Document:

GEOTHERMAL LEASE

          THIS LEASE is made this 31st day of August, 1983, by and between MAGMA
ENERGY, INC., ("Lessor") a Nevada corporation, as Lessor, and HOLT GEOTHERMAL
COMPANY, ("Lessee") a California corporation, as Lessee.

                                    Recitals

          Lessor has heretofore drilled certain wells and developed certain
geothermal resources on the land and premises hereinafter described. Lessee
desires to undertake to develop additional geothermal resources on said land and
to construct thereon facilities to utilize geothermal resources for the
generation of electric power, utilizing the Magmamax power process, a
proprietary and patented process owned by Lessor for generating electric power
utilizing geothermal resources, the U.S. patent number thereon being 3,757,516.
Lessee desires, in addition to a non-exclusive license to utilize on and limited
to the leased land the Magmamax power process, to use a portion of said land
for electric power generating facilities and to obtain, on a continuing basis
and subject to License Agreement, the benefit of Lessor's continuing knowledge
and experience with respect to the Magmamax process and to have the
non-exclusive right to utilize any new developments or improvements of the
Magmamax process on and limited to the leased land.

          1. WITNESSETH: that in consideration of the agreements contained
herein, the parties hereby enter into a lease of the hereinafter described land
(the "leased land") by Lessor to Lessee and concurrently herewith, and as part
of one integrated transaction, the parties shall enter into a License Agreement
with respect to the leased land and with respect to the use by Lessee of the
Magmamax power process. In consideration of the agreements contained herein, the
Lessor does grant, lease, let and demise unto the Lessee, its successors and
assigns, the leased land with the sole and exclusive right to the Lessee to
enter upon and to use and occupy the leased land to explore for, drill for,
develop, mine, produce and use the natural heat of the earth, the energy, in
whatever form, below the surface of the earth present in, resulting from, or
created by, or which may be extracted from, such natural heat, and all minerals
in solution or other products obtained from naturally heated fluids, brines,
associated gases, and steam, in whatever form, found below the surface of the
earth ("geothermal resources") and to take, store, remove, dispose of and use
same

                                       -2-

and for uses and purposes incidental thereto, together with the right to use the
leased land and to construct and maintain any and-all facilities thereon and
therein as may be necessary for Lessee's operations on the leased land or other
lands in the vicinity of the leased land, and for use of the geothermal
resources including but not limited to well sites, pipelines, power plants,
power transmission lines, power stations, tanks, ponds, wells for injection or
reinjection of waste water, gases and other residual products, roads, and other
structures and installations. Lessor retains all rights to use and occupy the
surface and subsurface of the leased land for all purposes, provided that such
use or occupancy shall not unreasonably interfere with the rights of Lessee
under this Lease.

          2. Description The leased land is described in Exhibit "A" attached
hereto and made a part hereof. In addition to the above-described leased land,
this Lease also covers accretions and any small strips or parcels of land now or
hereafter owned by Lessor which are contiguous or adjacent to the
above-described leased land. Lessor agrees to execute at Lessee's request any
additional or supplemental instruments for a more complete or accurate
description of the land so covered.

          3. Term TO HAVE AND TO HOLD the leased land for a period of thirty
(30) years from the date hereof ("primary term") and so long thereafter as any
geothermal resources are produced therefrom, or are capable of being produced
therefrom, or drilling or producing operations are conducted thereon, or
excused under the terms hereof.

          4. Commencement of Operations Within eighteen (18) months after the
effective date of this Lease, Lessee shall commence and diligently continue the
drilling of one or more wells for production of geothermal resources from the
leased land until Lessee shall have satisfied itself that sufficient geothermal
resources are obtainable to supply the needs of a power plant or power plants of
a gross capacity of ten (10) or more megawatts. If, within six (6) months after
commencement of drilling the first well on the leased land, Lessee determines in
its sole judgment that it is not able to develop on the leased land a sufficient
quantity of geothermal resources to warrant installation of one or more power
plants for generating electricity therefrom, Lessee may, upon notice given to
Lessor within thirty (30) days after expiration of such six (6) month period,
terminate and be freed of all obligations under this Lease. If Lessee elects not
to so terminate this Lease, Lessee shall proceed with the drilling of such well
as wells as it deems appropriate to supply the requisite quantity of geothermal

                                       -3-

resources for operation of a power plant or power plants and shall proceed
diligently and in good faith with construction of a power plant or power plants
on the leased land for generation of electricity utilizing the geothermal
resources.

          5. Royalty Lessee shall pay to Lessor as royalty during the full term
of this Lease compensations as follows: (a) As to electricity generated by
facilities having a gross rated capacity of ten (10) megawatts or less, Lessee
shall pay to Lessor twenty-two percent (22%) of the gross proceeds received by
Lessee. The said payment shall be deemed to embrace a payment of nineteen
percent (19%) of gross proceeds for geothermal resources produced from the
leased land and utilized for the generation of electricity thereon and three
percent (3%) of gross proceeds as payment for the said non-exclusive license,
for surface land use and for Lessee's agreement to make available to Lessor
subject to License Agreement its continuing knowledge and experience with
respect to the Magmamax power process and the right to utilize new developments
or improvements thereof on the leased land; (b) As to electricity generated by
facilities having a gross rated capacity in excess of ten (1O) megawatts, Lessee
shall pay to Lessor twenty-five percent (25%)of the gross proceeds received by
Lessee. The said payment shall be deemed to embrace a payment of twenty-two
percent (22%) of gross proceeds for geothermal resources produced and utilized
for the generation of electricity and three percent (3%) of gross proceeds as
payment for the said non-exclusive license, for surface land use and for
Lessor's agreement to make available to Lessee subject to License Agreement its
continuing knowledge and experience with respect to the Magmamax power process
and the right to utilize new developments or improvements thereof on the leased
land; (c) The payment by Lessee to Lessor of the total compensations provided
for in subparagraphs (a) and (b) hereof, when due, for the full term of this
Lease is a condition to the continuation of Lessee's rights under this Lease and
its right to use or occupy the leased land or any part thereof. In the event
Lessee shall default under any covenant or condition of this Lease and shall
fail to remedy such default or to commence in good faith to remedy such default,
if such default cannot be remedied within the notice period, Lessor shall have
the right, upon expiration of sixty (60) days written notice of default, to
terminate this Lease and all of Lessee's rights hereunder. The term "gross
proceeds" means the amount received from the sale to others of electricity
produced on the leased land from geothermal resources therein by the Lessee.
Lessee shall pay to Lessor said royalty on the last day of each month for
accrued royalties for the preceding calendar month. If the geothermal resources
produced from the leased land are insufficient for operation of

                                       -4-

Lessee's plant or plants at a gross capacity of ten (10) megawatts, at the
request of Lessee, Lessor may supply geothermal resources from other land and
the 22% royalty rate shall apply to gross proceeds produced therefrom. If Lessor
is unable to provide sufficient geothermal resources, Lessee may secure
geothermal resources from other lands without paying royalty to Lessor on the
geothermal resources so secured. Lessee shall have the right to commingle the
geothermal resources with geothermal resources produced from other lands and to
pay Lessor's royalty on the basis of production allocable to the leased land as
determined by metering or gauging same. Lessee shall not be required to pay
royalty on any electricity generated on the leased land and used by it in its
operations under this Lease.

          6. License Agreement Lessor agrees to grant to Lessee, by separate
agreement entered into concurrently herewith, a non-exclusive license to utilize
on and limited to the leased land for the term of this Lease Lessor's patented
Magmamax power process and improvements thereof. Together with said license,
Lessor will agree to make available to Lessee without additional consideration,
Lessor's continuing knowledge and experience with respect to said process. In
the event Lessee shall develop any patentable improvements to the Magmamax power
process, Lessor shall be entitled to a non-exclusive royalty free license with
respect thereto.

          7. Plant Expansion Lessee shall have the right to increase the
capacity of its plant or build additional plants on the leased land if
operations under this Lease demonstrate the availability of an adequate supply
of geothermal resources on the same terms and conditions as set forth herein.
Lessee shall have the right of first refusal for the development of electricity
available from geothermal resources on adjacent or nearby lands leased or
otherwise controlled by Lessor, in the event Lessee's operation proves the
adequacy of the geothermal resources and the commercial feasibility of producing
electricity therefrom. Lessee shall have four (4) years from the date of firm
operation of the plant to determine if an increase in plant and production
capacity is warranted by the geothermal resources underlying the leased land on
the basis of its operations. Lessee will notify Lessor of its determination on
or before the fourth anniversary of said date. If an increase in the size of the
plant or construction of additional plants is not warranted in Lessee's sole
judgment, Lessee will relinquish its rights to the surface area not actually
used for the original plant or plants, gathering and injection lines, and wells.
Lessor shall assume full responsibility for compliance

                                       -5-

with any necessary governmental approvals of such a relinquishment by Lessee. A
release of surface rights to any part of the leased land shall not constitute a
release of any part of the geothermal resources underlying the leased land.

