Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - U.S. Geothermal Inc. - Exhibit 10.7

 GEOTHERMAL 

  LEASE AND AGREEMENT  

This Lease and Agreement is made and entered into as of this 1st day of March, 2004, by and between:

 Jay Newbold, Party of the first part, 

  hereinafter referred to as “Lessor” 

 and 

 US Geothermal Inc., an Idaho corporation, 

  Party of the second part,

  hereinafter referred to as “Lessee” 

who are referred to in the plural as the “Parties”.

 Recitals 

 WHEREAS Lessor is the owner of certain land and geothermal
  rights situated in Cassia County, in the State of Idaho, which the Parties believe
  are suited for the development of Hot Water, Steam and Thermal Energy for use
  as such and/or the conversion of such geothermal energy to the production of
  electric power, or for any purpose other than the generation of electric power,
  and 

 WHEREAS It is the desire of Lessor and Lessee to enter
  into an agreement which will enable the development of said Hot Water, Steam
  and Thermal Energy for any of the aforesaid purposes for the mutual profit of
  the Parties, 

 BE IT THEREFORE HEREBY AGREED AS FOLLOWS: 

 1.           Purpose.
    For and in consideration of the sum of Ten Dollars ($10.00) and
  other valuable consideration set forth in clauses (4.) and (5.) below, receipt
  of which initial sum and sufficiency of which is hereby acknowledged, and in
  consideration of the covenants and agreements hereinafter contained, Lessor
  has granted, leased, let and demised to Lessee, its grantees, successors and
  assigns, upon and subject to the terms and conditions contained herein, the
  land hereinafter described, the sole and exclusive right to drill for, produce,
  extract, take, remove and sell geothermal heat energy including , Hot Water,
  Steam, or Thermal Energy therefrom, and to store, utilize, process, convert
  and otherwise treat such geothermal energy upon said land, during the term hereof,
  with the right of entry thereon and use and occupancy thereof at all times for
  said purposes and the furtherance thereof, including the right to construct,
  use and maintain thereon and to remove therefrom structures, facilities and
  installations, pipelines, utility and power transmission lines. 

 1 

 The possession by Lessee of said land shall be sole and exclusive
  for the purposes hereof and for the purposes incident or related thereto, excepting
  that Lessor reserves the right to use and occupy said land, or to lease or otherwise
  deal with the same, without interference with Lessee rights, for residential,
  agricultural, commercial, or grazing uses, or for any and all uses other than
  the uses and rights permitted to Lessee herein. 

 2.           Lands.
  The land which is the subject of this lease is situated in the county and state
  above first named consisting of approximately 20 acres and which is described
  in Exhibit A attached hereto and incorporated as if more fully set forth herein,
  including also in the leased land all rights of Lessor, presently owned or hereafter
  acquired, in and under roads, ditches, and rights of way traversing or adjacent
  to said land, (hereinafter referred to as “Lands”). 

 3.           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 leased land or lands 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 has not completed
  one or more wells on the leased land or lands pooled, unitized or combined therewith,
  which well or wells separately or collectively are either producing, or capable
  of producing, Hot Water, Steam or Thermal Energy of Sufficient Power Potential
  in Commercial quantities, but lessee is then engaged in operations for drilling,
  reworking, recompleting, redrilling or enhancement of any well on the leased
  land or lands pooled, unitized or combined therewith, this Lease shall remain
  in force so long as drilling, reworking, recompleting, redrilling or enhancement
  operations are prosecuted (whether on the same or different wells) on the leased
  land or lands pooled, unitized or combined therewith 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 in Commercial quantities, such well or wells will be deemed
  to have been completed and such existence is established during the primary
  term of this Lease. 

 4.           Primary
  Term Consideration. It is understood and agreed that the initial consideration
  paid 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, for the first five (5) years of the lease,
  on or before said anniversary date, Lessee shall pay or tender to Lessor an
  annual rental in the amount of TEN DOLLARS ($10.00) per acre , which shall constitute
  rental until the next anniversary date hereof. For the second five (5) year
  period of the lease, Lessee shall, on or before each succeeding anniversary
  date during the primary term hereunder, pay or tender to Lessor an annual rental
  in the amount of FIFTEEN DOLLARS ($15.00) per acre , 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 

 2

the Lessee the existence of Sufficient Power Potential 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 after the expiration of said primary term shall be deemed
  advance royalties. 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) than 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.

