EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 1st day of January 2008

BETWEEN:

US Geothermal Inc., a body corporate having an office at 1505 Tyrell Lane Boise, Idaho 83706
(the "Company")

AND:

Daniel Kunz of 1505 Tyrell Lane, Boise, Idaho 83706
(the "Employee")

WHEREAS:

(A)         the Company is in the business of developing geothermal properties;

(B)         the Company wishes to engage the Employee as President and Chief Executive Officer; and

(C)         the parties hereto wish to enter into this Agreement for the purpose of fixing the compensation and terms applicable to the employment of the Employee during the period hereinafter set out.

               NOW, THEREFORE, THIS AGREEMENT WITNESSES that the parties hereto, in consideration of the respective covenants and agreements on the part of each of them herein contained, do hereby covenant and agree as follows:

1.         Employment

              The Company hereby engages the Employee as President and Chief Executive Officer of the Company and the Employee hereby accepts such employment, upon the terms and conditions hereinafter set out.

2.         Term

             This Agreement will be effective from January 1, 2008 and will remain in full force and effect until the earlier of December 31, 2008 or until terminated as hereinafter provided.

3.         Responsibility

             The Employee will devote appropriate working time to his Employment hereunder, and while engaged in his employment will have the authority and duty to perform and carry out such duties and responsibilities as are customarily carried out by persons holding similar positions in other development companies comparable in size to

the Company and such additional and related duties as may from time to time be assigned, delegated, limited or determined by the Board of Directors.

4.         Other Business Activities

              It is agreed that the Employee's employment hereunder shall constitute one hundred forty (140) hours per month, which shall be devoted exclusively for the benefit of the Company.

(a)          the Employee may engage in any other business activities, so long as such activities will not interfere with, or impede, or have the potential to conflict in any significant manner with either the interests of the Company and/or the performance of his duties as President and Chief Executive Officer of the Company. Before the Employee can engage in any other geothermal-related business activity the Employee must disclose full particulars thereof in writing to the Board of Directors, and within 15 days after the date of such disclosure, the Employee must receive from a majority of the Board of Directors a decision that such activities by the Employee will not, in the opinion of the Board of Directors, interfere or be in conflict with the interests of the Company and/or the Employee's performance of his duties to the Company hereunder;

(b)          the Employee shall refer to the Board of Directors any and all matters and transactions in respect of which an actual or potential conflict of interest between the Employee and the Company has arisen or may arise, however remote the possibility, and the Employee shall not proceed with any such matter or transaction until the Board of Director's approval therefore is obtained. Such approval shall not be unreasonably withheld. For purposes of clarification, this provision is not intended to limit in any way the Employee's other fiduciary obligations to the Company, which may arise in law or in equity.

5.        Compensation

              In consideration of the performance by the Employee of his responsibilities and duties as President and Chief Executive Officer hereunder:

(a)          the Company will pay the Employee the sum of US$170,400 per annum, payable in monthly installments of $14,200 no later than the last working day of the month;

(b)          the Company will grant the Employee incentive stock options in such amount and on such conditions as the Board of Directors of the Company may determine from time to time;

6.         Expenses

               The Company shall reimburse the Employee for any and all reasonable and documented expenses actually and necessarily incurred by the Employee in connection with the performance of his duties under this Agreement. The Employee will furnish the Company with an itemized account of his expenses in such form or forms as may reasonably be required by the Company and at such times or intervals as may be required by the Company.

7.         Vacation

               Employee will be entitled to a paid vacation of four weeks within each 12-month period under the terms of this Agreement, to be calculated from the date of the commencement of employment set forth in Section 2 herein.

8.         Change of Control

Cognizant that the Company is a publicly owned entity, should a Change of Control occur, the Employee shall be entitled to receive a lump sum payment in an amount equal to twenty-four (24) monthly installments of the Employee’s Compensation no later than five (5) working days after the effective date that the Change of Control has occurred. This compensation is payable by the Company or its Successor regardless of whether or not the Employee continues under employment pursuant to this Employment Agreement or is replaced with a new agreement.

If this Agreement is terminated in accordance with Section 8, the benefits provided to the Employee pursuant to Section 5 of this Employment Agreement shall continue for the four (4) months of Compensation the Employee following the termination of this Agreement pursuant to Section 8 or until the Employee commences alternative employment, whichever occurs first.

“Change of Control” means an event occurring after the effective date of this Agreement pursuant to which: