Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - U.S. Geothermal Inc. - Exhibit 10.24

POWER PURCHASE AGREEMENT 
BETWEEN 
RAFT RIVER
ENERGY I LLC 
AND 
IDAHO POWER COMPANY 

TABLE OF CONTENTS 

	ARTICLE 1 	DEFINITIONS 
	 	 
	ARTICLE 2 	RULES OF CONSTRUCTION 
	 	 
	ARTICLE 3 	CONDITIONS TO ACCEPTANCE OF ENERGY FIRST ENERGY DATE
    
	 	 
	ARTICLE 4 	TERM AND OPERATION DATE 
	 	 
	ARTICLE 5 	PRICE 
	 	 
	ARTICLE 6 	ENVIRONMENTAL ATTRIBUTES 
	 	 
	ARTICLE 7 	DELIVERY AND SHORTFALL OBLIGATIONS 
	 	 
	ARTICLE 8 	TRANSMISSION AGREEMENT 
	 	 
	ARTICLE 9 	METERING AND TELEMETRY 
	 	 
	ARTICLE 10 	SYSTEM PROTECTION 
	 	 
	ARTICLE 11 	FACILITY AND INTERCONNECTION 
	 	 
	ARTICLE 12 	GENERAL OPERATIONS 
	 	 
	ARTICLE 13 	RELIABILITY MANAGEMENT SYSTEM 
	 	 
	ARTICLE 14 	BILLING, RECORDS, AUDITS 
	 	 
	ARTICLE 15 	INDEMNIFICATION AND INSURANCE 
	 	 
	ARTICLE 16 	CREDIT AND COLLATERAL REQUIREMENTS 
	 	 
	ARTICLE 17 	FORCE MAJEURE 
	 	 
	ARTICLE 18 	FORCED OUTAGE 

	POWER PURCHASE
      AGREEMENT – RAFT RIVER ENERGY –09/20/07) 

	ARTICLE 19 	BUYER’S
      ACCESS RIGHTS 
	 	 
	ARTICLE 20 	NO THIRD
      PARTY LIABILITY, NO DEDICATION OF FACILITY OR SYSTEM 
	 	 
	ARTICLE 21 	SEVERAL
      OBLIGATIONS 
	 	 
	ARTICLE 22 	WAIVER
    
	 	 
	ARTICLE 23 	CHOICE OF
      LAW 
	 	 
	ARTICLE 24 	LIMITATIONS
      
	 	 
	ARTICLE 25 	DISPUTES
    
	 	 
	ARTICLE 26 	EVENTS OF
      DEFAULT, DELAY DAMAGES AND MATERIAL BREACHES 
	 	 
	ARTICLE 27 	TERMINATION
      
	 	 
	ARTICLE 28 	GOVERNMENTAL
      AUTHORIZATION 
	 	 
	ARTICLE 29 	BOARD AND
      REGULATORY APPROVAL 
	 	 
	ARTICLE 30 	SUCCESSORS
      AND ASSIGNS 
	 	 
	ARTICLE 31 	MODIFICATION
      
	 	 
	ARTICLE 32 	TAXES
  
	 	 
	ARTICLE 33 	NOTICES
    
	 	 
	ARTICLE 34 	ADDITIONAL
      TERMS AND CONDITIONS 
	 	 
	ARTICLE 35 	SEVERABILITY
      
	 	 
	ARTICLE 36 	CONFIDENTIAL
      BUSINESS INFORMATION 
	 	 
	ARTICLE 37 	REPRESENTATIONS AND WARRANTIES 
	 	 
	ARTICLE 38 	ENTIRE
      AGREEMENT 
	 	 
	ARTICLE 39 	COUNTERPARTS
      
	 	 
	ARTICLE 40 	CAPTIONS
    

	POWER PURCHASE
      AGREEMENT – RAFT RIVER ENERGY –09/20/07) 

POWER PURCHASE AGREEMENT 
BETWEEN 
RAFT RIVER
ENERGY I LLC 
AND 
IDAHO POWER COMPANY 

          This
Power Purchase Agreement (“Agreement”), is entered into this ________ day of
_______________ , 2007, by and between RAFT RIVER ENERGY I LLC a Delaware
limited liability company with a principal place of business at 1509 Tyrell
Lane, Suite B, Boise, ID 83706 (“Seller”), and IDAHO POWER COMPANY, an Idaho
corporation with a principal place of business at 1221 W. Idaho Street, Boise,
ID 83702 (“Buyer”). Seller and Buyer may be referred to individually as “Party,”
or jointly as “Parties.” 

Recitals 

          A.      Seller
desires to develop, construct, own and operate a geothermal electric generating
facility with an estimated average annual net output of 13 MW. 

          B     .
Seller has responded to Buyer’s solicitation of bids for the provision of
renewable energy, and Buyer has accepted Seller’s offer in accordance with the
terms and conditions set forth in this Agreement. 

          C.      Seller
and Buyer wish to enter into this Agreement in order to set forth the terms and
conditions under which Seller will sell and Buyer will purchase energy from the
Seller’s Facility. 

          D.      Seller
and Buyer, upon Commission approval and satisfaction by the Seller of all
requirements to attain a First Energy Date as specified within this Agreement,
wish to terminate the PURPA Firm Energy Sales Agreement between the Buyer and
the Seller dated December 29, 2004. 

          NOW,
  THEREFORE, in consideration of the mutual covenants contained in this Agreement,
  the sufficiency and adequacy of which are hereby acknowledged by each Party,
  the Parties agree to the following: 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

ARTICLE 1 
DEFINITIONS 

          1.1     
“Affiliate” means any other person or entity that controls, is under the control
of, or is under common control with, the named person or entity. For purposes of
this definition, the term “control” (including the terms “controls,” “under the
control of,” and “under common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
the policies of a person or entity, whether through ownership interest, by
contract or otherwise. 

          1.2     
“Annual Capacity Factor” means 90%. 

          1.3      “Annual
Guaranteed Output” means the Annual Output Forecast as defined in Section 7.5
multiplied by the Annual Capacity Factor. 

          1.4     
“Bankrupt” means with respect to any entity, such entity (1) files a petition or
otherwise commences, authorizes or acquiesces in the commencement of a
proceeding or cause of action under any bankruptcy, insolvency, reorganization
or similar law, or has any such petition filed or commenced against it, (2)
makes an assignment or any general arrangement for the benefit of creditors, (3)
otherwise becomes bankrupt or insolvent (however evidenced), (4) has a
liquidator, administrator, receiver, trustee, conservator or similar official
appointed with respect to it or any substantial portion of its property or
assets, or (5) is generally unable to pay its debts as they fall due. The term
“Bankruptcy” shall have a corollary meaning when used herein. 

          1.5     
“BPA” means Bonneville Power Administration or its successor. 

          1.6      “Business
Day” means any calendar day that is not a Saturday, a Sunday, or a
NERC-recognized holiday. 

          1.7     
  “Buyer’s Delivery Business Unit” means that portion of Idaho
  Power Company, or its successor, that is responsible for the interconnections
  and operations of the Idaho Power Company distribution and transmission system
  as specified in the Idaho Power Company OATT.

          1.8     
“Commission” means the Idaho Public Utilities Commission or its successor. 

          1.9     
“Commission Approval” means an order issued by the Commission approving this
Agreement and finding the Contract Price to be reasonable and that all payments
to be made to Seller under this Agreement shall be allowed as prudently incurred
expenses of Buyer for ratemaking purposes, without condition(s) or
modification(s) other than condition(s) or modification(s) accepted in writing
by the Party or Parties adversely affected by such condition(s) or
modification(s). 

          1.10     
  “Contract Price” means the price for all Net Energy that has been
  agreed to by the Parties in this Agreement and referenced in Appendix A.

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          1.11      “Contract
Year” means the period commencing each calendar year on the same calendar
date as the Operation Date and ending one (1) year later. 

          1.12     
“Credit Rating” means (1) with respect to any entity other than a
financial institution, the (a) current ratings issued or maintained by S&P’s
or Moody’s with respect to such entity’s long-term senior, unsecured,
unsubordinated debt obligations (not supported by third-party credit
enhancements) or (b) corporate credit rating or long-term issuer rating issued
or maintained with respect to such entity by S&P’s or Moody’s, or (2) if
such entity is a financial institution, the ratings issued or maintained by
S&P’s or Moody’s with respect to such entity’s long-term, unsecured,
unsubordinated deposits. 

          1.13     
“Delay Energy Quantity” means 9,000 kW less any portion of capacity rating (kW)
of the Facility that has met the Operation Date requirements specified in
Section 4.4 multiplied by the hours beginning with the 744th hour
past midnight of the Scheduled Operation Date to midnight of the day preceding
the Operation Date, not to exceed, 2,160 total hours.

          1.14      “Delay
Liquidated Damages” means the Delay Energy Quantity multiplied by the Delay
Price.

          1.15     
  “Delay Price” means the applicable month’s Market Energy Price
  less the applicable month’s Contract Price. If this calculation results
  in a value less than zero (0) then the result will be zero (0). 

          1.16      “Designated
Dispatch Facility” means Buyer’s generation dispatch group or any subsequent
group designated by Buyer.

          1.17     
“Effective Date” means the date first written above. 

          1.18     
“Emergency” means an emergency condition as defined under the Interconnection
Agreement or the applicable OATT. 

          1.19     
  “Environmental Attributes” means the aggregate amount of environmental
  air quality credits, off-sets, or other benefits related to the Net Energy produced
  by the Facility that reduces, displaces or off-sets emissions resulting from
  fuel combustion at another location pursuant to any federal, state or local
  legislation or regulation, and the aggregate amount of credits, offsets or other
  benefits related to Buyer’s current marketing program, any successor green
  pricing program, or other environmental or renewable energy credit trading program
  derived from the use, purchase or distribution of Net Energy from the Facility
  or any similar program pursuant to any federal, state or local legislation or
  regulation. The Environmental Attributes include, but are not limited to, green
  tags, green certificates, renewable energy credits (REC’s) and tradable
  renewable certificates directly associated with the Net Energy produced at this
  Facility. One REC is associated with the generation and delivery of one (1)
  MWh of Net Energy. Notwithstanding any other provision of this Agreement, Environmental
  Attributes do not include: (1) the PTC’s, (2) any investment tax
  credits, and any other tax credits, deductions, exemptions, or other tax benefits
  associated with the Facility, and (3) any state, federal, local or private cash
  payments, exemptions, refunds or grants relating in any way to the Facility,
  construction of 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

the Facility or output of the Facility, including the
production of Inadvertent Energy, Test Energy, Station Use, or Net Energy. 

          1.20     
  “Facility” means the electric generation facility commonly known as
  Seller’s Raft River geothermal power plant unit #1, as described in more
  detail in Appendix B, which includes all of the equipment required to enable
  this power plant to produce and deliver the energy as specified within this
  Agreement to the Buyer. This equipment shall include but not be limited to the
  electrical interconnection equipment, generator, turbine, heat exchanger, and
  cooling tower(s). The geothermal fluid extraction wells, geothermal fluid injection
  wells, geothermal fluid transportation systems from the various wells to the
  generation unit are included in the Facility to the extent that they are used
  in the production of energy from the Facility.

          1.21     
“Facility Assets” shall have the meaning given to that term in Section 30.7.1.

          1.22     
“Facility Lender” means, collectively, any lender(s) providing any Project
Financing and any successor(s) or assigns thereto. 

          1.23     
“Financing Documents” means the loan and credit agreements, notes, bonds,
indentures, security agreements, lease financing agreements, mortgages, deeds of
trust, and other documents relating to any Project Financing for the Facility,
and any and all amendments, modifications, or supplements to the foregoing that
may be entered into from time to time at the discretion of Seller in connection
with any Project Financing of the Facility, or of the Facility in combination
with other assets of the Seller.

          1.24     
“First Energy Date” means the day commencing at 0001 hours, Mountain Time,
following the day that the conditions in Section 3.1 have been satisfied. 

          1.25     
“Forced Outage” means a Facility condition that requires a sudden or mandatory
unplanned curtailment of the Net Energy deliveries from the Facility that (1) is
due to equipment failure or unplanned shutdown which was not caused by an event
of force majeure or by neglect, disrepair or lack of adequate
preventative maintenance of the Seller’s Facility or (2) is required to allow
unplanned repair or maintenance to prevent equipment failure.

          1.26     
“Good Utility Practice(s)” means any of the practices, methods and acts engaged
in or approved by a significant portion of the electric utility industry during
the relevant time period, or any of the practices, methods and acts which, in
the exercise of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired result of
the lowest reasonable cost consistent with good business practices, reliability,
safety and expedition. Good Utility Practice(s) is not intended to be limited to
the optimum practice, method or act to the exclusion of all others, but rather
to be acceptable practices, methods, or acts generally accepted in the region
and consistently adhered to. 

          1.27     
  “Guaranty” means an instrument or agreement pursuant to which
  a guarantor guarantees the performance of the obligations of an obligor, which
  instrument or agreement is substantially in the form set forth as Appendix C.
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          1.28     
“Guaranty Default” means with respect to a Guaranty or the guarantor thereunder,
the occurrence of any of the following events: (1) any representation or
warranty made or deemed to be made or repeated by such guarantor in connection
with such Guaranty shall be false or misleading in any material respect when
made or when deemed made or repeated; (2) such guarantor fails to pay, when due,
any amount required pursuant to such Guaranty; (3) the failure of such guarantor
to comply with or timely perform any other material covenant or obligation set
forth in such Guaranty if such failure is not capable of remedy or shall not be
remedied in accordance with the terms and conditions of such Guaranty; (4) such
Guaranty shall expire or terminate, or shall fail or cease to be in full force
and effect and enforceable in accordance with its terms against such guarantor,
prior to the satisfaction of all obligations of the obligor under this
Agreement, in any such case without replacement; (5) such guarantor shall
repudiate, disaffirm, disclaim, or reject, in whole or in part, or challenge the
validity of, its Guaranty, or (6) such guarantor becomes Bankrupt; provided,
however, that no Guaranty Default shall occur or be continuing in any event with
respect to a Guaranty after the time such Guaranty is required to be canceled or
returned to a Party in accordance with the terms of this Agreement. 

