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HOT SPRINGS RANCHGEOTHERMAL LEASE AND AGREEMENT

THIS
  GEOTHERMAL LEASE AND AGREEMENT, (herein sometimes referred to as Lease)
  made and entered as of the 24th day of May, 2006 by and between JR Land and
  Livestock Inc., hereinafter referred to as Lessor, whether one or
  more, and U.S. Geothermal Inc., a Delaware corporation, hereinafter referred
  to as Lessee;

WITNESSETH:

1.      Purpose.
That Lessor, for and in consideration of Ten Dollars ($10.00) in hand paid to
Lessor by Lessee, the rentals provided for hereinafter, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and in consideration of the covenants and agreements hereinafter
contained has granted, leased, let and demised and by these presents does grant,
lease, let and demise exclusively to Lessee, its grantees, successors and
assigns, upon and subject to the terms and conditions hereinafter set forth, all
that certain land, geothermal and mineral rights for real property located in
the County of Malheur, State of OREGON, more particularly described in Exhibit
A attached hereto and by this reference made a part hereof (hereinafter
referred to as the leased rights ), including all roads, streets, alleys,
easements and rights of way owned or claimed by Lessor, on, within, or adjoining
the lands above described. This Lease shall cover all the interest in the leased
rights now owned or hereafter acquired by Lessor. Lessee further grants Lessor
an Area Of Influence, which shall extend 1 mile beyond the boundary of the
property described in Exhibit A, into which any property acquired by Lessee
shall become subject to the terms and conditions of this Lease.

By the use of such methods as Lessee may desire, Lessee, and
its designated representatives, shall have the sole and exclusive right to
utilize the leased rights, including but not limited to the right to explore
for, drill for, test, develop, operate, produce, extract, take, remove or sell
Hot Water, Steam and Thermal Energy and Extractable Minerals, and to store,
utilize, process, convert and otherwise treat such Hot Water, Steam and Thermal
Energy, and to extract any Extractable Minerals during the term hereof and to
transport same, and to inject or reinject effluents into the well or any wells
drilled pursuant to the leased rights; or inject water, gas or other fluid or
substances by artificial means into formations containing Hot Water, Steam or
Thermal Energy. Further, Lessee, its designated representatives and anyone
purchasing Leased Substances (as hereinafter defined) from Lessee are hereby
granted the use of any easements owned by Lessor across said land, to the full
extent of any such rights held by Lessor. In the event this Lease should
terminate with respect to a portion of the rights granted Lessee, it shall
nevertheless continue in full force and effect to any rights of way and any
easements appurtenant thereto that are being used from time to time when such
termination occurs and shall continue in effect so long as such rights of way
and easements or any of them

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continue to be used from time to time for the purposes above
described or for the production and utilization of Geothermal Resources from
lands in the vicinity thereof by Lessee, its designated representatives, or
anyone who has purchased, or is purchasing, Leased Substances from Lessee, their
successors and assigns. The possession by Lessee of the leased rights shall be
sole and exclusive for the purposes hereof and for purposes incident or related
thereto. Lessee agrees to conduct its activities in a manner which will not
unreasonably interfere with any rights reserved to Lessor.

2.      Term.
This Lease shall be for a term of ten (10) years from and after the date hereof
(hereinafter referred to as the Primary Term) and so long thereafter as Leased
Substances, or any of them, are derived or produced in commercial quantities
from the well or through the leased rights, or lands, rights or facilities
pooled, unitized or combined therewith, and for so long as Lessee is prevented
from producing same, or the obligations of Lessee hereunder are suspended, for
the causes hereinafter set forth, or this Lease is continued in force by reason
of any other provision hereof.

If
at the expiration of the Primary Term, Lessee is then engaged in operations for
drilling, reworking, recompleting, redrilling or enhancement of the well, or any
well developed in exercise of the leased rights, or any well on or lands pooled,
unitized or combined therewith, this Lease shall remain in force so long as any
such drilling, reworking, recompleting, redrilling or enhancement operations are
prosecuted (whether on the same or different wells) with no cessation of such
operations for more than six (6) months, and if such operations result in
production or the establishment to the satisfaction of the Lessee of the
existence of Sufficient Power Potential or Extractable Minerals in Commercial
quantities, such well or wells will be deemed to have been completed during the
primary term of this Lease.