          8. Reinjection Lessee shall have the right to drill such well or wells
on the leased land as Lessee may deem desirable, including wells for injection
or reinjection purposes, and shall have the 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, located on the leased land or from wells,
power plants, or other facilities, located in the vicinity of the leased land.
Lessee shall have the right to freely transfer geothermal resources from wells
located on the leased land, or other lands in the vicinity of the leased land,
to and from the leased land and to inject geothermal resources into a well or
wells located on the leased land.

          9. Inspection by Lessor Lessor, or its agents, at Lessor's sole risk,
may during hours of operation examine the leased land and the workings,
installations and structures thereto and operations of Lessee thereon, and may
at reasonable times inspect the books and records of Lessee with respect to
production and operations and matters pertaining to the payment of royalties to
Lessor. Lessee shall make available to Lessor all of Lessee's information and
operating experience as to producing and injection wells and the installed
electric generating facilities. Lessee shall also furnish to Lessor all
drilling, engineering and geological reports, tests and logs as to all wells
drilled on said land. Lessor retains the right to utilize the leased land for
any and all purposes provided that such use shall not unreasonably interfere
with Lessee's operations thereon. Lessor, its employees, representatives and
permittees retain the right at all times to enter upon the leased land and to
view all operations and activities of Lessee thereon, provided that Lessee shall
not be liable to Lessor or to any such persons for personal injury or property
damage not resulting from any negligent act or omission of Lessee. Lessor shall
maintain all information gained by such inspection in strict confidence and
shall not disclose any of such information to third parties without advance
written permission of Lessee.

          10. Warranty of Title Lessor hereby warrants that it has clear title
to the leased land and the geothermal resources contained therein, agrees to
defend title conveyed to Lessee under this Lease, and agrees that Lessee, at
Lessee's option, may pay and discharge any taxes, mortgages or liens
existing, levied or assessed on or against the leased land. If Lessee

                                       -6-

exercises such option, Lessee shall be subrogated to the rights of the party to
whom payment is made to the extent of all payments, costs and expenses,
including attorneys' fees, and, in addition to its other rights, may reimburse
itself out of any royalties otherwise payable to Lessor, In the event Lessee is
made aware of any claim inconsistent with Lessor's title. Lessee may suspend the
payment of royalties under this Lease, without interest, until Lessee has been
furnished satisfactory evidence that such claim has been resolved.

          11. Lesser Interest If the Lessor or any party Lessor owns a lesser
interest in the geothermal resources under this Lease than the entire and
undivided fee estate therein, then the royalty herein provided as to geothermal
resources shall be paid to the Lessor or such party Lessor only in the
proportion which his ownership bears to the whole and undivided fee. Lessor
shall bear the entire cost of any underlying royalty interest in the fee estate
or otherwise.

          12. Removal 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
the 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. Lessee agrees after termination
of this Lease to leave the leased land in a clean condition and to level sump
holes or excavations.

          13. Implied Covenants This Lease constitutes and expresses the entire
agreement between the parties and no implied covenant of any kind shall be read
into it and in particular there shall not be read into it any implied covenant
requiring Lessee to commence or to continue to conduct more drilling or other
operations on the leased land or to drill more wells thereon or fixing any
greater measure of diligence than Lessee has herein expressly agreed to.

          14. Ancillary Rights In exploring for, developing, producing, using
and marketing geothermal resources on the leased land, Lessee shall have the
right of ingress and egress along with the right to conduct such operations on
the leased land as may be reasonably necessary for such purposes, including but
not limited to geophysical operations, the drilling of wells, and the
construction and use of roads, canals, pipelines, tanks, water wells, disposal
wells, injection wells, pits, electric and telephone lines, power stations and
plants, and

                                       -7-

other facilities deemed necessary by Lessee to discover, produce, store, treat
or transport geothermal resources and easements necessary thereto. Lessee may
use in such operations, free of cost, any water or other substances produced on
the leased land. The right of ingress and egress granted hereby shall apply to
the entire leased land described, notwithstanding any partial release or other
termination of this Lease with respect thereto.

          15. Breach or Default In the event at any time after four (4) years
from the date hereof Lessee shall sell electrical power from said leased land
in any amount less than two (2) megawatts gross generating capacity and if
such condition continues for a period of one (1) year (the generating output
would be computed on an average for said one year), Lessor shall have the right
to consider the aforesaid event a default under this Lease, provided that Lessee
shall not be required to produce and sell electricity in excess of the reservoir
capability of the leased land. If Lessee at any time during the term of this
Lease and Agreement determines in good faith that it is uneconomic or not
feasible to continue its operations on the leased land, Lessee shall have the
right to terminate this Lease and to relinquish its rights under this lease. In
the event of termination Lessee shall execute and deliver appropriate
instruments to clear title to the leased land and shall remove surface
facilities and provide for wells as herein provided in the event of termination
due to Lessee's default. No litigation shall be initiated by Lessor with respect
to any breach or default by Lessee under this Lease, for a period of at least
ninety (90) days after Lessor has given Lessee written notice fully describing
the breach or default, and then only if Lessee fails to begin to remedy the
breach or default within such period. In the event the matter is litigated and
there is a final judicial determination that a breach has occurred, this Lease
shall not be forfeited or cancelled in whole or in part unless Lessee is given a
reasonable time after such judicial determination to remedy the breach or
default and Lessee fails to do so.

          16. Forbearance by Lessor If any default shall occur which entitles
Lessor to terminate this Lease, Lessor shall have no right to terminate this
Lease unless, following the expiration of the period of time given to
Lessee to cure such default, Lessor shall notify any beneficiary under a deed of
trust covering all or any part of the leased land ("Mortgagee") of Lessor's
intent to so terminate at least thirty (30) days in advance of the proposed
effective date of such termination (the "Termination Notice"). Lessor shall
have no right to terminate

                                       -8-

this Lease if after delivering the Termination Notice to Mortgagee any of the
following occurs: (a) In the case of a default in the payment of royalties,
Mortgagee shall notify Lessor of Mortgagee's desire to cure such default, and
Mortgagee shall pay or cause to be paid all royalties, and any other payments
then due and in arrears as specified in the Termination Notice, as well as such
sums which may become due during such thirty day period, or extended period as
provided in subsection (c) below; (b) In the case of a default which does not
involve the payment of money but is reasonably susceptible of being cured by
Mortgagee, Mortgagee shall notify Lessor of Mortgagee's desire to cure such
default, and Mortgagee shall comply, or in good faith and with reasonable
diligence commence to comply, with all such nonmonetary requirements of this
Lease then in default and diligently pursue such cure to completion, subject to
paragraph 17; (c) In the case of a default not reasonably susceptible of being
cured by Mortgagee, including failure of production, or in the event Mortgagee
is complying with the requirements of subsections (a) or (b) above, this Lease
shall not terminate provided (i) within ninety (90) days after the giving by
Lessor of the Termination Notice, Mortgagee gives written notice to Lessor of
Mortgagee's intention to foreclose its deed of trust, and (ii) Mortgagee, within
ninety (90) days after the giving of the Termination Notice commences
foreclosure or similar proceedings under its deed of trust for the purpose of
acquiring Lessee's interest in this Lease and thereafter diligently prosecutes
the same (provided however, that if Mortgagee is restrained by a court of
competent jurisdiction from so proceeding, the time periods set forth above
shall be tolled), and (iii) either Mortgagee or any other purchaser of Lessee's
interest under this Lease, within a reasonable time after the acquisition of
such interest, commences production, or otherwise cures all defaults hereunder
susceptible of being cured by Mortgagee or such purchaser. No cancellation,
surrender or modification of this Lease shall be effective unless consented to
in writing by any Mortgagee.