          1.29     
  “Inadvertent Energy” (expressed in kWh), means all of the electric
  energy produced by the Facility, less Station Use, and delivered to and measured
  at the Metering Point, less Losses that are incurred between the Metering Point
  and the Buyer’s Point of Delivery and that is (1) after an Operation Date
  has been established in the PURPA Agreement and (2) energy in excess of 10,000
  kW multiplied by the hours in a given month and, (3) produced prior to the First
  Energy Date of this Agreement and (4) delivered by the Seller to the Transmitting
  Entity and (5) delivered by the Transmitting Entity to the Point of Delivery
  and (6) accepted by the Buyer at the Point of Delivery and (7) not exceeding
  the Maximum Capacity. 

          1.30     
“Initial Term” has the meaning given to that term in Section 4.1.1. 

          1.31     
“Interconnection Agreement” means the agreement between the Interconnection
Provider and the Seller that enables the Seller’s energy to be delivered and
integrated into the Interconnection Provider’s electrical system. 

          1.32     
“Interconnection Facilities” means all equipment required to be installed
to interconnect and deliver energy from the Facility to the Transmitting
Entity’s system including, but not limited to, connection, switching, metering,
relaying, communications and safety equipment. 

          1.33     
“Interconnection Provider” means the electric utility which the Facility is
directly electrically interconnected to.

          1.34     
  “Interest Rate” means (1) for purposes of identifying the Interest
  Rate to be paid on cash collateral, an annual interest rate equal to the overnight
  federal funds rates, or (2) for purposes of identifying the Interest Rate to
  be paid in an event of default, an annual interest rate equal to one hundred
  percent (100%) of the LIBOR three (3) month rate plus two hundred (200) basis
  points. The designated Interest Rate shall be the rate published on the date
  of the invoice, or other notice, in The Wall Street Journal (or, if 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

The Wall Street Journal is not published on that day,
the next succeeding date of publication); provided, however, that the
annual interest rate used as the Interest Rate shall not exceed the maximum rate
permitted by law.

          1.35     
“Investor” means any investor(s) (including any transferees of such investors)
that acquire a direct or indirect interest in Seller.

          1.36     
“Losses” means the loss of electrical energy expressed in kilowatt hours (kWh)
occurring as a result of the transformation and transmission of energy between
the point where the Facility’s energy is delivered to the Transmitting Entity
(measured by the Buyer’s Metering Equipment) and the Point of Delivery on the
Buyer’s electrical system. The loss calculation formula will be as specified in
Appendix B of this Agreement. 

          1.37     
“Market Energy Cost” means the monthly weighted average of the daily on-peak and
off-peak Dow Jones Mid-Columbia Index (Dow Jones Mid-C Index) prices for
non-firm energy. If the Dow Jones Mid-C Index price is discontinued by the
reporting agency, both Parties will mutually agree upon a replacement index
similar to the Dow Jones Mid-C Index. The selected replacement index will be
consistent with other similar agreements and a commonly used index by the
electrical industry. 

          1.38     
“Market Energy Price” means eighty-five percent (85%) of the Market Energy Cost.

          1.39     
  “Material Adverse Change” means, with respect to Seller’s
  Guarantor, the Guarantor’s non-credit enhanced unsecured debt has (a) a
  Credit Rating below BBB- by S&P or below Baa3 by Moody's, or (b) a Credit
  Rating of BBB– by S&P accompanied by a negative watch or Baa3 by Moody's
  accompanied by a negative watch, or (c) both ratings are withdrawn or terminated
  on a voluntary basis by the rating agencies. If S&P changes its rating system
  during the Term, “BBB–“ shall be replaced by S&P’s lowest
  investment grade rating under the new rating system; likewise, if Moody’s
  changes its rating system during the Term, “Baa3” shall be replaced
  by Moody’s lowest investment grade rating under the new rating system.

          1.40     
“Material Breach” means a default or Event of Default (Article 26) subject to
Section 26.3.

          1.41     
“Maximum Capacity” shall be 15.8 MW. 

          1.42      “Metering
and Telemetry Equipment” means all equipment specified in the Interconnection
Agreement, this Agreement, and any additional equipment specified in Appendix B
required to measure, record and telemeter power flows between the Facility and
Buyer's electrical system. 

          1.43     
“Metering Point” means the point on the Transmitting Entity’s or Interconnection
Provider’s electrical system where the Seller’s energy is delivered to the
Transmitting Entity and measured by the Buyer provided Metering Equipment. 

          1.44     
  “Moody’s” means Moody’s Investor Services, Inc. or its successor.
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          1.45     
“NERC” means the North American Electric Reliability Council or its
successor. 

          1.46     
“Net Energy”, expressed in (kWh), means all of the electric energy produced by
the Facility, less Station Use, and delivered to and measured at the Metering
Point, less Losses that are incurred between the Metering Point and the Buyer’s
Point of Delivery and that is (1) after an Operation Date has been established
and (2) delivered by the Seller to the Transmitting Entity and (3) delivered by
the Transmitting Entity to the Point of Delivery and (4) accepted by the Buyer
at the Point of Delivery and (5) not exceeding the Maximum Capacity. Net Energy
does not include Test Energy. At any time during the term of this Agreement
during which Appendix D is in force, Net Energy shall not include any
Surplus/Shortfall Energy as defined in Appendix D. 

          1.47     
  “Net Energy Shortfall” means as calculated in Section 7.5.5 and subject
  to Net Energy Shortfall Damages.

          1.48     
“Net Energy Shortfall Price” means the price used to calculate the Net Energy
Shortfall Damages as specified in Appendix E. 

          1.49     
“Net Energy Shortfall Damages” means any remaining Net Energy Shortfall after
the provisions of Section 7.5.5.2 have been applied, multiplied by the Net
Energy Shortfall Price applicable to the actual period when the Net Energy
Shortfall occurred.

          1.50     
“OATT” means the Open Access Transmission Tariff applicable to the
Interconnection Provider’s system, the Transmitting Entity’s system, or the
Buyer’s transmission system. 

          1.51     
“Operation Date” means the day commencing at 0001 hours, Mountain Time,
following the day that all conditions of Section 4.4 have been satisfied. 

          1.52     
“Performance Assurance” means collateral in the form of either a Guaranty, cash,
letter(s) of credit, or other security acceptable to Buyer, as described in
Article 16. 

          1.53     
“Point of Delivery” means the point where the Transmitting Entity delivers the
energy generated by the Facility to the Buyer’s electrical system as
specifically described in Appendix B. 

          1.54     
“Project Financing” means debt with respect to which the Facility Lender(s) are
granted security interests in the Facility, as well in such other of Seller’s
assets, and in such revenues generated therefrom, as are specified in the
Financing Documents. 

          1.55     
  “PTC’s” means Production Tax Credits applicable to electricity
  produced from certain renewable resources pursuant to 26 U.S.C. § 45, or
  replacement or substitute tax benefits based on energy production from the Facility.
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          1.56     
“PTC Value” means an amount equal to: (A) the PTCs to which Seller would have
been entitled with respect to renewable energy it is unable to deliver because
of a Buyer Event of Default; plus (B) a “gross up” amount to take into account
the federal, state and local income tax to Seller on such payments in lieu of
PTCs, so that the net amount retained by Seller, after payment of federal, state
and local income taxes, is equal to the amount set forth in clause (A) of this
definition. For purposes of determining the foregoing, Seller shall deliver a
certificate from an officer of Seller stating the corporate income tax rates
(federal, state or local, as applicable) that are in effect for the Seller
during the tax year in which the receipt of such PTC Value is taxed, and such
income tax rates shall be used in the calculation of the PTC Value. 

          1.57     
“PURPA Agreement” means the Firm Energy Sales Agreement between the Buyer and
the Seller dated December 29, 2004 for delivery of energy from this same
Facility to the Buyer. 

          1.58     
“RRREC” means the Raft River Rural Electric Cooperative or its successor. 

          1.59     
“Scheduled Maintenance” means as defined in Section 12.2. 

          1.60     
“Scheduled Operation Date” means the date specified in Appendix B. 

          1.61     
“Scheduled Outage” means the pre-scheduled kWh curtailment associated with the
Scheduled Maintenance. 

          1.62     
“Seller’s Guarantor” means the entity providing the Guaranty or a successor or
assignee thereof that is not experiencing a Material Adverse Change. 

          1.63     
“Site” means the parcel of real property on which the Facility will be
constructed and located, including any easements, rights-of-way, surface use
agreements, and other interests or rights in real estate reasonably necessary
for the construction, operation and maintenance of the Facility.

          1.64      “Station
Use” means electric energy produced by the Facility that is used to operate
equipment that is auxiliary or otherwise related to the production of
electricity by the Facility. The Buyer shall have the option to serve certain
Facility loads such as irrigation pumps, geothermal production pumps, Site
lighting and Site offices from the Facility or as purchased power from RRREC.
Power purchased from RRREC shall not be regarded as Station Use energy. 

          1.65     
“S&P” means Standard & Poor’s, a division of McGraw-Hill Companies Inc.
or its successor. 

          1.66      “Term”
means the period of time during which this Agreement shall remain in full force
and effect, including the Initial Term and any extension of the Term as provided
in Article 4. 

          1.67      “Test
  Energy” (expressed in kWh), means all of the electric energy produced by
  the Facility, less Station Use, and delivered to and measured at the Metering
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

Point, less Losses that are incurred between the Metering Point
and the Buyer’s Point of Delivery and that is (1) prior to an Operation
Date being established and (2) delivered by the Seller to the Transmitting
Entity and (3) delivered by the Transmitting Entity to the Point of Delivery and
(4) accepted by the Buyer at the Point of Delivery and (5) not exceeding the
Maximum Capacity. At any time during the term of this Agreement during which
Appendix D is in force, Test Energy shall not include any Surplus/Shortfall
Energy as defined in Appendix D.

          1.68     
“Total Annual Facility Net Energy” means the sum of twelve (12) months of actual
Net Energy beginning with March 1st of each calendar year. 

          1.69      “Transmitting
Entity” means the signatory(s) (other than the Seller) to the Transmission
Agreement referred to in Article 8 and their successors and assigns. 

          1.70      “WECC”
means the Western Electricity Coordinating Council or its successor. 

ARTICLE 2 
RULES OF CONSTRUCTION 

          2.1      General.
The defined terms listed in Article 1 (as indicated by initial
capitalization) shall have the meanings set forth in Article 1 whenever the
terms appear in this Agreement and attached Appendices, whether in the singular
or the plural or in the present or past tense. Other terms used in this
Agreement but not listed in Article 1 shall have meanings as otherwise defined
within this Agreement or as commonly used in the English language and, where
applicable, in Good Utility Practice(s). Words not otherwise defined in this
Agreement that have well-known and generally accepted technical or trade
meanings are used in accordance with such recognized meanings. In addition, the
following rules of interpretation shall apply: 

                         2.1.1     The
masculine shall include the feminine and neuter. 

                         2.1.2     
References to “Articles,” “Sections,” or “Appendices” shall be to articles,
sections or appendices of this Agreement. 

                         2.1.3      The
Appendices attached to this Agreement are incorporated in and are intended to be
a part of this Agreement. 

                         2.1.4     
This Agreement was negotiated and prepared by both Parties with the advice and
participation of counsel. The Parties have agreed to the wording of this
Agreement, and none of the provisions of this Agreement shall be construed
against one Party on the ground that such Party is the author of this Agreement
or any part of this Agreement. 

                         2.1.5     
  The Parties shall act reasonably and in accordance with the principles of good
  faith and fair dealing in the performance of this Agreement. Unless expressly
  provided otherwise in this Agreement, (i) where the Agreement requires consent,
  approval, or a similar action by a Party, such consent, approval or other action
  shall not be unreasonably withheld, conditioned or delayed, and (ii) where the
  Agreement 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

gives a Party a right to determine, require, specify or take
similar action with respect to a matter, such determination, requirement,
specification or similar action shall be reasonable. 

          2.2      Interpretation
of Interconnection Agreement, Transmission Agreement(s), transmission
arrangements and Buyer’s Delivery Business Unit documentation. The
Parties recognize that the Seller will enter into separate Interconnection,
Transmission Agreements and transmission arrangements enabling the delivery of
the Facility’s electrical energy not to exceed the Maximum Capacity to the
Buyer. These agreements and arrangements shall include but not be limited to an
Interconnection Agreement with the Interconnection Provider, Transmission
Agreement(s) with all appropriate Transmitting Entities (e.g., RRREC, BPA, etc.)
and documentation from the Buyer’s Delivery Business Unit approving the delivery
of the Facility’s energy to the Point of Delivery. 

                         2.2.1     
The Parties acknowledge and agree that the Interconnection Agreement,
Transmission Agreement(s), transmission arrangements and the Buyer’s Delivery
Business Unit documentation shall be separate and free-standing documents,
agreements and arrangements, and that the terms of this Agreement are not
binding upon the Interconnection Provider, Transmission Entity, transmission
arrangements or the Buyer’s Delivery Business Unit. 

                         2.2.2     
Notwithstanding any other provision in this Agreement, nothing in the
Interconnection Agreement, Transmission Agreement(s), transmission arrangements
or the Buyer’s Delivery Business Unit documentation shall alter or modify the
Buyer’s or Seller’s rights, duties and obligations under this Agreement. This
Agreement shall not be construed to create any rights between the Seller and the
Interconnection Provider, Transmitting Entity(s) or the Buyer’s Delivery
Business Unit. 

                         2.2.3      Seller
expressly recognizes that, for purposes of this Agreement, the Interconnection
Provider, Transmitting Entity(s) and the Buyer’s Delivery Business Unit shall be
deemed to be separate entities and separate contracting parties whether or not
any of these agreements and/or other documentation are provided by or entered
into by the Buyer or an Affiliate of the Buyer. 