3.      Primary
Term Consideration. It is understood and agreed that the initial consideration
paid, FIFTEEN THOUSAND DOLLARS ($15,000.00) upon the execution hereof, covers
both the rental in full hereunder for a period of one (1) year from the date of
this Lease and for all other rights conferred hereunder. Thereafter, on or
before said anniversary date, Lessee shall pay or tender to Lessor an annual
rental in the following amounts:

| | Year 2 | $20,000.00                               
| | ------ | -----------------------------------------
| | Year 3 | $25,000.00                               
| | Year 4 | $30,000.00 and each year
      thereafter

which shall constitute rental until the next anniversary date
hereof, until such time as from the drilling of a well or wells on the leased
land, or lands pooled, unitized or combined therewith, there has been
established to the satisfaction of the Lessee the existence of Sufficient Power
Potential or Extractable Minerals in Commercial quantities. Upon such
establishing as aforesaid, Lessee may nevertheless continue to pay or tender
annual rental payments on or before each anniversary date, until Lessee has
commenced the actual sale of one or more Leased Substances, and so long as such
annual rental payments to be paid or tendered, whether beyond the Primary Term
or not, this lease shall remain in force and effect. All payments so paid or
tendered shall be deemed advance royalties. Lessee shall have the right to
reimburse itself for any such payments of one-half (1/2) of any royalties which
shall thereafter become payable hereunder. So long as such payments are paid or
tendered each well or wells shall be deemed to be actually producing one or more
Leased Substances in Commercial Quantities under the terms hereof; provided,
however, that if within five (5) years after the date of expiration of the
Primary Term hereof Lessee shall have failed to make, or make arrangements for
(by executed contract or contracts) a bona fide Commercial sale of one or more
Leased Substances (or electric energy generated therefrom) then Lessor, at its
option, may consider Lessee in default hereunder. Additionally, should Lessee
fail to make any annual payment herein provided for on or before a particular
anniversary date, Lessor may, at its option, consider Lessee in default
hereunder.

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4.      Lessee
shall conduct all work in compliance with the applicable laws and regulations of
the state of Oregon and the United States of America. Lessee shall be fully
responsible for compliance with all applicable Federal, state, and local
statutes, regulations, and ordinances relating to such work, and for reclamation
bonding and any bonding required for geothermal wells. Lessor agrees to
cooperate with Lessee in Lessees application for governmental licenses,
permits, and approvals, all costs of which shall be borne by Lessee.

Lessee
shall fence all excavations (including sumps and settling ponds), and, upon the
termination of the Lease, Lessee shall level and fill all sump holes and
excavations, shall remove all debris and shall leave the locations or premises
used by Lessee in a clean and sanitary condition.

Lessee
shall replace all fences which the Lessee removed for its purposes and repair
all fences which Lessee damaged, and if and when so required by the Lessor, will
provide a proper livestock guard at any new point of entry upon lands used by
Lessee.

Lessee
shall have reasonable access to and use of water from the leased land for
Lessees drilling, testing and exploration operations thereon, in the vicinity
thereof, or on land or lands pooled, unitized or combined therewith provided
that such use shall not interfere with Lessors own use for domestic,
commercial, stock or agricultural purposes, nor interfere with any legal or
contractual commitments of Lessor relating thereto and existing on the date
hereof.. Lessor shall be allowed to enter on to the Lands during the term of the
lease for regular water monitoring activities of all wells or water sources.

Lessee
shall protect Lessors interest in the leased rights against liens of every
character arising from its operations thereon. Lessee, at its own expense, prior
to commencing operations pursuant to the leased rights, shall obtain, and
thereafter while this Lease is in effect shall maintain, adequate Workers
Compensation Insurance. Lessee shall protect Lessor against damages of every
kind and character arising out of the operations or working of Lessee or those
under Lessees control pursuant to the leased rights, but Lessee shall not be
liable hereunder in the event of the negligence or willful misconduct of parties
other than Lessee.

