U.S. Geothermal Inc.: Exhibit 10.1 - Filed by newsfilecorp.com





EMPLOYMENT AGREEMENT

     This AGREEMENT is made and dated
as of the 19th day of April, 2013, between U.S. GEOTHERMAL, INC.
(“Company”) and DENNIS GILLES (“Executive”).

WHEREAS:

	A. 	
      The Company is in the business of developing and
      operating geothermal power generation facilities;

	 	 
	B. 	
      The Executive is a senior executive with extensive
      industry experience and the Company wishes to engage Executive as its
      Chief Executive Officer;

	 	 
	C. 	
      The Company has determined that appropriate arrangements
      should be taken to encourage the continued attention and dedication of the
      Executive to his assigned duties without distraction;

	 	 
	D. 	
      In Consideration of the Executive’s employment with the
      Company, the Company desires to provide the executive with certain
      compensation and benefits as set forth in this Agreement in order to
      ameliorate the financial and career impact on the executive in the event
      the Executive’s employment with the Company is terminated for a reason
      related to, or unrelated to, a Change in Control of the Company.

	 	 
	E. 	
      The Company and the Executive (the “Parties”) wish
      to enter into this written employment agreement
  (“Agreement”).



     NOW THEREFORE THIS AGREEMENT
WITNESSETH that in consideration of the forgoing recitals and of the mutual
covenants, agreements and representations contained herein and other valuable
consideration given by each party hereto to the other, the receipt and
sufficiency of which are hereby acknowledged by each of the Parties, the Parties
hereby agree as follows:

1. DEFINITIONS

Unless otherwise defined in the body of this Agreement, defined
terms have the meanings ascribed to them in Schedule “A” of this Agreement.

2. EMPLOYMENT

2.1 Position and Duties. The
Company agrees to employ the Executive and the Executive hereby accepts
employment with the Company as its Chief Executive Officer during the Term
subject to the general supervision, advice and direction of the Company’s
Chairman of the Board (“Chairman”) and the Company’s Board of Directors
(“Board”), and subject to the terms and conditions of this Agreement. The
Executive’s authority, duties and responsibilities shall be consistent with such
authority, duties and responsibilities as are customary for his position,
including without limitation: supervising and managing all aspects of the
Company’s businesses; further developing, refining and implementing the Company’s strategic growth plans; and overall
responsibility for the Company’s operations. Executive shall also perform such
other services and duties as the Chairman or Board may from time-to-time
lawfully assign or communicate to the Executive on behalf of the Company by the
Board.




2.2 Term. The initial term of
employment pursuant to this Agreement shall be from April 19, 2013 (the
  “Effective Date”) and this Agreement shall remain in full force and
effect until the earlier of April 18, 2015 or until Executive’s employment is
terminated in accordance with Section 4 of this Agreement. This Agreement will
automatically renew at the end of the initial term and at the end of each
subsequent term, for an additional one (1) year term unless either party gives
written notice of non-renewal to the other at least ninety (90) days prior to
the expiration of the then current term. The initial term of this Agreement and
any subsequent one year extensions(s) will be referred to as the “Term”.

2.3 Service.

During the term the Executive shall:

	 	(a) 	
      well and faithfully serve the Company and use his best
      efforts to promote the best interests of the Company;

	 	 	 
	 	(b) 	
      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
      renewable energy companies of comparable 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;
and

	 	 	 
	 	(c) 	
      comply in all material respects with any Company policies
      that may apply to the Executive from time to time.



During the term, and after Executive’s employment with the
Company ends, the Company shall:

	 	(d) 	
      defend and indemnify Executive in connection with legal
      claims, lawsuits, causes of action, or liabilities asserted against him
      arising out of or related to his employment with the Company to the
      maximum extent legally permitted by the Company’s and its subsidiaries’
      and affiliates’ articles of Incorporation or Bylaws, including their
      directors and officers insurance policies, with such defense and
      indemnification to be on terms determined by the Board or any of its
      committees, but on terms no less favorable than provided to any other
      Company executive officer or director and subject to the terms of any
      separate written indemnification agreement. The Company will also provide
      the Executive with an advance for any expenses in connection with such
      defense and/or indemnification.



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3. COMPENSATION AND BENEFITS

3.1 Salary. The Company shall pay
to the Executive an annual base salary of Three Hundred Seventy Five Thousand
Dollars ($375,000.00) (“Base Salary”) payable in accordance with the
Company’s regular payroll practices, as established from time to time or on such
other basis as mutually agreed between the Company and the Executive. The Base
Salary will increase to Four Hundred Ten Thousand Dollars ($410,000.00)
(“Second Year Base Salary”) effective on the one year anniversary of the
Effective Date, which salary shall remain in place as a minimum salary during
all successive periods that follow as a result of automatic extension noted in
Section 2.2, if applicable.

