Employment Agreement dated January 1, 2009 with Kerry D. Hawkley

Exhibit 10.16

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 1st day of January, 2009

BETWEEN:

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

AND:

Kerry D. Hawkley of 11917 W Fiddler Drive, Boise, Idaho 83713 (the "Employee")

WHEREAS:

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 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 January 1, 2009 and will remain in full force and effect until the earlier of December 31, 2009 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.

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

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, and reimbursement by the Company will be made as soon as administratively practicable thereafter but in no event later than three (3) months after the date of termination.

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7.

Vacation

The 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 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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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 up to and including such date of termination and the pro-rata monetary equivalent of any unused vacation days accrued to the date of termination payable in accordance with usual payroll practices but in no event later than three (3) months following the date of termination. Expenses incurred up to and including such date of termination shall be reimbursed only in accordance with Section 6.

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 up to and including such date of termination and the pro-rata monetary equivalent of any unused vacation days accrued to the date of termination. Expenses incurred up to and including such date of termination shall be reimbursed only in accordance with Section 6.

8.4

In the event that (i) Employee’s employment is terminated either by Company without Cause or by Employee for Good Reason (as defined below), and (ii) a Change of Control (as defined below) has occurred within the twelve (12) month period preceding the date of such termination, the Employee shall be entitled to receive a lump sum payment in an amount equal to eighteen (18) monthly installments of the Employee’s base annual salary as set forth under Section 5(a). Any payments made under this Section 8.4, in all events, will be paid within 60 days of the date of termination. For purposes of this Section 8.4, the Employee 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 the Employee 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 the Employee is expected to perform is expected to decrease permanently to no more than 20% of the average level of bona fide services that the Employee performed over the immediately preceding 36-month period. Whether the Employee has had a termination of employment will be determined in a manner consistent with the definition of “separation from service” under Code section 409A.

8.5

If this Agreement is terminated in accordance with Section 8.4, the benefits provided to the Employee pursuant to Section 5(c) of this Agreement shall continue for the number of months of compensation the Employee is entitled to following the termination of employment pursuant to Section 8.4 or until the Employee commences alternative employment, whichever occurs first; provided that, if such continued participation is not permissible under applicable law, Company or its successor shall provide Employee with benefits substantially similar to those to which Employee would have been entitled under those plans in which Employee’s continued participation is not permissible. The percentage of the contributions by the Company for the cost of the benefits provided pursuant to this Section 8.5 shall be at the same level as the Company’s contribution for such benefits during the Employee’s employment.

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“Good Reason” shall mean any one of the conditions set forth below, provided that Employee 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. If the condition is not remedied within such 30 day period, the following conditions will constitute “Good Reason”:

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

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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, 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.

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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 Agreement is defined as a 10-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 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.

Employee represents and warrants to Company that Employee 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 Employee’s performance of the covenants, services and duties provided for in this Agreement. Employee agrees to indemnify Company and hold it harmless against any and all liabilities or claims arising out of any unauthorized act or acts by Employee that, the foregoing representation and warranty to the contrary notwithstanding, are in violation, or constitute a breach, of any such contract, commitment, arrangement or understanding.

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Employee acknowledges and agrees that 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 Employee under the terms of this Agreement, and that Employee is solely responsible for Employee’s compliance with any and all laws applicable to such payments or other consideration.

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 Employee’s employment with Company, are withheld or collected from Employee.

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.

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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.

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 be sufficiently given if delivered personally, by electronic transmission, 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:

US Geothermal Inc.
1505 Tyrell Lane
Boise, Idaho 83706
Attention: Corporate Secretary
Fax No.: 208 ###-###-####

in the case of Employee:

Kerry D. Hawkley
11917 W Fiddler Drive
Boise, Idaho 83713
Fax No.: 208 ###-###-####

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

US GEOTHERMAL INC.

By: ______________________________
        Daniel J. Kunz, President and CEO

SIGNED by the Employee in the presence of:

___________________________________                    ___________________________________
Witness                                                                                       Kerry D. Hawkley

__________________________
Printed Name of Witness