5.      Royalty.
Royalties shall be payable as follows:

(a)      With
respect to Hot Water, Steam or Thermal Energy (collectively to be referred to as
Energy Produced) produced, saved and sold by Lessee and then used by the
purchaser for the generation of electric power, Lessee shall pay to Lessor as
royalty Ten Percent (10%) of the market value of such Hot Water, Steam or
Thermal Energy produced from the well or in exercise of the leased rights at and
as of the point of origin on the land associated with the well or the leased
rights, which market value shall be deemed to be the gross proceeds received by
Lessee from such sale at the point of origin, unless the sale occurs at a
location other than the point of origin, in which case the market value shall be
deemed to be the gross proceeds received by lessee from such sale less all costs
and expenses of processing and transportation between the point of origin and
the point of sale.

(b)      With
respect to Hot Water, Steam or Thermal Energy produced, saved and used for the
generation of electric power which is then sold by Lessee, Lessee shall pay to
Lessor as royalty, a percent of the actual revenue, net of transmission losses
and other transmission charges (hereinafter called Gross Proceeds) received by
Lessee from the sale of electric power under the following schedule based on the
date that Lessees power plant achieves commercial operation:

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Years 1 through 5
    3% of Gross ProceedsYears 6 through 15
    4% of Gross ProceedsEach Year Thereafter
    5% of Gross Proceeds


(c)      With
respect to Energy Produced, saved and sold by Lessee and which is used for any
purpose other than the generation of electric power, Lessee shall pay to Lessor
as royalty Five Percent (5%) of the gross proceeds received by Lessee from the
sale of Energy Produced, as such, produced from the well or in exercise of the
leased rights at and as of the point of origin on the land associated with the
well or the leased rights.

(d)      With
respect to Extractable Minerals, Lessee shall pay as royalty to Lessor Five
Percent (5%) of the net proceeds received by Lessee from the sale of any gases
(as herein defined) and from the sale of effluents (containing minerals and/or
minerals in solution) produced and sold from the well or in exercise of the
leased rights, or, in the event Lessee extracts from the effluents minerals
and/or minerals in solution, Five Percent (5%) of the proceeds received by
Lessee from the sale of minerals and/or minerals in solution contained in and
extracted from such effluents less costs of transportation and extraction. If
Lessee consumes Leased Substances or electric power generated therefrom, by
either use or exchange, for purposes other than its operations with respect to
the well or the leased rights, then such Leased Substances or electric power
generated therefrom shall be deemed sold for royalty purposes and the
above-described royalty shall be paid on the same value basis as if such Leased
substances or electric power generated therefrom had been sold by Lessee at the
time of production under Lessees then existing sales contract.

(e)      With
respect to Energy Produced, Extractable Minerals, or Hot Water, Steam, or
Thermal Energy produced, saved, sold or used by Lessee, on lands that fall
within the Area of Influence, which are used for any purpose, Lessee shall pay
as royalty to Lessor 1.0% of Gross Proceeds received by Lessee from the
sale.

Lessee
shall pay to Lessor on or before the twenty-fifth day of each month the
royalties accrued and payable for the preceding calendar month, or on or before
the twenty-fifth day of the month next following that in which Lessee receives
payment therefor from the purchaser thereof, whichever method may be chosen by
Lessee from time to time, and in making such royalty payments Lessee shall
deliver to Lessor statements setting forth the basis for computation and
determination of such royalty.

Lessee
shall not be required to account to Lessor for or to pay any royalty on Hot
Water, Steam, Thermal Energy or Extractable Minerals produced by Lessee which is
not utilized, saved and sold, or which is used by Lessee in its operations with
respect to the well or the leased rights for or in connection with the
developing, recovering, producing, extracting and/or processing of Hot Water,
Steam, Thermal Energy and/or minerals in solution or in facilities for the
generation of electric power, or which are unavoidably lost.

Lessee
shall have the right from time to time and at any time to commingle (for
purposes of storing, transporting, utilizing, selling and processing, or any of
them) the Leased Substances, or any of them, that are produced or extracted from
the well or in exercise of the leased rights or lands pooled, unitized or
combined therewith, with Geothermal Resources, or any of them, produced from
other lands or units in the vicinity of the well or the land associated with the
leased rights, and in the event of such commingling, Lessee shall meter, gauge,
or measure the production from the well or in exercise of the leased rights, or
from the unit or units, including leased and other units or lands, as the

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case may be, and compute and pay
Lessors royalty payable under the provisions hereof on the basis of such
production so determined or allocated, as the case may be.