3.2 Bonus at Signing. Executive
shall receive a signing bonus (the “Signing Bonus”) of One Hundred
Thousand Dollars ($100,000.00) payable in cash or in a combination of Stock and
cash within two (2) weeks following completion of Probationary Period. If any
portion of the bonus is satisfied through the grant of stock, then the company
shall gross up the number of shares of stock granted so that the value of the of
stock received by Executive net of taxes due on same, plus the gross amount of
the cash portion of the bonus, equal $100,000.

3.3 Initial Equity at Signing.
Executive shall receive an award of Three Hundred Thousand (300,000) shares
of the Company’s Restricted Stock on the Effective Date of this Agreement.
Restricted Stock will vest one year after the Effective Date of this
Agreement.

3.4 Stock Options at Signing.
Executive shall receive a stock option grant on the Effective Date of this
Agreement in compliance with the Stock Option Plan. The grant shall be for
options to acquire One Million, Two Hundred Fifty Thousand (1,250,000) shares of
Company Stock in accordance with the Stock Option Plan. Options will be priced
at the price of the company stock at the close of the market on the Effective
Date of this agreement. These options shall be exercisable, once vested, until
the earlier of the tenth anniversary of the Effective Date of this Agreement and
the latest date permitted under the Stock Option Plan. Vesting of the options
shall be as set forth in Schedule A under “Options Vesting.”

3.5 Annual Bonus. The Executive
shall be eligible to earn an annual bonus (“Annual Target Bonus”) on the
annual anniversary of this Agreement. The target bonus amount will be 100% of
the Executive’s annual base salary. Annual Bonus will be a combination of cash
and Restricted Stock, with no more than half of the Bonus paid will be in the
form of Restricted Stock. The actual Bonus amount to be subject to discretion of
the Board and Compensation Committee.

3.6 Annual Stock Option Award. On
the last day of the first year of this Agreement, the Executive shall receive an
award of options to acquire shares of the Company Stock with a target value
equal to 35% of the Executive’s then current annual salary. Stock Option awards
shall be in accordance with the Stock Option Plan, and priced at the close of
the market applicable for the date they are granted. On subsequent yearly
anniversaries, the Executive will be eligible to receive stock option awards at
a similar level, with the actual amount determined at the discretion of the Board. Options granted to Executive during his employment shall
have a term of five years. Vesting of options granted to Executive shall be as
set forth in Schedule A under “Options Vesting.”

3




3.7 Group Benefits. The Executive
(and his immediate family consisting of spouse and children as applicable) will
be eligible to participate in the Company's employee health insurance, dental
insurance, retirement and any other employee benefit plans, provided that such
participation will be subject to all terms and conditions of such plans
(including, without limitation, all waiting periods, eligibility requirements,
contributions, exclusions or other similar conditions and limitations). The
introduction and administration of the employee benefit plans is within the
Company's sole discretion, and the Executive agrees that the introduction,
deletion or amendment of any of the benefits shall not constitute a breach of
this Agreement.

3.8 Vacation. The Executive will be
entitled to five (5) weeks of paid vacation within each twelve (12) month period
under the terms of this Agreement, to be calculated from the effective date of
this Agreement. The timing of vacation will be subject to the Company's business
needs at the time.

3.9 Expenses. The Executive shall
be reimbursed by the Company for all reasonable expenses incurred in connection
with the Executive's employment within a reasonable time after receipt of the
appropriate invoice or other documentation reasonably required by the Company
related to such expenses. The Executive shall also be reimbursed for the cost of
travel between the Company office in Boise, Idaho and the Executive’s home,
allowing for weekly round trip travel the first 3 months of this Agreement and
for two round trips per month thereafter. All expenses paid or reimbursed to the
Executive under this Section 3.9 are subject to all of the following
conditions:

	 	(a) 	
      The payment or reimbursement must be made no later than
      the end of the calendar year following the year in which the expense was
      incurred;

	 	 	 
	 	(b) 	
      The Executive does not have a right to receive from the
      Company any other benefit or payment in lieu of the payment or
      reimbursement of the expense;

	 	 	 
	 	(c) 	
      Payments or reimbursements of any expense in one calendar
      year may not affect the payment or reimbursement made in another year;
      and

	 	 	 
	 	(d) 	
      If the Executive is a Specified Employee and the payment
      or reimbursement is subject to and not exempt from Code Section 409A,
      payments will be delayed and not be made during the first six months
      following the termination of employment.



3.10 Life Insurance. Until the
earlier of expiration or termination of this Agreement, the Company will provide
the Executive, at the Company’s expense, a $1,000,000 life insurance policy that
names the Gilles Family Trust as the beneficiary in the event of the death of
the Executive. 

