness Date.

        
        “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 Registerable
        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, (iii) the Additional Shares
        (as defined in Section 2(b)), and (iv) 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
        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 (the “TSX”) 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 Securities and
                        Exchange Commission (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 but, in any event, no later than its Effectiveness Date, 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)

                    	
                        
                        If the Registration Statement is not declared effective by
                        the Commission on or prior to its required Effectiveness Date, then the
                        Company shall issue to each Holder, as its sole and exclusive remedy for
                        the failure of the Registration Statement to become effective and as
                        liquidated damages and not as a penalty, an additional 0.1 Common Shares
                        for every Unit purchased pursuant to the Subscription Agreement to which
                        this Schedule is attached (the “Additional Shares”). No
                        fractions of a share of Additional Shares shall be issued, but in lieu
                        thereof each Holder otherwise entitled to a fraction of an Additional Share
                        shall be entitled to receive an amount of cash (without interest)
                        determined by multiplying the average closing price for Common Shares as
                        reported on the TSX on the required Effectiveness Date by the fractional
                        share interest to which such holder

                    

        

        

        
        would otherwise be entitled. The parties acknowledge that payment of the
        cash consideration in lieu of issuing fractional shares was not separately bargained for
        consideration, but merely represents a mechanical rounding off for purposes of simplifying
        the corporate and accounting complexities that would otherwise be caused by the issuance of
        fractional shares.

        
            	
                         

                    	
                        
                        (c)

                    	
                        
                        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.

                    

        

        
            	
                         

                    	
                        
                        (d)

                    	
                        
                        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 May 9, 2008. The
                        Company shall not be required to include the Registrable Securities of a
                        Holder in the Registration Statement and shall not be required to pay any
                        liquidated or other damages under Section 2(b) to any Holder who fails to
                        furnish to the Company a fully completed Selling Holder Questionnaire by
                        the later of (i) May 9, 2008 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 or pay any
                        liquidated or other damages under Section 2(b) to any 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.

                    

        

        
            	
                         

                    	
                        
                        (e)

                    	
                        
                        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.

                    

        

        
        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. The Effectiveness Date shall be
                        extended by the number of days such objection remains unresolved
                        (calculated commencing on the sixth Trading Day after the Holders were
                        furnished copies of the applicable filing and ending on the date the
                        Company is notified of the lifting of such objection in
                        writing).

                    

        

        
            	
                         

                    	
                        
                        (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
                        Underwriters 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.

                    

        

        
            	
                         

                    	
                        
                        (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 NASD Rule 2710, 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 Registerable 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 then outstanding Registrable Securities.
                        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) Registerable 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 Trading Market 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 shares 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 shares 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 resale shares. There is no
        underwriter or coordinating broker acting in connection with the proposed sale of the
        resale shares 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 resale shares will be sold only through registered
        or licensed brokers or dealers if required under applicable state securities laws. In
        addition, in certain states, the resale shares 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 resale shares 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: _____________________________

                    

        

         

         

        
            	
                        
                         

                    	
                        
                        - 2 -

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