From the time when Lessee shall commence Commercial production
from said Lands, Lessee shall then pay Lessor the geothermal royalty set forth
herein, or the annual payments, whichever shall be the larger. This change from
annual lease payments to geothermal royalty payments shall occur at the time
when geothermal royalties exceed annual lease payments in any given year.

6.      Use
of Lease. Lessee shall have the right to drill such well or wells as Lessee may
deem desirable for the exercise of the leased rights, including wells for
injection or reinjection purposes, and shall have the further right to dispose
in any such wells waste brine, water and other substances, waste products from a
well or wells, power plants or other facilities. Lessee shall further have the
right for testing purposes, to freely transfer Leased Substances and Geothermal
Resources and to inject such leased Substances and Geothermal Resources into
well or into any wells developed pursuant to the leased rights.

7.      Land
Compensation. In return for actual surface use of leased land required for well
site, pipeline, transmission and plant operations hereunder, or if producing
agricultural lands are required by Lessee to be taken out of production, either
temporarily or permanently for Lessees operations, including but not limited to
as a result of Lessees use of water from the leased lands, Lessee shall
compensate Lessor at the annual rate of $ 200 per acre for such lands so
affected for the duration of their use. For greater clarity, if Lessee requires
2 acres of producing agricultural land, but its use impacts 10 acres, the rate
would apply to the 10 acres. For these purposes any pipelines or transmission
lines shall be deemed to require a 10 foot wide ground area. All pipelines shall
be insulated as per typical project specifications and shall be colored
according to industry norms or permit requirements as may be imposed. Lessee
shall further be responsible for any costs associated with the redesign and/or
relocation of structures or sprinkling equipment affected by Lessees
operations.

8.      Commingled
and Unit Operations. Lessee may, at any time or from time to time, as a
recurring right for drilling, development, production or operating purposes,
pool, unitize or combine all or any part of the leased rights into a unit with
any other land or lands or lease or leases (whether held by Lessee or others)
adjacent, adjoining or in the immediate vicinity of the land on which the well
is located or with which the leased rights are associated, which Lessee desires
to develop or operate as a unit. Such unit shall be deemed created either upon
Lessee recording in the office of the county recorder a written declaration of
such unit or upon Lessee giving written notice of such unit to Lessor. Any well
(whether or not Lessees well) commenced, drilled, drilling and/or producing or
being capable of producing in any part of such unit shall for all purposes of
this Lease be deemed a well commenced, drilled, drilling and/or producing in
exercise of the leased rights, and Lessee shall have the same rights and
obligations with respect thereto and to drilling and producing operations upon
the lands from time to time included within any such unit as provided under this
Lease provided, however, that notwithstanding this or any other provision or
provisions of this Lease to the contrary:

(a)      Production
as to which royalty is payable from any such well or wells drilled upon any such
unit, whether located upon the leased rights or other lands, shall be allocated
to the well and leased rights in the proportion that the acres of geothermal
rights associated with the leased rights bears to the total geothermal acreage
of such unit, and such allocated portion thereof shall for all purposes of this
Lease be considered as having been produced pursuant to the leased rights and
the royalty payable under this Lease shall be payable only upon that proportion
of such production so allocated thereto, and

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(b)     
If any taxes of any kind are levied or assessed (other than taxes on the land
and on Lessors improvements), any portion of which is chargeable to Lessor
under Paragraph 14 hereof, then the share of such taxes to be borne by Lessor as
provided in the Lease, shall be in proportion to the share of the production
from such unit allocated to the well and leased rights.

Allocation
of unit production whether to the well and the leased rights or to other lands
in the unit, shall continue after any termination of all or any part of this or
any other lease covering lands in the unit until any exploration, drilling,
remedial drilling or production operations are begun on the lands so terminated,
or until contracts regarding any such operations are entered into, whereupon all
such terminated lands shall be excluded in the production to be allocated to the
respective lands in such unit. In the event of the failure of Lessors, or any
other owners, title as to any portion of the rights or land included in any
such unit, such portion of such land or associated land shall likewise be
excluded in allocating production from such unit, provided, however, Lessee
shall not be held to account for any production allocated to any lands excluded
from any such operating unit unless and until Lessee has actual knowledge of the
circumstances requiring such exclusion. Any exclusion shall be deemed effective
the first day of the month next following the date upon which such exclusion
becomes finally established.