4




3.11 Other Perquisites. Until the
earlier of expiration or termination of this Agreement, the Company agrees to
pay all reasonable costs associated with professional membership dues incurred
by the Executive related to the Executive's employment.

3.12 Office Space. Until the
earlier of expiration or termination of this Agreement, the Company will provide
office space for use by the Executive in its executive offices in Boise,
Idaho.

3.13 Relocation Cost Reimbursement.
Company agrees to provide the Executive relocation cost reimbursement up to
a maximum amount of $35,000. Eligible costs will include all costs incurred by
the employee or family related to establishing and maintaining housing and
transportation in Boise, Idaho, prior to and thru the Term of this Agreement,
including all travel expenses to/from Boise incurred by family members,
temporary housing, and related costs.

3.14 Legal and Tax Advice. Company
agrees to reimburse the Executive for any costs the Executive incurs in
connection with the review, preparation and negotiation of this Agreement (and
any drafts) by his legal counsel and/or tax advisors.

4. TERMINATION OF EMPLOYMENT

4.1 Termination by Company for Cause.
The Company may terminate Executive’s employment pursuant to this Agreement
at any time during the Term with at least fifteen days’ notice. In the event the
Company terminates Executive’s employment for “Cause,” Executive shall only be
entitled to such compensation as would otherwise be payable to the Executive
hereunder through the date of termination, as the case may be.

4.2 Termination by Company Without Cause During
Probationary Period. Executive's employment pursuant to this
Agreement may be terminated without Cause during an initial sixty (60) day
probationary period (“Probationary Period”), upon two (2) weeks’ notice to the
Executive. In such event, Executive shall be paid his salary up through the date
of termination in accordance with usual payroll practices. Expenses incurred up
to and including such date of termination shall be reimbursed only in accordance
with Section 3.9. If the Executive’s employment is terminated during this
Probationary Period, the Company shall not be obligated to pay an unpaid portion
of the Signing Bonus noted in Section 3.2, unvested portions of the Initial
Equity at Signing issued as part of Section 3.3 will be cancelled, and unvested
Stock Options at Signing noted in Section 3.4 will be cancelled. 

4.3 Termination by Executive Without Good
Reason. Executive's employment pursuant to this Agreement may be
terminated by Executive for any reason other than Good Reason by giving the
Company sixty (60) days’ notice. In such event, the Executive will be entitled
to payment of salary through the date designated in Executive’s notice, plus
payment for unused vacation days granted or accrued through the date of
termination, payable in accordance with the Company’s usual payroll practices.
Expenses incurred up to and including such date of termination shall be
reimbursed only in accordance with Section 3.9.

5




4.4 Termination by Executive for Good Reason or by
Company Without Cause After Probationary Period.
In the event Executive’s employment is terminated either by Company without
Cause or by Executive for Good Reason, Executive shall be entitled to receive a
lump sum payment in an amount equal to one and a half (1.5) times the sum of
Executive’s Second Year Base Salary plus Annual Target Bonus. Any payments made
under this Section 4.4, in all events, will be paid within 60 days after the
date of termination.

4.5 Severance Benefits in Event of Change of
Control. In the event Executive’s employment is terminated by
Executive for Good Reason or by Company without Cause within the twelve (12)
month period following a Change of Control, then Executive shall receive total
severance payments equal to three (3.0) times the sum of Executive’s Second Year
Base Salary plus Annual Target Bonus. Any payments made under this Section 4.5,
in all events, will be paid within 60 days after the Change of Control. If a
Change in Control occurs during the 12 month period following termination of
Executive’s employment, then in addition to payment(s) pursuant to Section 4.4
above, Executive shall be entitled to a second payment equal to one and a half
(1.5) times the sum of Executive’s Second Year Base Salary plus Annual Target
Bonus, which shall be paid within 60 days of the Change of Control.

4.6 Vesting of Equity in Event of Termination for
Good Reason or Without Cause. If the Executive’s employment under
this Agreement terminates for any reason set out in Section 4.4 or 4.5 above,
then any outstanding Company Stock Options held by the Executive as of his
Termination Date that are not vested and exercisable as of such date shall
receive accelerated vesting by the Company and become fully vested, for any
portion of the Executive’s stock options, if any, which would have vested and
become exercisable within the eighteen (18) month period after the Executive’s
Termination Date had Executive’s employment with the Company continued. Such
Options (as well as any outstanding stock options that previously became vested
and exercisable) will remain exercisable until the expiration of the original
term of the option. In addition, with respect to any Restricted Stock
representing shares of Company common stock (“Restricted Stock Shares”) held by
the Executive that are unvested at the time of his Termination Date, that number
of unvested Restricted Stock Shares that would have otherwise vested within the
eighteen (18) month period after the Executive’s Termination Date shall vest and
settle not later than sixty (60) days following the Termination Date. 