          17. Force Majeure Lessee's obligations under this Lease shall be
suspended until expiration of ninety (90) days after removal of cause for
suspension and the term of this Lease and the period for removal of Lessee's
property in the event of termination shall be extended while Lessee is prevented
from complying therewith by strikes, lockouts, riots, action of the elements,
accidents, delays in transportation, inability to secure labor or materials in
the open market, laws, rules, or regulations of any Federal, State, Municipal or
other governmental agency, authority, or representative having jurisdiction,

                                       -9-

inability to secure or absence of a market for commercial sale of geothermal
resources from the leased land; or by other matters or conditions beyond the
reasonable control of Lessee, whether or not similar to the conditions or
matters specifically enumerated in this Paragraph.

          18. Liens, Taxes and Insurance Lessee shall hold harmless, indemnify
and defend Lessor against all claims, demands, actions and causes of action for
injury or death to persons, damage or destruction of property unless caused by
the negligence or misconduct of Lessor, mechanic's and materialman's liens
arising out of or by virtue of Lessee's rights or exercise of any rights under
this Lease, operations on the leased land or any acts or omissions by Lessee,
and Lessee undertakes and agrees to obtain and maintain insurance coverage,
naming Lessor as additional insured, in an amount not less than ten million
dollars ($10,000,000) principal amount to protect Lessor against any such
claims. See 3rd Amendment. Lessee shall pay all taxes levied and assessed
against all structures, improvements and personal property placed upon the
leased land by Lessee. Lessor shall pay all taxes levied and assessed against
the leased land as such including the geothermal resources and the right to
production thereof and against any rights therein not covered by this Lease and
shall pay all taxes levied and assessed against all structures and improvements
placed on the leased land by Lessor. See 3rd Amendment. Lessee, at its own
expense, prior to commencing operations on the leased land, shall obtain, and
thereafter while this Lease is in effect shall maintain, adequate Workers'
Compensation Insurance.

          19. Assignment Except as provided in this Paragraph, the interest of
either Lessor or Lessee under this Lease may be assigned, devised or otherwise
transferred in whole or in part, by area and by depth or zone and the rights and
obligations shall extend to their respective heirs, devisees, executors,
administrators, successors and assigns. No change in Lessor's ownership shall
have the effect of reducing the rights or enlarging the obligations of Lessee
under this Lease and no change in ownership shall be binding on Lessee until
sixty (60) days after Lessee has been furnished the original or certified or
duly authenticated copies of the documents establishing such change of ownership
to the satisfaction of Lessee. Lessee shall not transfer, assign or reassign its
interest in whole or in part in this Lease without the consent of Lessor, which
consent shall not be unreasonably withheld, provided that this Lease may be
hypothecated for the benefit of any creditor of Lessee or Lessee's successor in
interest. If Lessee transfers its interest under this Lease in whole or in part,
Lessee shall be

                                      -10-

relieved of all obligations thereafter arising with respect to the transferred
interest, and failure of the transferee to satisfy such obligations with respect
to the transferred interest shall not affect the rights of Lessee with respect
to any interest not so transferred.

          20. Notice Any notice from the Lessor to the Lessee must be given by
sending the same by registered or certified mail, postage prepaid, addressed to
its office at 1301 Chelton Way, South Pasadena, California 91030, and any notice
from the Lessee to the Lessor must be given in the same manner addressed to the
Lessor at 631 South Witmer Street, Los Angeles, California 90017. The parties
may, upon notice, change their said respective addresses for notice.

          21. Severability If any provision of this Lease 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 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 remaining terms and conditions shall remain binding,
valid and subsisting and in full force and effect between the parties, it being
specifically understood and agreed that the provisions of this Lease are
severable for the purposes of the provisions of this Paragraph. This Lease shall
not in any event extend beyond such term as may be legally permissible under
applicable laws, and should any such applicable law limit the term to less than
that provided in Paragraph 3, then this Lease shall not be void but shall be
deemed to be in existence for such term and no longer.

          22. Integration This Lease constitutes the entire agreement between
the parties and supersedes all other agreements and understandings, whether oral
or written, the parties may have in connection therewith, including the March 3,
1982, Letter of Intent to enter into this Lease, and may be modified or
terminated only by a writing signed by the parties.

          23. Binding Effect This Lease shall extend to and be binding upon the
heirs, executors, administrators, grantees, successors and assigns of the
parties.

          24. New Paragraph 24 (4/87)

          25. New Paragraph 25 (4/87)

                                     -11-

          IN WITNESS WHEREOF the parties hereto have executed this Lease
effective as of the date first written above.

HOLT GEOTHERMAL COMPANY                 MAGMA ENERGY, INC.

By: /s/ Illegible                       By: /s/ Illegible
    ---------------------------------       ------------------------------------
    President                               Chairman

Attest: /s/ Illegible                   Attest: /s/ Illegible
        -----------------------------           --------------------------------
        Secretary                               Secretary

STATE OF CALIFORNIA,    )
                        ) ss.
COUNTY OF LOS ANGELES   )

          On 31 August 1983 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Ben Holt, known to me to be the
President, and W. F. Viney, known to me to be Secretary of Holt Geothermal
Company, the corporation that executed the within Instrument, known to me to be
the persons who executed the within Instrument on behalf of the corporation
therein named, and acknowledged to me that such corporation executed the within
instrument pursuant to its by-laws or resolution of its board of directors.

WITNESSETH my hand and official seal.

/s/ Betty J. Peterson                   ------------------------------------
-------------------------------------   [SEAL]         OFFICIAL SEAL
Betty J. Peterson                                    BETTY J. PETERSON
                                                  NOTARY PUBLIC CALIFORNIA
                                                     LOS ANGELES COUNTY
                                               My comm. expires MAY 14, 1984
                                        ------------------------------------

STATE OP CALIFORNIA     )
                        ) ss.
COUNTY OF LOS ANGELES   )

          On August 31, 1983 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared B. C. McCabe, known to me to be
the Chairman, and Joseph W. ______, known to me to be Secretary of Magma
Energy, Inc., the corporation that executed the within Instrument, known to me
to be the persons who executed the within Instrument on behalf of the
corporation therein named, and acknowledged to me that such corporation executed
the within instrument pursuant to its by-laws or resolution of its board of
directors.

/s/ April L. Wogatzke                   -------------------------------------
-------------------------------------   [SEAL]         OFFICIAL SEAL
april L. Wogatzke                                    APRIL L. WOGATZKE
                                                 NOTARY PUBLIC - CALIFORNIA
                                                      SAN DIEGO COUNTY
                                               My comm. expires JUL 27, 1984
                                        -------------------------------------
                                        P.O. Box 17760, Los Angeles, CA 90017

                                   EXHIBIT "A"

                                    Parcel A

          Those patented placer mining claims in the Mammoth Mining District,
County of Mono, State of California, known and described in the Patent as
follows:

          WHITE OWL NO. 2 claim, embracing Section 32, West half of Northwest
quarter of Northeast quarter;

          WHITE OWL NO. 3 claim, embracing Section 32, Northwest quarter of
Southwest quarter of Northeast quarter, and

          WHITE OWL NO. 5 claim, embracing Section 32, North half of Southeast
quarter of Northwest quarter;

according to the official plat of said land approved January 28, 1857.

          EXCEPTING THEREFROM any veins or lodes of quartz, or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other valuable
deposits within the land above described, which may have been discovered or
known to exist on or prior to November 20, 1950.

          Subject to rights of way, easements, and rights (other than ownership
of or rights to receive any rents or royalties on goethermal resources in, under
or that may be produced from said land) of record.

                                    Parcel B

          Southwest quarter of the Northwest quarter of Section 32, Township 3
South, Range 28 East, M.D.M., in the County of Mono, State of California
according to the official Plat thereof filed in the District Land office on June
23, 1857.

          EXCEPTING THEREFROM the surface of the Southwesterly three (3) acres,
more or less, occupied by a lumberyard as of the date of this Lease.

          Subject to rights of way, easements, and rights (other than ownership
of or rights to receive any rents or royalties on geothermal resources in,
under or that may be produced from said land) of record.

Recording Requested By and
When Recorded Return To:

WILLIAM E. VINEY, ESQ.
530 West 6th Street, Suite 623
Los Angeles, California 90014

                               MEMORANDUM OF LEASE

               THIS MEMORANDUM OF LEASE is made on August 31, 1983 between Magma
               Energy, Inc., a Nevada corporation ("Lessor"), and Holt
               Geothermal Company, a California corporation ("Lessee").

                                   WITNESSETH:

          The parties hereto have entered into a Geothermal Lease (the "Lease")
granting to Lessee the exclusive right to the geothermal resources produced from
the land subject to the Lease. Under the terms of the Lease, the Lessor shall
share in the revenues received from the use of the energy derived from the
geothermal resources.