 5.           Geothermal
  Royalties. Royalties shall be payable as follows:

          (a)
            With respect to
  Hot Water, Steam or Thermal Energy produced, saved and sold by Lessee and then
  used by the purchaser for the generation of electric power, Lessee shall pay
  to Lessor as a royalty Ten Percent (10%) of the market value of such Hot Water,
  Steam or Thermal Energy produced from the leased land at and as of the point
  of origin on the leased land, which market value shall be deemed to be the gross
  proceeds received by Lessee from such sale at the point of origin on the leased
  land, unless the sale occurs at a location other than the point of origin on
  the leased land, 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 extraction,
  production, storage, processing, reinjection, and transportation between the
  point of origin on the leased land and the point of sale.

          (b)
            With respect to
  Hot Water, Steam or Thermal Energy produced (collectively to be referred to
  as “Energy Produced”), saved and used for the generation of electric
  power which is then sold by Lessee, Lessee shall pay to Lessor as a royalty
  Ten Percent (10%) of the Net Proceeds from the sale of Energy Produced from
  the leased land, at and as of the point of origin on the leased land in accordance
  with the definition of Net Proceeds from the sale of Energy Produced as defined
  in paragraph 19, subparagraph (h).

          (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 a
  royalty Five Percent (5%) of the gross proceeds received by Lessee from the
  sale of Energy Produced, as such, produced from the leased land at and as of
  the point of origin on the leased land.

 3 

          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 therefore
  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 produced by Lessee on the leased land which is
  not utilized, saved and sold, or which is used by Lessee in its operations on
  or with respect to the leased land for or in connection with the developing,
  recovering, producing, extracting and/or processing of Hot Water, Steam, or
  Thermal Energy 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
  leased land 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 leased land, and in the event of such commingling, Lessee shall meter,
  gauge, or measure the production from the leased land, or from the unit or units,
  including leased and other units or lands, as the 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 Lessor shall commence Commercial production
  from said Lands, Lessee shall then pay Lessor the geothermal royalty set forth
  herein, or the initial term 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 month. 

 6.           Commingled
  and Unit Operations. Lessee shall have the right to commingle, or unitize said
  leased land, for the purpose of utilizing, selling, processing, the Leased Substances
  produced from the lease land with the steam or heat energy produced from other
  lands, and to meter or gauge the production of steam or heat energy from leased
  land and to compute and pay Lessor royalty on the basis of such production as
  so determined. 

 In the event that the production of Leased Substances from
  the leased lands or from lands in the general area of the leased land should
  at any time exceed the demand for the facility use thereof in the opinion of
  Lessee and the Lessee elects to reduce the total amount of steam produced or
  consumed, then in that event each well participating on a commingling basis
  shall be reduced in percentage amount equal to its proportion of the whole.

 4 

 7.           Use
  Of Lease. Lessee shall have the right to drill such wells on leased land as
  Lessee may deem desirable for the purposes hereof including the exploration
  and production of Geothermal Resources for heat or electric power production
  purposes and any reinjection of fluids thereof. Lessee shall have the right
  to construct upon leased land such equipment and structures as Lessee may deem
  desirable for the purpose of utilizing Leased Substances including geothermal
  power plants, access and piping and transmission equipment related thereto.

 8.           Minimize
  Use. Notwithstanding any provisions of this lease to the contrary, Lessee shall
  utilize for such purpose only so much of the leased land as shall be reasonably
  necessary for Lessee activities and operations thereon and shall interfere as
  little as reasonably possible with the use and occupancy of the leased land
  by the Lessor. 

 Lessee agrees, upon written request of Lessor, to fence all
  excavations (including sumps and setting 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 agrees to replace all fences which the Lessee may have
  removed for its purposes and repair all fences which Lessee may have damaged,
  and if and when so required by the Lessor, will provide a proper livestock guard
  at any point of entry upon lands used by Lessee. 

 In the event this Lease terminates as to a portion of either
  the leased land or rights granted hereunder, it shall continue in full force
  and effect as to those facilities necessary to the permitted use of the remaining
  leased lands or rights hereunder. 