4.7 Medical Benefit Continuation.
If Executive’s employment pursuant to this Agreement is terminated in
accordance with Section 4.4, Executive shall receive a lump sum cash payment
equal to the Company’s contribution to the monthly cost of the medical and
dental benefits provided to Executive pursuant to Section 3.7 of this Agreement
multiplied by twenty-four (24). If Executive’s employment pursuant to this
Agreement is terminated in accordance with Section 4.5, the Executive shall
receive a lump sum cash payment equal to the Company’s contribution to the
monthly cost of the medical and dental benefits provided to Executive pursuant
to Section 3.7 of this Agreement multiplied by thirty-six (36). Payment pursuant
to this section shall be made at the same time and in the same manner as
payments made pursuant to Sections 4.4 and 4.5.

4.8 Handling of Payments Subject to Excise Tax
Pursuant to Code Section 4999.

Notwithstanding anything to the contrary in this Section 4, if
the Executive is a “disqualified individual” (as defined in Section 280G(c) of
the Code), and the severance benefits provided for in this Section 4, together with any other payments and
benefits which the Executive has the right to receive from the Company or its
Affiliates (the “Aggregate Severance”), would be subject to the excise tax
imposed by Section 4999 of the Code, including any interest and penalties
imposed with respect to such excise tax (the “Excise Tax”), then the severance
benefits provided hereunder shall be either (1) reduced (but not below zero) so
that the present value of the Aggregate Severance equals the Safe Harbor Amount
(as defined below) and so that no portion of the Aggregate Severance shall be
subject to the Excise Tax, or (2) paid in full, whichever produces the better
net after-tax position to the Executive (taking into account the Excise Tax and
any other applicable taxes). The determination as to whether any such reduction
in the Aggregate Severance is necessary shall be made initially by the Employer
in good faith. If applicable, the reduction of the amounts payable hereunder in
accordance with subclause (1) above shall be made by first reducing the cash
payments pursuant to this Section, and in any event shall be made in such a
manner as to maximize the value of the Aggregate Severance paid to the
Executive. If the Aggregate Severance is reduced in accordance with the
preceding sentence and through error or otherwise the Aggregate Severance
exceeds the Safe Harbor Amount, the Executive shall immediately repay such
excess to the Employer upon notification that an overpayment has been made. For
purposes of this Section, “Safe Harbor Amount” means an amount equal to one
dollar ($1.00) less than three (3) times the Executive's “base amount” for the
“base period,” as those terms are defined under Section 280G of the Code. 

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5. CONFIDENTIAL INFORMATION

5.1 The Executive acknowledges that, by reason of the
Executive's employment by the Company, the Executive will have access to
Confidential Information of the Company that the Company has spent time, effort
and money to develop and acquire. For the purposes of this Agreement any
reference to the “Company” shall mean the Company, and such respective
affiliates and subsidiaries as may exist from time to time.

5.2 The Executive acknowledges that the Confidential
Information is a valuable and unique asset of the Company and that the
Confidential Information is and will remain the exclusive property of the
Company.

5.3 The Executive agrees to maintain securely and hold
in strict confidence all Confidential Information received, acquired or
developed by the Executive or disclosed to the Executive as a result of or in
connection with the Executive's employment with the Company. The Executive
agrees that, both during his employment with the Company and after the
termination of his employment with the Executive, the Executive will not,
directly or indirectly, divulge, communicate, use, copy or disclose or permit
others to use, copy or disclose, any Confidential Information to any person,
except as such disclosure or use is required to perform his duties hereunder or
as may be consented to by prior written authorization of the Company.

5.4 The obligation of confidentiality imposed by this
Agreement shall not apply to information that appears in issued patents or
printed publications, that otherwise becomes generally known in the industry
through no act of the Executive in breach of this Agreement, or that is required
to be disclosed by court order or applicable law.

7




5.5 The Executive understands that the Company has from
time to time in its possession information belonging to third parties or which
is claimed by third parties to be confidential or proprietary and which the
Company has agreed to keep confidential. The Executive agrees that all such
information shall be Confidential Information for the purposes of this
Agreement.

5.6 The Executive agrees that documents, copies, records
and other property or materials made or received by the Executive that pertain
to the business and affairs of the Company, including all Confidential
Information which is in the Executive's possession or under the Executive's
control are the property of the Company and that the Executive will return same
and any copies of same to the Company immediately upon termination of the
Executive's employment or at any time upon the request of the Company.