ARTICLE 3 
CONDITIONS TO ACCEPTANCE OF ENERGY FIRST
ENERGY DATE 

          3.1     
  Conditions. As a condition of the Buyer’s acceptance of deliveries
  of energy from the Seller, the following conditions shall be satisfied. If any
  of the following conditions to acceptance of energy have been satisfied in a
  different energy sales agreement between the Buyer and the Seller that provides
  for the delivery of this same Facility’s energy to the Buyer, the Seller
  may reference this previously provided information in their response to each
  requirement and if the Buyer determines the previously provided information
  is acceptable, the Buyer shall not require additional information to satisfy
  that specific requirement. 

  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

                         3.1.1      The
Commission shall have approved this Agreement as contemplated by Articles 28 and
29, or Buyer shall have waived such approval. 

                         3.1.2     
Seller shall have notified Buyer of the expected First Energy Date no later than
five (5) Business Days before the expected First Energy Date. 

                         3.1.3      Seller
shall have delivered to the Buyer a certificate signed by an officer of Seller
(1) certifying that to the best of the officer’s knowledge all licenses, permits
or approvals necessary for Seller’s commencement of deliveries have been
obtained from applicable federal, state or local authorities, and (2) listing
all such licenses, permits and approvals.

                                        3.1.3.1     
Seller shall certify that either (a) the Seller’s market-based tariff applicable
for sale of the Test Energy and Net Energy has attained FERC Market-Rate
authority or (b) the Facility is exempt from FERC Market-Rate authority and such
application or acceptance is not required for Seller to commence Test Energy and
Net Energy deliveries under this Agreement. 

                         3.1.4     
Opinion of Counsel. Seller shall have submitted to the Buyer an opinion
letter signed by a law firm that includes attorneys admitted to practice and in
good standing in the State of Idaho providing an opinion that Seller’s licenses,
permits and approvals as set forth in Section 3.1.3 above are legally and
validly issued, are held in the name of the Seller and, based on a reasonable
review (which may include reliance on certificates provided by officers or other
responsible personnel of Seller), the firm is of the opinion that Seller is in
substantial compliance with said permits as of the date of the opinion letter.
The opinion letter will be in a form acceptable to Buyer and will acknowledge
that the firm rendering the opinion understands that Buyer is relying on said
opinion in connection with and for the purposes of this transaction. Buyer’s
acceptance of the form will not be unreasonably withheld, conditioned or
delayed. The opinion letter will be governed by and shall be interpreted in
accordance with the legal opinion accord of the American Bar Association Section
of Business Law (1991). If Buyer does not object in writing to the proposed form
of opinion letter within ten (10) Business Days after receiving in it, it shall
be deemed accepted. 

                         3.1.5     
Seller shall have delivered to Buyer certification that the Facility is
substantially complete, tested and capable of beginning energy deliveries to the
Buyer in a safe manner. 

                         3.1.6      Engineer’s
Certifications. Submit an executed Engineer's Certification of Design &
Construction Adequacy and an Engineer's Certification of Operations and
Maintenance (O&M) Policy. These certificates will be in the form specified
in Appendix F but may be modified to the extent necessary to recognize the
different engineering disciplines providing the certificates. 

                         3.1.7     
  Insurance. Submit written proof to the Buyer of all insurance required
  in Article 15. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

                         3.1.8      Interconnection
Agreement, Transmission Agreement(s), transmission arrangements and Buyer’s
Delivery Business Unit documentation. Provide the Buyer with proof that all
Interconnection Agreements, Transmission Agreement(s), transmission arrangements
and Buyer’s Delivery Business Unit approvals, including proof that firm
transmission capacity has been acquired that enables the Facility to deliver
Test Energy and Net Energy to the Buyer’s Point of Delivery equal to the Maximum
Capacity are complete.

                         3.1.9      Written
Acceptance. Request and obtain written confirmation from the Buyer that all
conditions to acceptance of Test Energy have been fulfilled. Such written
confirmation shall be provided within a commercially reasonable time following
the Seller’s request and will not be unreasonably withheld by the Buyer. 

The conditions set forth in this Section 3.1 are to be used
solely for purposes of determining when the Facility has achieved its First
Energy Date. They are not intended to affect in any way when the Facility is
deemed to have been “placed in service” for purposes of PTC eligibility. 

          3.2     
Buyer’s Approval of First Energy Date; Disagreements. Seller’s
designation of the First Energy Date shall be subject to Buyer’s approval, which
Buyer shall not unreasonably withhold, condition or delay. No later than five
(5) Business Days after Seller’s notification to the Buyer of the Seller’s
proposed First Energy Date, as specified in Section 3.1.9, Buyer shall send
Seller a written notice, either (A) approving the First Energy Date specified in
the notice, or (B) setting forth in reasonable detail Buyer’s reasons for
concluding that the First Energy Date has not been achieved or will be achieved
on a date other than the date designated in Seller’s notice. If Buyer does not
respond on or before the fifth (5th) Business Day after Seller’s
notice, the First Energy Date shall be deemed to have occurred on the date
designated in Seller’s notice. If Buyer reasonably disagrees that the First
Energy Date has been achieved, the Parties shall cooperate promptly and in good
faith to address Buyer’s concerns and agree upon the First Energy Date. If the
Parties are unable to agree to a First Energy Date within ten (10) Business Days
of Buyer’s notice of disagreement, either Party may pursue dispute resolution
under Article 25 to determine the First Energy Date. 

ARTICLE 4 
TERM AND OPERATION DATE 

          4.1      Term.

                         4.1.1      Initial
Term. This Agreement shall become effective as of the Effective Date and
shall remain in full force and effect through the last day of the month in which
the twenty-fifth (25th) anniversary of the Operation Date occurs,
subject to any termination provisions set forth in this Agreement (the “Initial
Term”). 

                         4.1.2      Buyer’s
  Option to Extend Term. Buyer shall have the option to extend the Term. Buyer
  may exercise this option by giving irrevocable notice of exercise to Seller
  on or before the end of the twenty-third (23rd) Contract Year. If
  Buyer does not timely exercise this option, the option shall automatically expire.
  The option set forth in 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

this Section shall automatically terminate upon any termination
of this Agreement. If Buyer timely exercises this option, the Parties will
negotiate, in good faith, the terms and conditions under which the Term of this
Agreement would be extended; provided, however, the option set forth in
this Section shall terminate without liability to either Party if the Parties
fail to enter into a definitive written agreement concerning the extension to
the Term within six (6) months following the date of Buyer’s notice. The terms
and conditions of any such extension shall be subject to the Parties’ respective
management, Board of Directors, and any required Commission approval. 

          4.2     
Progress Reports. On the first day of each calendar month following the
Effective Date until the Operation Date is achieved, Seller shall submit to the
Buyer progress reports on the development and construction of the Facility in a
form reasonably satisfactory to the Buyer. These Progress Reports shall include,
but not be limited to, a project development schedule including all significant
activities and milestones and the status of these items, notation and
explanation of any significant delays and the Seller’s planned action, and other
information pertinent to Seller’s progress on development and construction of
the Facility.

          4.3     
Monitoring of Facility. Buyer shall have the right at its sole risk and
expense to monitor the construction, start-up and testing of the Facility and
the Seller shall comply with all reasonable requests of the Buyer with respect
to these monitoring events. Seller shall cooperate in such physical inspections
of the Facility as may be reasonably requested by the Buyer during and after
completion of construction. All persons visiting the Facility on behalf of the
Buyer shall comply with all of the Seller’s applicable safety and health rules
and requirements. Buyer’s technical review and inspection of the Facility shall
not be construed as endorsing the design of the Facility nor as any warranty of
the safety, durability, or reliability of the Facility. 

          4.4     
Operation Date. Seller will in good faith seek to achieve the Operation
Date by the Scheduled Operation Date. The Operation Date shall occur after all
of the following conditions have been satisfied. If any of the following
conditions to achieve an Operation Date have been satisfied in a different
energy sales agreement between the Buyer and the Seller that provides for the
delivery of this same Facility’s energy to the Buyer, the Seller may reference
this previously provided information in their response to each requirement and
if the Buyer determines the previously provided information is acceptable, the
Buyer shall not require additional information to satisfy that specific
requirement. 

                         4.4.1     
Seller shall notify the Buyer of the Seller’s proposed Operation Date, in
written form no later than five (5) Business Days prior to the proposed
Operation Date. 

                         4.4.2      Seller
shall have completed and shall have maintained all conditions to acceptance of
energy as specified in Article 3. 

                         4.4.3      The
  generator, turbines, extraction wells, injection wells and other associated
  equipment enabling the Facility to deliver at least 4,000 kW of Net Energy in
  a 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

stable, reliable, consistent and safe manner have been
installed, tested and determined to be functioning properly. 

                         4.4.4      All
Facility systems necessary for the stable, safe, reliable and consistent
operation of the installed Facility are substantially complete, any testing of
the installed Facility required pursuant to the Interconnection Agreement,
Transmission Agreements, transmission arrangements, Buyer’s Delivery Business
Unit documents and equipment supplier requirements have been successfully
completed, and the Facility is available for operation in all material respects
in accordance with applicable laws. 

                         4.4.5      Seller
shall have delivered to Buyer a “Certificate of Facility Completion” signed by
an officer of Seller certifying that the requirements of Sections 4.4.3 and
4.4.4 have been satisfied with respect to the Facility. 

                         4.4.6      Seller
shall have requested and obtained written confirmation from the Buyer that all
conditions to receiving an Operation Date have been fulfilled. Such written
confirmation shall be provided within a commercially reasonable time following
the Seller’s request and will not be unreasonably withheld by the Buyer. 

These Operation Date requirements are to be used solely for
purposes of determining when the Facility has achieved its Operation Date. They
are not intended to affect in any way when the Facility is deemed to have been
“placed in service” for purposes of PTC eligibility. 

          4.5      Buyer’s
Approval of Operation Date; Disagreements. Seller’s designation of the
Operation Date shall be subject to Buyer’s approval, which Buyer shall not
unreasonably withhold, condition or delay. No later than five (5) Business Days
after Seller’s notification to the Buyer of the Seller’s proposed Operation
Date, as specified in Section 4.4.6, Buyer shall send Seller a written notice,
either (A) approving the Operation Date specified in the notice, or (B) setting
forth in reasonable detail Buyer’s reasons for concluding that the Operation
Date has not been achieved or will be achieved on a date other than the date
designated in Seller’s notice. If Buyer does not respond on or before the fifth
(5th) Business Day after Seller’s notice, the Operation Date shall be
deemed to have occurred on the date designated in Seller’s notice. If Buyer
reasonably disagrees that the Operation Date has been achieved, the Parties
shall cooperate promptly and in good faith to address Buyer’s concerns and agree
upon the Operation Date. If the Parties are unable to agree to an Operation Date
within ten (10) Business Days of Buyer’s notice of disagreement, either Party
may pursue dispute resolution under Article 25 to determine the Operation Date.
Upon completion of the dispute resolution process establishing an Operation Date
and/or upon mutual agreement between the Parties of an Operation Date, the Buyer
shall revise any previous Net Energy payments to reflect the applicable Net
Energy Price from the date of the agreed upon Operation Date.

          4.6      Continuing
Obligations. Seller shall provide Buyer with the following during the
Term of this Agreement: 

                         4.6.1      At
  Buyer’s request, Seller shall provide evidence that it is in compliance
  with the insurance requirements set forth in Section 15.2. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

                         4.6.2     
Seller shall maintain compliance and remain in good standing in all requirements
of Articles 3 and 4 of this Agreement.

ARTICLE 5 
PRICE 

          5.1      Test
Energy Price. Notwithstanding any other energy pricing provisions in the
Agreement, Buyer shall pay the Seller the lesser of the current month Market
Energy Price or Contract Price for each kWh of Test Energy. 

          5.2      Net
Energy Price. For all Net Energy delivered by the Seller to the Buyer from
the Operation Date through the end of the Initial Term, Buyer shall pay the
Seller the Contract Price.

          5.3     
Inadvertent Energy Price. At the time the First Energy Date is
established as specified within this Agreement, a price shall be calculated to
be paid by Buyer for the Inadvertent Energy. This price shall be the lesser of
the monthly Market Energy Price or the monthly Contract Price for the specific
and individual month(s) in which actual Inadvertent Energy was accepted by the
Buyer. 

          5.4      Contract
  Price, Terms and Conditions to Remain in Effect for Term. The prices, terms
  and conditions specified in this Agreement shall remain in effect until expiration
  of the Term. Notwithstanding any provision in this Agreement, neither Party
  shall seek, nor shall support any third party in seeking, to prospectively or
  retroactively revise the prices, terms or conditions of service of this Agreement
  through application or complaint to FERC pursuant to the provisions of Section
  205, 206 or 306 of the Federal Power Act, or any other provisions of the Federal
  Power Act, absent the prior written agreement of the Parties. Further, absent
  the prior agreement in writing by both Parties, the standard of review for changes
  to the prices, terms and conditions of service of this Agreement proposed by
  a Party, a non-Party or the FERC acting sua sponte shall be the “public
  interest” standard of review set forth in United Gas Pipe Line Co. v.
  Mobile Gas Service Corp., 350 US 332 (1956) and Federal Power Commission
  v. Sierra Pacific Power Co., 350 US 348 (1956). 

ARTICLE 6 
ENVIRONMENTAL ATTRIBUTES 

          6.1      Environmental
  Attributes. The Parties’ ownership of the Environmental Attributes
  shall be as specified in Appendix G of this Agreement. Title to all Environmental
  Attributes that the Buyer has attained the rights to shall pass to the Buyer
  within thirty-one (31) days of transfer of title of the associated Test Energy
  or Net Energy to the Buyer. If after the Effective Date of this Agreement, any
  additional Environmental Attributes or similar environmental attribute is created
  by legislation or regulation, the Buyer shall be granted ownership of these
  additional items associated with the Test Energy or the Net Energy delivered
  by the Seller to the Buyer in the same proportion as the Environmental Attributes
  distributed to the Buyer under this Agreement at no additional cost. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          6.2      Concurrent
with the monthly Billing Invoice, the Seller shall deliver to the Buyer an
Environmental Attribute Attestation and Bill of Sale with respect to the
Environmental Attributes sold or transferred to the Buyer associated with energy
delivered to the Buyer in the previous month. 