          ACCORDINGLY, in consideration of the premises and the mutual covenants
set forth in the Lease, it is agreed between the parties as follows:

          1. Term of Premises. The Lessor hereby leases exclusively to Lessor,
and Lessee hereby leases for its exclusive use from Lessor all rights to the
geothermal resources

                                       -2-

produced from the real property located near the Casa Diablo Hot Springs, County
of Mono, State of California described in Exhibit A attached to this
Memorandum of Lease. The term of the Lease is for thirty (30) years from and
after the date hereof and so long thereafter as any geothermal resources are
produced therefrom, or are capable of being produced therefrom, or drilling or
producing operations are conducted thereon or excused under the terms of the
Lease. The Lease also provides Lessee with a right to use a certain portion of
the surface of the real property, the right to conduct certain activities on the
surface of the real property, continuing access rights to the real property, all
as more specifically set forth in the Lease, which Lease is dated August 31,
1983. The provisions of the Lease are incorporated into this Memorandum of Lease
by reference.

          2. Purpose of Memorandum of Lease. This memorandum of Lease is
prepared for the purpose of recordation, and it in no way modifies the
provisions of the Lease referred to in Section 1 hereof.

          IN WITNESS WHEREOF the parties hereto have executed this Memorandum of
Lease effective as of the date first written above.

HOLT GEOTHERMAL COMPANY                 MAGMA ENERGY, INC.

By: /s/ Illegible                       By: /s/ Illegible
    ---------------------------------       ------------------------------------
    President                               Chairman

Attest: /s/ Illegible                   Attest: /s/ Illegible
        -----------------------------           --------------------------------
        Secretary                               Secretary

                                       -3-

STATE OF CALIFORNIA,    )
                        ) ss.
COUNTY OF LOS ANGELES   )

          On August 31, 1983 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared B.C. Me_abe, known to me to be
the Chairman, and Joseph W. A_dlin, known to me to be Secretary of Magma Energy,
Inc., the corporation that executed the within Instrument, known to me to be the
persons who executed the within Instrument on behalf of the corporation therein
named, and acknowledged to me that such corporation executed the within
instrument pursuant to its by-laws or resolution of its board of directors.

WITNESSETH my hand and official seal.

                                        --------------------------------------
/s/ April L Wogatzke                                    OFFICIAL SEAL
-------------------------------------                  APRIL L WOGATZKE
April L. Wogatzke                       [SEAL]    NOTARY PUBLIC - CALIFORNIA
                                                       SAN DIEGO COUNTY
                                                 My comm. expires JUL 27, 1984
                                        --------------------------------------
                                        P. O. Box 17780, Los Angeles, CA 90017

STATE OF CALIFORNIA,    )
                        ) ss.
COUNTY OF LOS ANGELES   )

          On 31 August 1983 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Ben Holt, known to me to be the
President, and W.E. Viney, known to me to be Secretary of Holt Geothermal
Company, the corporation that executed the within Instrument, known to me to be
the persons who executed the within Instrument on behalf of the corporation
therein named, and acknowledged to me that such corporation executed the within
instrument pursuant to its by-laws or resolution of its board of directors.

WITNESSETH my hand and official seal.

                                        --------------------------------------
/s/ Betty J. Peterson                                    OFFICIAL SEAL
-------------------------------------                  BETTY J PETERSON
Betty J. Peterson                       [SEAL]    NOTARY PUBLIC - CALIFORNIA
                                                       LOS ANGELES COUNTY
                                                 My comm. expires MAY 14, 1984
                                        --------------------------------------

                                   EXHIBIT "A"

                                    Parcel A

          Those patented placer mining claims in the Mammoth Mining District,
County of Mono, State of California, known and described in the Patent as
follows:

          WHITE OWL NO. 2 claim, embracing Section 32, West half of Northwest
quarter of Northeast quarter;

          WHITE OWL NO. 3 claim, embracing Section 32, Northwest quarter of
Southwest quarter of Northeast quarter, and

          WHITE OWL NO. 5 claim, embracing Section 32, North half of Southeast
quarter of Northwest quarter;

according to the official plat of said land approved January 28, 1857.

          EXCEPTING THEREFROM any veins or lodes of quartz, or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other valuable
deposits within the land above described, which may have been discovered or
known to exist on or prior to November 20, 1950.

          Subject to rights of way, easements, and rights (other than ownership
of or rights to receive any rents or royalties on geothermal resources in,
under or that may be produced from said land) of record.

                                    Parcel B

          Southwest quarter of the Northwest quarter of Section 32, Township 3
South, Range 28 East, M.D.M., in the County of Mono, State of California,
according to the official Plat thereof filed in the District Land office on June
23, 1857.

          EXCEPTING THEREFROM the surface of the Southwesterly three (3) acres,
more or less, occupied by a lumberyard as of the date of this Lease.

          Subject to rights of way, easements, and rights (other than ownership
of or rights to receive any rents or royalties on geothermal resources in,
under or that may be produced from said land) of record.

[PACIFIC LIGHTING ENERGY SYSTEMS LOGO]

                                                            6055
                                                            East
                                                            Washington
                                                            Boulevard.
                                                            Commerce,
                                                            California
                                                            90040
A SUBSIDIARY Of
Pacific
Lighting                                                    TELEPHONE
Corporation                                                 (213)725-1139

                                                                    May 11, 1987

Mr. Kenneth Schueler
Vice President, Finance
PACIFIC LIGHTING LEASING COMPANY, INC.
P. O. BOX 3233
Culver City, California 90230

     Subject: Consent to Amendment of Geothermal Lease between Mammoth-Pacific
              and Magma Energy, Inc.

Dear Ken:

          As you know, on September 7, 1983, Pacific Lighting Leasing Company
("PLLC") entered into a Construction and Term Loan Agreement (the "Loan
Agreement") with Mammoth-Pacific, a joint venture organized as a California
general partnership ("Mammoth"). Section 7.02(d) of the Loan Agreement requires
consent by PLLC to any amendment or modification of the Geothermal Lease between
the Mammoth-Pacific and Magma Energy, Inc.

          Mammoth intends to enter into an amendment of the Geothermal Lease to
modify, in a manner beneficial to Mammoth-Pacific, royalty and other provisions
of Geothermal Lease. A copy of the First Amendment to Geothermal Lease is
attached to this letter.

Mr. Kenneth Schueler
May 11, 1987
Page -2-

          If PLLC will consent to the First Amendment to the Geothermal Lease as
required by the Loan Agreement, please countersign this letter in the space
indicated below and return it to me.

                                        Sincerely,

                                        MAMMOTH-PACIFIC,
                                        a California general partnership

                                        By: Pacific Geothermal Company

                                        By: /s/ Donald C. Liddell
                                            ------------------------------------
                                            Donald C. Liddell
                                            Vice President

DCL: rj
Attachment

Agreed to and accepted by
PACIFIC LIGHTING LEASING COMPANY
this             day of May, 1987
     -----------

By: /s/ Illegible
    ---------------------------------
Title: ______________________________
Dated: July 17, 1987

[PACIFIC LIGHTING ENERGY SYSTEMS LOGO]                             6055
                                                                   East
                                                                   Washington
                                                                   Boulevard,
                                                                   Commerce,
                                                                   California
                                                                   90040
A SUBSIDIARY OF
Pacific
Lighting                                                           TELEPHONE
Corporation                                                        (213)725-1139

                                                                    May 11, 1987

Mr. Sebastian J. Nola
Manager of Cogeneration Development
SOUTHERN CALIFORNIA EDISON COMPANY
2244 Walnut Grove Avenue
Rosemead, California 91770

     Subject: Consent to Amendment of Geothermal Lease between Mammoth-Pacific
              and Magma Energy, Inc.

Dear Bash:

          As you know, on December 28, 1983, Southern California Edison Company
("Edison") entered into a Deed of Trust, Assignment of Rents and Security
Agreement (the "Deed of Trust") associated with a Power Purchase and Sales
Agreement with Mammoth-Pacific, a joint venture organized as a California
general partnership ("Mammoth"). Section 8 of the Deed of Trust requires consent
by Edison to any amendment or modification to the Geothermal Lease between
Mammoth and Magma Energy, Inc.

          As we discussed by telephone today, Mammoth intends to enter into an
amendment of the Geothermal Lease to modify, in a manner beneficial to
Mammoth, the royalty and other provisions of the Geothermal Lease. A copy of the
First Amendment to Geothermal Lease is attached to this letter.

