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EMPLOYMENT AGREEMENT

THIS AGREEMENTmade 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:

Douglas Glaspeyof 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 Chief Operating 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 WITNESSESthat 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 Chief
Operating 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 December 31, 2008 or until
terminated as hereinafter provided.

**3.**      
**Responsibility**The Employee will devote one hundred percent
of his 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 President.

**4.**      
**Other Business Activities**It is agreed that the Employee's
employment hereunder shall constitute one hundred percent of his working time
which shall be devoted exclusively for the benefit of the

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Company, and therefore, the Employee may not engage in any
other business activities that would interfere with, or impede, in any
significant manner, the performance of his duties as Chief Operating Officer of
the Company.

**5.**      
**Compensation**In consideration of the performance by
the Employee of his responsibilities and duties as Chief Operating Officer
hereunder:

**(a)**      
****the Company will pay the Employee the sum of US$144,000
per annum, payable in monthly installments of $12,000 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;

| | (c) | the Company will provide the Employee and his immediate
      family (consisting of spouse and children) with medical, dental and
      related coverage as are available to the other employees of the Company;
      and,
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| |     |                                                                                                                                                                                                                            
| | (d) | the Company will provide a 401K retirement benefit as is
      available to the other employees of the Company.                                                                                                            

**6.**     **Expenses**          The
Company will 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. This vacation must be
taken on dates which do not adversely compromise the Employees performance of
his duties under this Agreement.

**8.**       **Termination**           
This Agreement and the Employee's employment may be terminated by the Company
summarily and without notice, payment in lieu of notice, severance payments,
benefits, damages or any sums whatsoever, on the occurrence of any one or more
of the following events:

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| | (a) | The Employee's failure to carry out his duties hereunder
      in a competent and professional manner;                                                                                                                                   
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                          
| | (b) | The Employee's appropriation of corporate opportunities
      for the Employee's direct or indirect benefit or his failure to disclose
      any material conflict of interest;                                                          
| |     |                                                                                                                                                                                                                                          
| | (c) | The Employee's plea of guilty to, or conviction of, an
      indictable offence once all appeals (if any) have been completed without
      such conviction having been reversed;                                                        
| |     |                                                                                                                                                                                                                                          
| | (d) | The existence of cause for termination of the Employee at
      common law including but not limited to cause related to fraud,
      dishonesty, illegality, breach of statute or regulation, or gross
      incompetence;              
| |     |                                                                                                                                                                                                                                          
| | (e) | Failure on the part of the Employee to disclose material
      facts concerning his business interests or employment outside of his
      employment by the Company, provided such facts relate to the Employee's
      duties hereunder;
| |     |                                                                                                                                                                                                                                          
| | (f) | Refusal on the part of the Employee to follow the
      reasonable and 1awfull directions of the Company;                                                                                                                                
| |     |                                                                                                                                                                                                                                          
| | (g) | Breach of fiduciary duty to the Company on the part of
      the Employee;                                                                                                                                                               
| |     |                                                                                                                                                                                                                                          
| | (h) | Material breach of this Agreement or gross negligence on
      the part of the Employee in carrying out his duties under this Agreement;
      or                                                                                        
| |     |                                                                                                                                                                                                                                          
| | (i) | A declaration of bankruptcy on the part of the Employee
      by a court of competent jurisdiction.                                                                                                                                      

**8.1**      In the event
of the early termination of the Agreement for any reason set out in Section 8
above, the Employee shall only be entitled to such compensation as would
otherwise be payable to the Employee hereunder up to and including such date of
termination, as the case may be.

**8.2**     This
Agreement and the Employee's employment may be terminated on notice by the
Company to the Employee for any reason other than for the reasons set out in
Section 8 above of this Agreement upon one month notice to the Employee. In such
event, the Employee will be entitled to payment of salary and expenses until the
date one month after which notice was given.

**8.3**     This
Agreement and the Employee's employment may be terminated on notice by the
Employee to the Company for any reason upon one month notice to the Company. In
such event, the Employee will be entitled to payment of salary and expenses
until the date one month after which notice was given.

