Document:

Separation Agreement

 Exhibit 10.1 
 Execution Copy 
 SEPARATION AGREEMENT 
 THIS SEPARATION AGREEMENT, dated as of March 5, 2010, is made by and between Domino’s Pizza LLC (hereinafter referred to as the
“Company”) and L. David Mounts (hereinafter referred to as “Executive”). In consideration of the mutual covenants contained herein, the parties agree as follows: 
  

	 	1.	Termination of Active Employment. Executive’s last day of active employment with the Company will be March 31, 2010. However, Executive will continue
to provide certain services to the Company including cooperating with the reasonable requests of the Company to support the transition of the Executive’s duties to other Company personnel; and providing of information reasonably requested by
Company personnel to continue the projects under the current purview of Executive. The Company and Executive expressly waive any and all notice requirements under the Amended and Restated Employment Agreement (the “Employment Agreement”)
between the Company and the Executive. 

  

	 	2.	Vested Option Exercisability. In accordance with the action by the Compensation Committee of the Company, all of the then vested stock options held by Executive
on April 1, 2010 will remain exercisable through October 1, 2010 and will expire immediately thereafter and be canceled. 

  

	 	3.	Unvested Option Cancelation. All unvested stock options and performance shares held by Executive on March 31, 2010 will be canceled on that date.

  

	 	4.	No Compensation. Executive shall not be entitled to any other compensation or benefits after March 31, 2010, except as set forth in Section 2 above.

  

	 	5.	Effect of Breach. The Executive agrees that the benefits contained in this Agreement and which flow to the Executive from the Company are subject to termination,
reduction or cancelation in the event that the Executive takes any action or engages in any conduct deemed by the Company to be in violation of this Agreement or Section 7, 8 or 9 of the Employment Agreement. 

  

	 	6.	Additional Executive Obligations. 

  

	 	a.	Return of Property. The Executive shall return all papers, files, documents, cell phones, computers, reference guides, equipment, keys, identification, credit
cards, software, computer access codes, disks and institutional manuals, or other property belonging to the Company on or before March 31, 2010. The Executive shall not retain any copies, duplicates, reproductions or excerpts of any of the
Company’s property. The executive may retain copies of all agreements between the Executive and the Company and other documents relating to his personal performance. 

  

	 	b.	Nondisclosure of Confidential Information. During the course of the Executive’s employment with the Company, the Executive has become acquainted with and/or
developed confidential information belonging to the Company and its customers. The Executive agrees not to use or to disclose to any person or entity any confidential information of the Company or of any past or present customer of the Company,
including but not limited to financial data or projections, customer lists, projects, economic information, systems, plans, methods, procedures, operations, techniques, know-how, trade secrets or merchandising or marketing strategies.

  

	 	c.	Executive’s Compliance with Sections 7, 8, and 9 of Employment Agreement. In addition, Executive shall continue to be bound by the terms of Section 7,
8 and 9 of the Employment Agreement and agrees to comply with such terms and provisions. 

 [Remainder of Page Left
Intentionally Blank] 

 Execution Copy 
 IN WITNESS WHEREOF, the parties hereby agree to the foregoing terms and conditions of the Separation Agreement as of the date first written above. 
  

							
	DOMINO’S PIZZA LLC	 		 	EXECUTIVE
				
	By:	 	 /s/ J. Patrick Doyle
	 		 	 /s/ L. David Mounts

		 		 		 	L. David Mounts
	Name:	 	 J. Patrick Doyle
	 		 	
				
	Title:	 	 Chief Executive OfficerU.S. Geothermal Inc.- Exhibit 10.1 - Filed by newsfilecorp.com

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

          This
Securities Purchase Agreement (this “Agreement”) is dated as of March 8,
2010, between U.S. Geothermal Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto
(each, including its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”). 

          WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 promulgated thereunder, and pursuant to National
Instrument 45-106 (“NI 45-106”), the Company desires to issue and sell to
each Purchaser, and each Purchaser, severally and not jointly, desires to
purchase from the Company, securities of the Company as more fully described in
this Agreement. 

          NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as follows: 

ARTICLE I. 

  DEFINITIONS

          1.1      Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes
of this Agreement, the following terms have the meanings set forth in this
Section 1.1: 

          “Acquiring
Person” shall have the meaning ascribed to such term in Section 4.6.

          “Action”
shall have the meaning ascribed to such term in Section 3.1(j) . 

          “Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

          “AMEX”
means the NYSE Amex LLC.

          “Board
of Directors” means the board of directors of the Company.

          “Bracewell”
means Bracewell & Giuliani LLP, with offices at 711 Louisiana Street, Suite
2300, Houston, Texas 77002. 

          “Business
Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close. 

          “Canadian
Counsel” means Goodmans, with offices located at 355 Burrard Street, Suite
1900, Vancouver, British Columbia V6C 2G8. 

          “Canadian
Purchaser” means any purchaser of Securities that is a resident of Canada.

          “Closing”
means the closing of the purchase and sale of the Shares and Warrants pursuant
to Section 2.1. 

          “Closing
Date” means the Trading Day on which all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Shares and Warrants, in
each case, have been satisfied or waived. 

          “Commission”
means the United States Securities and Exchange Commission.

          “Common
Stock” means the common stock of the Company, par value $0.001 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed. 

          “Common
Stock Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock. 

          “Company
Counsel” means Dorsey & Whitney LLP, with offices located at 701 Fifth
Avenue, Suite 6100, Seattle, Washington 98104-7043.

          “Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1. 

          “Effective
Date” means the earlier of the date that (a) all of the Registrable
Securities (as defined in the Registration Rights Agreement) have been
registered for resale by the holders thereof pursuant to a registration
statement(s) declared effective by the Commission and (b) all of the Registrable
Securities have been sold pursuant to Rule 144 or may be sold pursuant to Rule
144 without the requirement for the Company to be in compliance with the current
public information required under Rule 144 and without volume or manner-of-sale
restrictions. 

          “Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s) .

          “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder. 

          “Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers or directors of the Company pursuant to any stock or option
plan duly adopted for such purpose, by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued
hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of
this Agreement to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such securities, other
than any adjustments in accordance with anti-dilution provisions contained in
such securities on the date hereof, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or
through its subsidiaries, an operating company or an asset in a business
synergistic with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is
investing in securities, and (d) securities issued by a Subsidiary of the
Company in connection with the development of such Subsidiary’s projects,
provided that any such securities are not exchangeable for or convertible into
securities of the Company or otherwise linked to securities of the Company. 

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          “GAAP”
shall have the meaning ascribed to such term in Section 3.1(h) . 

          “Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(cc) .

          “Intellectual
Property Rights” shall have the meaning ascribed to such term in Section
3.1(o) . 

          “Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.2(c)
.. 

          “Liens”
means a lien, charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction. 

          “Lock-up
Agreements” means the Lock-up Agreements between the Placement Agents and
each of the persons specified on Schedule 2.2(a)(vii), in the form of
Exhibit A attached hereto. 

          “Material
Adverse Effect” shall have the meaning ascribed to such term in Section
3.1(b) . 

          “Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m) .

          “Per
Share Purchase Price” equals $1.05, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement.

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          “Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind. 

          “Placement
Agents” means RBC Capital Markets Inc., Clarus Securities Inc., Dundee
Securities Corporation and Robert W. Baird & Co. 

          “Projects”
means the Gerlach Project, the Granite Creek Project, the Neal Hot Springs
Project, the Raft River Project and the San Emidio Project. 

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

          “Purchaser
Party” shall have the meaning ascribed to such term in Section 4.9.

          “Registration
Rights Agreement” means the Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit B
attached hereto. 

          “Registration
Statement” means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale by the Purchasers
of the Shares and the Warrant Shares. 

          “Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e) .

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

          “SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h)
..

          “Securities”
means the Shares, the Warrants and the Warrant Shares. 

          “Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder. 

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

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

          “Selling
Jurisdictions” means each of the provinces of Canada, other than Quebec, and
the United States and such other jurisdictions which are agreed to by the
Company and the Purchasers; and “Selling Jurisdiction” means, in the case of any
Purchaser, the jurisdiction in which such Purchaser is resident. 

          “Shares”
means the shares of Common Stock issued or issuable to each Purchaser pursuant
to this Agreement. 

          “Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock). 

          “Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for
Shares and Warrants purchased hereunder as specified below such Purchaser’s name
and address on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in immediately available
funds. 

          “Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and
shall, where applicable, also include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof. 