Mr. Sebastian J. Nola
May 11, 1987
Page -2-

          If Edison will consent to the First Amendment to Geothermal Lease as
required by the Deed of Trust, please countersign this letter in the space
indicated below and return it to me.

                                        Sincerely,

                                        MAMMOTH-PACIFIC,
                                        a California general partnership
                                        By: Pacific Geothermal Company

                                        By: /s/ Donald C. Liddell
                                            ------------------------------------
                                            Donald C. Liddell
                                            Vice President

DCL: rj
Attachment

Agreed to and accepted by
SOUTHERN CALIFORNIA EDISON COMPANY
this 6th day of July, 1987

By: /s/ Illegible
    ---------------------------------
Title: Vice President

-------------------------------------
        APPROVED AS TO FORM:
            JOHN R. BURY
  Vice President and General Counsel

By: /s/ Illegible
    ---------------------------------
                             Attorney

    June 12, 1987
--------------------------------------

                               ASSIGNMENT OF LEASE

               THIS ASSIGNMENT OF LEASE is made on August 31, 1983, between Holt
               Geothermal Company, a California corporation ("Assignor") and
               Mammoth-Pacific, a California general partnership ("Assignee").

                                   WITNESSETH:

          On August 31, 1983, Assignor entered into a Geothermal Lease (the
"Lease") with Magma Energy, Inc., a Nevada corporation, with respect to real
property located near the Casa Diablo Hot Springs, County of Mono, California,
described in Exhibit A attached hereto.

          Assignor desires to assign all of its right, title and interest in
the Lease to Assignee, and Assignee desires to accept such assignment and assume
all of the obligations of Assignor under the Lease.

          The Lease is evidenced by a Memorandum of Lease recorded on September
6, 1983 as instrument No. 1765 in the Official Records of the County Recorder of
Mono County, California.

                                       -2-

          ACCORDINGLY, in consideration of the premises, it is agreed as
follows:

          1. Assignment and Assumption. Assignor hereby assigns and transfers to
Assignee all of its right, title and interest in the Lease, and Assignee accepts
the assignment and assumes and agrees to perform, effective upon the date that
this assignment is signed by Assignee, as a direct obligation to Assignor, all
provisions of the Lease.

          2. Warranty and Indemnity.

          Assignor covenants with Assignee that Assignor is the lawful owner of
and has good title to the interest assigned in Section 1 hereof and to the
Lease, estate, rights and property, free and clear from all liens, encumbrances
or adverse claims; that the Lease is a valid and subsisting lease on the above
described real property; and that all royalties due under the Lease have been
paid and all conditions necessary to keep the Lease in full force have been duly
performed. Assignor will warrant and forever defend such title against all
persons whomsoever, lawfully claiming or to claim the same; hold Assignee
harmless from any claims or liability arising from performance or nonperformance
under the Lease; and indemnify Assignee against any costs or attorneys' fees
incurred in relation thereto.

                                       -3-

          IN WITNESS WHEREOF, the parties have signed this Assignment of Lease
effective on the date that the acceptance hereof is signed by Assignee.

HOLT GEOTHERMAL COMPANY                 MAMMOTH-PACIFIC

                                        By: PACIFIC ENERGY RESOURCES
                                            INCORPORATED, General Partner

By: /s/ Illegible                       By: /s/ Illegible
    ---------------------------------       ------------------------------------
               President                                 President

Attest: /s/ Illegible                   Attest: /s/ Illegible
        -----------------------------           --------------------------------
                 Secretary                                 Secretary

STATE OF CALIFORNIA,    )
                        ) ss.
COUNTY OF LOS ANGELES   )

          On 31 August 1983 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Ben Holt, known to me to be the
President, and W. E. Viney, known to me to be Secretary of Holt Geothermal
Company, the corporation that executed the within Instrument, known to me to be
the persons who executed the within Instrument on behalf of the corporation
therein named, and acknowledged to me that such corporation executed the within
instrument pursuant to its by-laws or resolution of its board of directors.

WITNESSETH my hand and official seal.

                                             -----------------------------------
/s/ Betty J. Peterson                                       OFFICIAL SEAL
-------------------------------------                     BETTY J. PETERSON
Betty J. Peterson                            [SEAL]   ________________California
                                                         __________________
                                                    ____________________ __ 1984
                                             -----------------------------------

                                       -4-

STATE OF CALIFORNIA,    )
                        ) ss.
COUNTY OF LOS ANGELES   )

          On September 7, 1983, before me, the undersigned, a Notary Public in
and for said State, personally appeared ________________________, known to me to
be the President, and ________________________, known to me to be Secretary of
Pacific Energy Resources Incorporated, the corporation that executed the
within Instrument and known to me to be the persons who executed the within
Instrument on behalf of said corporation, said corporation being known to me to
be one of the partners of Mammoth-Pacific, the general partnership that
executed the within Instrument, and acknowledged to me that such corporation
executed the same as such partner and that such partnership executed the same.

WITNESSETH my hand and official seal.

                                             -----------------------------------
/s/ Deborah L. Rodney                                       OFFICIAL SEAL
-------------------------------------                     DEBORAH L. RODNEY
                                             [SEAL]   NOTARY PUBLIC CALIFORNIA
                                                         LOS ANGELES COUNTY
                                                    My ____________ NOV 17, 1984
                                             -----------------------------------FIRST AMENDMENT
                               TO GEOTHERMAL LEASE

     THIS FIRST AMENDMENT TO GEOTHERMAL LEASE (the "Amendment") is made and
entered into effective as of April 30th, 1987 (the "Effective Date") by and
between Magma Energy, Inc., a Nevada corporation (the "Lessor") and
Mammoth-Pacific, a California general partnership (the "Lessee"), collectively
referred to herein as the "Parties".

                                    Recitals

     WHEREAS, the Parties made and entered into that certain Geothermal Lease
dated the 31st day of August, 1983, by and between Lessor and Holt Geothermal
Company, to which Lessee is the successor-in-interest as Lessee (the "Lease"), a
copy of which is attached as Exhibit "A" to this Amendment and incorporated by
reference herein; and

     WHEREAS, the Parties now desire to modify the Lease with respect to the
royalties to be paid by Lessee to Lessor in connection with the operation of one
or more electric power plants fueled by geothermal resources underlying the
leased land, the expansion of the existing electric power plant and the
construction of additional electric power plants, and any other matters referred
to herein.

     NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, Lessor and Lessee agree to amend
the Lease as follows:

     1. Paragraph 3 of the Lease is hereby deleted in its entirety and a new
Paragraph 3, reading as follows, is substituted in its place instead:

     3. Term. TO HAVE AND TO HOLD the leased land for a period of thirty (30)
     years from the date hereof (the "primary term") and so long thereafter as
     electricity is produced on the leased land from the geothermal resources
     therein, or excused under the terms of Paragraph 17 of this Lease.

     2. Paragraph 5 of the Lease is hereby deleted in its entirety and a new
Paragraph 5, reading as follows, is substituted in its place instead:

     5. Royalty. Lessee shall pay to Lessor as royalty during the balance of the
     full term of this Lease compensation as follows:

                                       -1-

     5.1 Existing Plant Base Royalty. As to electricity or other energy
     generated by all facilities in commercial operation on or before the
     Effective Date of this Amendment (the "Existing Plant"), Lessee shall pay
     to Lessor as royalties during the balance of the full term of the Lease the
     following percentage of the "Gross Proceeds", as such term is defined
     below, received by Lessee from each such facility (the "Existing Plant Base
     Royalty"), together with applicable "Bonus Royalties," as such term is
     defined at Subparagraph 5.3 below:

          (a) From April 1, 1987, and for a period of twenty-four (24)
          consecutive months thereafter, the higher of (i) twenty-five percent
          (25%), or (ii) twelve and one half-percent (12.5%) of "Baseline
          Revenue," as such term is defined at Subparagraph 5.3 below, and
          applicable "Bonus Royalties," as such term is defined at Subparagraph
          5.3 below;

          (b) From the date following the conclusion of the period set out in
          Subparagraph 5.1(a), above, and for a period of twelve (12)
          consecutive months thereafter, the higher of (i) twenty percent (20%),
          or (ii) twelve and one half-percent (12.5%) of "Baseline Revenue," as
          such term is defined at Subparagraph 5.3 below, and applicable "Bonus
          Royalties," as such term is defined at Subparagraph 5.3 below;

          (c) From the date following the conclusion of the period set out in
          Subparagraph 5.1(b), above, and for a period of twelve (12)
          consecutive months thereafter, the higher of (i) sixteen percent
          (16%), or (ii) twelve and one half-percent (12.5%) of "Baseline
          Revenue," as such term is defined at Subparagraph 5.3 below, and
          applicable "Bonus Royalties," as such term is defined at Subparagraph
          5.3 below; and,

          (d) From the date following the conclusion of the period set out in
          Subparagraph 5.1(c), above, and for the balance of the term of this
          Lease, twelve and one-half percent (12.5%), together with applicable
          "Bonus Royalties," as such term is defined at Subparagraph 5.3 below.