Lessee
may, at its sole option, at any time when there is no Commercial production in
such unit, terminate, enlarge or diminish such unit either by Lessee recording
in the office of the county recorder a written declaration thereof, or by Lessee
giving written notice thereof to Lessor.

9.      Inspection
by Lessor. Lessor, or its agents, at Lessors sole cost and risk, may during
normal hours of operation examine the any working, installations, structures, or
operations of Lessee constructed or undertaken pursuant to the leased rights,
and may at reasonable times inspect the books and records of Lessee with respect
to matters pertaining to the payment of royalties to Lessor.

10.      Default
Notice. Upon the violation of any of the terms and conditions of this Lease by
Lessee (including but not limited to payment of rental, advance royalty and/or
royalty) and the failure of Lessee, as to monetary matters, to make payment, and
as to other violations, to begin in good faith to remedy the same, within sixty
(60) days after written notice from Lessor so to do, specifying in said notice
the nature of such default, then at the option of Lessor this Lease shall
forthwith cease and terminate and all rights of Lessee in and to the well and
the leased rights shall be at an end, except for each and any well then being
drilled, or capable of producing, or capable of being used for injection
purposes, and in respect to which Lessee shall not be in default, together with
the rights, rights of way and easements which may be retained by Lessee by
virtue of the granting clause of this Lease.

11.      Termination.
Notwithstanding any other provisions of this Lease, and in consideration of the
payment made by the Lessee to the Lessor for the execution of this Lease, Lessee
shall have the right at any time prior to or after default hereunder, to
quitclaim and surrender to Lessor all right, title and interest of Lessee in and
to the well and the leased rights, and thereupon all rights and obligations of
the parties hereto one to the other shall cease and terminate, save and except
as to any then accrued royalty obligations of Lessee then payable as to which
Lessee shall remain liable to Lessor, and save and except the rights, rights of
way and easements which may be retained by Lessee by virtue of the granting
clause of this Lease.

12.      Partial
Ownership Interests. In the event Lessor at the time of making this Lease owns
an interest in the leased land less than One Hundred Percent (100%) of the
right, title and interest purportedly granted or leased hereby to Lessee, then
any payments due Lessor hereunder shall be paid to Lessor only in the proportion
which Lessors Interest bears to a One Hundred Percent (100%) interest in the
leased land.

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Notwithstanding the foregoing, should Lessor hereafter acquire
any additional right, title or interest in or to the leased land, it shall be
subject to the provisions hereof to the same extent as if owned by Lessor at the
date hereof, and any increase in payments of money hereunder necessitated
thereby shall commence with the payment next following receipt by Lessee of
satisfactory evidence of Lessors acquisition of such additional interest.

13.      Title.
Lessor hereby warrants and agrees to defend title to the leased rights and
agrees that Lessee, at its option, may pay and discharge any taxes, mortgages,
trust deeds or other liens or encumbrances existing, levied or assessed on or
against the well or the leased rights, and in the event Lessee exercises such
option, Lessee shall be subrogated to the rights of any holder thereof, and
shall have, among other rights, the right of applying to the discharge of any
such mortgage, tax or other lien or encumbrance any payments accruing to Lessor
hereunder.

14.      Tax
Payments. Lessee shall pay all taxes levied on structures and improvements
constructed by Lessee pursuant to this Lease. In the event any taxes are levied
or assessed against the right to produce Leased Substances, or against any
Leased Substances on or in the land associated with the well or the leased
rights, or in the event any increase in the taxes levied or assessed against the
well or the leased rights shall be based upon the production of Leased
Substances from, or reserves of Leased Substances attributed to, the well or the
lease rights, then in either such event Lessee shall pay Ninety Percent (90%) of
any such taxes or increase, as the case may be, and Lessor shall pay Ten (10%)
thereof. Lessor shall pay all taxes levied and assessed against all structures
and improvements owned by Lessor or placed by or pursuant to permission of
Lessor.