6. RESTRICTED ACTIVITIES

6.1 Restriction on Competition. The
Executive covenants and agrees with the Company that the Executive will not,
without the prior written consent of the Company, at any time during his
employment or for a period of twelve (12) months following the termination of
the Executive's employment, for any reason, either individually or in
partnership or in conjunction with any person, whether as principal, agent,
shareholder, director, officer, employee, investor, or in any other manner
whatsoever, directly or indirectly, advise, manage, carry on, be engaged in, own
or lend money to, or permit the Executive's name or any part thereof to be used
or employed by any person managing, carrying on or engaged in a geothermal
business anywhere in Oregon, Idaho, Nevada, or the Republic of Guatemala or
other jurisdiction in which the Company is carrying on active business which is
in Direct Competition with the business of the Company of its subsidiaries. The
Company acknowledges that at the time that this Agreement was entered, Executive
had informed the Company of his involvement with a current business venture
which is not directly competitive with the Company’s business, and Executive
shall be permitted to attend to that venture outside of his work time for the
Company and his involvement with that venture will not be considered in conflict
with this Section 6 or any other provision of this Agreement.

6.2 Restriction on Solicitation.
The Executive shall not, at any time during his employment or for a period
of twelve (12) months after the termination of the Executive's employment, for
any reason, without the prior written consent of the Company, for his account or
jointly with another, either directly or indirectly, for or on behalf of himself
or any individual, partnership, corporation or other legal entity, as principal,
agent, employee or otherwise, solicit, influence, entice or induce, attempt to
solicit, influence, entice or induce:

	 	(a) 	
      any person who is employed by the Company to leave such
      employment; or

	 	 	 
	 	(b) 	
      any person, firm or corporation whatsoever, who is or was
      at any time in the last twelve (12) months of the Executive's employment a
      customer or supplier of the Company or any affiliate or subsidiary of the
      Company, to cease its relationship with the Company or any affiliate or
      subsidiary of the Company.



7. ENFORCEMENT

     The Executive acknowledges and
agrees that the covenants and obligations under this Agreement, including
Sections 5 and 6, are reasonable, necessary and fundamental to the protection of
the Company's business interests, and the Executive acknowledges and agrees that
any breach of this Agreement by the Executive would result in irreparable harm
to the Company and loss and damage to the Company for which the Company could
not be adequately compensated by an award of monetary damages. Accordingly, the
Executive agrees that, in the event the Executive violates any of the
restrictions referred to this Agreement and in particular in Sections 5 or 6,
the Company shall suffer irreparable harm and shall be entitled to preliminary
and permanent injunctive relief and any other remedies in law or in equity which
the court deems fit in addition to rights the Company may have to damages
arising from said breach or threat of breach.

8




8. REPRESENTATIONS AND WARRANTIES

     The Executive represents and
warrants to the Company that the execution and performance of this Agreement
will not result in or constitute a default, breach, or violation, or an event
that, with notice or lapse of time or both, would be a default, breach, or
violation, of any understating, agreement or commitment, written or oral,
express or implied, to which the Executive is currently a party or by which the
Executive or the Executive’s property is currently bound. 

     The Executive represents and
warrants to the Company that the Executive is free to enter into this Agreement
and has no contract, commitment, arrangement or understanding to or with any
party that restrains or is in conflict with the Executive’s performance of the
covenants, services and duties provided for in this Agreement, other than as
noted in Section 6.1 above. The Executive agrees to indemnify the Company and
hold it harmless against any and all liabilities or claims arising out of any
unauthorized act or acts by the Executive that, the forgoing representation and
warranty to the contrary notwithstanding, are in violation, or constitute a
breach, of any such contract, commitment, arrangement or understanding between
Executive and any third party. 

     The Executive acknowledges and
agrees that the Company has made no representations or warranties with respect
to the tax consequences of any of the payments or other consideration provided
by the company to the Executive under the terms of this Agreement, and that
Employee is solely responsible for the Executive’s compliance with any and all
laws applicable to such payments or other consideration.

     The Company may take such action
as it deems appropriate to insure that all applicable federal, state, city and
other payroll, withholding, income or other taxes arising from any compensation,
benefit or any other payments made pursuant to this Agreement, or any other
contract, agreement or understanding that relates, in whole or in part, to the
Executive’s employment with the Company, are withheld or collected from the
Executive.

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9. GENERAL PROVISIONS

9.1 Cooperation and Assistance. The
  Executive agrees that he shall, both during the term of this Agreement and
  thereafter, fully co-operate with and assist the Company in the resolution of
  complaints, claims or disputes against the Company, including without limitation
  civil, criminal or regulatory proceedings.

9.2 Use of Likeness. The Executive
hereby grants to the Company, its parent, subsidiary and affiliated companies,
during the term of the Executive's employment with the Company, and for
previously published materials a period of one (1) year after the termination of
that employment for any reason, the right to use the Executive's name, likeness
and biography in connection with the advertising, sale and/or marketing of the
Company's, or its parent or affiliated company's, products or services.