          6.3      The
Parties shall cooperate to ensure that all Environmental Attribute
certifications, rights and reporting requirements are completed by the
responsible Parties. 

                         6.3.1      Neither
the Seller nor the Buyer shall report under Section 1605(b) of the Energy Policy
Act of 1992 or under any applicable program that any Environmental Attributes
are owned by any entity, other than the Party or other entity entitled to such
Environmental Attributes in accordance with the terms of this Agreement. 

                         6.3.2     
Environmental Attributes owned by one Party cannot be sold, traded, assigned or
otherwise transferred or claimed by the other Party. 

                         6.3.3     
As requested by the Buyer, the Seller shall obtain any Environmental Attribute
certifications required by the Buyer for those Environmental Attributes
delivered to the Buyer from the Seller. If the Seller incurs cost, as a result
of a Buyer’s request, Seller shall invoice the Buyer for the reasonable costs of
providing such certification. If the Buyer elects to obtain its own
certifications, then Seller shall fully cooperate with the Buyer in obtaining
such certification. 

ARTICLE 7 
DELIVERY AND SHORTFALL
OBLIGATIONS

          7.1      Delivery
and Acceptance of Test Energy. Except when either Party's performance is
excused as provided herein, the Buyer will purchase and Seller will sell the
Test Energy produced by the Facility.

          7.2     
Delivery and Acceptance of Net Energy. Except when either Party's
performance is excused as provided herein, the Buyer will purchase and Seller
will sell the Net Energy produced by the Facility.

          7.3     
  No Deliveries In Excess of the Maximum Capacity. Under no circumstances
  will the Transmitting Entity deliver Net Energy and/or Test Energy on behalf
  of the Seller’s Facility to the Point of Delivery in an amount that (1)
  exceeds 16.55 MW at any moment in time or (2) that exceeds the Maximum Capacity
  by any amount for more than five (5) consecutive minutes. Delivery of Net Energy
  and/or Test Energy by the Transmitting Entity to the Point of Delivery that
  exceeds either item 1 or 2 of this section shall be a Material Breach of this
  Agreement. 

          7.4      Forecasting.
  At its expense, Seller shall provide to Buyer for the Term, forecasting information
  provided via electronic format acceptable to the Buyer or any other format that
  the Buyer and Seller mutually agree is acceptable. The Seller shall be responsible
  for all costs associated with creating and transmitting the forecasting information
  to the Buyer. Each forecast will take into account any Scheduled Outages, any
  known Forced Outages, known curtailments or known capacity deratings affecting
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

the Facility. The Buyer and Seller shall mutually develop and
approve the electronic format and process of transmitting the data no later than
thirty (30) days prior to the Operation Date. The forecasting information shall
be provided as follows: 

  
    
      (1) No later than 1:00 pm each Business Day, the Seller
        shall provide an hourly forecast that starts at 5:00 am Pacific Time of
        the next day and runs for a minimum of 168 hours (7 days). 

      (2) Any deviations exceeding or equal to plus or minus
        10% of the previously provided forecast will be communicated to the Buyer
        in a prompt and timely manner. In the case of a planned event the Seller
        shall notify the Buyer by 5:00 pm Pacific Time of the preceding day of
        any Net Energy forecasting deviation of the previously provided forecast.
        In the case of an unplanned event, the Seller shall notify the Buyer promptly
        after the occurrence of the unplanned event. In both cases, the Buyer
        will include with this notification the expected duration and quantity
        of the energy delivery reductions that will occur at the Point of Delivery.
      

    

  

                         7.4.1     
Basis of Forecasts. The forecasts called for by this Agreement shall be
consistent with any specific requirements of this Agreement, geothermal industry
standards and Good Utility Practice(s).

                         7.4.2      Provision
  of Forecasting. The provision of the forecasting information described in
  Section 7.4 in accordance with Good Utility Practice(s) is an integral component
  of this Agreement. Accordingly, Seller shall act in a manner consistent with
  Good Utility Practice(s) with the goal of providing timely, useful, quality
  forecasts to the Buyer under Section 7.4. If Seller fails in any material respect
  to act in conformity with the preceding sentence, Buyer may provide notice to
  Seller stating in reasonable detail the basis for Buyer’s belief that Seller
  is defaulting in its obligations under this Article 7. Seller shall have ten
  (10) Business Days in which to cure the alleged default, to commence the cure
  of the alleged default if it cannot reasonably be cured within the ten (10)
  Business Day period (and thereafter diligently pursue such cure to completion),
  or to submit the matter to dispute resolution under Article 25. With respect
  to any Facility Lender or Investor, the ten (10) Business Day periods set forth
  in the preceding sentence shall be extended to thirty (30) days from date of
  Buyer’s notice to Seller under this Section 7.4. As long as Seller is pursuing
  dispute resolution under Article 25 in good faith, Seller shall not be in default
  of this Section and shall have sixty (60) days from any final resolution of
  the dispute in which to implement any agreed-upon or required cure (“Forecast
  Cure Period”). If Seller fails to cure the default within the Forecast
  Cure Period, the provisions contained in Appendix D shall govern in lieu of
  Section 7.4 effective as of the first day of the next calendar month following
  the end of the Forecast Cure Period. 

  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          7.5      Output
  Guarantee 

                         7.5.1      By
December 1st of each calendar year, the Seller shall submit in
writing to the Buyer the identity of a licensed professional independent
engineer or licensed professional independent engineering firm (not required to
be licensed in the State of Idaho) and the independent engineer or engineering
firm’s qualifications that the Seller intends to contract with to complete the
annual certification as required in this Section. The Seller shall be
responsible for all costs of retaining this engineer and the cost of completing
the certification as required within this Section. No later than ten (10)
Business Days after Seller’s notification to the Buyer of the Seller’s proposed
independent engineer or independent engineering firm, Buyer shall send Seller a
written notice, either (A) approving the independent engineer or independent
engineering firm specified in the notice, or (B) setting forth in reasonable
detail Buyer’s reasons for concluding that the independent engineer or
independent engineering firm selected by the Seller is not acceptable. If Buyer
does not respond on or before the end of the tenth (10th) Business
Day after Seller’s notice, the independent engineer or the independent
engineering firm selected by the Seller shall be deemed to be acceptable. If
Buyer reasonably disagrees that the Seller selected independent engineer or
independent engineering firm is acceptable, the Parties shall cooperate promptly
and in good faith to address Buyer’s concerns and agree upon an independent
engineer or independent engineering firm. If the Parties are unable to agree to
an independent engineer or independent engineering firm within ten (10) Business
Days of Buyer’s notice of disagreement, either Party may pursue dispute
resolution under Article 25 to determine an independent engineer.

                         7.5.2     
No later than February 1st of each calendar year, the Seller will
provide the Buyer with a report and an energy forecast, stamped and approved by
the professional independent engineer or the independent engineering firm
specified above, containing at the minimum, certification of the following: 

	 	a) 	
      Current status of the geothermal resource in comparison
      to the previous status of the resource. This information will include a
      detailed description of any geothermal resource degradation, the apparent
      cause of such degradation, assessment of future status of the resource and
      its ability to sustain its current level of output in consideration of the
      requirements of Section 7.9.

	 	 	 
	 	b) 	
      Estimated lost Net Energy (measured in kWh) production
      associated with Scheduled Outages as specified in Section 1.61 that are
      planned to occur for the next twenty-four (24) months beginning with March
      1st of the current year.

	 	 	 
	 	c) 	
      Estimated energy (measured in kWh) that the Facility will
      be able to deliver to the Point of Delivery for each of the next
      twenty-four (24) months beginning with March of the current
year.

	 	 	 
	 	d) 	
      The assumptions used by the
engineer.

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

                         7.5.3     
No later than ten (10) Business Days after Seller provides a written copy of the
certification as specified above to the Buyer, the Buyer shall send Seller a
written notice, either (A) approving the certification, or (B) setting forth in
reasonable detail Buyer’s reasons for concluding that the certification is not
acceptable. If Buyer does not respond on or before the end of the tenth
(10th) Business Day after Seller’s notice, the certification provided
by the Seller shall be deemed to be acceptable. If Buyer reasonably disagrees
that the Seller’s certification is acceptable, the Parties shall cooperate
promptly and in good faith to address Buyer’s concerns and agree upon a
certification. If the Parties are unable to agree on the certification as being
acceptable within ten (10) Business Days of Buyer’s notice of disagreement,
either Party may pursue dispute resolution under Article 25 to determine an
acceptable certification. 

                         7.5.4      The
  “Annual Output Forecast” (measured in kWh) shall be the sum of the
  monthly estimated energy established in Section 7.5.2 c) for the first twelve
  (12) months of the information provided or 108,186,000 kWh whichever is lower.
  The last Annual Output Forecast of the Initial Term of this Agreement shall
  be based upon the actual months available for the project to deliver Net Energy
  from March 1st to the last day of the Initial Term of this Agreement,
  which may or may not be a full twelve (12) months. 

  
               7.5.4.1      For
      the period of March 1, 2008 through February 28, 2010 an Annual Output Forecast
      shall be provided for information purposes only and no Net Energy Shortfall
      will be calculated for this period. 

               7.5.4.2      Upon
      conclusion of an event that causes energy deliveries to the Buyer to be
      reduced, the Seller shall calculate the quantity of energy delivery reductions
      they believe occurred due to the event. These events shall include Forced
      Outages, force majeure, actual Scheduled Maintenance outages, curtailments
      required by the Buyer, curtailments required by the Buyer’s Delivery
      Business Unit or the Transmitting Entity(s). Upon mutual agreement as to
      the quantity of energy delivery reduction, the Annual Guaranteed Output
      shall be adjusted accordingly.

  

                         7.5.5     
  Energy Delivery Guarantee, Reconciliation, and Net Energy Shortfall
  Determination. Seller guarantees that the Total Annual Facility Net Energy
  shall equal or exceed the Annual Guaranteed Output for each period during the
  Initial Term of this Agreement beginning with March 1, 2010. The determination
  of whether Seller has met its Annual Guaranteed Output requirement shall be
  made on an annual basis beginning on March 1, 2011 by comparing the amount of
  the previous twelve (12) month’s Total Annual Facility Net Energy to the
  Annual Guaranteed Output as provided for in this Section. 

            7.5.5.1      If
    the Total Annual Facility Net Energy is equal to or greater than the Annual
    Guaranteed Output in the applicable period, Seller shall be deemed to have
    met its Annual Guaranteed Output obligation for that period, and Seller shall
    have no obligation to pay Net Energy Shortfall Damages or to true-up 

  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

  
    energy delivery obligations with respect to that period. Any Net Energy
      delivered during this period exceeding the Annual Guaranteed Output may
      be used to make up the previous period Net Energy Shortfall if one exists.

              7.5.5.2     
      If the Total Annual Facility Net Energy is less than the Annual Guaranteed
      Output for a specified period, then a Net Energy Shortfall exists and is
      equal to the Annual Guaranteed Output minus the Total Annual Facility Net
      Energy. The Net Energy Shortfall may be made up in the subsequent twelve
      (12) month period beginning at March 1. Net Energy delivered during the
      immediately following twelve (12) month period in excess of the Annual Guaranteed
      Output for that period may be used to make up the previous period’s
      Net Energy Shortfall. At the end of the subsequent twelve (12) month period,
      if the Net Energy Shortfall has not been made up, then any remaining Net
      Energy Shortfall Damages will be calculated based upon any remaining balance
      of the Net Energy Shortfall and a billing will be presented to the Seller
      which the Seller will be required to pay the Buyer within fifteen (15) days
      of the date of the billing notice. 

    Any remaining Net Energy Shortfall at the end of the Initial Term of this
      Agreement will be payable to the Buyer within fifteen (15) days of the date
      of the billing notice being provided to the Seller. 

  

          7.6     
Effect of Appendix D on Net Energy Shortfalls and Net Energy Shortfall
Damages. At the time Appendix D is implemented, the current year’s Net
Energy deliveries shall be compared to the Annual Guaranteed Output on a
pro-rata basis for the current Annual Guarantee Output period. If there is a Net
Energy Shortfall, then Net Energy Shortfall Damages shall be calculated. If
there have been Net Energy deliveries in excess of the pro-rated Annual
Guaranteed Output, then the excess Net Energy may be applied to any Net Energy
Shortfall from the previous Annual Guarantee Output period. Any Net Energy
Shortfall Damages due shall be billed by Buyer to Seller and shall be due within
fifteen (15) days of the presentation of the billing. Upon implementation of
Appendix D, all Net Energy Shortfall calculations will be suspended until such
time as this Agreement is terminated or application of Appendix D rescinded.

          7.7     
  Seller’s Reversion Rights. At any time after Appendix D takes effect,
  Seller may from time to time propose to Buyer forecasting information and/or
  processes that are in accord with Good Utility Practice(s). The proposed forecasting
  process shall be subject to Buyer’s approval, which Buyer shall not unreasonably
  withhold, condition or delay. If the proposed forecasting process is approved
  by Buyer, Appendix D shall cease to be effective as of the first day of the
  calendar month following such approval (or as otherwise agreed by the Parties).
  If Appendix D ceases to be effective pursuant to this Section 7.7 all Sections
  of this agreement previously suspended due to Appendix D becoming effective
  shall become operative again (including the right to invoke 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

Appendix D), with Total Annual Facility Net Energy to be tested
against Annual Guaranteed Output prorated for the months remaining in the
current Annual Guaranteed Output period and for all full Annual Guaranteed
Output periods thereafter. 