 Lessee shall have the right at any time and from time to time
  to remove from the leased land any and all casing, machinery, equipment, structures,
  installations and property of every kind and character placed upon said leased
  land by or pursuant to permission of Lessee, provided that if such removal should
  occur after termination of all rights granted herein, it shall be completed
  within a reasonable time thereafter. 

 9.            Exclusive
  Rights. Lessee shall have exclusively the 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 is set
  forth herein. 

 10.          Water.
  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.
  Lessee shall purchase such water owned by Lessor at standard commercial rates
  for the area and will reimburse Lessor for the use of any water which is being
  purchased by Lessor. 

 11.          Permits.
  Any wells drilled by Lessee hereunder shall only be drilled after first obtaining
  any relevant governmental agency permits regarding geothermal well drilling
  on the leased land and in conformance with approved well design by relevant
  agencies. 

 5 

 Power plant structures shall be engineered and constructed
  in conformance with and only after obtaining any relevant governmental agency
  permits regarding geothermal or biomass power plants. Lessor agrees to cooperate
  with Lessee’s application for governmental licenses, permits, and approvals,
  the cost of which shall be borne by Lessee. 

 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. 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.
  In the event Lessor has no interest in the Leased Substances produced hereunder,
  but has an interest in said land, Lessee shall pay Lessor an overriding royalty
  of One Percent (1%) of the Net Proceeds received by Lessee from the sale of
  Leased Substances produced from the leased land, as rental for the surface thereof.

 13.         Assignment.
  There is hereby expressly reserved to Lessor and to Lessee the right and privilege
  to convey, transfer or assign, in whole or in part, or to deal with in any manner,
  subject to the provisions hereof, their respective rights and interests in and
  under this Lease and Agreement or in the leased land, or the Leased Substances
  produced on or from the leased land but in the event Lessor shall sell or transfer
  any part or parts of the leased land or any interest in the aforesaid Leased
  Substances therefrom then Lessees obligations hereunder shall not thereby be
  altered, increased or enlarged, but Lessee may continue to operate the leased
  land and to pay and settle rents and royalties as an entirety. 

 14.         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 leased land 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 land 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 all
  obligations hereunder except payment of taxes and protection of the leased land.
  It is expressly agreed that the 

 6 

 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. 

 15.         Tax Payments.
  Lessee shall pay all taxes on Lessee structures and improvements placed upon
  the leased land by Lessee and shall pay taxes levied and assessed against products
  of Lessee operations hereunder and taxes levied and assessed against the right
  to produce steam and heat energy from leased lands. Lessor shall pay all taxes
  levied and assessed against leased land not covered by this lease and/or Lessee
  tax payment requirements herein. 

 16.         Project
  Costs. All labor to be performed and materials to be furnished in operations
  of Lessee hereunder shall be at the cost and expense of Lessee, and Lessor shall
  not be chargeable with, or liable for, any part thereof. Lessee shall protect
  the leased land against liens arising from its operations thereon. Upon commencement
  of operations upon leased land, Lessee shall protect Lessor against damages
  of every kind and character which may be occasioned to any of the parties hereto
  or to any other person by reason of the operations or workings of the Lessee
  upon said leased land. The protection of Lessor shall include maintenance of
  workman’s compensation insurance typical for geothermal drilling and power
  plant construction projects and good and safe drilling, construction and power
  plant operations designed by competent drilling and power plant engineering
  experts. 

 17.         Land Compensation.
  In return for actual surface use of leased land required for well site, pipeline,
  transmission and plant operations hereunder, Lessee shall compensate Lessor
  at the annual rate of $50.00 per acre for such lands so affected for the duration
  of their use. 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. 

 18.         Default
  Notice. Upon violation of any of the terms and conditions of this lease by Lessee
  and the failure of Lessee to begin in good faith to remedy same within 30 days
  after written notice from Lessor to do so, 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 said leased land shall be at
  an end, except that in the event of such termination Lessee shall have the right
  to remove from the leased land all surface facilities and improvements of whatsoever
  kind and character placed upon leased land by Lessee. Upon default, if any,
  Lessee shall remove from leased land any and all machinery and structures placed
  upon leased land within one hundred twenty (120) days thereof. 

 19.         Title.
  Lessor hereby warrants and agrees to defend title to the leased land 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
  leased land, and in the event Lessee exercises such option, Lessee shall be
  subrogated to the rights of any holder or holders thereof, and shall have the
  right to reimburse itself by applying to the discharge of any such mortgage,
  tax or other lien or encumbrance any royalties or rentals accruing to Lessor
  hereunder. 