15.      Assignment.
The rights of either party hereunder may be assigned in whole or in part, and
the right and privilege to do so is hereby reserved by each party, and the
provisions hereof shall extend to the heirs, personal representatives,
successors and assigns of the parties hereto, but no change or division in
ownership of the well, rights, rentals or royalties, however accomplished, shall
operate to enlarge the obligations or diminish the rights of Lessee, and no such
change in ownership shall be binding upon Lessee until the expiration of thirty
(30) days after Lessee is furnished with written notice of such transfer or
assignment, together with a certified copy of the instruments of transfer or
assignment. In the event of assignment of this lease as to a segregated portion
of the leased right, the rentals payable hereunder shall be apportionable
between the several leasehold owners ratably according to the surface area of
each, and default in rental payment by one shall not affect the rights of other
leasehold owners hereunder. Lessees right of assignment expressly includes the
right to sublease all or any portion of its rights and obligations hereunder.
Lessee must notify the Lessor, in writing, within 30 days of any assignment.

16.     
Force Majeure. The obligation of the Lessee hereunder shall be suspended and the
terms of this Lease shall be extended as the case may be, while Lessee is
prevented from complying therewith, in whole or in part, by strikes, lockouts,
riots, war or the results thereof, acts of God or the elements, fire, flood,
accidents, delays in transportation, inability to secure labor or material in
the open market, laws, orders, rules, or regulations of Federal, State, County,
Municipal, or other governmental agencies, authority, or representative, or any
other matter or condition beyond reasonable control of Lessee, whether or not
similar to the conditions or matters herein specifically enumerated, or while
litigation contesting Lessors title to the well or the leased rights or the
rights granted Lessee hereunder or litigation involving Lessees operations
hereunder shall be pending and undetermined or during any period when Lessee has
no market for the products it is then capable of producing from the leased
rights or the market price then available for such products will not produce an
acceptable profit. For so long as any of the above circumstances continue to
exist, Lessee, without impairment of its rights hereunder, shall be excused from
performance of al obligations hereunder except payment of taxes and protection
of the leased rights. It is expressly agreed that

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the prevention of settlement of any litigation or strike or
labor disturbance shall not be considered a matter subject to Lessees control
within the meaning of this Paragraph.

If
the permission of approval of any governmental agency is necessary before
drilling or producing operations may be commenced pursuant to the leased rights,
then if such permission or approval has been applied for at least thirty (30)
days prior to the date upon which such operations much be commenced under the
terms hereof, the obligation to commence such operations shall be suspended
until ninety (90) days after the governmental permit is granted or approval
given, of if such permit or approval is denied initially, then so long as Lessee
in good faith appeals from such denial or conducts further proceedings in an
attempt to secure such permit or approval and ninety (90) days thereafter.
Lessor agrees to fully support and cooperate with Lessee in securing permits and
authorizations to conduct geothermal operations on the leased rights, all costs
of which shall be borne by Lessee.

17.      All
statements of production and royalty and all payments to be made by Lessee to
Lessor hereunder shall be sent to the person hereinafter set forth, at the
address indicated:

JR Land and Livestock Inc. C/o
Richard Jordan PO Box 188 Westfall, OR 97920

Lessee
shall, upon written notification of change of ownership in the well or leased
rights or in the rentals or royalties hereunder, as provided in Paragraph 12
hereof, divide and distribute the same to the new owners of such interest;
provided, however, that if at any time there are three or more persons entitled
to rentals or royalties hereunder, Lessee may, at its option, withhold payment
of such rentals or royalties until a majority in interest of such persons
designate in writing in a recordable instrument delivered to Lessee, a bank,
trust company or corporation, as a common agent and depositary, to receive all
payments due hereunder to such persons. Such designation may be changed at any
time in the same manner. Delivery of all statements and payments hereunder may
be made by depositing same in the United States mail duly addressed to Lessor at
the above address or addresses or to such agent and depositary, which shall
constitute full performance of Lessees obligation to make such delivery. In the
event that the amount payable under this Lease shall result in a payment of less
than Five Hundred dollars ($500.00) becoming due Lessor, Lessee may, at is
option, withhold and accrue sufficient periodic payments until the total due
Lessor exceeds Five Hundred Dollars ($500.00) .