          7.8     
Buyer Adjustment of the Annual Guaranteed Output

                         7.8.1      The
Buyer shall be excused from accepting and paying for Net Energy and Test Energy
produced by the Facility and delivered by the Transmitting Entity to the Point
of Delivery if it is prevented from doing so by an event of Force Majeure, or if
the Buyer determines that curtailment, interruption or reduction of Net Energy
or Test Energy deliveries is necessary because of line construction or
maintenance requirements, emergencies, electrical system operating conditions on
its system or as otherwise required by Good Utility Practice(s) provided that
during such curtailment, interruption or reduction the Buyer, the Transmitting
Entity and the Seller shall within reasonable limits attempt to coordinate,
schedule and deliver Net Energy to the Buyer’s electrical system at other points
of delivery if the Buyer is capable of accepting the Net Energy deliveries at
other points of delivery at no additional cost to the Buyer. The Buyer shall not
curtail Net Energy or Test Energy deliveries from the Seller’s Facility due to
economic dispatch. If the Buyer requires a curtailment of the Facility’s Net
Energy or Test Energy deliveries to the Point of Delivery, any such curtailment
shall not exceed the Facility’s pro-rata contribution to the event causing the
curtailment. For example – if 500 MW of generation resources are making use of
the same firm transmission path and a 50 MW curtailment is required on this
transmission path, the Facility will be required to curtail no more then 10% (50
MW / 500 MW) of its actual energy production at the time the curtailment event
occurs.

          7.8.1.1      If,
for reasons other than an event of Force Majeure, the Buyer requires
curtailment, interruptions or reductions of Net Energy deliveries for a period
that exceeds twenty (20) days, beginning with the twenty-first (21st)
day of such interruption, curtailment or reduction, Seller will be deemed to be
delivering Net Energy at a rate equivalent to the daily average of the Net
Energy deliveries that were occurring during the immediately proceeding
twenty-four (24) hour period prior to the curtailment. Buyer will notify Seller
when the interruption, curtailment or reduction is terminated. 

                         7.8.2     
If the Buyer is excused from accepting and paying for Net Energy as allowed
within this Agreement or the Seller is prevented from delivering Net Energy to
the Buyer as provided for in this Agreement, the Seller may attempt to sell all
or a portion of the Net Energy to another party.

                         7.8.3     
  If the Buyer is required to reduce Net Energy deliveries to the Buyer from the
  Seller’s Facility as described in Section 7.8.1, the Annual Guaranteed
  Output for the impacted Annual Guaranteed Output period(s) will be revised to
  reflect the reduction of Net Energy deliveries that were a direct result of
  the Buyer’s need to reduce Net Energy deliveries.

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

     7.9      Requirements
for the Addition of New Geothermal Energy Uses.

Seller may add additional uses of geothermal energy controlled
by Seller or available for Seller’s use, subject to the terms of this Section
7.9.

                         7.9.1     
Certification of Geothermal Energy Sufficiency. Prior to allowing each
new geothermal use(s) to be built and delivery of geothermal energy to commence
to the new geothermal use(s), an independent licensed geothermal reservoir
engineer shall certify that for the remaining Term of this Agreement and in the
professional judgment of this engineer, the geothermal energy production
capability of the geothermal resource controlled by Seller or available for
Seller’s use is sufficient to supply at least one hundred percent (100%) of the
geothermal energy requirements of (1) the Facility, (2) the existing other
use(s) of geothermal energy, and (3) the proposed new use(s) of the geothermal
energy.

          7.9.1.1     
The independent engineer shall be selected by Seller and shall be reasonably
acceptable to Buyer. The Seller shall be responsible for all costs of retaining
this engineer and the cost of completing the certification as required within
this Section. 

          7.9.1.2     
Seller shall provide Buyer with a copy of the independent engineer’s
certification prior to adding any additional geothermal uses. 

                         7.9.2     
  Allocation of Geothermal Energy Shortfalls. If during the Term of this
  Agreement, the geothermal energy controlled by Seller, or available for Seller’s
  use is unable to provide the Facility and the additional geothermal use(s) installed
  per the requirements of Section 7.9.1 with adequate geothermal energy to maintain
  operations of all of the geothermal use(s) at full design capacity, then Seller
  shall allocate the geothermal energy between the Facility and the additional
  geothermal use(s) installed per the requirements of Section 7.9.1. The allocation
  shall be pro-rata between the Facility and the other use(s), based on the percentage
  of their particular design geothermal energy usage rates compared to the total
  design geothermal energy usage rate of the group. Geothermal energy use(s) that
  utilize waste heat from the Facility or from other user(s) shall be excluded
  from the above pro-rata allocations. A pro-ration of the geothermal resource
  shall not be required if so doing requires capital investment by the Seller
  with a negative net present value.

          7.10     
Title and Risk of Loss. As between the Parties, Seller shall be deemed to
be in control of the energy output from the Facility up to and until delivery
and acceptance at the Point of Delivery by the Buyer. Title and risk of loss
related to the energy shall transfer from Seller to Buyer at the Point of
Delivery. 

          7.11     
  Station Energy. This Agreement does not require Buyer to supply any electric
  service to the Seller or to the Facility. Seller shall enter into separate arrangements
  for the supply of electric services to the Facility. Seller is responsible for
  causing these electric services to be available before the First Energy Date.
  Seller will specifically design the Facility to ensure that no energy purchased
  for supply of electric 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

energy to the Facility is delivered to the Buyer by the
Transmitting Entity as Net Energy or Test Energy. 

          7.12     
Buyer’s Failure to Take Energy. Except as expressly provided by Section
7.8.1, if the Buyer fails to accept all or part of the energy that the Facility
is able to generate and the Transmitting Entity is able to deliver to the Point
of Delivery after the Operation Date that is less than the Maximum Capacity, and
such failure is not excused under the terms of this Agreement then (1) For
energy from the Facility that is sold to another party, Buyer shall pay Seller
an amount equal to the positive difference, if any, obtained by subtracting the
sales price obtained by the Seller from selling the energy to another party,
from the Contract Price for such energy, or (2) For any amount of energy which
the Seller is capable of generating but is unable to sell to either the Buyer or
another party, Buyer shall pay Seller the Contract Price plus the applicable PTC
Value plus the value of the Environmental Attributes that would have gone to the
Seller with respect to all energy not received. Each payment under this Section
shall be due for the month in which the failure occurred or within fifteen (15)
Business Days after Buyer’s receipt of an invoice. The invoice for such amount
shall include a written statement explaining in reasonable detail Seller’s
calculation of the energy that would have been delivered to Buyer but for
Buyer’s failure to receive it and the amount due.

ARTICLE 8 
TRANSMISSION AGREEMENT 

          8.1     
Transmission Agreement. The Seller will arrange and pay for the delivery
of Test Energy and/or Net Energy over the facilities of the Transmitting
Entities (BPA and the RRREC) to the Point of Delivery. The delivery of Net
Energy and Test Energy from the Facility to the Point of Delivery shall be in
accordance with the terms and conditions of a Transmission Agreement(s) and/or
transmission arrangement(s) between the Seller and the Transmitting Entities and
must make use of firm transmission capacity over the Transmitting Entities
facilities for delivery of all Net Energy to the Point of Delivery. 

                         8.1.1      As
specified in the Transmission Agreement(s) or transmission arrangement(s) (that
are in compliance with all applicable transmission tariffs) the monthly
transmission cost allocated to this Facility shall be the monthly calculated
amount to provide firm transmission capacity that enables the Seller to deliver
energy up to the Maximum Capacity to the Buyer. Failure of the Seller to provide
firm transmission for all of the actual Net Energy deliveries prior to the
actual delivery of the Net Energy to the Buyer will be a Material Breach of this
Agreement.

                         8.1.2      The
  Seller shall act in a reasonable and prudent manner to secure the required firm
  transmission capacity at the least cost available. The monthly transmission
  cost will be included and itemized individually on the monthly Net Energy invoice
  from the Seller beginning with delivery of Net Energy to the Buyer. The Buyer
  shall only be responsible to reimburse the Seller for actual transmission costs
  incurred by the Seller. If during the term of this Agreement the Seller or Buyer
  is able to reduce the Seller’s transmission cost of providing firm transmission
  for the delivery of Net Energy 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

from this Facility to the Point of Delivery, the monthly
transmission cost included on the monthly Net Energy invoice will be reduced
accordingly for all applicable months. 

          8.2     
Acceptance of Transmission Agreement(s) and transmission
arrangements.

                         8.2.1      The
Seller has provided the Buyer with copies of Transmission Agreement(s) for
twelve (12) MW of firm transmission capacity. The Buyer has reviewed these
agreements and finds them to be acceptable contingent upon the Seller executing
all required roll-over and activation requirements in order to activate and
maintain these Transmission Agreement(s) for the full term of this Agreement.

                         8.2.2      At
the minimum, ten (10) Business Days prior to any deliveries of Net Energy and/or
Test Energy to the Point of Delivery that exceeds twelve (12) MW, the Seller
shall submit to the Buyer Transmission Agreement(s) or transmission
arrangement(s) that will ensure that all Net Energy and/or Test Energy
deliveries to the Point of Delivery shall make use of firm transmission capacity
across any and all Transmitting Entities’ facilities. These agreements and/or
arrangements shall be reviewed and either accepted or rejected by the Buyer.
Until such time as the Buyer has accepted the provided agreements and/or
arrangements the Seller shall not deliver any Net Energy or Test Energy that
exceeds twelve (12) MW. Such acceptance will not be unreasonably withheld. 

                         8.2.3      A
  material default by Seller under any of the Transmission Agreement(s) or transmission
  arrangement(s) which result in the Seller not being able to deliver the Net
  Energy to the Buyer as specified in this Article 8 will be a Material Breach
  under this Agreement.

          8.3     
Losses. The Buyer will only purchase the Net Energy and Test Energy that
is delivered by the Transmitting Entity to the Point of Delivery. Losses between
the Metering Point and the Point of Delivery may be calculated as provided in
Appendix B or may be purchased or replaced by the Seller. 

ARTICLE 9 
METERING AND TELEMETRY 

          9.1     
Metering and Telemetry. The Buyer shall provide, install, and maintain
Metering and Telemetry Equipment to be located at the Metering Point to
accurately calculate the actual energy deliveries from the Seller to the
Transmitting Entity at the Metering Point and provide continuous telemetry
information from the Facility to the Buyer. The Metering and Telemetry Equipment
shall be of the type required to accurately measure, record and report the
energy to provide the Buyer adequate Net Energy and Test Energy measurement data
to administer this Agreement and to integrate the Facility’s energy into the
Buyer’s electrical system. The Seller shall be responsible for all costs of the
actual Metering and Telemetry Equipment, installation, inspections, maintenance
and testing costs.

          9.2      Seller
  will arrange for and make available at Seller's cost a communication circuit
  acceptable to the Buyer, dedicated to Buyer’s use to be used for load profiling
  and 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

another communications circuit dedicated to Buyer’s
communication equipment for continuous telemetering of the Facility’s energy
deliveries to the Transmitting Entity to Buyer’s Designated Dispatch Facility.
Buyer-provided equipment will be owned and maintained by Buyer, with total cost
of purchase, installation, operation, and maintenance, including administrative
cost to be reimbursed to Buyer by the Seller.

          9.3      All
meters used to determine the billing hereunder shall be sealed and the seals
shall be broken only by the Buyer when the meters are to be inspected, tested or
adjusted. 

          9.4     
Meter Inspection. The Buyer shall inspect the Metering and
Telemetry installations regularly and test meters on the applicable periodic
test schedule relevant to the Metering and Telemetry Equipment installed. If
requested by the Seller, the Buyer shall make a special inspection or test of a
meter and the Seller shall pay the reasonable costs of such special inspection.
The Seller shall be notified at least two (2) Business Days prior to the time
when any inspection or test shall take place, and the Seller may have
representatives present at the test or inspection. If a meter is found to be
inaccurate or defective, it shall be adjusted, repaired or replaced, at the
Seller’s expense, in order to provide accurate metering. If a meter fails to
register, or if the measurement made by a meter during a test varies by more
than two percent (2%) from the measurement made by the standard meter used in
the test, adjustment (either upward or downward) to the payments Seller has
received shall be made to correct those payments affected by the inaccurate
meter for the actual period during which inaccurate measurements were made. If
the actual period cannot be determined, corrections to the payments shall be
based on the shorter of (1) a period equal to one-half (1/2) the time from the
date of the last previous test of the meter to the date of the test which
established the inaccuracy of the meter; or (2) six (6) months. Seller shall
state such adjustment as a credit or additional charge, as appropriate, on its
next invoice.

          9.5      Additional
Telemetry. If the Buyer requests telemetry equipment, information or
services of any nature beyond that expressly required by the Interconnection
Provider, Transmitting Entity or the Buyer’s Delivery Business Unit, the Seller
and Buyer shall mutually cooperate to make efficient use of Seller’s and Buyer’s
telemetry equipment to provide the additional information requested by Buyer in
the most cost-effective manner. The Buyer shall be responsible for any cost
associated with additional telemetry equipment, information, services or
requirements that are beyond those expressly required by the Interconnection
Provider, Transmitting Entity or the Buyer’s Delivery Business Unit. 

ARTICLE 10 
SYSTEM PROTECTION 

          10.1     
  Operation and Maintenance of Seller’s Facilities. Seller shall construct,
  operate and maintain the Facility and Seller’s side of the Interconnection
  Facilities in accordance with the Interconnection Providers’ requirements,
  Good Utility Practice(s), the National Electrical Code, the National Electrical
  Safety Code, and any other applicable local, state and federal codes. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

ARTICLE 11 
FACILITY AND INTERCONNECTION 

          11.1     
Design of Facility. Seller will design, construct, install, own, operate
and maintain the Facility and any Seller-owned Interconnection Facilities so as
to allow safe and reliable generation and delivery of energy to the Transmitting
Entity for the full Term of the Agreement. 