          “Trading
Day” means a day on which the principal Trading Market is open for trading.

          “Trading
Market” means any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: AMEX, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, the OTC Bulletin Board, TSX or the TSX Venture Exchange
(or any successors to any of the foregoing). 

          “Transaction
Documents” means this Agreement, the Warrants, the Registration Rights
Agreement, the Lock-Up Agreements, all exhibits and schedules thereto and hereto
and any other documents or agreements executed in connection with the
transactions contemplated hereunder. 

          “Transfer
Agent” means Computershare Trust Company N.A., the current transfer agent of
the Company, with a mailing address of 350 Indiana Street, Suite 800, Golden, CO
80401 and a facsimile number of (303) 262-0632, and any successor transfer agent
of the Company. 

          “TSX”
means the Toronto Stock Exchange.

          “Variable
Rate Transaction” shall have the meaning ascribed to such term in Section
4.12(b) . 

5

          “VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if the Common Stock is not then listed or quoted for trading on the OTC Bulletin
Board and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (c) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Purchasers of a majority in interest of
the Shares then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company. 

          “Warrants”
means, collectively, the Common Stock purchase warrants delivered to the
Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be exercisable six months after the Closing Date (the “Initial
Exercise Date”) and have a term of exercise equal to five (5) years from the
Initial Exercise Date, in the form of Exhibit C attached hereto. 

          “Warrant
Shares” means the shares of Common Stock issuable upon exercise of the
Warrants. 

ARTICLE II. 
PURCHASE AND SALE 

          2.1     
Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchasers, severally and not jointly, agree to purchase, up to an
aggregate of $8,619,994.95 of Shares and Warrants. Each Purchaser shall deliver
to the Company via wire transfer of immediately available funds equal to such
Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser, and the Company shall deliver to each Purchaser its
respective Shares and a Warrant, as determined pursuant to Section 2.2(a), and
the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of Bracewell or such other location as the parties shall mutually agree.

          2.2      Deliveries.

          (a)     
On or prior to the Closing Date, the Company shall deliver or cause to be
delivered to each Purchaser the following: 

          (i)     
this Agreement duly executed by the Company; 

          (ii)      a
legal opinion of Company Counsel, substantially in the form of Exhibit D
attached hereto; 

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          (iii)      a
legal opinion of Canadian Counsel, substantially in the form of Exhibit E
attached hereto; 

          (iv)     
a copy of the irrevocable instructions to the Transfer Agent instructing the
Transfer Agent to deliver, on an expedited basis, a certificate evidencing a
number of Shares equal to such Purchaser’s Subscription Amount divided by the
Per Share Purchase Price, registered in the name of such Purchaser; 

          (v)      a
Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to 50% of such Purchaser’s Subscription Amount
divided by 1.05, with an exercise price equal to $1.25, subject to adjustment
therein; 

          (vi)      the
Registration Rights Agreement duly executed by the Company; and 

          (vii)     
a Lock-up Agreement from each of the persons specified on Schedule
2.2(a)(vii) hereto. 

          (b)      On
or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following: 

          (i)     
this Agreement duly executed by such Purchaser; 

          (ii)     
such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company; 

          (iii)     
if the Purchaser is a Canadian Purchaser, an executed copy of the Subscriber
Certificate attached as Appendix A or Appendix B, as applicable,
and in the manner further described in Section 3.4; and 

          (iv)      the
Registration Rights Agreement duly executed by such Purchaser. 

          2.3     
Closing Conditions.

          (a)      The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met: 

          (i)      the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein);

          (ii)      all
obligations, covenants and agreements of each Purchaser required to be performed
at or prior to the Closing Date shall have been performed; 

7 

          (iii)      the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement; and 

          (iv)      the
approval by each of AMEX and TSX of the listing of the Shares and the Warrant
Shares on such respective Trading Market. 

          (b)      The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met: 

          (i)     
the accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein (unless as of a
specific date therein); 

          (ii)     
all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;

          (iii)      the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

          (iv)      there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof; and 

          (v)     
from the date hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company’s principal Trading Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable or inadvisable to
purchase the Shares and Warrants at the Closing. 

ARTICLE III. 
REPRESENTATIONS AND
WARRANTIES

          3.1     
Representations and Warranties of the Company. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to the extent of
the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties
to each Purchaser: 

          (a)     
Subsidiaries. All of the direct and indirect subsidiaries of the Company
are set forth on Schedule 3.1(a). The Company owns, directly or
indirectly, all of the capital stock or other equity interests
of each Subsidiary free and clear of any Liens, and all of the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. If the Company has no subsidiaries, all
other references to the Subsidiaries or any of them in the Transaction Documents
shall be disregarded. 

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          (b)     
Organization and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no Proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit
or curtail such power and authority or qualification. 

          (c)      Authorization;
Enforcement. The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection therewith other than in connection
with the Required Approvals. Each Transaction Document to which it is a party
has been (or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

9

          (d)      No
Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents, the issuance and sale of the Securities and the
consummation by it of the transactions contemplated hereby and thereby to which
it is a party do not and will not: (i) conflict with or violate any provision of
the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect. 

          (e)      Filings,
Consents and Approvals. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
the filings required pursuant to Section 4.5 of this Agreement (collectively,
the “Required Approvals”). 

          (f)      Issuance
of the Securities. The Securities (including the Warrant Shares) are duly
authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The Company
has reserved from its duly authorized capital stock the maximum number of shares
of Common Stock issuable pursuant to this Agreement, including the Warrants.

          (g)      Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(g),
which Schedule 3.1(g) also includes the number of shares of Common Stock
owned beneficially, and of record, by Affiliates of the Company as of the date
hereof. The Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant to the
exercise of employee stock options under the Company’s stock option plans, the
issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities, and except for
5,729,875 shares of Common Stock issuable by the Company
pursuant to stock options held by the Company’s officers, directors and other
employees, and 7,675,725 shares of Common Stock issuable pursuant to
outstanding warrants, there are no outstanding options, warrants, scrip rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire any
shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary, other than Raft River
Energy I, LLC, is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents. The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under any of such securities. All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders. 

10

          (h)     
SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the 12 months preceding the date hereof (or
such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”). As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The Company has never been an issuer subject to Rule
144(i) under the Securities Act. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing; provided that the annual
financial statements of the Company for the year ended March 31, 2009 so
complied at the time of filing of Amendment No. 2 to the Company’s Annual Report
on Form 10-K filed with the Commission on November 24, 2009. Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments. 

11

          (i)      Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of
the latest audited financial statements included within the SEC Reports, except
as specifically disclosed in a subsequent SEC Report filed prior to the date
hereof: (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Securities
contemplated by this Agreement or as set forth on Schedule 3.1(i), no
event, liability, fact, circumstance, occurrence or development has occurred or
exists, or is reasonably expected to occur or exist, with respect to the Company
or its Subsidiaries or their respective business, properties, operations, assets
or financial condition, that would be required to be disclosed by the Company
under applicable Securities Laws at the time this representation is made or
deemed made that has not been publicly disclosed at least one Trading Day prior
to the date that this representation is made. 

          (j)      Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the Securities
or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act
except for the requirement to refile the Company’s Registration Statement on
Form S-3 (No. 333-151858) on Form S-1. 

12

          (k)     
Labor Relations. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company,
which could reasonably be expected to result in a Material Adverse Effect. None
of the Company’s or its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company or such Subsidiary, and
neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their
relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant in favor of any third party,
and, to the knowledge of the Company, the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. 

          (l)     
Compliance. Neither the Company nor any Subsidiary: (i) is in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
judgment, decree, or order of any court, arbitrator or governmental body or
(iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business and all such laws that
affect the environment, except in each case as could not have or reasonably be
expected to result in a Material Adverse Effect. 

          (m)     
Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit. 

          (n)      Title
to Assets. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them and good and marketable title
in all personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries and Liens for the
payment of federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance except where non-compliance could not reasonably be expected
to result in a Material Adverse Effect. 

13

          (o)     
Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described
in the SEC Reports as necessary or material for use in connection with their
respective businesses and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property Rights”).
Neither the Company nor any Subsidiary has received a notice (written or
otherwise) that any of the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. 

          (p)     
Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage at least equal to the aggregate Subscription Amount.
Neither the Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost. 

          (q)     
Transactions With Affiliates and Employees. Except as set forth in the
SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $120,000 other than for: (i) payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including
stock option agreements under any stock option plan of the Company. 