18.      Notice.
Any notice herein required, or permitted to be given, or furnished by one party
to the other shall be in writing. Delivery of such written notice to Lessor
shall be made in person, by depositing the same in the United States mail duly
certified or by express delivery and addressed to Lessor at PO Box 188,
Westfall, OR 97920 and delivery of such written notice to Lessee shall be made
in person, by depositing the same in the United States mail duly certified or
delivered by express delivery and addressed to Lessee at 1509 Tyrell Lane, Suite
B, Boise, Idaho 83706. Either party hereto may by written notice to the other
party change its address to any other location.

19.      Definitions.
For the purposes of this Lease the following definitions shall apply:

(a)     
The terms Hot Water, Steam and Thermal Energy, collectively referred to as
Energy Produced, each shall mean natural geothermal water and/or steam, and
shall also mean the natural heat of the earth and the energy present in,
resulting from or created by, or which may be

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extracted from, the natural heat of the
earth or the heat present below the surface of the earth, in whatever form such
heat or energy naturally occurs;

(b)      The
term Extractable Minerals shall mean any minerals in solution in the well
effluents and all minerals and gases produced from or by means of the well or
any well or wells developed in exercise of the leased rights or by means of
condensing steam or processing water produced from the effluents from any such
well or wells. Said terms shall also include any water so produced or obtained
from condensation or steam; provided, however, that the term gases shall not
include hydrocarbon gases that can be produced separately from the well
effluents;

(c)     
The term Leased Substances shall collectively mean the matter, substances and
resources defined in subparagraphs 18(a) and 18(b) that are subject to this
Lease;

(d)      The
term Geothermal Resources shall collectively mean the matter, substances and
resources defined in subparagraph 18(a) and 18(b) that are not subject to this
Lease but are located on adjacent land or lands in reasonable proximity thereto;

(e)      The
term Power Potential shall mean, when used herein with respect to any well or
wells, the quantity, or units, of energy capable of being recovered from the Hot
Water, Steam or Thermal Energy produced therefrom by means of any energy
conversion or utilization facility (including, but not limited to, electrical
generating facilities) or equipment designed for use thereof;

(f)      The
term Sufficient Power Potential shall mean that Power Potential which, in the
sole judgment of Lessee shall be sufficient for the Commercial sale or
utilization thereof, or shall warrant the construction of facilities for the
Commercial sale or other utilization thereof, or shall justify additional
drilling or other operations in exercise of the leased rights;

(g)     
The term Commercial shall mean those qualities of Leased Substances produced,
sold or used, the value of which, after determining Lessees direct operating
costs (or extraction costs in the case of Extractable Minerals) will be capable
of providing a sufficient return to cause Lessee, in its sole judgment, to
continue production thereof or to elect to proceed with further development or
exploratory operations in exercise of the leased rights.

20.      Severability.
In the event any part or portion or provision of this instrument shall be found
or declared to be null, void or unenforceable for any reason whatsoever by any
Court of competent jurisdiction, then and in such event only such part, portion
or provision shall be affected thereby, and such finding, ruling or decision
shall not in any way affect the remainder of this instrument or any of the other
terms or conditions hereof, which said remaining terms and conditions shall
remain binding, valid and subsisting and in full force and effect between the
parties hereto, it being specifically understood and agreed that the provisions
hereof are severable for the purposes of the provisions of this clause. In this
connection, this Lease shall not in any event extend beyond such term as may be
legally permissible under present applicable laws, and should be any such
applicable law limit the term hereof to less than that herein provided, then
this Lease shall not be void but shall be deemed to be in existence for such
term and no longer.

21.      Exclusive
Rights. Lessee shall have the exclusive rights to all Leased Substances and to
all power production from Leased Substances on and/or from leased land during
the term hereof, subject only to payment of the royalties to Lessor as set forth
herein.

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22.     
If more than one person is named as Lessor herein and one or more of them fails
to execute this Lease, said Lease shall nevertheless (when accepted by Lessee)
become effective as a lease from such of said named parties Lessor as may have
executed the same.