9.3 Severability. If any provision
of this Agreement is declared unenforceable or invalid for any reason
whatsoever, such unenforceability or invalidity shall not affect the
enforceability or validity of any remaining portion of this Agreement, which
remaining portion shall remain in full force and effect with such unenforceable
or invalid provisions shall be severed from the remainder of this Agreement.

9.4 Survival. The Company and the
Executive expressly acknowledge and agree that the provisions of this Agreement,
which by their express or implied terms extend beyond the termination of the
Executive's employment hereunder, or beyond the termination of this Agreement,
shall continue in full force and effect notwithstanding the termination of the
Executive's employment or the termination of this Agreement for any reason.

9.5 Effect of Agreement. The
provisions of this Agreement constitute the entire employment agreement between
the Parties and it supersedes and cancels all previous communications,
representations and agreements, whether oral or written, between the Parties
with respect to the Executive's employment by the Company. In consideration of
the Company entering into this Employment Agreement, the Executive hereby
remises, releases and forever discharges the Company from any and all claims,
liability, actions or causes of actions arising or which may arise now or
hereafter in connection with any claim by the Executive in respect of any prior
written or oral employment contracts or arrangements between the Executive and
Company that pre-date the date of execution of this Employment Agreement.

9.6 Amendment. This Agreement may
not be amended or modified except by written instrument signed by the Company
and the Executive.

9.7 Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Idaho and the federal laws of United States applicable therein, which shall be
deemed to be the proper law hereof. The Parties hereby attorn to and submit to
the jurisdiction of the courts of Idaho.

9.8 Enurement. This Agreement shall
enure to the benefit of and be binding upon the Parties hereto and their
respective heirs, executors, administrators, successors, personal
representatives and permitted assigns.

10




9.9 Affiliated Corporations. The
Executive acknowledges and agrees that all of the Executive's covenants and
obligations to the Company, as well as the rights of the Company under this
Agreement shall run in favor of and shall be enforceable by the parent,
subsidiary and affiliated companies of the Company. The Executive acknowledges
that notwithstanding references in this Agreement to affiliated companies of the
Company, this Agreement is between the Executive and the Company.

9.10 Legal Advice. The Executive
acknowledges this Agreement has been prepared by the Company and that the
Executive has had sufficient time to review these documents thoroughly,
including enough time to obtain independent legal advice concerning the
interpretation and effect of these documents prior to their execution. By
signing these documents, the Executive represents and warrants that he has read
and understood these documents and that he executes them of his own free will
and act.

9.11 409A Tax Compliance. This
Agreement is designed and intended to be applied in a manner that does not
result in any additional income taxes to the Executive under Code Section 409A
or an inclusion in income under Code Section 409A(a). All references to Code
Section 409A include the regulations thereunder. Each payment is intended to be
a separate payment under Code Section 409A. For purposes of this Agreement, the
Executive shall be considered to have had a termination of employment as of the
date that the facts and circumstances indicate that it is reasonably anticipated
that Executive will perform no further services for the Company and its
affiliates after such date or that the level of bona fide services for the
Company and its affiliates that Executive is expected to perform is expected to
decrease permanently to no more than 20% of the average level of bona fide
services that Executive performed since the Effective Date of this Agreement.
Whether Executive has had a termination of employment will be determined in a
manner consistent with the definition of “separation from service” under Code
Section 409A. It is the intent of the parties that the payments in Sections 4.4
and 4.5 comply with either the short term deferral exception or the involuntary
termination exception of Code Section 409A; as a result, any payments made under
Sections 4.4 and 4.5 will be paid within 60 days after the date of termination.
To the extent the payment or portion thereof would be deferred compensation
covered by and not exempt from Code Section 409A, the portion of such payment
that is so covered and not so exempt shall be paid on the sixtieth day following
the payment event, except that if the Executive is a Specified Employee and the
payment is paid on account of the Executive’s termination the payment will be
paid on the day after the six month anniversary of the date of the Executive’s
termination, with the portion exempt from Code Section 409A payable in a
lump-sum within sixty days of the payment event.

9.12 Multiple Counterparts and
Orignals. The parties may execute this Agreement in counterparts,
each of which shall be considered an original, and all of which taken together
shall be considered this Agreement. Duplicates of original, executed copies of
this Agreement shall have the same legal effect as signed originals.

[signature page follows]

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     IN WITNESS WHEREOF the
Parties have hereto have duly executed this agreement as of the day and year
first above written.

	  	  	U.S. GEOTHERMAL, INC. 
	  	  	  