14

          (r)     
Projects. 

          (i)      The
Company has acquired (or in the case of future actions, expects to acquire in
the ordinary course of business) 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 Projects, and rights and allocation to water,
that are necessary to conduct its business as currently conducted, and proposed
to be conducted at the Raft River, Neal Hot Springs and San Emidio Repower
Projects as described in the Disclosure Schedules, except where the failure to
hold such leases easements, rights of way, access rights, and rights and
allocation to water would not have a Material Adverse Effect. 

          (ii)     
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 (or in the case of future actions,
are expected to be acquired in the ordinary course of business) and are
sufficient to permit the Company and each Subsidiary to conduct its business as
currently conducted and proposed to be conducted at the Raft River, Neal Hot
Springs and San Emidio Repower Projects as described in the Disclosure
Schedules. 

          (iii)      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 have
a Material Adverse Effect. 

          (iv)      The
Company has not received any, nor to the Company’s knowledge are there any
pending or threatened, notices of violation or alleged violation of any
applicable laws affecting the Projects. 

          (v)      The
Company has such rights of entry and exit to and from the Projects as are
reasonably necessary to carry on its business and operate at the Projects. 

          (vi)      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 Projects. 

          (vii)     
To the Company’s knowledge, the Projects are now zoned and otherwise regulated
so as to permit the use of the sites for their intended uses and in accordance
with applicable law. 

15

          (viii)      Neither
the Company 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 Projects other than liens or encumbrances
imposed in the ordinary course of business. 

          (ix)      There
are no outstanding judgments, writs of execution, seizures, injunctions or
directives against the Company 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 Projects. 

          (x)      The
Company holds all necessary rights for all roads necessary for full utilization
of the Projects, as applicable, as each is currently conducted. 

          (xi)      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 Projects as each project is currently
conducted at the Raft River, Neal Hot Springs and San Emidio Projects and as
each is intended to be developed. 

          (s)     
Sarbanes-Oxley; Internal Accounting Controls. The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it as of the Closing Date. Other than as disclosed in the SEC
Reports, the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Other
than as disclosed in the SEC Reports, the Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed annual report under
the Exchange Act (such date, the “Evaluation Date”). The Company
presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no changes in the Company’s internal
control over financial reporting (as such term is defined in the Exchange Act)
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting. 

16

          (t)     
Securities Laws. The Company is a reporting issuer under the securities
laws of the provinces of Ontario, Alberta and British Columbia and a registrant
under the Exchange Act, and except as disclosed to the Purchasers in writing is
not in default in any material respect of any requirement of such Securities
Laws. The Company is not included on a list of defaulting reporting issuers by
the securities regulatory authorities of the provinces of Ontario, Alberta and
British Columbia. Since March 31, 2009, and except as disclosed to the
Purchasers in writing, the Company has been in compliance in all material
respects with its continuous disclosure obligations under the Securities Laws.

          (u)      Certain
Fees. Except for compensation paid or payable to the Placement Agents, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by the Transaction
Documents. 

          (v)     
Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 and the Canadian
Purchasers’ representations and warranties set forth in Section 3.4, no
registration under the Securities Act or the filing of any prospectus under any
Canadian Securities Laws is required for the offer and sale of the Securities by
the Company to the Purchasers as contemplated hereby. The issuance and sale of
the Securities hereunder does not contravene the rules and regulations of the
Trading Markets. 

          (w)      Investment
Company. The Company is not, and is not an Affiliate of, and immediately
after receipt of payment for the Securities, will not be or be an Affiliate of,
an “investment company” within the meaning of the Investment Company Act of
1940, as amended. The Company shall conduct its business in a manner so that it
will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended. 

          (x)     
Registration Rights. Other than each of the Purchasers and as disclosed
in Schedule 3.1(x), no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the
Company. 

          (y)     
Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. The Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements. 

17

          (z)      Application
of Takeover Protections. The Company and the Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities. 

          (aa)      Disclosure.
Except with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or
might constitute material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representation in
effecting transactions in securities of the Company. All of the disclosure
furnished by or on behalf of the Company to the Purchasers regarding the
Company, its business and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of this
Agreement taken as a whole do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made and when made, not misleading. The Company acknowledges and
agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof. 

          (bb)      No
Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 and the Canadian
Purchasers’ representations and warranties set forth in Section 3.4, neither the
Company, nor any of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of (i) the Securities Act which would require the
registration of any such securities under the Securities Act, or (ii) any
applicable shareholder approval provisions of any Trading Market on which any of
the securities of the Company are listed or designated. 

          (cc)     
Solvency. Based on the consolidated financial condition of the Company as
of the Closing Date, after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder: (i) the fair saleable value
of the Company’s assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof, and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its liabilities when such
amounts are required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt). The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date.
Neither the Company nor any Subsidiary is in default with respect to any
Indebtedness. For the purposes of this Agreement, “Indebtedness” means
(x) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. 

18

          (dd)      Tax
Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the
Company and each Subsidiary has filed all necessary federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Company has no knowledge of a tax deficiency which has been
asserted or threatened against the Company or any Subsidiary. 

          (ee)     
No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has, directly or indirectly, offered or sold any of the
Securities by any form of general solicitation or general advertising (as such
terms are used in Regulation D under the Securities Act). The Company has
offered the Securities for sale only to the Purchasers and certain other
“accredited investors” within the meaning of Rule 501 under the Securities Act,
and, in respect of any sale of Securities to Canadian Purchasers, the Company
has offered the Securities for sale only to Canadian Purchasers whom it
reasonably believes are “accredited investors” within the meaning of section 1.1
of NI 45-106. 

          (ff)     
Foreign Corrupt Practices. Neither the Company, nor to the knowledge of
the Company, any agent or other person acting on behalf of the Company, has: (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law or (iv) violated in any
material respect any provision of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder or the Corruption of Foreign
Public Officials Act (Canada). 

19

          (gg)      Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(gg) of the
Disclosure Schedules. To the knowledge and belief of the Company, such
accounting firm: (i) is a registered public accounting firm as required by the
Exchange Act and (ii) shall express its opinion with respect to the financial
statements to be included in the Company’s Annual Report for the fiscal year
ending March 31, 2010. 

          (hh)      No
Disagreements with Accountants and Lawyers. There are no disagreements of
any kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company and the Company is current with respect to any fees owed
to its accountants and lawyers which could affect the Company’s ability to
perform any of its obligations under any of the Transaction Documents. 

          (ii)     
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives, and on
each Purchaser’s representations, warranties and agreements in the Transaction
Documents. 

          (jj)      Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or
elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and
4.14 hereof), it is understood and acknowledged by the Company that: (i) none of
the Purchasers have been asked by the Company to agree, nor has any Purchaser
agreed, to desist from purchasing or selling, long and/or short, securities of
the Company, or “derivative” securities based on securities issued by the
Company or to hold the Securities for any specified term, (ii) past or future
open market or other transactions by any Purchaser, specifically including,
without limitation, Short Sales or “derivative” transactions, before or after
the closing of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded securities, (iii) any
Purchaser, and counter-parties in “derivative” transactions to which any
such Purchaser is a party, directly or
indirectly, may presently have a “short” position in the Common Stock and (iv)
each Purchaser shall not be deemed to have any affiliation with or control over
any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (y) one or more Purchasers may engage
in hedging activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Warrant Shares deliverable with respect to Securities are being determined,
and (z) such hedging activities (if any) could reduce the value of the existing
stockholders’ equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents. 

20

          (kk)      Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its
behalf has, (i) taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid to
the Placement Agents in connection with the placement of the Securities. 

          (ll)      Stock
Option Plans. Each stock option granted by the Company under the Company’s
stock option plan was granted (i) in accordance with the terms of the Company’s
stock option plan and (ii) with an exercise price at least equal to the fair
market value of the Common Stock on the date such stock option would be
considered granted under GAAP and applicable law. No stock option granted under
the Company’s stock option plan has been backdated. The Company has not
knowingly granted, and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects. 

          3.2     
Representations and Warranties of the Purchasers. Each Purchaser
(including each Canadian Purchaser), for itself and for no other Purchaser,
hereby represents and warrants as of the date hereof and as of the Closing Date
to the Company as follows (unless as of a specific date therein): 

          (a)     
Organization; Authority. Such Purchaser is either an individual or an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with full right, corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of the
Transaction Documents and performance by such Purchaser of the transactions
contemplated by the Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or similar action,
as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms, except:
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law. 