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8.4      If a Change of Control (as
herein defined) occurs and this Agreement is terminated by the Company, either
effectively or constructively, within twelve (12) months of such Change of
Control, the Employee shall be entitled to receive a lump sum payment in an
amount equal to eighteen (18) monthly installments of the Employees
Compensation.

8.5      If this Agreement is
terminated in accordance with Section 8.4, the benefits provided to the Employee
pursuant to Section 5 of this Employment Agreement shall continue for the amount
of months of Compensation the Employee is entitled to following the termination
of this Agreement pursuant to Section 8.4 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:

| | a) | a merger, amalgamation, arrangement, consolidation,
      reorganization or transfer takes place in which securities of the Company
      possessing more than 50% 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;
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| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | b) | 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, 50% or more of the voting
      rights attached to all outstanding voting securities;                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | c) | any person, or any 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                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | d) | the 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.                                                                                                                                                                                                                                                                                                                                                                                      

**9.**      
**Confidential
Information**      
     The Employee agrees to keep the affairs and
Confidential Information (as defined below) of the Company strictly confidential
and shall not disclose the same to any person, company or firm, directly or
indirectly, during or after his employment by the Company except as authorized
in writing by the Board. "Confidential Information" includes, without
limitation, the following types of information or material, both existing and
contemplated, regarding the Company or its parent, affiliated or subsidiary
companies: corporate information, including contractual licensing arrangements,
plans, strategies, tactics, policies, resolutions, patent, trademark and trade
name applications; any litigation or negotiations; information concerning
suppliers; marketing information, including sales, investment and product plans,
customer lists, strategies, methods,

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customers, prospects and market research data; financial
information, including cost and performance data, debt arrangements, equity
structure, investors and holdings; operational and scientific information,
including trade secrets; technical information, including technical drawings and
designs; any information relating to any mineral projects in which the Company
has an actual or potential interest; and personnel information, including
personnel lists, resumes, personnel data, organizational structure and
performance evaluations. The Employee agrees not to use such information,
directly or indirectly, for his own interests, or any interests other than those
of the Company, whether or not those interests conflict with the interests of
the Company during or after his employment by the Company. The Employee
expressly acknowledges and agrees that all information relating to the Company,
whether financial, technical or otherwise shall, upon execution of this
Agreement and thereafter, as the case may be, be the sole property of the
Company, whether arising before or after the execution of this Agreement. The
Employee expressly agrees not to divulge any of the foregoing information to any
person, partnership, Company or other legal entity or to assist in the
disclosure or divulging of any such information, directly or indirectly, except
as required by law or as otherwise authorized in writing by the Board. The
provisions of this Section 9 and Section 9.1 below shall survive the termination
of this Agreement for a period of one year.

**9.1**     ****The Employee agrees that all documents of any nature pertaining to the
activities of the Company or its related corporate entities, including
Confidential Information, in the Employee's possession now or at any time during
the Employee's period of employment, are and shall be the property of the
Company and that all such documents and copies of them shall be surrendered to
the Company when requested by the Company.

**10.**     **Non-Competition**            During
the Non-Competition Period (as defined below), the Employee shall not, either
individually or in partnership or jointly or in conjunction with any other
person, entity or organization, as principal, agent, consultant, lender,
contractor, employer, employee, investor, shareholder or in any other manner,
directly or indirectly, advise, manage, carry on, establish, control, engage in,
invest in, offer financial assistance or services to, or permit the Employee's
name or any part thereof to be used by, any business in geothermal resources
that competes with the business of the Company, its parent, affiliated or
subsidiary companies, or any business in which the Company, its parent,
affiliated or subsidiary companies is engaged. Competition, for purposes of this
paragraph is defined as a 100-mile radius around any and all geothermal
properties acquired by the Company up to and inclusive of the date of
termination. For purposes of this Agreement, "Non-Competition Period" means a
period ending twelve (12) months after the end of the termination of this
Agreement.