 7 

20.         Notice.
  Any notice or other communication hereunder from Lessor to Lessee shall be given
  in writing by delivering same personally to Lessee or by sending same by registered
  or certified mail postage prepaid or Federal Express to Lessee at 1509 Tyrell
  Lane, Suite B, Boise, Idaho 83706. Any notice or other communication hereunder
  from Lessee to Lessor shall be given in writing by delivering same personally
  to Lessor or by sending same by registered or certified mail postage prepaid
  or Federal Express to Lessor at the Lessor address set forth on the signature
  page of this lease. Any notice so sent shall be deemed to have been given and
  received within 96 hours of deposit thereof in the United States mail or within
  48 hours of deposit thereof with Federal Express, providing that Lessor has
  provided and street address and telephone number. The parties may upon written
  notice to the other party, at any time and from time to time change their respective
  addresses for the purposes hereof.

 21.         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 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 “Leased
  Substances” shall collectively mean the matter, substances and resources
  defined in subparagraph 21(a) that are subject to this Lease;

           
            (c)           The
  term “Geothermal Resources” shall collectively mean the matter, substances
  and resources defined in subparagraph 21(a) that are not subject to this Lease
  but are located on adjacent land or lands in reasonable proximity thereto;

           
            (d)           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;

           
            (e)           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 on the leased land;

                       (f)
            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 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 on the leased land.

 8

           
            (g)           The
  term “Net Proceeds” is defined as proceeds from the sale of generated
  electric power to a third party, independent of the Lessor or Lessee, less deductions
  of the sum of all direct operating costs, financing costs, interest expense
  on capital, property taxes, franchise and other taxes, administration and marketing
  expenses and the depreciation of production wells, reinjection wells, monitoring
  wells, pipelines, all production facilities, power generation facilities, electrical
  distribution equipment and power lines through to the sales delivery point.
  Depreciation shall be on a fifteen (15) year straight-line basis with asset
  capitalization in accordance with generally accepted accounting principles.
  Electric power is computed and paid for on the basis of kilowatt- hours (“Kw-h”)
  and the royalty shall be calculated on a basis of cents per Kw-h. 

 22.         Severability.
  In the event that 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 or any governmental agency having authority
  thereover, 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, or any Lessor rights or obligations are not, or would not be so held
  to be, void or unenforceable, which said remaining terms and conditions and
  such Lessor rights or obligations, as aforesaid, of this instrument 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,
  and the Lessor rights or obligations embraced within such provisions, are severable
  for the purposes of the provisions of this clause. 

 23.         Governing
  Law. This lease and agreement shall be interpreted, governed by and construed
  under the laws of the state of Idaho, without consideration of any conflicts
  of law between the location of the parties or states of domicile thereof. 

 24.         Execution
  Authority. The signatories hereto represent that they are the proper person
  to execute this Lease and Agreement on behalf of the parties hereto. 

 25.         Binding
  Effect. This Lease and Agreement and all of the terms, covenants and conditions
  hereof shall extend to the benefit of and be binding upon the respective 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. 

	U. S. Geothermal Inc	 	 
	 	 	Jay Newbold – Lessor
	 	  	 
	 	 	 
	By: Douglas J. Glaspey, COO - Lessee	 	Lee Newbold – Lessor

9

  

1228 117th Street East 

  Puyallup, WA 98374 

	State of ________________ 	) 	On this _____ day of ________________ 2004, before
      me,
	 	)	 	 
	County of _______________________________	)	 	the undersigned Notary Public, personally appeared
		 	 	 
	 	 	 	( )   personally known to me
	 	 	 	( )  proved to me on the basis of satisfactory evidence
      to be the person(s) whole name(s) subscribed to the within instrument, and
      acknowledged that executed it. 
	 
	 
	 	 	 	  
	 	 	 	WITNESS my hand and official seal.
		 	 	 
		 	 	 
		 	 	 
	 	 	 	Notary’s
      Signature

10

		 	 	 
		 	 	 
		 	 	 
	State of Idaho	) 	On this _____ day of ________________ 2004, before
      me,
	     	)	 	 
	 County of _______________________________	)	 	 
	 	 	 	the undersigned Notary Public, personally appeared 

      Douglas Glaspey
	 	 	 	( )   personally known to me
	 	 	 	( )  proved to me on the basis of satisfactory evidence
      to be the person(s) whole name Douglas Glaspey subscribed to the within
      instrument, and acknowledged that he executed it. 
	 