21

          (b)     
Own Account. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws). Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business. 

          (c)     
Purchaser Status. At the time such Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it exercises
any Warrants, it will be an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3) or (a)(7) under the Securities Act. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act. 

          (d)      Experience
of Such Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment. 

          (e)      General
Solicitation. Such Purchaser is not purchasing the Securities as a result of
any general solicitation or general advertising (as such terms are used in
Regulation D under the Securities Act), including, without limitation, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. 

          (f)      Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such
Purchaser, executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing as of the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s
assets, the representation set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. Such Purchaser
has maintained the confidentiality of all disclosures made to it in connection
with this transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with
respect to the identification of the availability of, or securing of, available
shares to borrow in order to effect Short Sales or similar transactions in the
future, provided that all such transactions are made in compliance with
applicable laws, including Regulation M under the Exchange Act. 

22

          (g)      Purchaser
Address. Such Purchaser is a resident in the jurisdiction set out on the
Purchaser signature pages to this Agreement. Such address was not created and is
not being used solely for the purpose of acquiring the Securities and such
Purchaser was solicited to purchase the Securities and executed this Agreement
in such jurisdiction. 

          (h)      No
Conflicts. The execution and delivery of this Agreement, the performance and
compliance with the terms hereof, the purchase of the Securities and the
completion of the transactions described herein by such Purchaser 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 constituting documents, by-laws or resolutions of such
Purchaser, the Securities Laws or any other laws applicable to such Purchaser,
any agreement to which such Purchaser is a party, or any judgment, decree,
order, statute, rule or regulation applicable to such Purchaser. 

          (i)     
Public Information. Such Purchaser 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 of the Securities, and
such Purchaser’s decision to subscribe for the Shares and Warrants was based
upon the Transaction Documents, the Company’s publicly available documents
included in the Edgar database administered by the Commission and the SEDAR
database administered under the direction of the Canadian Securities
Administrators. Such Purchaser’s investment decision was not otherwise based
upon, and such Purchaser has not relied upon, any other verbal or written
representations as to facts made by or on behalf of the Company. 

23

          (j)      No
Brokerage or Finder’s Fees. Other than the Placement Agents, to the best of
such Purchaser’s knowledge, there is no person acting or purporting to act on
behalf of such Purchaser in connection with the transactions contemplated herein
who is entitled to any brokerage or finder’s fee. 

          3.3      Agreements
and Acknowledgements of the Purchasers. Each Purchaser (including each
Canadian Purchaser), for itself and for no other Purchaser, hereby agrees with,
and acknowledges to, the Company as follows: 

          (a)      Responsibility
Regarding Resale Restrictions. There are restrictions on such Purchaser’s
ability to resell the Securities and it is the responsibility of such Purchaser
to find out what those restrictions are and to comply with them before selling
the Securities. Such Purchaser has been advised to consult its own legal
advisors with respect to trading in any of the Securities and with respect to
the resale restrictions imposed by the Securities Laws of the jurisdiction in
which such Purchaser resides, other applicable Securities Laws, and the policies
of the TSX and AMEX, and acknowledges that it is solely responsible to find out
what these restrictions are and for compliance with applicable resale
restrictions. 

          (b)      No
Regulatory Review, Insurance. No securities commission or similar regulatory
authority has reviewed or passed on the merits of the Securities. There is no
government or other insurance covering the Securities. There are risks
associated with the purchase of the Securities. 

          (c)     
Certain Remedies Unavailable. The Company has advised such Purchaser that
the Company is relying on an exemption from the requirements to provide such
Purchaser with a prospectus and to sell Securities through a person registered
to sell Securities under the Securities Laws and, as a consequence of acquiring
Securities pursuant to this exemption, certain protections, rights and remedies
provided by the Securities Laws, including certain statutory rights of
rescission or damages, will not be available to such Purchaser. 

          3.4      Representations
and Warranties of the Canadian Purchasers. Each Canadian Purchaser, for
itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a
specific date therein): 

          (a)     
Such Canadian Purchaser is resident in one of the Selling Jurisdictions and is
entitled to purchase the Securities without the benefit of a prospectus
qualified under applicable Canadian Securities Laws. 

          (b)      Such
Canadian Purchaser is purchasing for investment only and not with a view to
resale or distribution. 

          (c)      Such
Canadian Purchaser agrees that it will not be able to resell the Securities
until expiry of the applicable hold period under applicable Securities Laws as
set out in the legend on the certificates evidencing the Securities, except in
accordance with limited exemptions and compliance with other requirements of
applicable Securities Laws, and such Canadian Purchaser (not
the Company) is responsible for compliance with applicable Canadian resale
restrictions or hold periods and will comply with all relevant Canadian
Securities Laws in connection with any resale of Securities. 

24

          (d)     
If not an individual or an investment fund, such Canadian Purchaser had a
pre-existing purpose and was not established solely or primarily for the purpose
of acquiring the Securities, in reliance on an exemption from applicable
prospectus requirements in the Selling Jurisdictions. 

          (e)     
If required by applicable Securities Laws or stock exchange rules, such Canadian
Purchaser will execute, deliver and file or assist the Company or the Placement
Agents in obtaining and filing such reports, undertakings and other documents
relating to the purchase of the Securities by such Canadian Purchaser as may be
required by applicable Securities Laws, any securities commission, stock
exchange or other regulatory authority. 

          (f)      Either:

          (i)      if
such Canadian Purchaser is (A) a resident of Ontario or Newfoundland and
Labrador and purchasing the Securities from a dealer appropriately registered
under Canadian Securities Laws, or (B) a resident of any Canadian province or
territory other than the provinces of Ontario or Newfoundland and Labrador, it
is purchasing the Securities with the benefit of the prospectus exemption
provided by section 2.3 of NI 45-106 and that such Canadian Purchaser is an
“accredited investor” as defined section 1.1 of NI 45-106 and as specified and
set out in Appendix A hereto, who is purchasing the Securities as
principal for its own account in accordance with applicable Securities Laws; or

          (ii)     
if such Canadian Purchaser is a resident of Ontario or Newfoundland and
Labrador, it is purchasing the Securities from a dealer registered in a
jurisdiction outside of Canada that satisfies the conditions to the
“international dealer exemption” under Canadian Securities Laws and is a
“permitted client” as defined in section 1.1 of National Instrument 31-103 and
as specified and set out in Appendix B hereto. 

          (g)      The
funds representing the Subscription Amount which will be advanced by such
Canadian Purchaser to the Company hereunder will not represent proceeds of crime
for the purposes of the Proceeds of Crime (Money Laundering Act) (Canada)
(the “PCMLA”) and such Canadian Purchaser acknowledges that the Company
may in the future be required by law to disclose such Canadian Purchaser’s name
and other information relating to this Agreement and such Canadian Purchaser’s
purchase hereunder, on a confidential basis, pursuant to the PCMLA. To the best
of its knowledge: none of the funds comprising the Subscription Amount to be
provided by such Canadian Purchaser (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 such Canadian Purchaser, and it shall
promptly notify the Company if such Canadian Purchaser discovers that any of
such representations ceases to be true and provide the Company with appropriate
information in connection therewith. 

25

          (h)      Such
Canadian Purchaser is not, with respect to the Company or any of its affiliates,
a “control person” under Canadian Securities Laws and such Canadian Purchaser
will not become a “control person” by purchasing the number of Securities
subscribed for under this Agreement and does not intend to act jointly or in
concert with any other person to form a control group in respect of the Company.

          (i)      The
executed copy of the Subscriber Certificate in the form attached as Appendix
A or Appendix B of this Agreement and delivered to the Company on or
prior to the Closing Date is true and correct as of the date of execution of
this Agreement and will be true and correct as of the Closing. 

          (j)      Purchasing
as Agent or Trustee. Unless deemed to be purchasing as principal under
Canadian Securities Laws, in the case of the purchase by such Canadian Purchaser
of the Securities as agent or trustee for any principal whose identity is
disclosed or undisclosed or identified by account number only, each beneficial
purchaser of the Securities for whom such Canadian Purchaser is acting, is
purchasing its Securities as principal for its own account, and not for the
benefit of any other person, for investment only and not with a view to resale
or distribution, the beneficial purchaser is a resident in a Canadian Selling
Jurisdiction and is an “accredited investor”, such Canadian Purchaser has due
and proper authority to act as agent or trustee, and to enter into this
Agreement, for and on behalf of such beneficial purchaser in connection with the
transactions contemplated hereby and this Agreement constitutes a legal, valid
and binding agreement of such beneficial purchaser. 