	  	  	  
	  	  	  
	  	  	Per:
      /s/ John H. Walker 
	  	  	           
       Authorized Signatory 
	  	  	  
	  	  	  
	  	  	  
	SIGNED, SEALED AND DELIVERED in 	) 	  
	the presence of: 	) 	  
	  	) 	  
	/s/ Douglas J. Glaspey 	) 	  
	Witness 	) 	  
	 	) 	 
       /s/ Dennis Gilles 
	Douglas J. Glaspey	) 	   DENNIS GILLES 
	Name 	) 	  
	  	) 	  
	1940 S. Teal LN 	) 	  
	Address 	) 	  
	  	) 	  
	Boise, ID 83706 	) 	  
	  	) 	  
	  	) 	  
	Engineer 	) 	  
	Occupation 	) 	  


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SCHEDULE “A”

DEFINITIONS

The following terms shall have the following definitions:

	(a) 	
      “Board” means the Board of Directors of the
      Company;

	 	 	 
	(b) 	
      “Cause” has the meaning commonly ascribed to the
      phrase “cause” or “just cause for termination” at common law and, without
      limiting the foregoing, includes any of the following acts or omissions by
      Executive:

	 	 	 
		(i) 	
      willful misconduct in the performance of Executive’s
      duties which is materially injurious to Company;

	 	 	 
		(ii) 	
      refusal, without proper reason, to perform his duties
      after being provided notice within sixty days of any alleged refusal and
      an opportunity to cure same;

	 	 	 
		(iii) 	
      committing an act of fraud, embezzlement, or willful
      breach of a fiduciary duty to Company, or a material breach of this
      Agreement (including the unauthorized disclosure of confidential or
      proprietary material information of Company or other violations of
      Sections 5 or 6);

	 	 	 
		(iv) 	
      being convicted of (or pleading no contest to) a crime
      involving fraud, dishonesty, or moral turpitude or any felony;
or

	 	 	 
		(v) 	
      being convicted of (or pleading no contest to) any
      violation of U.S. or foreign securities laws or entering into a cease and
      desist order with the Securities and Exchange Commission alleging
      violation of U.S. or foreign securities laws.

	 	 	 
		
      No act, or failure to act, on Executive's part shall be
      considered “willful” unless done, or omitted to be done, by him other than
      in good faith and without reasonable belief that his action or omission
      was in the best interest of Company.

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

	 	 	 
		(i) 	
      a merger, amalgamation, arrangement, consolidation,
      reorganization or transfer takes place in which securities of the Company
      possessing more than 40% of the total combined voting power of the
      Company’s outstanding voting securities are acquired by a person or
      persons different from the person holding those voting securities
      immediately prior to such event, and the composition of the board of
      Directors of the Company following such event is such that the directors
      of the Company prior to the transaction constitute less than 50% of the
      Board membership following the event; or,



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	 	(ii) 	
      any person or any combination of persons acting jointly
      or in concert by virtue of an agreement, arrangement, commitment or
      understanding acquires, directly or indirectly, 30% or more of the voting
      rights attached to all outstanding voting securities; public and private
      placement share offerings are exempt this clause; or,

	 	 	 
	 	(iii) 	
      any person, or combination of persons, acting jointly or
      in concert by virtue of an agreement, arrangement or commitment or
      understanding acquires, directly or indirectly, the right to appoint a
      majority of the directors of the Company; or,

	 	 	 
	 	(iv) 	
      Company sells, transfers or otherwise disposes of all or
      substantially all of its assets, except that no Change of Control will be
      deemed to occur if such sale or disposition is made to a subsidiary or
      subsidiaries of the Company; or,

	 	 	 
	 	(v) 	
      individuals who, as of the date of the signing of this
      Agreement, constitute the Board of Directors (the “Incumbent Board”) cease
      for any reason to constitute at least a majority of such Board; provided
      that any individual who becomes a director of the Company subsequent to
      the date of the signing of this Agreement, whose election, or nomination
      for election by the Company stockholders, was approved by the vote of at
      least a majority of the directors then in office shall be deemed a member
      of the Incumbent Board.




	(d) 	
      “COBRA” means the Consolidated Omnibus Budget
      Reconciliation Act of 1986, as amended.

	 	 	 
	(e) 	
      “Code” means the Internal Revenue Code of 1986, as
      amended.

	 	 	 
	(f) 	
      “Confidential Information” means all trade
      secrets, proprietary information and other data or information (and any
      tangible evidence, record or representation thereof), whether prepared,
      conceived or developed by an employee of the Company (including the
      Executive) or received by the Company from an outside source which is
      maintained in confidence by the Company or any of its employees,
      contractors or customers including, without limitation:

	 	 	 
		(i) 	
      any ideas, drawings, maps, improvements, know-how,
      research, geological records, drill logs, inventions, innovations,
      products, services, sales, scientific or other formulae, core samples,
      processes, methods, machines, procedures, tests, treatments, developments,
      technical data, designs, devices, patterns, concepts, computer programs or
      software, records, data, training or service manuals, plans for new or
      revised services or products or other plans, items or strategy methods on
      compilation of information, or works in process, or any inventions or
      parts thereof, and any and all revisions and improvements relating to any
      of the foregoing (in each case whether or not reduced to tangible form)
      that relate to the business or affairs of the Company or that result from
      its marketing, research and/or development activities;