	 
	 	 	 	  
	 	 	 	WITNESS my hand and official seal.
		 	 	 
		 	 	 
		 	 	 
	 	 	 	Notary’s
      Signature

11

 Exhibit A  

20.0 acres more or less 

 100% Surface, Minerals and Geothermal:

Township 15 South, Range 26 East 

  Section 23:          E1/2 NE 1⁄4
  SE 1⁄4 

12Filed by Automated Filing Services Inc. (604) 609-0244 - U.S. Geothermal Inc. - Exhibit 10.8

	RECORDING REQUESTED BY	   
	 	 
	 	 
	WHEN
      RECORDED MAIL TO	 
	 	 
	 	 
	 	 
	 	 
	 	 
	SPACE
      ABOVE THIS LINE FOR RECORDER’S USE	 
	 	 

 RAFT RIVER 

  GEOTHERMAL LEASE AND AGREEMENT 

                     THIS
  GEOTHERMAL LEASE AND AGREEMENT, (herein sometimes referred to as “Lease”)
  made and entered as of the 28th day of June, 2003 by and between Janice Crank
  and the children of Paul Crank hereinafter referred to as “Lessor”,
  whether one or more, and U.S. GEOTHERMAL Inc., an Idaho corporation, hereinafter
  referred to as “Lessee”; 

WITNESSETH: 

           1.       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, those certain geothermal
  and mineral rights for real property located in the County of CASSIA, State
  of IDAHO, more particularly described in Exhibit “A” attached hereto
  and by this reference made a part hereof (hereinafter referred to as the “leased
  rights”), including 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.

           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 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 the 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 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. 

 1

          2.       This
  Lease shall be for a term of four (4) years from and after the date hereof (hereinafter
  referred to as the “Primary Term” ending June 28, 2007) and so long
  thereafter as Leased Substances, or any of them, are derived or produced in
  commercial quantities 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.       Lessee
  shall conduct all work in compliance with the applicable laws and regulations
  of the state of Idaho 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 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.

          
  4.       Royalties shall be payable as follows:

          
  (a)          Lessor acknowledges
  that $15,000.00 has been paid for the years 2002-2003 and 2003-2004 under the
  terms of the June 28, 2002 lease and that these payments will be credited as
  advances on future production royalties. At the beginning of successive years
  of the Primary Term, Lessee will pay to Lessor the following sums on the anniversary
  of the Lease as further advances on production royalties: 

	 	June 28, 2003	Year 2003 - 2004:	$10,000.00 (Paid)
	 	June 28, 2004	Year 2004 - 2005:	$10,000.00
	 	June 28, 2005	Year 2005 - 2006:	$10,000.00
	 	June 28, 2006	Year 2006 - 2007:	$10,000.00

          Lessee
  shall be entitled to credit all advance royalties paid toward production royalties
  owed pursuant to the following subparagraphs. Lessor will be entitled to payment
  of production royalties only after crediting of all advance royalties previously
  paid by Lessee.

          (b)          If
  Leased Substances are derived or produced in commercial quantities through the
  Leased Rights from and after the Primary Term, a minimum annual production royalty
  of $18,000.00 will be due to Lessor. 

2 

          (c)          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 in exercise of the leased rights at and as
  of the point of origin on the land associated with 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. 

          (d)          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 Ten Percent (10%) of the Net Proceeds in accordance with
  the definition of Net Proceeds in paragraph 16, subparagraph (h). 

          (e)          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 in exercise of the leased rights
  at and as of the point of origin on the land associated with the leased rights.

          (f)          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 net proceeds received
  by Lessee from the sale of minerals and/or minerals in solution contained in
  and extracted from such effluents less all costs of transportation, injection
  and extraction. If Lessee consumes Leased Substances or electric power is generated
  therefrom, by either use or exchange, for purposes other than its operations
  with respect to 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. 

          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 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 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 land associated with the leased rights, and in the event of such commingling,
  Lessee shall meter, gauge, or measure the production in exercise of the leased
  rights, or from the unit or units, including leased and other units or lands,
  as the 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. 