          11.2     
Interconnection Facilities. Seller will construct, install, own and
maintain all Interconnection Facilities other than those owned, installed or
maintained by the Transmitting Entity or the Interconnection Provider. Seller
will pay all costs of interconnecting with the Transmitting Entity and
Interconnection Provider. 

ARTICLE 12 
GENERAL OPERATIONS 

          12.1      Communications.
Seller, Transmitting Entity and Buyer shall maintain appropriate operating
communications through the Designated Dispatch Facility in accordance with
Appendix H. 

          12.2      Scheduled
Maintenance. On or before March 1st of each calendar year, Seller
shall submit a written proposed maintenance schedule of significant Facility
maintenance for the next twelve (12) months, beginning with March 1st
of the current year, and Buyer and Seller shall mutually agree as to the
acceptability of the proposed schedule. The Parties determination as to the
acceptability of Seller’s timetable for scheduled maintenance will take into
consideration the need to perform maintenance and perform other work as required
to maintain the Facility’s reliable operations, Good Utility Practice(s),
Buyer’s system requirements, and Seller’s preferred schedule. Neither Party
shall unreasonably withhold acceptance of the proposed maintenance schedule.
Upon mutual agreement between the Parties, or otherwise if required by Good
Utility Practices, the previously approved Scheduled Maintenance may be revised
during a Contract Year.

          12.3      Maintenance
Coordination. Seller shall, to the extent practical, coordinate its line and
Facility maintenance schedules with the Interconnection Provider’s maintenance
schedules, Transmitting Entity’s maintenance schedules and the Buyer’s
maintenance schedules such that they occur simultaneously. 

          12.4     
  Contact Prior to Curtailment. The Buyer will make a reasonable attempt
  to contact Seller and/or the Transmitting Entity prior to exercising its rights
  to curtail, interrupt or reduce deliveries from the Transmitting Entity from
  the Seller’s Facility. Seller understands that in the case of emergency
  circumstances, real time operations of the electrical system, and/or unplanned
  events, the Buyer may not be able to provide notice to the Seller or the Transmitting
  Entity prior to interruption, curtailment, or reduction of electrical energy
  deliveries to the Buyer.

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

ARTICLE 13 
RELIABILITY MANAGEMENT SYSTEM 

          13.1     
Purpose. In order to maintain the reliable operation of the transmission
grid, the WECC Reliability Criteria Agreement sets forth reliability criteria
adopted by the WECC to which Seller and Buyer shall be required to comply.
Seller acknowledges receipt of and understanding of the WECC Reliability
Criteria Agreement and how it pertains to the Seller’s Facility. 

          13.2      Compliance.
Seller shall comply with the requirements of the WECC Reliability Criteria
Agreement, including the applicable WECC reliability criteria set forth in
Section IV of Annex A thereof, and, in the event of failure to comply, Seller
agrees to be subject to the sanctions applicable to such failure. Such sanctions
shall be assessed pursuant to the procedures contained in the WECC Reliability
Criteria Agreement. Each and all of the provisions of the WECC Reliability
Criteria Agreement are hereby incorporated by reference into this Article 13 as
though set forth fully herein, and Seller shall for all purposes be considered a
Participant, and shall be entitled to all of the rights and privileges and be
subject to all of the obligations of a Participant, as defined in the WECC
Reliability Criteria Agreement, under and in connection with the WECC
Reliability Criteria Agreement, including, but not limited to the rights,
privileges and obligations set forth in Sections 5, 6 and 10 of the WECC
Reliability Criteria Agreement. 

          13.3     
Payment of Sanctions. Seller shall be responsible for reimbursing Buyer
for any monetary sanctions assessed against Buyer due to the action or inaction
of the Seller by WECC pursuant to the WECC Reliability Criteria Agreement.
Seller also shall be responsible for payment of any monetary sanction assessed
against the Seller by WECC pursuant to the WECC Reliability Criteria Agreement.
Any such payment shall be made pursuant to the procedures specified in the WECC
Reliability Criteria Agreement. 

          13.4      Transfer
of Control or Sale of Generation Facilities. In any sale or transfer of
control of any generation facilities subject to this Agreement, Seller shall, as
a condition of such sale or transfer, require the acquiring party or transferee
with respect to the transferred facilities either to assume the obligations of
the Seller with respect to this Agreement or to enter into an agreement with
Buyer imposing on the acquiring party or transferee the same obligations
applicable to the Seller pursuant to this Article 13. 

          13.5     
Publication. Seller consents to the release by the WECC of information
related to the Seller’s compliance with this Agreement only in accordance with
the WECC Reliability Criteria Agreement. 

          13.6      Third
  Parties. Except for the rights and obligations between the WECC and the
  Seller specified in this Article 13, this Agreement creates contractual rights
  and obligations solely between the Parties. Nothing in this Agreement shall
  create, as between the Parties or with respect to the WECC: (1) any obligation
  or liability whatsoever (other than as expressly provided in this Agreement),
  or (2) any duty or standard of care whatsoever. In addition, nothing in this
  Agreement shall create any 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

duty, liability or standard of care whatsoever as to any other
party. Except for the rights, as a third-party beneficiary under this Article
13, of the WECC against the Seller for the Seller, no third-party shall have any
rights whatsoever with respect to enforcement of any provision of this
Agreement. Buyer and the Seller expressly intend that the WECC is a third-party
beneficiary to this Article 13, and the WECC shall have the right to seek to
enforce against the Seller any provision of this Article 13, provided that
specific performance shall be the sole remedy available to the WECC pursuant to
Article 13 of this Agreement, and the Seller shall not be liable to the WECC
pursuant to this Agreement for damages of any kind whatsoever (other than the
payment of sanctions to the WECC, if so construed), whether direct,
compensatory, special, indirect, consequential, or punitive. 

          13.7      Reserved
Rights. Nothing in this Article 13 of this Agreement or the WECC Reliability
Criteria Agreement shall affect the right of Buyer, subject to any necessary
regulatory approval, to take such other measures to maintain reliability,
including disconnection that Buyer may otherwise be entitled to take. 

          13.8     
Termination of Article 13. Seller may terminate its obligations pursuant
to this Article 13: 

                         13.8.1     
If after the effective date of this Article 13, the requirements of the WECC
Reliability Criteria Agreement applicable to the Seller are amended so as to
adversely affect the Seller, provided that the Seller gives fifteen (15) days
notice of such termination to Buyer and WECC within forty-five (45) days of the
date of issuance of a Commission order accepting such amendment for filing,
provided further that the forty-five (45) day period within which notice of
termination is required may be extended by the Seller for an additional
forty-five (45) days if the Seller gives written notice to Buyer of such
requested extension within the initial forty-five (45) day period; or 

                         
13.8.2      For any reason on one (1) year’s
written notice to Buyer and the WECC. 

ARTICLE 14 
BILLING, RECORDS, AUDITS 

          14.1      Billing
Invoices. The monthly billing period shall be the calendar month. No later
than three (3) Business Days after the end of each calendar month, Seller shall
provide to Buyer, by e-mail or fax and confirmed by first-class mail, an invoice
for the amount due Seller by Buyer for the previous calendar month billing
period. Seller’s invoice shall show all billing parameters, rates and factors,
and any other data reasonably pertinent to the calculation of monthly payments
due to the Seller. Each such monthly invoice shall calculate the amount that
Buyer owes to the Seller for Test Energy, Net Energy, transmission costs and any
offsets for Net Energy Shortfall Damages. Upon receipt of this invoice, Buyer
shall review and confirm all calculations and contact the Seller with any
identified discrepancies. 

                         14.1.1     
  Inadvertent Energy Billing. Within fifteen (15) Business Days after the
  First Energy Date is established as provided for within this Agreement, the
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

Seller shall submit an Inadvertent Energy billing to the Buyer.
This billing shall include detail of all month(s) actual Inadvertent Energy
deliveries to the Buyer and the Inadvertent Energy Price applicable to each
month(s) Inadvertent Energy deliveries. This billing shall not include any
transmission costs. 

          14.2     
Payments. Unless otherwise specified in this Agreement, undisputed
payments due under this Agreement shall be due and payable by electronic funds
transfer on or before the twenty-fifth (25th) day of the invoicing
month or fifteen (15) days after receipt of the billing statement from the
Seller by the Buyer, whichever is later. If the due date occurs on a day that is
not a Business Day, payment will be due on the next Business Day. If the
undisputed amount due is not paid on or before the due date, a late payment
charge shall be applied to the unpaid balance and shall be added to the next
billing statement. Such late payment charge shall be calculated based on the
Interest Rate.

          14.3     
Maintenance of Records. Seller shall maintain at the Facility or such
other location mutually acceptable to the Parties adequate total generation, net
generation, and maximum generation (kW) records in a form and content consistent
with Good Utility Practice(s). 

          14.4     
Right to Audit; Refunds; Billing Disputes. 

                         14.4.1      Audit
  Rights. Each Party shall have the right, upon reasonable notice to the other
  Party and during the other Party’s regular business hours and without unduly
  interfering with the conduct of that Party’s business, to access all of
  that Party’s records pertaining to invoices under this Agreement and to
  audit reports, data, calculations, invoices, Net Energy, and maximum generation
  records pertaining to the Facility. The auditing Party shall bear its own costs
  of performing such audit; provided, however, that the other Party shall
  cooperate with the audit and shall not charge the auditing Party for any reasonable
  costs (including without limitation the cost of photocopies) that the other
  Party may incur as a result of such audit. A Party shall have twenty-four (24)
  months from the date on which an invoice or notice is received to audit and
  to challenge that invoice or notice.

                         14.4.2      Refunds
of Overpayments and Underpayments. If an audit discovers a billing error or
errors that resulted in an overpayment by the Buyer, Seller shall refund to the
Buyer the amount of the overpayment plus interest calculated at the Interest
Rate thereon from the date such overpayment was made by the Buyer to (but not
including) the date the Buyer actually receives the refund from the Seller. If
the audit discovers a billing error or errors that resulted in an underpayment
by the Buyer, the Buyer shall pay to the Seller the amount of the underpayment
plus interest calculated at the Interest Rate thereon from the due date thereof
to (but not including) the date the Seller actually receives the payment thereof
from the Buyer. The Interest Rate used in this Section shall be the Interest
Rate applicable to cash collateral. 

                         14.4.3     
  Billing Disputes. Either Party may dispute invoiced amounts, but shall
  pay to the other Party at least the undisputed portion of invoiced amounts on
  or before the invoice due date. To resolve any billing dispute, the Parties
  shall use the procedures set forth in Article 25. When the billing dispute is
  resolved, the Party owing 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

shall pay the amount owed within five (5) Business Days of the
date of such resolution, with interest charges calculated on the amount owed in
accordance with the provisions of Section 14.4.2. Buyer at any time may offset
against any and all amounts that may be due and owed to Seller under this
Agreement, any and all undisputed amounts, including damages and other payments,
that are owed by Seller to Buyer pursuant to this Agreement. Likewise, Seller at
any time may offset against any and all amounts that may be due and owed to
Buyer under this Agreement, any and all undisputed amounts, including damages
and other payments, that are owed by Buyer to Seller pursuant to this Agreement.
Undisputed and non-offset portions of amounts invoiced under this Agreement
shall be paid on or before the due date or shall be subject to the interest
charges set forth in Section 14.4.2. 

ARTICLE 15 
INDEMNIFICATION AND INSURANCE 

          15.1     
Indemnification. Each Party shall agree to hold harmless and to indemnify
the other Party, its officers, agents, affiliates, subsidiaries, parent company
and employees against all loss, damage, expense and liability to third persons
for injury to or death of person or injury to property, proximately caused by
the indemnifying Party’s construction, ownership, operation or maintenance of,
or by failure of, any of such Party’s works or facilities used in connection
with this Agreement. The indemnifying Party shall, on the other Party’s request,
defend any suit asserting a claim covered by this indemnity. The indemnifying
Party shall pay all costs, including reasonable attorney fees, that may be
incurred by the other Party in enforcing this indemnity. 

          15.2      Insurance.
During the Term of this Agreement, Seller shall secure and continuously
carry the following insurance coverage: 

                         15.2.1     
Worker’s Compensation Insurance. Seller shall, during the Initial Term of
this Agreement and any extensions thereof, provide and maintain Worker’s
Compensation Insurance for all its employees engaged in work under this
Agreement in accordance with statutory requirements. Seller shall obtain a
Waiver of Subrogation Endorsement in favor of Buyer in reference to Worker’s
Compensation Insurance. 

          If any
direct claim for Worker’s Compensation benefits is asserted against Seller by
any of Seller’s employees or, in the event of the death of a Seller’s employee,
by such employee’s personal representatives, then, upon timely written notice
from Buyer, Seller shall undertake to defend Buyer against such claim(s) and
shall indemnify and hold Buyer harmless from and against any such claim(s) to
the extent of all benefits awarded.

                         15.2.2      Comprehensive
  General Liability Insurance (including coverage for bodily injury and death,
  property damage, independent contractors, products and completed operations)
  with limits equal to $1,000,000, each occurrence, combined single limit. The
  deductible for such insurance shall be consistent with current Insurance Industry
  Utility practices for similar property. Seller to obtain a Waiver of Subrogation
  Endorsement in favor of Buyer in reference to comprehensive general liability
  insurance. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

                         15.2.3     
Excess/Umbrella Liability Insurance with limits not less than $5,000,000. 

                         15.2.4      If
the Seller, in its sole discretion, elects to obtain Boiler and Machinery
Insurance, Property Insurance or Business Interruption Insurance, the coverages
and deductible shall be additionally declared on the annual insurance
certification as required in section 15.3.