     For all purposes herein, the term "Gross Proceeds" shall mean (i) with
     respect to the Existing Plant, all amounts received by Lessee, directly or
     indirectly, from the sale to others of electricity, including energy and
     capacity payments, or energy in any other form, produced on the leased land
     from the geothermal

                                       -2-

resources therein or, if applicable, the "Adjacent Lease", as such term is
defined at Subparagraph 5.8 below, and (ii) with respect to the "New Plants", as
such term is defined at Subparagraph 5.2 below, all amounts received by Lessee,
directly and indirectly, from the sale to others of electricity, including
energy and capacity payments, or energy in any other form produced from any
lands or geothermal resources without regard to ownership thereof.

     5.2 New Plant Base Royalty. As to electricity or other energy generated by
     all additional plants utilizing the "Standard Offer Number Four Contracts",
     as such term is defined at Subparagraph 7.1 below (the "New Plants"),
     Lessee shall pay to Lessor for the balance of the full term of the Lease,
     twelve percent (12%) of the Gross Proceeds received by Lessee {the "New
     Plant Base Royalty"), together with applicable "Bonus Royalties," as such
     term is defined at Subparagraph 5.3 below.

     5.3 Bonus Royalties. The Existing Plant Base Royalty and New Plant Base
     Royalty payable by Lessee to Lessor with respect to the Existing Plant and
     each New Plant pursuant to Subparagraphs 5.1 and 5.2 above, shall be
     augmented by additional royalties (the "Bonus Royalties") calculated in
     accordance with the procedure set forth in Appendix "A" attached to this
     Amendment and incorporated by reference herein. Except as otherwise
     provided at Subparagraph 5.1(a), (b) and (c) above, the Existing Plant Base
     Royalty for the Existing Plant and the New Plant Base Royalty for each New
     Plant (collectively, the "Base Royalties") shall be applied to all Gross
     Proceeds for each such plant at or below the "Baseline Revenue" in any
     year. The term "Baseline Revenue" for each such plant shall mean the
     forecasts of annual revenues determined as set forth in Appendix "A" to
     this Amendment. For all Gross Proceeds from the Existing Plant and each of
     the New Plants, respectively, in excess of the Baseline Revenue (the
     "Additional Revenue") for such plants, the Bonus Royalties shall be applied
     to calculate the total amount of royalty payable to Lessor.

     5.4 Inflation Adjustment. The applicable Baseline Revenue for each of the
     plants shall not be subject to adjustment during the fixed price period of
     any power purchase agreement associated with such plant. The Baseline
     Revenue for each of the plants shall be adjusted annually for all years
     after expiration of the period of firm prices provided in the power
     purchase agreement associated with such plant to account for the difference
     between an assumed inflation rate of five percent (5%) per annum and the
     actual inflation

                                       -3-

     experienced (the "Inflation Adjustment"). For the purpose of the Inflation
     Adjustment, the "Actual Inflation" shall be determined from comparison of
     the value of the Producer Price Index for Finished Goods Excluding Food
     (the "Inflation Index") on December 31st of the then current year to the
     value of the Inflation Index on December 31, 1986. The Actual Inflation
     shall be equal to the ratio of the value of the Inflation Index on December
     31st of the then current year to the value of the Inflation Index on
     December 31, 1986. The "Assumed Inflation" shall be equal to one and five
     hundredths ("1.05") raised to a power equal to the number of years between
     1986 and the then current year. The "Inflation Adjustment Factor" shall be
     equal to the Actual Inflation divided by the Assumed Inflation. The
     "Adjusted Baseline Revenue" for each year shall be determined by
     multiplying the Baseline Revenue for each year by the Inflation Adjustment
     Factor.

          In determining the foregoing Inflation Adjustment, the percentage of
     increase or decrease in the Inflation Index shall be calculated to the
     nearest one hundredth of one percent (1/100th of 1%). Percentage changes in
     the Inflation Index shall be calculated based on the original released
     United States Department of Labor, Bureau of Labor Statistics published
     data with the base "1967-100" until a new base period is established.
     Calculations shall be made based on data on the new base period from that
     time forward. If, for any reason, the statistics compiled by the United
     States Department of Labor, Bureau of Labor Statistics and referred to
     above, are not available for use for the foregoing adjustment, an
     adjustment shall be made by mutual agreement of Lessor and Lessee. If the
     United States Department of Labor, Bureau of Labor Statistics designates an
     index with a new title and/or code number as being continuous with the
     Inflation Index then such new index shall be used for the foregoing
     adjustment.

     5.5 Consequences of Default by Lessee. The payment when due by Lessee to
     Lessor of the total compensation provided for in this Paragraph 5, for the
     balance of the full term of the Lease, is a condition to the continuation
     of Lessee's rights under the Lease and its right to use or occupy the
     leased land or any part thereof. In the event, that Lessee shall default
     under any covenant or condition of the Lease and shall fail to remedy such
     default or to commence in good faith to remedy such default, if such
     default cannot be remedied within the notice period, Lessor shall have the
     right, upon expiration of sixty (60) days written notice of default, to
     terminate the Lease and all of Lessee's rights hereunder.

                                       -4-

     5.6 Payment of Royalties. Lessee shall pay to Lessor the Base Royalties,
     and any applicable Bonus Royalties, on the last day of each month for
     accrued royalties for the preceding calendar month. Lessee shall calculate
     the amount of actual Bonus Royalties due under the Lease at the end of each
     calendar year during the term of the Lease, and shall make payment of any
     underpayment to Lessor or Lessor shall make payment of any overpayment to
     Lessee, as the case may be, for any amount due (the "Additional Royalties")
     and payable no later than forty-five (45) days after the end of each
     calendar year during the term of the Lease. When applicable under
     Subparagraph 5.4 above, Inflation Adjustments to the Baseline Revenue
     resulting from application of the Inflation Index shall be made on a dollar
     basis by each January 31st during the term of the Lease before calculating
     the actual Bonus Royalties. The Baseline Revenue for the first year of
     operation for any New Plant shall be prorated from the date of first
     delivery to the end of the calendar year to adjust for differences in
     actual and forecasted revenue set forth in the schedules of Baseline
     Revenue established for such plant.

     5.7 Insufficiency of Geothermal Resources.

     (a)  With respect to both the Existing Plant and any New Plants or any
          "Additional Plants," as such term is defined at Subparagraph 5.9
          below, built on the leased land or the "Adjacent Lease", as such term
          is defined at Subparagraph 5.8 below, Lessee shall utilize geothermal
          resources produced from the leased land and/or the "Adjacent Lease".
          If the geothermal resources obtainable from the leased land and the
          Adjacent Lease are insufficient for operation of the Existing Plant,
          any New Plant, or any Additional Plant at their respective average
          capacity during the preceding three (3) calendar years, Lessor may,
          but shall not be obligated to, make available geothermal resources
          from other lands at the applicable royalty rates provided in
          Subparagraphs 5.1, 5.2 and 5.3 above. In such case, Lessor shall pay
          all underlying, overriding, or other form of royalty or production
          payment, net revenue interest, or other form of compensation payable
          to the United States of America or any other third party on geothermal
          resources supplied from such other land. If Lessor is unwilling or
          unable, as provided above, to make available sufficient geothermal
          resources for the Existing Plant or for any such New Plant or any such
          Additional Plant, Lessee may secure geothermal resources from other
          lands ("Other Lands") for any such plant without paying

                                       -5-

          royalty to Lessor on the geothermal resources so secured. In such a
          case, Lessee shall have the right to commingle the geothermal
          resources provided with geothermal resources provided from such Other
          Lands and to pay Lessor's royalty on the basis of production allocable
          to the leased land and the Adjacent Lease, and the Other Lands made
          available by Lessee, as determined by metering or gauging same.