23.      This
Lease may be executed in any number of counterparts and all such counterparts
shall be deemed to constitute a single lease and the execution of one
counterpart by any party Lessor shall have the same force and effect as if such
party had signed all the other counterparts.

24.     
This Geothermal Lease and Agreement and all of the terms, covenants and
conditions hereof shall extend to the benefit of and be binding upon the
respective heirs, personal representatives, successors and assigns of the
parties hereto.

IN
WITNESS WHEREOF, the parties have caused this instrument to be duly executed as
of the date hereinabove first written.

|On behalf of,                  |  | On behalf of,                              
|------------------------------ |  | -------------------------------------------
|**JR Land and Livestock Inc.** |  | **U.S. Geothermal Inc.**                   
|                               |  |                                            
|                               |  |                                            
|                               |  |                                            
|/s/ Richard Jordan             |  | /s/
      Douglas J. Glaspey               
|Richard Jordan, President      |  | Douglas J. Glaspey, Chief Operating Officer
|Lessor                         |  | Lessee                                     

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State of Idaho
    )
      On this 24th day of May, 2006, before me,)County of Ada
    )the undersigned Notary Public, personally
      appearedDouglas J. Glaspey(x) personally known to me(  ) proved to me on the basis of
      satisfactory evidenceto be the person(s) whole name(s) Douglas J.
      Glaspeysubscribed to the within instrument, and
      acknowledged thatDouglas J. Glaspey, executed it.WITNESS my hand and official seal./s/ Amy MitchellNotarys SignatureCommission Expires: 7/29/2010State of Oregon
    )
      On this 24th day of May, 2006, before me,)County of Malheur
    )the undersigned Notary Public, personally
      appearedRichard Jordan(  ) personally known to me(x) proved to me on the basis of satisfactory
        evidenceto be the person(s) whole name(s) Dick Jordansubscribed to the within instrument, and
      acknowledged thatRichard Jordan executed it.WITNESS my hand and official seal./s/ Kerry BaumgardnerNotarys SignatureCommission Expires: 4.03.10


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EXHIBIT A

Hot Springs Ranch  5,409 acres more or less

Lands located in Malheur County, Oregon

Township 18 South, Range 42 East W.M.Section 13:
      SE1⁄4SW1⁄4, SW1⁄4SE1⁄4,
          E1⁄2SE 1⁄4Section 24:
      N1⁄2NW1⁄4Township 18 South, Range 43 East W.M.Section 5:
      SW1⁄4SW1⁄4Section 7:
      Lots 2, 3, 4, SE1⁄4NW1⁄4,
          SW1⁄4NE1⁄4, E1⁄2NE1⁄4, SE1⁄4 , E1⁄2SW 1⁄4Section 8:
      AllSection 9:
      All, EXCEPTING a parcel situated
          in the NW1⁄4NE1⁄4 and the E1⁄2NW1⁄4,More particularly described
          as follows:Beginning at the North quarter
          corner of Section 9, thence East 660 feet, thence South 660 feet, thence
          on a straight line in a Southwesterly direction to a point 330 feet
          North of the Southwest corner of the NW1⁄4NE1⁄4 of Section 9;thence continuing South 660
          feet, thence on a straight line in a Southwesterly direction to a point
          which bears N 64o 00 W 737.89 feet from the center quarter
          corner of Section 9; thence S 89o 26 W 266.45 feet,thence N 20o 54
          E 30.0 feet, thence N 18o 51 E 129.0 feet,thence N 11o 01
          E 145.5 feet, thence N 1o 51 E 539.6 feet,thence N 43o 22
          E 89.5 feet, thence N 16o 29 W 89.3 feet,thence N 20o 15
          E 353.0 feet, thence North 330 feet,thence on a straight line in
          a Northeasterly direction to a point 330 feet South of the North quarter
          corner of Section 9, thence North 330 feet to the point of beginning.Section 11:
      W1⁄2, S1⁄2SE1⁄4Section 15:
      AllSection 16:
      SW1⁄4 , W1⁄2NW1⁄4
          , NE1⁄4Section 17:
      AllSection 18:
      AllSection 19:
      All


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