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August 11, 2005


|Mr. Louis Capuano        
|-------------------------
|ThermaSource, Inc.       
|725 Farmers Lane Suite #8
|Santa Rosa CA 95405      

Re: Letter of Agreement for California Geothermal Venture

Dear Lou,

This
  document will formalize our discussions and confirm our mutual agreement in
  regards to Encore forming a Joint Venture Limited Liability Corporation or Limited
  Liability Partnership (the JV) with ThermaSource Inc. to develop
  Encores Magnetic Piston Generator (MPG) and thermal hydraulic
  Heat Seeker heat conversion technologies in the Field of Use of Geothermal
  and Hydrothermal applications exclusively in the State of California.

The purpose of the JV is to install Encores geothermal
  heat and pressure recovery technologies in both new and existing geothermal
  wells and geothermal facilities in California, generating clean energy revenues
  that the JV may share, under various conditions, with local geothermal resource
  owners.

| |    | Encore and ThermaSource hereby agree as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 1. | Encore agrees to sub-license, on an exclusive basis,
        in the territory of the State of California, any and all of its patent,
        copyright or other such intellectual property rights, which Encore has
        in the MPG and HeatSeeker under the Encore Hunt License Agreement, to
        a Limited Liability Corporation (LLC) or Limited Liability Partnership
        (LLP) to be formed between Encore and ThermaSource (the JV).                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 2. | The JV shall own the exclusive rights to exploit and
        sub-license the MPG in the Field of Use of Geothermal and Hydrothermal
        energy conversion within the State of California as its exclusive
        territory.                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 3. | ThermaSource will contribute its engineering and technical
        expertise in drilling, constructing and operating geothermal facilities
        to the JV, for which ThermaSource shall receive an ownership interest
        in the JV equal to fifteen percent (15%). ThermaSource shall have the
        right to nominate one member of the five member board of directors or
        board of managers set up to manage the JV.                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 4. | In consideration of exclusively assigning its rights
        in the MPG and HeatSeeker for geothermal applications in California to
        the JV, Encore shall receive an ownership interest in the JV equal to
        eighty-five percent (85%). Encore shall have the right to nominate four
        members of the five member board of directors or board of managers set
        up to manage the JV.                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 5. | Encore will initially fund, or compensate third-party
        Investors for funding, the first round of financing of the JV out of Encores
        85% ownership interest in the JV, with all parties thereafter subject
        to equal pro-rata dilution for subsequent rounds of financing.                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 6. | Louis Capuano shall be appointed as the Managing
        Director of the LLC or LLP, and upon satisfactory financing of the
        LLC or LLP, of a minimum of $500,000, he will be paid a Minimum Consulting
        Fee of five thousand dollars ($5000.00) per month by the LLC or LLP
        for an initial term of three (3) years. Once the LLC achieves net revenues
        in any year, this monthly fee will be increased to a minimum of ten thousand
        ($10,000.00) per month.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 7. | Until such time as the JV negotiates its own insurance
        liability policy, ThermaSource shall make the JV a party to ThermaSources
        current insurance liability and indemnification policy to protect                                                                                                                                                                                                                                                                                 

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| |    | the JV as and when the JV performs, or pays ThermaSource
        to perform, any geothermal-related field activities that require such
        insurance coverage or indemnification.                                                                                                                                                                                                                                                                         
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | 8. | On behalf of and at the expense of the JV, Lou Capuano
        will represent the interests of the JV in negotiating a final agreement
        with, and fulfilling all of the conditions of that certain major geothermal
        facility owner in The Geysers, who confirmed their offer in a July 5,
        2005 letter to ThermaSource, to conditionally allow Encore to install
        and test the HeatSeeker in one of their observation test wells.

Our
  signatures below constitute the basic terms of the Agreement between you and
  Encore. The terms outlined in this letter, as well as all necessary SEC or other
  such regulatory filings, will be prepared and formalized by the Companys
  lawyers within 30 business days.

|Sincerely,                                          
|----------------------------------------------------
|Encore Clean Energy, Inc.                           
|                                                    
|                                                    
|                                                    
|/s/ Dan Hunter                                      
|Dan Hunter                                          
|CEO                                                 
|                                                    
|                                                    
|Accepted and Agreed to this 11th Day of August, 2005
|                                                    
|ThermaSource, Inc.:                                 
|                                                    
|                                                    
|                                                    
|/s/ Louis Capuano                                   
|Louis Capuano                                       

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