     (b)  With respect to any New Plant built on land other than the leased land
          or the Adjacent Lease, Lessee shall pay Lessor the full royalty due
          under Subparagraphs 5.2 and 5.3 above regardless of the source of the
          geothermal resources, in accordance with definition of Gross Proceeds
          in Subparagraph 5.1 above and the last sentence of Subparagraph 7.1
          below, and the provisions of Subparagraph 5.7(a) above shall have no
          application.

     5.8 Unitization of Geothermal Resources. Lessor may not voluntarily commit
     federal Geothermal Lease Number CA-11667-A (the "Adjacent Lease") to any
     unit or cooperative agreement without the prior written consent of Lessee
     and shall cooperate fully with Lessee, at no cost to Lessor, in accepting
     or opposing, as determined by Lessee, any attempt to compel unitization or
     other form of joinder of the Adjacent Lease pursuant to applicable laws and
     regulations including, but not limited to, the Geothermal Steam Act of
     1970, and implementing regulations published at Title 43 Code of Federal
     Regulations, Part 3200, et seq., with all seasonable expenses thereof to be
     borne by Lessee. In the event that the Adjacent Lease becomes unitized or
     otherwise joined with any other land leased or otherwise controlled by
     Lessee, Lessor may not propose, or make any election with respect to, any
     "Participating Area", as such term is defined in applicable laws and
     regulations without the prior written consent of Lessee.

     5.9 Additional Plants. As to electricity or other energy generated by all
     additional plants built on the leased land or, if applicable, the Adjacent
     Lease from geothermal resources therein, other than the Existing Plant or
     the New Plants (the "Additional Plants"), Lessee shall pay to Lessor during
     the remainder of the full term of the Lease, royalties as provided at
     Subparagraphs 5.2, 5.3, 5.4, 5.6 and 5.7 above.

     5.10 Minimum Royalty. Notwithstanding Subparagraph 5.7 hereof, Lessee shall
     pay to Lessor during the remainder of the full term of the Lease, a minimum
     royalty of 3%

                                       -6-

     of gross proceeds from the sale to others of electricity, including energy
     and capacity payments, or energy in any other form generated by plants
     built on the leased land or when applicable, the Adjacent Lease.

     5.11 No Guaranteed Internal Rate of Return. Lessor shall not be deemed to
     have guaranteed Lessee a minimum internal rate of return with respect to
     the Existing Plant, any New Plant, or any Additional Plant.

     3. Paragraph 7 of the Lease is hereby deleted in its entirety and a new
Paragraph 7, reading as follows, is substituted in its place instead.

     7. Plant Expansion. Lessee shall have the right to expand its operations on
     the leased land, the Adjacent Lease, or any other lands without regard to
     ownership thereof beyond the capacity of the Existing Plant as follows:

     7.l Plant Expansion. Subject to the provisions of Subparagraph 7.2 below,
     Lessee shall have the right to increase the capacity of the Existing Plant
     or build the New Plants on the leased land, if operations under the Lease
     demonstrate the availability of an adequate supply of geothermal resources,
     on the terms and conditions set forth herein. Subject to the provisions of
     Subparagraph 7.2 below and the first and second provisos to this sentence,
     Lessee shall have the right of first refusal for the development of
     electricity available from utilization of geothermal resources underlying
     the Adjacent Lease; provided that Lessee's operation proves the adequacy of
     the geothermal resources and the commercial feasibility of producing
     electricity therefrom; and provided further, that Lessee shall have
     committed to construction of one or more of the New Plants associated with
     the Standard Offer Number Four Power Purchase Contracts between Lessee and
     Southern California Edison Company bearing Document Numbers 2433H and 2435H
     (the "Standard Offer Number Four Contracts") or expanded the Existing Plant
     in an amount of no less than ten (10) megawatts nameplate rating prior to
     the expiration of the Standard Offer Number Four Contracts.

          Lessee hereby agrees to exercise good faith efforts to obtain all
     necessary governmental permits, authorizations, and approvals to build and
     operate two (2) New Plants on the leased land or on adjacent land leased or
     otherwise controlled by Lessor and, if it obtains governmental permits,
     authorizations, and approvals which, in its sole discretion, are such that
     make construction of the two New Plants economically

                                       -7-

     viable, agrees to seek all necessary internal corporate and partnership
     authorizations, and sufficient financing for the construction of such two
     New Plants. In the event that Lessee is unable, in the exercise of good
     faith efforts, to obtain all necessary external and internal permits,
     authorizations, approval and financing to build and operate any New Plants
     or determine not to build any New Plants for any reason or no reason,
     Lessee shall proceed in accordance with the terms of Subparagraph 7.2,
     below. Regardless of ownership of the land or geothermal resource
     dedicated to any New Plant, Lessee shall pay Lessor royalties on the Gross
     Proceeds of such New Plants as provided in Subparagraphs 5.2 and 5.3,
     above.

     7.2 Consequences of Failure to Expand. If Lessee shall fail to complete
     prior to the expiration of the Standard Offer Number Four contracts an
     increase in the capacity of the Existing Plant of no less than ten (10)
     megawatts nameplate rating or the construction of at least one (1) New
     Plant, Lessee shall relinquish to Lessor its rights under the Lease to the
     surface and subsurface area not actually used for the Existing Plant,
     gathering and injection lines, and wells and shall further relinquish its
     right to use the geothermal resource underlying the leased land or the
     Adjacent Lease for any purpose other than operating the Existing Plant as
     provided herein. If Lessee so relinquishes its rights to the surface and
     subsurface area and the geothermal resource, with respect to the surface
     and subsurface actually used for the Existing Plant, gathering and
     injection lines and wells, Lessee and Lessor shall jointly hold such rights
     on a non-interference basis. If Lessee so relinquishes the foregoing
     rights, Lessor shall have the right, to utilize (i) the surface and
     subsurface not actually used for the Existing Plant, gathering and
     injection lines, and wells and the geothermal resources underlying the
     leased land, and (ii) the Adjacent Lease, for any purpose; provided,
     however Lessor may not exercise any of the foregoing reserved rights which,
     in the reasonable opinion of Lessee, might interfere with the operation of
     the Existing Plant.

     4. A new Paragraph number 24 is hereby added to the Lease as follows:

     24. Upon request, Lessee shall provide Lessor with full access to review,
     and, with respect to Lessor operations on the leased land or Adjacent
     Lease, to use without charge all geotechnical data, geotechnical reports,
     and documents containing geotechnical information of any kind related to
     Lessee's operations on the leased land.

                                       -8-

     5. A new Paragraph number 25 is hereby added to the Lease as follows:

     25. Lessee hereby waives, discharges and releases Lessor from any and all
     claims of Lessee against Lessor, its directors, officers, employees or
     agents which have accrued prior to April 1, 1987 and which arose out of, in
     connection with, or relate to the negotiations of Lessee's entering into,
     or Lessor's performance or nonperformance of the Lease.

     6. As modified or added to by the terms of this Amendment, all terms and
conditions of the Lease shall remain in full force and effect. All capitalized
terms contained herein, unless otherwise defined, shall have the meaning
ascribed to such terms in the Lease.

     IN WITNESS WHEREOF, this Amendment has been executed on the first date
written above by the duly authorized representatives of the parties.

MAGMA ENERGY, INC., Lessor              MAMMOTH-PACIFIC, Lessee

                                        By: PACIFIC GEOTHERMAL COMPANY,
                                            general partner of MAMMOTH-PACIFIC

By: /s/ Illegible                       By: /s/ Illegible
    -------------------------------         ------------------------------------
Title: President & CEO                  Title: President

                                       -9-

                                  Appendix "A"

                       Calculation of Additional Royalties

     As provided in Paragraph 5 of the Amendment to which this Appendix "A" is
attached, the basic structure of the royalty arrangement for the Existing Plant
and each New Plant includes a mutually agreed upon baseline revenue forecast
(the "Baseline Revenue") and a two-tier royalty rate. For all Gross Proceeds, as
such term is defined at Subparagraph 5.1 of the Lease, as amended by the
Amendment, in a given year in excess of the applicable Baseline Revenue for a
plant (the "Additional Revenues"), additional royalties (the "Bonus Royalties")
equal to 50% of such Additional Revenues (the "Bonus Royalty Percentage") shall
be paid. The procedure set forth below details the steps to be followed in the
calculation of Bonus Royalties for the Existing Plant and each New Plant.
Calculations shall be made separately for the Existing Plant and each New Plant.