          3.5     
Agreements and Acknowledgements of the Canadian Purchasers. Each Canadian
Purchaser, for itself and for no other Purchaser, hereby agrees with, and
acknowledges to, the Company as follows: 

          (a)     
The Company or the Placement Agents and their respective agents and advisers may
each collect, use and disclose its name and other specified personally
identifiable information (the “Information”), including the amount of
Securities that such Canadian Purchaser has purchased for purposes of meeting
legal, regulatory and audit requirements and as otherwise permitted or required
by law or regulation. Such Canadian Purchaser consents to the disclosure of that
information. 

          (b)     
(i) The Information concerning such Canadian Purchaser will be disclosed to the
relevant Canadian securities regulatory authorities, including the Ontario
Securities Commission, and may become available to the public in accordance with
the requirements of applicable securities and freedom of information laws and
such Purchaser consents to the disclosure of the Information; (ii) the
Information is being collected indirectly by the applicable Canadian securities
regulatory authority under the authority granted to it in securities
legislation; (iii) the Information is being collected for the purposes of the
administration and enforcement of the applicable Canadian securities legislation; and (iv) by purchasing the
Securities, such Purchaser shall be deemed to have authorized such indirect
collection of personal information by the relevant Canadian securities
regulatory authorities. Questions about such indirect collection of Information
by the Ontario Securities Commission should be directed to the Administrative
Assistant to the Director of Corporate Finance, Ontario Securities Commission,
Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8 or to the
following telephone number: (416) 593-8086. 

26

          (c)      The
Company is organized under the laws of Delaware. Some of the Company’s directors
and officers are located outside of Canada and, as a result, it may not be
possible for Canadian Purchasers to effect service of process within Canada upon
the Company or such persons. All or a substantial portion of the assets of the
Company may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the Company in Canada or to enforce a
judgment obtained in Canadian courts against the Company outside of Canada. 

          (d)      The
Securities shall be subject to statutory resale restrictions under the
Securities Laws of the province or territory in which such Canadian Purchaser
resides and under other applicable Securities Laws, and such Canadian Purchaser
covenants that it will not resell the Securities except in compliance with such
laws and such Canadian Purchaser acknowledges that it is solely responsible (and
the Company is not in any way responsible) to find out what those restrictions
are and to comply with them before selling the Securities. 

          (e)      The
certificates representing the Shares and Warrants will bear, as of the Closing
Date, a legend substantially in the following form and with the necessary
information inserted: 

UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE
<INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1) DAY AFTER THE DISTRIBUTION
DATE>. 

          (f)      In
addition, the certificates representing the Shares will bear a legend
substantially in the following form: 

THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE BUT CANNOT BE TRADED
THROUGH THE FACILITIES OF THE TORONTO STOCK EXCHANGE SINCE THEY ARE NOT FREELY
TRANSFERABLE AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS
NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE.

          (g)      No
prospectus or offering memorandum, within the meaning of the Securities Laws, or
other similar disclosure document has been filed by the Company with a
securities commission, securities regulatory authority or other governmental
or regulatory authority in any province in
Canada or any other jurisdiction in connection with the issuance of the
Securities. 

27

          (h)      AN
INVESTMENT IN THE SECURITIES IS NOT WITHOUT RISK AND THE PURCHASER MAY LOSE HIS,
HER OR ITS ENTIRE INVESTMENT. 

          (i)      The
Company may complete additional financings in the future in order to develop the
business of the Company and fund its ongoing development, and such future
financings may have a dilutive effect on current securityholders of the Company,
including such Canadian Purchaser, but there is no assurance that such financing
will be available, on reasonable terms or at all, and if not available, the
Company may be unable to fund its ongoing development. 

          (j)      The
Company is relying on an exemption from the requirement to provide such Canadian
Purchaser with a prospectus under applicable Securities Laws and as a
consequence of acquiring the Securities 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 such Canadian Purchaser; 

          (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)      such
Canadian Purchaser may not receive information that would otherwise be required
to be given under applicable Securities Laws; and 

          (iv)     
the Company is relieved from certain obligations that would otherwise apply
under applicable Securities Laws. 

          3.6      Reliance
of Representations, Warranties, Agreements and Acknowledgements. Each
Purchaser acknowledges and agrees that the representations, warranties,
agreements and acknowledgements made by such Purchaser in this Agreement, in the
applicable Appendices attached hereto and in the other Transaction Documents are
made with the intention that they may be relied upon by the Company in
determining such Purchaser’s eligibility (and, if applicable, the eligibility of
others for whom such Purchaser is contracting hereunder) to purchase the
Securities under Securities Laws. Such Purchaser undertakes to immediately
notify the Company of any change in any statement or other information relating
to such Purchaser set forth in this Agreement, the applicable Appendices
attached hereto and in the other Transaction Documents, or in any document
furnished by such Purchaser to the Company in connection with this Agreement,
which takes place at or prior to the Closing. Such Purchaser further agrees that
by accepting the Shares and Warrants, it shall be representing and warranting
that such representations, warranties, agreements and acknowledgements are true
as at the Closing with the same force and effect as if they had been made by
such Purchaser at the Closing and that they shall survive the purchase by such Purchaser of the Securities
and shall continue in full force and effect notwithstanding any subsequent
disposition by such Purchaser of any of the Securities. 

28

ARTICLE IV. 
OTHER AGREEMENTS OF THE
PARTIES

          4.1     
No Regulatory Authority Review. No Securities Regulator, Trading Market,
or similar regulatory authority has reviewed, passed upon, made any finding or
determination with respect to, or recommended or endorsed the merits of, the
Securities. 

          4.2     
Transfer and Exercise Restrictions. 

          (a)      The
Securities have not been registered under the Securities Act or any state
securities laws, and the sale contemplated hereby is being made to “accredited
investors” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) in reliance on a private placement exemption. In addition, Purchasers other
than Canadian Purchasers agree not sell any Securities in Canada (including on
the TSX) before the date that is four months and one day after the Closing Date,
unless such sale would be permitted to be made by Canadian Purchasers on a basis
exempt from Securities Laws. The Securities are restricted securities, as
defined in Rule 144(a)(3) under the Securities Act, and may only be disposed of
in compliance with state, federal and provincial Securities Laws and other
applicable securities laws. In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Purchaser or in connection with a pledge as contemplated
in Section 4.2(b), the Company may require the transferor thereof to provide to
the Company and the Transfer Agent an opinion of counsel selected by the
transferor and reasonably acceptable to the Company, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and the Registration
Rights Agreement and shall have the rights and obligations of a Purchaser under
this Agreement and the Registration Rights Agreement.

          (b)      The
Purchasers agree to the imprinting, so long as is required by this Section 4.2
and applicable Securities Laws, of a legend on any of the certificates
representing the Shares and Warrants, as well as all certificates issued in
exchange for or in substitution of the Shares and Warrants, in the following
form: 

THIS SECURITY HAS NOT BEEN REGISTERED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE BUT CANNOT BE TRADED
THROUGH THE FACILITIES OF THE TORONTO STOCK EXCHANGE SINCE THEY ARE NOT FREELY
TRANSFERABLE AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS
NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK
EXCHANGE.

29

          The
Canadian Purchasers agree to the imprinting, so long as is required by this
Section 4.2 and applicable Securities Laws, of a legend on any of the
certificates representing the Shares and Warrants offered and sold in the
following form: 

UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE
<INSERT THE DATE THAT IS FOUR (4) MONTHS AND ONE (1) DAY AFTER THE
DISTRIBUTION DATE>. 

          The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Purchaser’s expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities are subject
to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders (as defined in the
Registration Rights Agreement) thereunder. 

          Each
Purchaser acknowledges and agrees that the Warrants may not be exercised unless
an exemption from the registration requirements of the 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 Company to such effect;
provided, however, that such Purchaser will not be required to deliver an
opinion of counsel in connection with its exercise of the Warrants at a time
when such Purchaser is an “accredited investor” as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act. 

30

          Each
Purchaser agrees to the imprinting, so long as is required by this Section 4.2,
of a legend on any of the certificates representing the Warrants, as well as all
certificates issued in exchange for or in substitution of the Warrants, in the
following form: 

THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED UNLESS
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE, AND, UNLESS THE
HOLDER IS THE ORIGINAL HOLDER AND IS AN ACCREDITED INVESTOR AS DEFINED IN RULE
501(a) OF REGULATION D UNDER THE SECURITIES ACT, THE HOLDER HAS DELIVERED AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY TO SUCH
EFFECT. 