                         15.2.5      All
of the above insurance coverages shall be placed with insurance companies with
an A.M. Best rating of A- or better and shall include: 

	 	a) 	
      A Waiver of Subrogation Endorsement in favor of the
      Buyer.

	 	 	 
	 	b) 	
      With respect to Comprehensive General Liability Insurance
      and Excess/Umbrella Liability Insurance, an endorsement naming Buyer as an
      additional insured, and loss payee.

	 	 	 
	 	c) 	
      The policy shall include a provision stating that such
      policy shall not be canceled or the limits of liability reduced without
      sixty (60) days’ prior written notice to Seller. Seller shall notify Buyer
      within five (5) Business Days after Seller receives any such
  notice.

          15.3     
Seller to Provide Certificate of Insurance. As required in Section 3.1.7
of this Agreement and annually thereafter, Seller shall furnish Buyer a
certificate of insurance evidencing the coverage and required endorsements as
set forth above. 

          15.4      Seller
to Notify Buyer of Loss of Coverage. If the insurance coverage
required by Section 15.2 shall lapse for any reason, Seller will immediately
notify the Buyer in writing. The notice will advise the Buyer of the specific
reason for the lapse and the steps the Seller is taking to reinstate the
coverage. 

          15.5      Seller’s
Failure to Maintain Required Insurance – Seller’s failure to maintain the
insurance as required in this Article 15 shall be a Material Breach of this
Agreement.

ARTICLE 16 
CREDIT AND COLLATERAL REQUIREMENTS

          16.1      Financial
Information.

                         16.1.1      The
  Buyer shall make available electronically to the Seller (i) within one hundred-twenty
  (120) days following the end of a Buyer’s fiscal year, a copy of that Buyer’s
  audited consolidated financial statements for its fiscal year, and (ii) within
  sixty (60) days after the end of each of its first three (3) fiscal quarters
  of each fiscal year, a copy of the Buyer’s unaudited consolidated financial
  statements for such fiscal quarter. In all cases, the statements shall be for
  the most recent accounting period and prepared in accordance with generally
  accepted accounting principles, consistently applied; provided, however,
  that should any such statements not be available on a timely 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

basis due to a delay in preparation or certification, such
delay shall not be an Event of Default so long as the Buyer diligently pursues
the preparation of the statements. 

                         
  16.1.2      The Seller shall make available electronically
  to the Buyer (i) within one hundred-twenty (120) days following the end of U.S.
  Geothermal’s fiscal year, a copy of U.S. Geothermal’s audited consolidated
  financial statements for its fiscal year, and (ii) within sixty (60) days after
  the end of each of its first three (3) fiscal quarters of each fiscal year,
  a copy of U.S. Geothermal’s unaudited consolidated financial statements
  for such fiscal quarter. In all cases, the statements shall be for the most
  recent accounting period and prepared in accordance with generally accepted
  accounting principles, consistently applied; provided, however, that
  should any such statements not be available on a timely basis due to a delay
  in preparation or certification, such delay shall not be an Event of Default
  so long as the Seller diligently pursues the preparation, certification and
  delivery of the statements.

                         16.1.3     
If during the Term of this Agreement any of the financial statements required in
sections 16.1.1 or 16.1.2 are not publicly available, the Parties shall mutually
agree to confidentially agreements to allow exchange of confidential information
and/or alternative reporting that is acceptable documentation in lieu of the
documents required in sections 16.1.1 and 16.1.2. 

          16.2      Seller’s
  Performance Assurance. The Seller shall deliver to the Buyer prior
  to the end of the third (3rd) Contract Year a Performance Assurance
  in the amount no less than seven hundred and fifty thousand dollars ($750,000)
  in a form that is reasonably acceptable to the Buyer. This seven hundred and
  fifty thousand dollars ($750,000) Performance Assurance shall then be maintained
  for the remaining Term of this Agreement. If at any time during the Term of
  this Agreement the Buyer draws funds from this Performance Assurance the Seller
  shall reestablish the seven hundred and fifty thousand dollars ($750,000) Performance
  Assurance to the Buyer at the rate of three hundred seventy five thousand dollars
  ($375,000) per Contract Year or the actual amount required to reestablish the
  seven hundred fifty thousand dollars ($750,000), whichever is less, with the
  deposits beginning no later than the end of the next Contract Year. To secure
  the obligations of the Seller to the Buyer under this Agreement, Seller shall
  provide one or a combination of the following as its “Performance Assurance”.

                         16.2.1     
Cause Seller’s Guarantor to execute and deliver to the Buyer a Guaranty which is
substantially in the form set forth as Appendix C (or, at Seller’s discretion,
cause another guarantor that is not experiencing a Material Adverse Change to
execute and deliver to the Buyer a Guaranty which is substantially in the form
set forth as Appendix C or in another form acceptable to the Buyer); or 

                         16.2.2      Establish
and maintain at the Seller’s expense an escrow account for the benefit of the
Buyer in a form reasonably acceptable to the Buyer; or 

                         16.2.3     
Provide a cash deposit to the Buyer; or 

                         16.2.4     
  Provide a letter of credit in a form reasonably acceptable to the Buyer. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          16.3     
Grant of Security Interest in Certain Collateral and Security. To secure
its obligations under this Agreement, Seller hereby grants to Buyer, a present
and continuing security interest in, and lien on (and right of setoff against),
and assignment of, all cash collateral and cash equivalent collateral and any
and all proceeds resulting therefrom or the liquidation thereof, whether now or
hereafter held by, on behalf of, or for the benefit of, the secured Party.
Seller shall take such action as Buyer reasonably requires in order to perfect
Buyer’s first-priority security interest in, and lien on (and right of setoff
against), such collateral and any and all proceeds resulting therefrom or from
the liquidation thereof. 

          16.4     
Realization Upon Performance Assurance. Upon or at any time after the
occurrence and during the continuation of an Event of Default or an Early
Termination Date affecting Seller, the Buyer may do any one or more of the
following: (i) exercise any of the rights and remedies of a secured party with
respect to all Performance Assurance, including any such rights and remedies
under law then in effect; (ii) exercise its rights of setoff against any and all
property of the Seller in the possession of the Buyer or its agent; (iii) draw
on any outstanding letter of credit issued for the Buyer’s benefit; and (iv)
liquidate all Performance Assurance then held by or for the benefit of the Buyer
free from any claim or right of any nature whatsoever of the Seller, including
any equity or right of purchase or redemption by the Seller. The Buyer shall
apply the proceeds of the collateral realized upon the exercise of any such
rights or remedies to reduce the Seller’s obligations under this Agreement,
subject to the Buyer’s obligation to return any surplus proceeds remaining after
such obligations are satisfied in full. 

          16.5      Interest
Rate on Cash Collateral. Performance Assurance in the form of cash shall
bear interest at the Interest Rate and shall be paid to Seller on the third
(3rd) Business Day of each calendar month. 

ARTICLE 17 
FORCE MAJEURE 

          17.1     
Force Majeure. 

                         17.1.1      General.
As used in this Agreement, “force majeure” or “an event of force
majeure” means any cause beyond the reasonable control of the Party claiming
force majeure which, despite the exercise of due diligence, such Party is
unable to prevent or overcome. Force majeure includes, but is not limited
to, acts of God, fire, flood, storms, wars, hostilities, civil strife, strikes
and other labor disturbances (even if such strikes or disturbances could be
resolved by conceding to the demands of a labor group), earthquakes, fires,
lightning, epidemics, sabotage, severe weather, or changes in law or regulation
or governmental orders occurring after the Effective Date, to the extent that by
the exercise of reasonable foresight such Party could not reasonably have been
expected to avoid and by the exercise of due diligence it shall be unable to
overcome such force majeure event.

                         17.1.2      Events
  That Are Not “Force Majeure.” Notwithstanding Section
  17.1.1, the term force majeure does not include: (a) Seller’s ability
  to sell, or Buyer’s ability to purchase, Net Energy or Environmental Attributes
  at a more 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

advantageous price than is provided under this Agreement; (b)
governmental or regulatory action occurring after receipt of the Commission
approval contemplated by Article 28 and Article 29 that impairs Buyer’s ability
to recover the Contract Price in its rates or that otherwise affects the value
of this Agreement to Buyer or (c) the inability for any reason to make payments
hereunder when due. 

                         17.1.3      Requirements
Upon Occurrence of Force Majeure. If either Party is rendered
wholly or in part unable to perform its obligations under this Agreement because
of an event of force majeure, both Parties shall be excused from whatever
performance is affected by the event of force majeure, provided that:

          17.1.3.1      The
Party claiming force majeure shall, as soon as is reasonably possible
after the occurrence of the force majeure, give the other Party written
notice describing the particulars of the occurrence. 

          17.1.3.2      The
suspension of performance shall be of no greater scope and of no longer duration
than is required by the event of force majeure. 

          17.1.3.3      No
obligations of either Party which arose before the occurrence causing the
suspension of performance and which could and should have been fully performed
before such occurrence shall be excused as a result of such occurrence. 

          17.1.3.4      The
Party claiming force majeure shall proceed with reasonable diligence to
remedy its inability to perform and shall provide weekly progress reports to the
other Party describing actions taken to end the force majeure. 

          17.1.3.5     
The Party claiming force majeure is able to resume performance of its
obligations under this Agreement, that Party shall give the other Party written
notice to that effect. 

Failure of a Party to comply with
provisions of 17.1.3.1, 17.1.3.2, 17.1.3.4 and 17.1.3.5 shall create liability
of such Party only to the extent the other Party is damaged by such failure.

          17.2     
Extension of Scheduled Operation Date and the Term. The Scheduled
Operation Date shall be extended on a day-for-day basis in the event of force
majeure. In no event will any delay or failure of performance caused by any
conditions or events of force majeure extend this Agreement beyond its
stated Term. 

          17.3      Termination
  for Extended Force Majeure. If a delay or failure of performance
  caused by the event of force majeure results in a 30% or more decrease
  in the delivery or receipt of Net Energy at the Point of Delivery of the Facility
  when similarly compared to the delivery and receipt of Net Energy in a twelve
  (12) month period immediately preceding the event of force majeure and
  continues for an uninterrupted period of three hundred sixty-five (365) days
  from the event’s occurrence or inception, the Party not claiming force
  majeure may, at any time following the end of 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

such three hundred sixty-five (365) day period, and prior to
the event of force majeure being cured, terminate this Agreement upon
written notice to the party claiming force majeure, without further
obligation by either Party except as to costs and balances incurred before the
effective date of such termination. The Party not claiming force majeure
may, but shall not be obligated to, extend such three hundred sixty-five (365)
day period, for such additional time as it, at its sole discretion, deems
appropriate. 

ARTICLE 18 
FORCED OUTAGE 

          18.1      Seller
to Notify Buyer. Promptly upon the occurrence of an event at the Facility
that the Seller deems to be a Forced Outage the Seller shall notify the Buyer of
the declared Forced Outage and adjust the forecast if required as specified in
Section 7.5.

          18.2     
Seller to Submit Explanation. Within two (2) Business Days of the Forced
Outage event the Seller shall submit to the Buyer a detailed explanation of the
Forced Outage event including but not limited to details of the equipment
failure, apparent cause of the failure, equipment affected by and taken out of
service, estimated lost energy production, schedule and plan for making the
necessary repairs. 

          18.3      Buyer
Shall Respond to Seller. Upon receipt of the detailed explanation of the
Forced Outage event, the Buyer shall within two (2) Business Days respond to the
Seller accepting, rejecting or requesting additional information in regards to
the declared Forced Outage event. If the Buyer does not respond to the Seller’s
initial submittal within two (2) Business Days, the declared Forced Outage event
shall be deemed to be accepted.

          18.4     
Adjustment to Seller’s Annual Guaranteed Output. Only after the declared
Forced Outage event has been accepted by the Buyer and the actual Net Energy
reduction of the specific Forced Outage event has been determined to be equal to
or greater than 24,000 kWh shall the Seller’s Annual Guaranteed Output
obligation be adjusted to reflect the Net Energy curtailment that was a result
of the Forced Outage. If it is determined that the actual Net Energy reduction
associated with the specific Forced Outage event is less that 24,000 kWh, no
adjustment of the Seller’s Annual Guaranteed Output shall be made.

ARTICLE 19 
BUYER’S ACCESS RIGHTS 

          19.1      Seller
to Provide Access. To the extent necessary, Seller hereby grants to
the Buyer for the Term of this Agreement all necessary rights-of-way and
easements to install, operate, maintain, replace, and remove the Buyer's
Metering and Telemetry Equipment, and other equipment and facilities necessary
or useful to this Agreement, including adequate and continuing access rights on
property of the Seller. 

          19.2     
  Indemnity. If the Buyer exercises any right under this Agreement to access
  or enter upon the Seller’s property, such access or entry shall be at the
  Buyer’s sole risk and expense. Buyer shall hold the Seller harmless from,
  and indemnify the Seller against, any and all liability for any loss, damage
  or injury to property or persons 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

arising from the Buyer’s access to or entry upon to the
Seller’s property, except to the extent that such loss, damage or injury is
cause by the Seller’s negligence or willful misconduct. 

ARTICLE 20 
NO THIRD PARTY LIABILITY, NO
DEDICATION OF FACILITY OR SYSTEM 

          20.1      No
  Third Party Liability. Nothing in this Agreement shall be construed to create
  any duty to, any standard of care with reference to, or any liability to any
  person not a Party to this Agreement. There are no third party beneficiaries
  of this Agreement. 

          20.2      No
Dedication. No undertaking by one Party to the other under any
provision of this Agreement shall constitute the dedication of that Party’s
system or facility or any portion thereof to the other Party or to the public or
affect the status of the Buyer as an independent public utility corporation or
the Seller as an independent entity. 

ARTICLE 21 
SEVERAL OBLIGATIONS 

          Except
where specifically stated in this Agreement to be otherwise, the duties,
obligations and liabilities of the Parties are intended to be several and not
joint or collective. Nothing contained in this Agreement shall ever be construed
to create an association, trust, partnership or joint venture, or impose a trust
or partnership duty, obligation or liability on or with regard to either Party.
Each Party shall be individually and severally liable for its own obligations
under this Agreement. 