     1. The Schedule of Baseline Revenue attached as Exhibit "A-l" to this
Appendix "A" has been established in accordance with mutually agreed upon
parameters for the New Plant scheduled to be completed first (see Paragraph 4
below). If the actual date of "Firm Operation", as such term is defined in any
applicable power purchase agreement, is other than that used in the agreed upon
parameters, the Baseline Revenue for the first year of operation and the tenth
year of operation (when energy pricing switches from the fixed price schedule to
as-available pricing) will be adjusted to reflect the actual date of Firm
Operation. The Baseline Revenue for any additional New Plants will be
established utilizing substantially the same bases as those utilized in
calculating the Baseline Revenue for the first New Plant. The Schedule of
Baseline Revenue attached as Exhibit "A-2" to this Appendix "A" has been
established for the Existing Plant in accordance with mutually agreed upon
parameters.

     2. Bonus Royalties will be calculated separately for the Existing Plant and
each New Plant and will be paid when earned. During any month in a given
calendar year in which the aggregate Gross Proceeds for a plant exceed the
applicable Baseline Revenues for that plant, Bonus Royalties will become payable
and will be paid at the same time that the Baseline Royalties for the plant are
to be paid. The Bonus Royalties for a plant will be calculated by multiplying
the Additional Revenues received during that month for that plant by the Bonus
Royalty Percentage.

     3. No later than forty-five (45) days after the end of each calendar year,
Lessee will calculate the amount of the actual Bonus Royalties due during such
year, and shall

                                       -1-

make payment of any underpayment to Lessor, or Lessor shall make payment of any
overpayment to Lessee, as the case may be. Calculation of actual Bonus Royalties
will be based on the following formulas:

     (a)  Adjusted Baseline Revenue.

          During the period commencing on the date of Firm Operation of each New
          Plant and ending ten years thereafter, and during the period
          commencing on January 1, 1987, and ending on December 31, 1995 for the
          Existing Plant (the "First Period"), the Adjusted Baseline Revenue
          shall equal the Baseline Revenue.

          After the expiration of the First Period, the Baseline Revenue shall
          be adjusted annually by the Inflation Adjustment Factor to reflect the
          difference between the assumed inflation index used in the calculation
          of the Baseline Revenue (the "Assumed Inflation") and the actual
          inflation rate as reported by the Producer Price Index for Finished
          Goods Excluding Food published by the department of Labor, Bureau of
          Labor Statistics for December of each year (the "Inflation Index").
          The method of adjustment is as follows:

                                  Baseline Revenue(n)        Inflation Index(n)
Adjusted Baseline Revenue(n) = -------------------------- X ---------------------
                               Assumed Inflation Index(n)   Inflation Index(1986)

          where "n" is the year of adjustment, and the Assumed Inflation index
          for such year is taken from the following table:

                             Assumed Inflation Index

       Index          Index          Index
Year   Value   Year   Value   Year   Value
----   -----   ----   -----   ----   -----
1986   1.000   1997   1.710   2008   2.925
1987   1.050   1998   1.796   2009   3.072
1988   1.103   1999   1.886   2010   3.225
1989   1.158   2000   1.980   2011   3.386
1990   1.216   2001   2.079   2012   3.556
1991   1.276   2002   2.183   2013   3.733
1992   1.340   2003   2.292   2014   3.920
1993   1.407   2004   2.407   2015   4.116
1994   1.477   2005   2.527   2016   4.322
1995   1.551   2006   2.653   2017   4.538
1996   1.629   2007   2.786   2018   4.765

                                       -2-

     (B)  Additional Revenue = Gross Proceeds - Adjusted Baseline Revenue

          except that if Gross Proceeds for any year is less than Adjusted
          Baseline Revenue for such year, then

          Additional Revenue = 0

     (c)  Except as provided in Subparagraph 5.1(a), (b) and (c),
          Base Royalties = Base Royalties
                           percentage of 12% or
                           12.5%, as the case may
                           be, X Adjusted Baseline
                           Revenue

          except that if Gross Proceeds for any year is less than Adjusted
          Baseline Revenue for such year, then

          Base Royalties = Base Royalties percentage of 12%
                           or 12.5%, as the case may be, X
                           Gross Proceeds

     (d)  Bonus Royalties = Bonus Royalties percentage of
                            50% X Additional Revenue

     (e)  Total Royalties = Base Royalties + Bonus Royalties

     (f)  Additional Royalties = Total Royalties - Base Royalties Paid

     4. The Schedule of Baseline Revenue attached as Exhibit "A-l" to
this Appendix "A" has been established for a New Plant consisting of a 12MW
facility with a Firm Operation date of November, 1988. Bases include: 85% load
factor after Firm Operation, energy revenue at the applicable Standard Offer
Number Four Contract rate for ten years, and then fixed at 50% of the Standard
Offer Number Four Contract rate in 1999, and escalating at 6% thereafter; and
100% of the capacity revenue based on the standard Offer Number Four Contract
as-available capacity schedule through 1998, and then fixed at the 1998 price
thereafter.

     5. The Schedule of Baseline Revenue attached as Exhibit "A-2" to this
Appendix "A" has heen established for the Existing Plant. Bases include: 70,000
MWh of energy sold per year through December 31, 1995, and 68,268 MWh per year
through December 31, 2015; energy and capacity revenues at rates provided in the
Amended and Restated Power Purchase and Sales Agreement for the Existing Plant,
dated December 12, 1986 through December 31, 1995; and then at 50% of the
Standard Offer Number Four Contract energy payment rate in 1996, and escalating
at 6% thereafter; and 100% of the capacity revenue payment rate of $.0194/Kwh
thereafter.

                                       -3-

                                  Exhibit "A-1"
                       New Plant Baseline Revenue Forecast

                     BASELINE
                      REVENUE
                     FORECAST
YEAR                   ($M)
----                 --------
1988                   1,776
1989                   7,782
1990                   8,302
1991                   8,829
1992                   9,650
1993                  10,457
1994                  11,272
1995                  12,177
1996                  13,018
1997                  14,021
1998                  14,921
1999                   9,059
2000                   9,495
2001                   9,958
2002                  10,448
2003                  10,967
2004                  11,518
2005                  12,101
2006                  12,720
2007                  13,376
2008                  14,071
2009                  14,808
2010                  15,589
2011                  16,417
2012                  17,294
2013                  18,225
2014                  19,211
2015                  20,256
2016                  21,364
2017                  22,538
2018                  23,783
2019 and for the      To be calculated
balance of the        using the same
term of the Lease.    bases.

                                  EXHIBIT "A-2"
                     EXISTING PLANT BASELINE REVENUE FORECAST

                                                BASELINE
                    NET                          REVENUE
       CAPACITY   MW HRS   ENERGY   AGREEMENT    FORECAST
         PRICE     SOLD     PRICE     PRICE       ($M)
       --------   ------   ------   ---------   --------
1987     .0194    70,000    .0700     .0894       6,258
1988     .0194    70,000    .0700     .0894       6,258
1989     .0194    70,000    .0700     .0894       6,258
1990     .0194    70,000    .0700     .0894       6,258
1991     .0194    70,000    .0700     .0894       6,258
1992     .0194    70,000    .0700     .0894       6,258
1993     .0194    70,000    .0700     .0894       6,258
1994     .0194    70,000    .0700     .0894       6,258
1995     .0194    70,000    .0700     .0894       6,258
1996     .0194    68,273    .0630     .0824       5,626
1997     .0194    68,273    .0668     .0862       5,884
1998     .0194    68,273    .0708     .0902       6,157
1999     .0194    68,273    .0750     .0944       6,447
2000     .0194    68,273    .0795     .0989       6,755
2001     .0194    68,273    .0843     .1037       7,080
2002     .0194    68,273    .0894     .1088       7,426
2003     .0194    68,273    .0947     .1141       7,792
2004     .0194    68,273    .1004     .1198       8,180
2005     .0194    68,273    .1064     .1258       8,591
2006     .0194    68,273    .1128     .1322       9,027
2007     .0194    68,273    .1196     .1390       9,489
2008     .0194    68,273    .1268     .1462       9,979
2009     .0194    68,273    .1344     .1538      10,499
2010     .0194    68,273    .1424     .1618      11,049
2011     .0194    68,273    .1510     .1704      11,633
2012     .0194    68,273    .1600     .1794      12,251
2013     .0194    68,273    .1696     .1890      12,907
2014     .0194    68,273    .1798     .1992      13,602
2015     .0194    68,273    .1906     .2100      14,338
2016 and for the balance of the term of the Lease to be calculated using the
same bases.

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