          (c)      Certificates
evidencing the Shares and Warrant Shares shall not contain any legend (including
the legend set forth in Section 4.2(b) hereof), (i)(A) while a registration
statement (including the Registration Statement) covering the resale of such
security is effective and its use is not suspended under the Securities Act, (B)
following any sale of such Shares or Warrant Shares pursuant to Rule 144, (C) if
such Shares or Warrant Shares are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Shares and Warrant Shares and
without volume or manner-of-sale restrictions, or (D) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission), and
(ii) if such legend is not required under applicable Canadian Securities Laws in
respect of Securities held by Canadian Purchasers. The Company shall cause its
counsel to issue a legal opinion to the Transfer Agent promptly after the
Effective Date if required by the Transfer Agent to effect the removal of the
legend hereunder. If all or any portion of a Warrant is exercised at a time when
there is an effective registration statement to cover the resale of the Warrant
Shares, or if such Shares or Warrant Shares may be sold under Rule 144 and the
Company is then in compliance with the current public information required under
Rule 144, or if the Shares or Warrant Shares may be sold under Rule 144 without
the requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Shares or Warrant Shares or if
such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by the staff of
the Commission) or under Canadian Securities Laws, as applicable, then such
Warrant Shares shall be issued free of all legends. The Company agrees that
following the Effective Date or at such time as such legend is no longer
required under this Section 4.2(c), it will, no later than three Trading Days
following the delivery by a Purchaser to the Company or the Transfer Agent of a
certificate representing Shares or Warrant Shares, as the case may be, issued
with a restrictive legend (such third Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and other legends.
The Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this
Section 4. Certificates for Securities subject to legend removal hereunder shall
be transmitted by the Transfer Agent to the Purchaser by crediting the account
of the Purchaser’s prime broker with the Depository Trust Company System as
directed by such Purchaser. 

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          (d)     
In addition to such Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Shares or Warrant Shares (based on the VWAP of the Common Stock
on the date such Securities are submitted to the Transfer Agent) delivered for
removal of the restrictive legend and subject to Section 4.2(c), $10 per Trading
Day (increasing to $20 per Trading Day five (5) Trading Days after such damages
have begun to accrue) for each Trading Day after the Legend Removal Date until
such certificate is delivered without a legend. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction
Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. 

          (e)     
Each Purchaser, severally and not jointly with the other Purchasers, agrees with
the Company that such Purchaser will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.2 is predicated upon the Company’s
reliance upon this understanding. 

          4.3     
Furnishing of Information; Public Information. Until the earliest of the
time that (i) no Purchaser owns Securities, (ii) the Warrants have expired or
(iii) the Securities are eligible to be resold by a non-affiliate pursuant to
Rule 144(b)(i) without regard for Rule 144(c)(i), the Company covenants to
maintain the registration of the Common Stock under Section 12(b) or 12(g) of
the Exchange Act and to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act. As long
as any Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as
is required for the Purchasers who are not Affiliates of the
Company to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act, including without
limitation, within the requirements of the exemption provided by Rule 144. 

32

          4.4      Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such
that it would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such
subsequent transaction. 

          4.5      Securities
Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City
time) on the Trading Day immediately following the date hereof, issue a Current
Report on Form 8-K and press release disclosing the material terms of the
transactions contemplated hereby, and including the Transaction Documents as
exhibits to such Form 8-K. From and after the issuance of such press release,
the Company shall have publicly disclosed all material, non-public information
delivered to any of the Purchasers by the Company or any of its subsidiaries, or
any of their respective officers, directors, employees or agents in connection
with the transactions contemplated by the Transaction Documents. The Company
shall not publicly disclose the name of any Purchaser, or include the name of
any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except: (a)
as required by applicable Securities Laws in connection with (i) any
registration statement contemplated by the Registration Rights Agreement, (ii)
the filing of final Transaction Documents (including signature pages thereto)
with the Commission and other Securities Regulators, (iii) the filing with the
Commission pursuant to the Registration Rights Agreement, (iv) the notice and/or
application(s) to each applicable Trading Market for the issuance and sale of
the Securities and the listing of the Shares and Warrant Shares for trading
thereon in the time and manner required thereby, (v) the filing of Form D with
the Commission and such filings as are required to be made under applicable
state securities laws, and (vi) the filing with the applicable Canadian
provincial securities regulatory authorities of a report in Form 45-106F1 (as
prescribed by NI 45-106) within 10 days from the date of issuance of the Shares
and Warrants, prepared and executed in accordance with Securities Laws of the
applicable Selling Jurisdictions and (b) to the extent such disclosure is
otherwise required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (b). If required by applicable Securities Laws, each
Purchaser will execute, deliver and file or assist the Company in filing such
reports, undertakings and other documents with respect to the issue of the
Securities as may be required by any Securities Regulators, Trading Markets or
other regulatory authority. 

33

          4.6     
Shareholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the Purchasers.

          4.7     
Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf, will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement with the
Company regarding the confidentiality and use of such information. The Company
understands and confirms that each Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the Company. 

          4.8     
Use of Proceeds. Except as set forth on Schedule 4.8 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and shall not use such proceeds for: (a)
the satisfaction of any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s business and prior
practices), (b) the redemption of any Common Stock or Common Stock Equivalents
or (c) the settlement of any outstanding litigation. 

          4.9     
Indemnification of Purchasers. Subject to the provisions of this Section
4.9, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that any such Purchaser Party may suffer or
incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action instituted
against a Purchaser in any capacity, or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser’s representations,
warranties, covenants or agreements under the Transaction Documents or any
agreements or understandings such Purchaser may have with any such stockholder
or any violations by such Purchaser of Securities Laws or any other applicable
law or any conduct by such Purchaser which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Purchaser Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the
position of such Purchaser Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate counsel.
The Company will not be liable to any Purchaser Party under this Agreement (y)
for any settlement by a Purchaser Party effected without the Company’s prior
written consent, which shall not be unreasonably withheld or delayed; or (z) to
the extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents. 

34

          4.10     
Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants. 

          4.11     
Listing of Common Stock. The Company hereby agrees to use best efforts to
maintain the listing or quotation of the Common Stock on each Trading Market on
which it is currently listed, and concurrently with the Closing, the Company
shall apply to list or quote all of the Shares and Warrant Shares on such
Trading Markets and promptly secure the listing of all of the Shares and Warrant
Shares on such Trading Markets. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will
then include in such application all of the Shares and Warrant Shares, and will
take such other action as is necessary to cause all of the Shares and Warrant
Shares to be listed or quoted on such other Trading Market as promptly as
possible. The Company will then take all action reasonably necessary to continue
the listing or quotation and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market. 

          4.12      Subsequent
Equity Sales. 

          (a)     

From the date hereof until the earlier of (i) forty-five (45) days after the
Effective Date and (ii) two hundred twenty-five (225) days after the Closing
Date, neither the Company nor any Subsidiary shall issue, enter into any
agreement to issue or announce the issuance or proposed issuance of any shares
of Common Stock or Common Stock Equivalents; provided, however,
that the forty-five (45) day period set forth in this Section 4.12 shall be
extended for the number of Trading Days during such period in which (i) trading
in the Common Stock is suspended by any Trading Market, or (ii) following the
Effective Date, the Registration Statement is not effective or the prospectus included in the Registration
Statement may not be used by the Purchasers for the resale of the Shares and
Warrant Shares. 

35

          (b)     

From the date hereof until the earlier of (i) forty-five (45) days after the
Effective Date and (ii) two hundred twenty-five (225) days after the Closing
Date, the Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its Subsidiaries of
Common Stock or Common Stock Equivalents for cash consideration (or a
combination of units thereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i)
issues or sells any debt or equity securities that are convertible into,
exchangeable or exercisable for, or include the right to receive, additional
shares of Common Stock either (A) at a conversion price, exercise price or
exchange rate or other price that is based upon, and/or varies with, the trading
prices of or quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly related to
the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may sell securities at a future determined price. Any
Purchaser shall be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to any right to
collect damages. 

          (c)     
Unless shareholder approval has been obtained and deemed effective, neither the
Company nor any Subsidiary shall make any issuance whatsoever of Common Stock or
Common Stock Equivalents which would cause any adjustment of the exercise price
of the Warrants to the extent the holders of the Warrants would not be
permitted, pursuant to Section 2(d)(ii) of the Warrants, to exercise their
respective Warrants in full, ignoring for such purposes the other exercise
limitations therein. Any Purchaser shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages. 