 3

           5.       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 any wells developed
  pursuant to the leased rights. 

           6.       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 with which the leased rights are associated, which Lessee desires
  to develop or operate as a unit, provided that the total acreage to be embraced
  within any such drilling, development, production, or operating unit shall no
  exceed one thousand nine hundred twenty (1,920) acres, plus an acreage tolerance
  of Ten Percent (10%), except that a larger unit may be created to conform to
  State or Federal regulations. 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 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 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 

          (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 to 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. 

           7.       Lessor,
  or its agents, at Lessor’s sole cost and risk, may during normal hours
  of operation examine 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. 

 4

           8.       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. 

           9.       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 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. 

           10.      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
  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. 

           11.      Lessee
  shall pay all taxes levied on structures and improvements constructed by Lessee
  pursuant to this Lease. 

           12.      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 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. 

           13.      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 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. 

 5

                     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. 

           14.      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: 

                                                                        Janice
  Crank

                                                                        
  2246 Tanglewood Lane 

                                                                        
  Emmett, Idaho 83617 

                    Lessee
  shall, upon written notification of change of ownership in the 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
  Twenty-Five dollars ($25.00) becoming due Lessor, Lessee may, at is option,
  withhold and accrue sufficient periodic payments until the total due Lessor
  exceeds Twenty-Five Dollars ($25.00).

          
  15.      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 by deposition the same in the
  United States mail duly certified and addressed to Lessor at 2246 Tanglewood
  Lane, Emmett, Idaho 83617 and delivery of such written notice to Lessee shall
  be made 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.

          
  16.       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 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 man the matter, substances and resources
  defined in subparagraphs 16(a) and 16(b) that are subject to this Lease;

 6 

                    (d)          The
  term “Geothermal Resources” shall collectively mean the matter, substances
  and resources defined in subparagraph 16(a) and 16(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.

                    
  (h)           The term
  “Net Proceeds” is defined as proceeds from the sale of generated electric
  power to a third party, independent of the Lessor or Lessee, less deductions
  of the sum of all direct operating costs, financing costs, interest expense
  of capital, property taxes, franchise and other taxes, marketing expenses and
  the depreciation of production, injection and monitoring wells, pipelines, production
  facilities, power generation and distribution facilities, and power lines through
  to the sales delivery point. Depreciation shall be on a fifteen (15) year straight-line
  basis with asset capitalization in accordance with generally accepted accounting
  principles. Electric power is computed and paid for on the basis of kilowatt-
  hours (“Kwh”) and the royalty shall be calculated on a basis of cents
  per Kwh.

          
  17.      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.

          
  18.      If more than one person is named as Lessor
  herein and on 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.

          
  19.      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.

          
  20.      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.

 7

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

	Social
      Security Number	 	 	Janice
      Crank                                                                  Lessor
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	By: 	Douglas
      J. Glaspey, CEO & Director
	 	 	 	                                                                                        Lessee

	State of Idaho 	)	On this _____ day of July 2003, before me,
	      	 )	 
	 County of ________________________________________	)	 
	 	 	the undersigned Notary Public, personally appeared
		 	 
	 	 	( )   personally known to me
	 	 	( )  proved to me on the basis of satisfactory
      evidence to be the person(s) whole name(s) ______________________________
      subscribed to the within instrument, and acknowledged that ___________________________________________
      executed it. 
	 
	 
	 	 	  
	 	 	WITNESS my hand and official seal.
		 	 
	 	 	Notary’s
      Signature

8 

 

	State of Idaho	 )	On this _____ day of July 2003, before me,
	     	 )	 
	 County of ________________________________________	) 	 
	 	 	the undersigned Notary Public, personally appeared
		 	 
	 	 	( )   personally known to me
	 	 	( )  proved to me on the basis of satisfactory
      evidence to be the person(s) whole name(s) ______________________________
      subscribed to the within instrument, and acknowledged that ___________________________________________
      executed it. 
	 
	 
	 	 	  
	 	 	WITNESS my hand and official seal.
		 	 
	 	 	Notary’s
      Signature

9 

EXHIBIT A 

Mineral rights, geothermal rights and the right of ingress
  and egress for the removal of such mineral and geothermal rights for the Northeast
  Quarter (NE 1⁄4) of Section 23, Township 15 South, Range 26 East Boise
  Meridian

10

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