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EMPLOYMENT AGREEMENT

> THIS AGREEMENTmade as of the 1st day of April,
>         2006

BETWEEN:

> US Geothermal Inc.,a body corporate having an
>         office at Suite B, 1509 Tyrell Lane Boise, Idaho 83706 
>         (the "Company")

AND:

> Kerry Hawkleyof 1509 Tyrell Lane, Suite B: Boise,
>         Idaho 83706 
>         (the "Employee")

WHEREAS:

**(A)**     ****the Company is in the business of developing the Raft River geothermal
property;

**(B)**     the
Company wishes to engage the Employee as Chief Financial 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 Financial 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 April 1, 2006 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 Financial Officer of
the Company.

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

**(a)**     ****the Company will pay the Employee the sum of US$96,000 per annum,
payable in monthly installments of $8,000 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; and

**(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.

**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 three 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:

| | (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;

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| | (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.

**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

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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, 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**

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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 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

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convenience or reference only and shall not affect the
construction or interpretation of this Agreement.

**19.**        **Time
of
Essence**               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. 1509 Tyrell Lane, Suite B Boise,
Idaho 83706 Attention: Corporate Secretary Fax No.: 208-424-1030

In the case of Employee:

Kerry Hawkley1509 Tyrell Lane, Suite B 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.

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

U.S. GEOTHERMAL INC.

|By: | /s/ Daniel Kunz                   | 
|--- | --------------------------------- | 
|    | **Daniel Kunz
      - President** | 



SIGNEDby the Employee in the presence of:



|/s/ Amy Mitchell        |  | /s/ Kerry Hawkley
|----------------------- |  | -----------------
|Witness                 |  | Kerry Hawkley    
|                        |  |                  
|                        |  |                  
|Amy Mitchell            |  |                  
|Printed Name of Witness |  |                  

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