**11.**     **Acknowledgement**            The
Employee acknowledges that damages would be an insufficient remedy for a breach
by him of this Agreement and agrees that the Company may apply for and obtain
any relief available to it in a court of law or equity, including injunctive
relief, to restrain breach or threat of breach of this Agreement by the Employee
or to enforce the covenants

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contained therein and, in particular, the covenants contained
in Sections 9 and 10, in addition to rights the Company may have to damages
arising from said breach or threat of breach.

**12.**     **Representations
and
Warranties**            The
Employee 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 understanding, agreement or
commitment, written or oral, express or implied, to which the Employee is
currently a party or by which the Employee or Employee's property is currently
bound.

**13.**     **Governing
Law**            This
Agreement shall be construed and enforced in accordance with the laws of the
State of Idaho, USA.

**14.**     **Entire
Agreement**            This
Agreement constitutes the entire agreement between the parties hereto with
respect to the relationship between the Company and the Employee and supersedes
all prior arrangements and agreements, whether oral or in writing between the
parties hereto with respect to the subject matter hereof.

**15.**     **Amendments**            No
amendment to or variation of the terms of this Agreement will be effective or
binding upon the parties hereto unless made in writing and signed by both of the
parties hereto.

**16.**     **Assignment**            This
Agreement is not assignable by the Employee. This Agreement is assignable by the
Company to any other company, which controls, is controlled by, or is under
common control with the Company. This Agreement shall enure to the benefit of
and be binding upon the Company and its successors and permitted assigns and the
Employee and his heirs, executors and administrators.

**17.**     **Severability**            Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the
prohibition or unenforceability and shall be severed from the balance of this
Agreement, all without affecting the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.

**18.**     **Headings**            The
division of this Agreement into Sections and the insertion of headings are for
convenience or reference only and shall not affect the construction or
interpretation of this Agreement.

**19.**     **Time
of Essence**

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Time shall be of the essence in all respects of this Agreement.

**20.**     **Independent
Legal
Advice**            The
Employee agrees that he has had, or has had the opportunity to obtain,
independent legal advice in connection with the execution of this Agreement and
has read this Agreement in its entirety, understands its contents and is signing
this Agreement freely and voluntarily, without duress or undue influence from
any party.

**21.**     **Notice**            Any
notice required or permitted to be made or given under this Agreement to either
party shall be in writing and shall b6 sufficiently given if delivered
personally, by facsimile, or if sent by prepaid registered mail to the intended
recipient of such notice at their respective addresses set forth below or to
such other address as may, from time to time, be designated by notice given in
the manner provided in this Section:

In the case of Company:

U.S. Geothermal Inc. 1505 Tyrell Lane Boise, Idaho
83706 Attention: Corporate Secretary Fax No.: 208-424-1030

In the case of Employee:

Douglas Glaspey 1505 Tyrell Lane Boise, Idaho 83706
Fax No.: 208-424-1030

**21.1**     Any
notice delivered to the party to whom it is addressed shall be deemed to have
been given and received on the day it is so delivered or, if such day is not a
business day, then on the next business day following any such day. Any notice
mailed shall be deemed to have been given and received on the 10th business day
following the date of mailing. In the case of facsimile transmission, notice is
deemed to have been given or served on the party to whom it was sent at the time
of dispatch if, following transmission, the sender receives a transmission
confirmation report or, if the sender's facsimile machine is not equipped to
issue a transmission confirmation report, the recipient confirms in writing that
the notice has been received.

IN WITNESS WHEREOFthe parties hereto have executed this
Agreement as of the day and year first above written.

U.S. GEOTHERMAL INC.

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By:________________________________________     
        Daniel Kunz - President



SIGNEDby the Employee in the presence of:



|                        |  |                
|----------------------- |  | ---------------
|Witness                 |  | Douglas Glaspey
|                        |  |                
|                        |  |                
|Printed Name of Witness |  |                

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