	 	 	 
		(ii) 	
      any information relating to the relationship of the
      Company with any personnel, suppliers, principals, investors, contacts or
      prospects of the Company and any information relating to the requirements,
      specifications, proposals, orders, contracts or transactions of or with
  any such persons;



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		(iii) 	
      any marketing material, plan or survey, business plan,
      opportunity or strategy, development plan or specification or business
      proposal, or any information relating to any geothermal projects in which
      the Company has an actual or potential interest;

	 	 	 
		(iv) 	
      financial information, including the Company's costs,
      financing or debt arrangements, income, profits, salaries or wages;
    and

	 	 	 
		(v) 	
      any information relating to the present or proposed
      business of the Company.

	 	 	 
	(g) 	
      “Direct Competition” means the ownership,
      development, or advising regarding the same property or property
      immediately adjacent to one owned by the Company or one of its
      subsidiaries or affiliates.

	 	 	 
	(h) 	
      “Good Reason” shall mean any one of the conditions
      set forth below, provided that Executive must provide notice to the
      Company within sixty (60) days of the existence of such condition and the
      Company will have thirty (30) days from receipt of such notice to remedy
      the condition, and the termination of employment occurs no later than two
      years following the initial existence of such condition. If the condition
      is not remedied within such 30 day period, the following conditions will
      constitute “Good Reason”:

	 	 	 
		(i) 	
      A material diminution in the Executive’s base
      compensation; or,

	 	 	 
		(ii) 	
      A material diminution in the Executive’s authority,
      duties, or responsibilities; or,

	 	 	 
		(iii) 	
      A Material diminution in the authority, duties, or
      responsibilities of the supervisor to whom the Executive is required to
      report, including a requirement that Executive report to a corporate
      officer or employee instead of reporting directly to the board of
      directors of the Company; or,

	 	 	 
		(iv) 	
      A material diminution in the budget over which the
      Executive retains authority; or,

	 	 	 
		(v) 	
      A material change in the geographic location at which the
      Executive must perform the services; or

	 	 	 
		(vi) 	
      Any other action that constitutes a material breach by
      the Company of this Agreement;

	 	 	 
	(i) 	
      For purposes of this Agreement, stock options granted to
      the Executive shall be subject to “Options Vesting” as
    follows:

	 	 	 
		(i) 	
      25% of stock options granted to executive shall vest as
      of the date of the grant;



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		(ii) 	
      25% of stock options granted to Executive shall vest six
      months after the date of grant;

	 	 	 
		(iii) 	
      25% of stock options granted to Executive shall vest
      twelve months after the date of grant; and

	 	 	 
		(iv) 	
      25% of stock options granted to Executive shall vest
      eighteen months after the date of grant.

	 	 	 
	(j) 	
      “Person” means an individual, partnership,
      association, company, body corporate, trustee, executor, administrator,
      legal representative and any national, provincial, state or municipal
      government; and

	 	 	 
	(k) 	
      “Probationary Period” means a period of Sixty (60)
      calendar days following the Effective date of this Agreement.

	 	 	 
	(l) 	
      “Restricted Stock” as used in this Agreement means
       Restricted Stock granted to Executive by the Company pursuant to an
      approved equity plan, subject to the terms of the grant and this
      Agreement. Except as otherwise set forth in this Agreement, Restricted
      Stock  granted to Executive shall vest on the later of one year after
      the Effective Date of this Agreement or one year after the date the
    Restricted Stock is granted.

	 	 	 
	(m) 	
      “Specified Employee” means a specified employee
      within the meaning of section 409A(a)(2)(B)(i) of the Code.

	 	 	 
	(n) 	
      “Stock” means the Company’s common stock, which
      is, as of the Effective Date of this Agreement, publicly traded on the New
      York Stock Exchange.

	 	 	 
	(o) 	
      “Stock Option” means an option to purchase shares
      of Company Stock granted pursuant to the Company’s Stock Option Plan or
      another plan approved by the Company’s Board of Directors, subject to the
      terms of such grant and this Agreement. Any Stock Option designated and
      qualified as an “incentive stock option” as defined in Section 422 of the
      Code shall be an incentive stock option; any option not qualifying as an
      incentive stock option shall be a non-qualified stock option.

	 	 	 
	(p) 	
      “Stock Option Plan” means the 2009 Stock Incentive
      Plan for U.S. Geothermal Inc. as amended from time to time, or another
      plan adopted and approved by the Company’s Board of
  Directors.”



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