          (d)      Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

          4.13     
Equal Treatment of Purchasers. No consideration (including any
modification of any Transaction Document) shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents. For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by the Company
and negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise. 

36

          4.14      Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly
with the other Purchasers, covenants that neither it, nor any Person acting on
its behalf or pursuant to any understanding with it will execute any purchases
or sales, including Short Sales, of any of the Company’s securities during the
period commencing with the execution of this Agreement and ending at such time
that the transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in Section 4.5.
Each Purchaser, severally and not jointly with the other Purchasers, covenants
that until such time as the transactions contemplated by this Agreement are
publicly disclosed by the Company pursuant to the initial press release as
described in Section 4.5, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information included in the
Transaction Documents and the Disclosure Schedules or any other information
provided to such Purchaser in connection with the transactions contemplated by
the Transaction Documents. Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) other than as set forth in Sections 3.2(f) and
4.2, no Purchaser makes any representation, warranty or covenant hereby that it
will not engage in effecting transactions in any securities of the Company after
the time that the transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in Section 4.5,
(ii) no Purchaser shall be restricted or prohibited from effecting any
transactions in any securities of the Company in accordance with Securities Laws
and other applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.5 and (iii) no
Purchaser shall have any duty of confidentiality to the Company or its
Subsidiaries after the issuance of the initial press release as described in
Section 4.5. Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement. 

          4.15     
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D. The Company shall take
such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at the Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser. 

          4.16     
Delivery of Securities After Closing. The Company shall deliver, or cause
to be delivered, the respective Shares and Warrants purchased by each Purchaser
to such Purchaser within three (3) Trading Days of the Closing Date. 

          4.17     
Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction Documents,
including, without limitation, its obligation to issue the Shares and Warrant
Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against any Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company. 

37

ARTICLE V. 

  MISCELLANEOUS

          5.1     
Termination. This Agreement may be terminated by any Purchaser, as to
such Purchaser’s obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers, by written notice
to the other party, if the Closing has not been consummated on or before March
31, 2010; provided, however, that such termination will not affect
the right of any party to sue for any breach by the other party (or parties).

          5.2     
Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers. 

          5.3      Entire
Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. 

          5.4      Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered by electronic mail to the electronic mail address set
forth on the signature pages attached hereto, (b) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (c) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (d) the second (2nd) Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (e) upon
actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as set forth on the
signature pages attached hereto. 

          5.5     
Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of a modification, supplementation or amendment, by the Company and the
Purchasers holding at least a majority in interest of the Shares then
outstanding or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right. 

38

          5.6     
Headings. The headings herein are for convenience only, do not constitute
a part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof. 

          5.7     
Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger or
acquisition). Any Purchaser may assign any or all of its rights under this
Agreement to any Person to whom such Purchaser assigns or transfers any
Securities, provided that such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchasers.” 

          5.8      No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.8. 

          5.9     
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then in addition to the obligations of the Company under Section 4.8,
the prevailing party in such action or proceeding shall be reimbursed by the
other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding. 

39

          5.10     
Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Securities. 

          5.11     
Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof. 

          5.12     
Severability. If any term, provision, covenant or restriction of this
Agreement 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. 

          5.13     
Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided,
however, that in the case of a rescission of an exercise of a Warrant,
the applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded exercise notice concurrently with the return to
such Purchaser of the aggregate exercise price paid to the Company for such
shares and the restoration of such Purchaser’s right to acquire such shares
pursuant to such Purchaser’s Warrant (including, issuance of a replacement
warrant certificate evidencing such restored right). 

          5.14      Replacement
of Securities. If any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction. The applicant for a new certificate
or instrument under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance of such
replacement Securities. 

40

          5.15     
Remedies. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate. 

          5.16      Payment
Set Aside. To the extent that the Company makes a payment or payments to any
Purchaser pursuant to any Transaction Document or a Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred. 

          5.17     
Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, each Purchaser and
its respective counsel have chosen to communicate with the Company through
Bracewell. Bracewell does not represent any of the Purchasers and only
represents the Placement Agents. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by any of the
Purchasers. 

          5.18     
Liquidated Damages. The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled. 

          5.19      Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall not be a
Business Day, then such action may be taken or such right may be exercised on
the next succeeding Business Day. 

41

          5.20      Construction.
The parties agree that each of them and/or their respective counsel has reviewed
and had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction
Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement. 

          5.21     
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR
PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE
PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

(Signature Pages Follow)

42

          IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 

	U.S. GEOTHERMAL INC. 	Address for Notice: 
	  	1505 Tyrell Lane 
	  	Boise, ID 83706 
	By: __________________________________________ 	Fax: (208) 424-1030 
	       Name: 	  
	       Title: 	  
	With a copy to (which shall not constitute notice): 	  

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
SIGNATURE PAGE
FOR PURCHASER FOLLOWS] 

[PURCHASER SIGNATURE PAGES TO U.S. GEOTHERMAL 
SECURITIES
PURCHASE AGREEMENT] 

          IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above. 

Name of Purchaser: 
_________________________________________________________________________________________

Signature of Authorized Signatory of Purchaser: 
__________________________________________________________________

Name of Authorized Signatory:  
_______________________________________________________________________________

Title of Authorized Signatory: 
________________________________________________________________________________

Email Address of Authorized Signatory: 
________________________________________________________________________

Facsimile Number of Authorized Signatory:
______________________________________________________________________

Address for Notice of Purchaser:  

 

 

Address for Delivery of Securities for Purchaser (if not same
as address for notice):

 

 

 

Subscription Amount: $_________________

Shares: _________________

Warrant Shares: __________________

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

[Applies to all Canadian Purchasers unless purchasing at the
solicitation of RBC Capital Markets 
Inc. or Robert W. Baird & Co. in
Ontario or Newfoundland and Labrador] 

Appendix A

PURCHASER CERTIFICATE (“ACCREDITED
INVESTOR”)

TO:             
U.S. GEOTHERMAL INC. (the “Company”) 

AND TO:    RBC CAPITAL MARKETS INC., CLARUS
SECURITIES INC., DUNDEE SECURITIES CORPORATION, AND ROBERT W. BAIRD & CO.
(the “Placement Agents”) 

Reference is made to the purchase agreement between the Company
and the undersigned (referred to herein as the “Purchaser”) dated as of
the date hereof (the “Purchase Agreement”). Upon execution of this
purchaser certificate (the “Purchaser Certificate”) by the Purchaser,
this Purchaser Certificate shall be incorporated into and form a part of the
Purchase Agreement. Terms not otherwise defined herein have the meanings
attributed to them in the Purchase Agreement and in National Instrument 45-106 -
Prospectus and Registration Exemptions (“NI 45-106”). 

In connection with the purchase of the Securities by the
Purchaser, the Purchaser represents, warrants and covenants (on its own behalf
or, if applicable, on behalf of those for whom the Purchaser is contracting
under the Purchase Agreement) and certifies to the Company and to the Placement
Agents and acknowledges that the Company and the Placement Agents are relying
thereon that: 

The Purchaser is an “Accredited
Investor” as such term is defined in NI 45-106, and as at the time of
the offer or sale of the Securities, the Purchaser falls within the following
categories: 

	[ ] 	(a) 	a Canadian financial institution,
      or a Schedule III bank, 
	  	  	 
	
      [ ] 
	
      (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 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), 

A-1

	[ ] 	(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 CDN$1,000,0001 , 

	  	  	
       

	[ ] 	(k) 	
      an individual whose net income before taxes exceeded
      CDN$200,000 in each of the 2 most recent calendar years or whose net
      income before taxes combined with that of a spouse exceeded CDN$300,000 in
      each of the 2 most recent calendar years and who, in either case,
      reasonably expects to exceed that net income level in the current calendar
      year, 

	  	  	
       

	[ ] 	(l) 	
      an individual who, either alone or with a spouse2
      , has net assets of at least CDN$5,000,000, 

	  	  	
       

	[ ] 	(m) 	
      a person, other than an individual or investment fund,
      that has net assets of at least CDN$5,000,000 as shown on its most
      recently prepared financial statements, and such person has not been
      created or used solely to purchase or hold securities as an accredited
      investor, 

	  	  	
       

	[ ] 	(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,

____________________________

	1 	
      For purposes of this certificate, (i) “financial assets”
      means cash, securities, or any contract of insurance or deposit or
      evidence thereof that is not a security for the purposes of securities
      legislation, and (ii) “related liabilities” means liabilities incurred or
      assumed for the purpose of financing the acquisition or ownership of
      financial assets and liabilities that are secured by financial
    assets.

	2 	
      For purposes of this certificate, the term “spouse” means
      an individual who (i) is married to another individual and is not living
      separate and apart within the meaning of the Divorce Act (Canada)
      from the other individual, (ii) is living with another individual in a
      marriage-like relationship, including a marriage-like relationship between
      individuals of the same gender, or (iii) in Alberta, is an individual
      referred to in paragraph (i) or (ii) above, or is an adult interdependent
      partner within the meaning of the Adult Interdependent Relationships
      Act (Alberta).

A-2 

	 	(ii) 	
      a person that acquires or acquired securities in the
      circumstances referred to in sections 2.10 of NI 45-106 [Minimum amount
      investment], and 2.19 of NI 45-106 [Additional investment in investment
      funds], or

	 	 	 
	 	(iii) 	
      a person described in paragraph (i) or (ii) that acquires
      or acquired securities under section 2.18 of NI 45-106 [Investment fund
      reinvestment],

	[ ] 	(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 account3 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 an adviser registered under the
      securities legislation of the jurisdiction of the registered charity to
      give advice on the securities being traded4 .

____________________________

	3 	
      A “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.

	4 	
      For the purposes of this certificate, an “eligibility
      adviser” means (a) an investment dealer or equivalent category of
      registration, registered under the securities legislation of the
      jurisdiction of the Purchaser and authorized to give advice with respect
      to the Shares; and (b) in Saskatchewan or Manitoba, also means a lawyer
      who is a practising 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 management accountants in a jurisdiction
      of Canada, provided that the lawyer or public accountant (a) does not have
      a professional, business or personal relationship with the Company, or any
      of its directors, executive officers, founders or control persons, and (b)
      has not acted for or been retained personally or otherwise as an employee,
      executive officer, director, associate or partner of a person or company
      that has acted for or been retained by the Company or any of its
      directors, executive officers, founders or control persons within the
      previous 12 months.

A-3 

	[ ] 	(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 adviser or, a person that is exempt from registration as an
      adviser, 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.

Dated: _________________________, 20___. 

	 	 	 
	 	[Purchaser] 
	 	 	 
	 	By: 	  
	 	 	Signature 
	 	 	  
	 	 	 
	 	[Signatory (if different from Purchaser)]
    

A-4 

[Applies only to Canadian Purchasers purchasing at the
solicitation of RBC Capital Markets 
Inc. or Robert W. Baird & Co. in
Ontario and Newfoundland and Labrador]

Appendix B

PURCHASER CERTIFICATE (“PERMITTED
CLIENT”)

TO:               
 U.S. GEOTHERMAL INC. (the “Company”) 

AND TO:      RBC CAPITAL MARKETS
INC. , CLARUS SECURITIES INC. AND DUNDEE SECURITIES CORPORATION, AND ROBERT W.
BAIRD & CO. (the “Placement Agents”) 

Reference is made to the purchase agreement between the Company
and the undersigned (referred to herein as the “Purchaser”) dated as of
the date hereof (the “Purchase Agreement”). Upon execution of this
purchaser certificate (the “Purchaser Certificate”) by the Purchaser,
this Purchaser Certificate shall be incorporated into and form a part of the
Subscription Agreement. Terms not otherwise defined herein have the meanings
attributed to them in the Subscription Agreement and in National Instrument
31-103 - Registration Requirements and Exemptions (“NI
31-103”).

In connection with the purchase of the Securities by the
Purchaser, the Purchaser represents, warrants and covenants (on its own behalf
or, if applicable, on behalf of those for whom the Purchaser is contracting
under the Purchase Agreement) and certifies to the Company and to the Placement
Agents and acknowledges that the Company and the Placement Agents are relying
thereon that: 

The Purchaser is a “Permitted
Client” as such term is defined in NI 31-103, and as at the time of
the offer or sale of the Shares, the Purchaser falls within the following
categories: 

	[ ] 	(a) 	
      a Canadian financial institution or a Schedule III bank;
      

	  	  	
       

	[ ] 	(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 other than as a
      scholarship plan dealer or a restricted dealer, 

	  	  	
       

	[ ] 	(e) 	
      a pension fund that is regulated by either the federal
      Office of the Superintendent of Financial Institutions or a pension
      commission or similar regulatory authority of a jurisdiction of Canada or
      a wholly-owned subsidiary of such a pension fund, 

B-1

	[ ] 	(f) 	
      an entity organized in a foreign jurisdiction that is
      analogous to any of the entities referred to in paragraphs (a) to (e),
    

	  	  	
      

	[ ] 	(g) 	
      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; 

	  	  	
      

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

	  	  	
      

	[ ] 	(i) 	
      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, 

	  	  	
      

	[ ] 	(j) 	
      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 managed account managed
      by the trust company or trust corporation, as the case may be, 

	  	  	
      

	[ ] 	(k) 	
      a person or company acting on behalf of a managed account
      managed by the person or company, if the person or company 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, 

	  	  	
      

	[ ] 	(l) 	
      an investment fund if one or both of the following apply:
      

	 	(i) 	
      the fund is managed by a person or company registered as
      an investment fund manager under the securities legislation of a
      jurisdiction of Canada; or

	 	 	 
	 	(ii) 	
      the fund is advised by a person or company authorized to
      act as an adviser under the securities legislation of a jurisdiction in
      Canada,

	
      [ ] 
	
      (m) 
	
      in respect of a dealer, a registered charity under the
      Income Tax Act (Canada) that obtains advice on the securities to be
      traded from an eligibility adviser, as defined in section 1.1 of NI
      45-106, or an adviser registered under the securities legislation of the
      jurisdiction of the registered charity1 ,

____________________________

	1 	
      For the purposes of this certificate, an “eligibility
      adviser” means (a) an investment dealer or equivalent category of
      registration, registered under the securities legislation of the
      jurisdiction of the Purchaser and authorized to give advice with respect
      to the Shares; and (b) in Saskatchewan or Manitoba, also means a lawyer
      who is a practising 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 management accountants in a jurisdiction
      of Canada, provided that the lawyer or public accountant (a) does not have
      a professional, business or personal relationship with the Company, or any
      of its directors, executive officers, founders or control persons, and (b)
      has not acted for or been retained personally or otherwise as an
      employee,

B-2 

	[ ] 	(n) 	
      in respect of an adviser, a registered charity under the
      Income Tax Act (Canada) that is advised by an eligibility adviser,
      as defined in section 1.1 of NI 45-106, or an adviser registered under the
      securities legislation of the jurisdiction of the registered charity,
    

	  	  	
       

	[ ] 	(o) 	
      an individual who beneficially owns financial assets, as
      defined in section 1.1 of NI 45-106, having an aggregate realizable value
      that, before taxes but net of any related liabilities, exceeds $5
      million2 , 

	  	  	
       

	[ ] 	(p) 	
      a person or company that is entirely owned by an
      individual or individuals referred to in paragraph (o), who holds the
      beneficial ownership interest in the person or company directly or through
      a trust, the trustee of which is 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, 

	  	  	
       

	[ ] 	(q) 	
      a person or company, other than an individual or an
      investment fund, that has net assets of at least $25 million as shown on
      its most recently prepared financial statements 

	  	  	
       

	[ ] 	(r) 	
      a person or company that distributes securities of its
      own issue in Canada only to persons or companies referred to in paragraphs
      (a) to (q). 

Dated: _________________________, 20___. 

	 	 	  
	 	[Purchaser] 
	 	 	 
	 	By: 	  
	 	 	Signature 
	 	 	 
	 	 	  
	 	[Signatory (if different from Purchaser)]
    

	 	 
		
      executive officer, director, associate or partner of a
      person or company that has acted for or been retained by the Company or
      any of its directors, executive officers, founders or control persons
      within the previous 12 months.

	2 	
      For purposes of this certificate, (i) “financial assets”
      means cash, securities, or any contract of insurance or deposit or
      evidence thereof that is not a security for the purposes of securities
      legislation, and (ii) “related liabilities” means liabilities incurred or
      assumed for the purpose of financing the acquisition or ownership of
      financial assets and liabilities that are secured by financial
    assets.

B-3

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