ARTICLE 22 
WAIVER 

          Any
waiver at any time by either Party of its rights with respect to a default under
this Agreement or with respect to any other matters arising in connection with
this Agreement shall not be deemed a waiver with respect to any subsequent
default or other matter. 

ARTICLE 23 
CHOICE OF LAW 

          This
Agreement shall be construed and interpreted in accordance with the laws of the
State of Idaho without reference to its choice of law provisions. 

ARTICLE 24 
LIMITATIONS 

          24.1     
  Remedies Satisfy Essential Purposes. THE PARTIES CONFIRM THAT THE EXPRESS
  REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL
  PURPOSES OF THIS AGREEMENT. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          24.2     
Sole and Exclusive Remedies. FOR ANY PROVISION FOR WHICH AN EXPRESS
REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF
DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. THE OBLIGOR’S LIABILITY SHALL BE
LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW
OR IN EQUITY ARE WAIVED. 

          24.3     
No Punitive, Consequential or Incidental Damages. IF NO REMEDY OR MEASURE
OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE
LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE
SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY
ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER
ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS IMPOSED IN THIS AGREEMENT ON REMEDIES AND THE MEASURE OF DAMAGES BE
WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE
OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR
PASSIVE. 

          24.4     
Liquidated Damages. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID
HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT
OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS
INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE
APPROXIMATION OF THE HARM OR LOSS. 

ARTICLE 25 
DISPUTES 

          25.1     
  Disputes. If a dispute arises under this Agreement (a “Dispute”),
  within ten (10) days following the delivered date of a written request by either
  Party (a “Dispute Notice”), (1) each Party shall appoint a representative,
  and (2) the Parties’ representatives shall meet, negotiate and attempt
  in good faith to resolve the Dispute quickly, informally and inexpensively.
  If the Parties’ representatives cannot resolve the Dispute within thirty
  (30) days after commencement of negotiations, then within ten (10) Business
  Days following any request by either Party at any time thereafter, each Party
  representative (3) shall independently prepare a written summary of the Dispute
  describing the issues and claims, (4) shall exchange its summary with the summary
  of the Dispute prepared by the other Party representative, and (5) shall submit
  a copy of both summaries to a senior officer of the representative’s Party
  with authority to irrevocably bind the Party to a resolution of the Dispute.
  Within ten (10) Business Days after receipt of the Dispute summaries, the senior
  officers for both Parties shall negotiate in good faith to resolve the Dispute.
  If the Parties are unable to resolve the Dispute within fourteen (14) Business
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

Days following receipt of the Dispute summaries by the senior
offices, either Party may seek available remedies. 

          25.2      Venue.
Venue for any litigation arising out of or related to this Agreement shall lie
in the District Court of the Fourth Judicial District of Idaho in and for the
County of Ada. 

ARTICLE 26 
EVENTS OF DEFAULT, DELAY DAMAGES AND
MATERIAL BREACHES 

          26.1      Events
of Default. The following shall be deemed to be Events of Default: 

                         26.1.1      A
Party’s dissolution or liquidation; 

                         26.1.2     
A Party’s assignment of this Agreement or any of its rights under this Agreement
for the benefit of creditors (except for an assignment to the Facility Lender as
security under the Financing Documents as permitted by this Agreement). 

                         26.1.3      A
Party’s filing of a petition in bankruptcy or insolvency or for reorganization
or arrangement under the bankruptcy laws of the United States or under any
insolvency act of any state, or a Party voluntarily taking advantage of any such
law or act by answer or otherwise. 

                         26.1.4      The
filing of a case in bankruptcy or any proceeding under any other insolvency law
against a Party that could materially impact Buyer’s ability to perform its
obligations under this Agreement if the affected Party does not obtain a stay or
dismissal of the filing within sixty (60) days after the Party receives a notice
of default. 

                         26.1.5      A
Party’s assignment of this Agreement, except as permitted by this Agreement.

                         26.1.6      Any
representation or warranty made by a Party in this Agreement proves to have been
false or misleading in any material respect when made or ceases to remain true
during the Term if such inaccuracy or cessation would reasonably be expected to
result in a significant adverse impact on the other Party and such default is
not cured within thirty (30) days after the Party’s receipt of a notice of
default. 

                         26.1.7      Seller’s
failure to establish and maintain Performance Assurance as required by this
Agreement if the failure is not cured within thirty (30) days of Seller’s
receipt of a notice of default. 

                         26.1.8      A
  Guaranty Default affecting a Guaranty delivered in support of this Agreement
  if the Guaranty Default is not cured within the time permitted by the Guaranty
  and the Seller does not provide substitute Performance Assurance to replace
  the Guaranty within fifteen (15) Business Days after the Seller’s receipt
  of a notice of the Guaranty Default. 

  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

                         26.1.9     
Seller’s unexcused failure to deliver energy from the Facility to Buyer as
required under this Agreement if the failure is not cured within fifteen (15)
Business Days of Seller’s receipt of a notice of default.

                         26.1.10     
Buyer’s unexcused failure to receive and accept energy from the Facility as
required under this Agreement if the failure is not cured within fifteen (15)
days of Buyer’s receipt of a notice of default. 

                         26.1.11      Seller’s
failure to attain an actual Operation Date within 2,904 hours (4 months) of the
Scheduled Operation Date. 

                         26.1.12      A
Party’s failure to make a payment to the other Party when due under this
Agreement, if the failure is not cured within ten (10) Business Days of the
Party’s receipt of a notice of default. 

                         26.1.13     
A Party’s failure to comply with any material obligation under this Agreement,
if the failure would result in a significant adverse impact on the other Party
(other than a default already specifically enumerated in this Article) and the
failure is not cured within thirty (30) days of the Party’s receipt of a notice
of default; provided, however, if such default cannot be cured within
thirty (30) days despite Seller’s diligent efforts but Seller commences the cure
within the thirty (30) day period and thereafter diligently pursues the cure,
the thirty (30) day period shall be extended for as long as is reasonably
required to cure the default (but in no event more than a total of one hundred
twenty (120) days. 

          26.2     
Notice of Default. If either Party defaults in its performance of
this Agreement as provided in Section 26.1, the non-defaulting Party may give
notice of the default in writing to the defaulting Party, specifying in
reasonable detail the nature of the default. If the defaulting Party fails to
cure the default within any cure period allowed for the default in Section 26.1,
the non-defaulting Party may, at its option, terminate this Agreement and/or
pursue its legal or equitable remedies, subject to any limitation on remedies
and damages set forth in this Agreement. 

          26.3      Material
Breaches. The notice and cure provisions in Article 26 do not apply to
defaults identified in this Agreement as Material Breaches. Material Breaches
must be cured as expeditiously as possible following occurrence of the breach.

          26.4     
Facility Lender’s Right to Cure Default of Seller. Seller shall provide
Buyer with a notice identifying the Facility Lender and providing appropriate
contact information for the Facility Lender. Following receipt of such notice,
Buyer shall provide notice of any Event of Default or Material Breach of Seller
to the Facility Lender within ten (10) Business Days of the Event of Default or
the Material Breach, and Buyer will accept a cure to an Event of Default or
Material Breach of Seller performed by the Facility Lender, so long as the cure
is accomplished within the applicable cure period set forth in this Agreement
plus an additional sixty (60) Days. 

          26.5     
  Delay Damages. If Seller fails to achieve the Operation Date within thirty
  (30) days after the Scheduled Operation Date and such failure is not excused
  by force majeure or Forced Outage by the Seller or by default or delay
  of Buyer, Delay Liquidated 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

Damages will be calculated as defined in Section 1.14 of this
agreement. Buyer shall calculate and invoice the Seller and the Seller shall pay
Buyer for any Delay Liquidated Damages accrued during a given calendar month
within fifteen (15) days of the receipt of the Buyer’s invoice. The calculation
and payment of Delay Damages to the Buyer from the Seller shall not exceed
$500,000.

          26.6     
Limitations on Seller’s Damages. The following limits shall apply to
Seller’s liability for damages: (a) Seller’s aggregate financial liability to
Buyer for Delay Damages shall not exceed the amount specified in Section 26.5,
(b) Seller’s aggregate financial liability for Net Energy Shortfall Damages for
any single Contract Year shall not exceed the values as specified in Appendix E.
The limitations on damages set forth in this Section 26.6 shall not apply to
damages arising out of either of the following events: 

                         26.6.1     
Willful breach of this Agreement by Seller. 

                         26.6.2      Any
claim for indemnification under Article 15. 

          26.7     
Duty to Mitigate Damages. Each Party agrees that it has a duty to
mitigate damages and covenants that it will use commercially reasonable efforts
to minimize any damages it may incur as a result of the other Party’s
performance or non-performance of the Agreement. 

ARTICLE 27 
TERMINATION 

          27.1      Termination.
Upon execution, this Agreement shall continue in full force and effect for the
Term unless terminated in accordance with this Article. 

          27.2     
Mutual Agreement. The Parties can mutually terminate this Agreement by a
writing signed by both Parties. 

          27.3     Event
of Default. A non-defaulting Party may terminate this Agreement in
accordance with Section 26.1. 

          27.4      Prolonged
Force Majeure. A Party not claiming force majeure may
terminate this Agreement in accordance with Section 17.3. 

          27.5      Right
to Terminate. 

                         27.5.1      If
  the Commission issues a final order either disapproving this Agreement or approving
  it with condition(s) or modification(s) unacceptable to the Party or Parties
  adversely affected by such modification(s) or condition(s), either Party has
  the right to terminate this Agreement by written notice to the other Party either
  within ten (10) Business Days after the Commission denies any Petition(s) for
  Reconsideration or, if the Commission grants reconsideration, within ten (10)
  Business Days after the Commission renders a decision on reconsideration if
  said decision either disapproves the Agreement or approves it with condition(s)
  or modification(s) 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

unacceptable to either Party. Any such termination under this
Section shall be effective ten (10) Business Days after such notice is
given.

                         27.5.2     
If a Party does not give the other Party a notice of termination in accordance
with this Section 27.5 on or before the applicable date specified above, the
affected termination right under this Section 27.5 shall be deemed waived and
this Agreement shall remain in full force and effect in accordance with its
terms regardless of any subsequent Commission order. 

                         27.5.3     
Neither Party shall have any liability to the other Party for any termination
under this Section 27.5.

                         27.5.4      Any
  termination under this Section shall be effective ten (10) Business Days after
  such notice is given. 

ARTICLE 28 
GOVERNMENTAL AUTHORIZATION 

          This
Agreement is subject to the jurisdiction of those governmental agencies having
control over either Party of this Agreement, including, but not limited to, the
Commission. 

ARTICLE 29 
BOARD AND REGULATORY APPROVAL 

          29.1      Within
ten (10) Business Days after the Effective Date Buyer shall file this Agreement
with the Commission, seeking Commission Approval.

          29.2      Buyer
has received approval of this Agreement by the Buyer’s Board of Directors.

          29.3      Upon
Commission Approval of this Agreement, the existing PURPA Agreement for this
Facility shall be terminated on the First Energy Date as established by this
Agreement. All rights of a Party to payment under the existing PURPA Agreement,
prior to its termination, shall remain in effect.

ARTICLE 30 
SUCCESSORS AND ASSIGNS 

          30.1      Binding
Agreement. This Agreement and all of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
permitted successors and assigns of the Parties. 

          30.2      Assignment
without Consent. Except as permitted in this Article, neither Party shall
assign this Agreement or any portion of this Agreement, without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld, conditioned or delayed. 

          30.3     
  Seller’s Consent Not Required. Seller’s consent shall not be
  required for Buyer to assign this Agreement to an Affiliate of the Buyer, provided
  that (1) the 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

assignee has the same or better credit rating from Moody’s and
S&P as the Buyer and (2) the assignee’s non-credit enhanced unsecured debt
(a) has a rating by at least one of the two rating agencies, and (b) does not
have a Credit Rating below BBB- by S&P or below Baa3 by Moody's, or does not
have a Credit Rating of BBB– by S&P accompanied by a negative watch or Baa3
by Moody's accompanied by a negative watch. If S&P changes its rating system
during the Term, “BBB-” shall be replaced by S&P’s lowest investment grade
rating under the new rating system; likewise, if Moody’s changes its rating
system during the Term, “Baa3” shall be replaced by Moody’s lowest investment
grade rating under the new rating system. 

          30.4     
Buyer’s Consent Not Required. Buyer’s consent shall not be required: 

                         30.4.1      For
Seller to assign this Agreement for collateral purposes to the Facility Lender;
or 

                         30.4.2     
  For Seller to assign this Agreement to any Affiliate of the Seller, provided
  that the assignee provide the Performance Assurance of the Agreement; or 

                         30.4.3      For
  Seller to Assign this Agreement to any third party or parties in connection
  with a sale of the Facility to such third party or parties, provided that such
  third party or parties shall either: (1) have at least three (3) years experience
  in operating geothermal electric generating facilities with an installed nameplate
  capacity of ten (10) MW or greater; or (2) enter into an operating agreement
  with another person (who may be the Seller or an Affiliate of the Seller) who
  has at least three year’s experience in operating geothermal electric generating
  facilities with an installed nameplate capacity of ten (10) MW or greater; and
  (3) the third party or parties shall provide the Performance Assurance of the
  Agreement.

          30.5      Accommodation
of Facility Lender or Investor. To facilitate the Seller’s obtaining of
Project Financing or to facilitate investments in the Seller, Buyer shall use
commercially reasonable efforts to provide such consents to assignments,
certifications, representations, information, opinions or other documents as may
be reasonably requested by the Seller, the Facility Lender or the Investor in
connection with the financing of or investment in the Facility; provided that in
responding to any such request, the Buyer shall have no obligation to provide
any consent, or enter into any agreement that significantly adversely affects
any of the Buyer’s rights, benefits, risks and/or obligations under this
Agreement. Seller shall reimburse, or shall cause the Facility Lender or the
Investor to reimburse, the Buyer for the incremental direct expenses (including,
without limitation, the reasonable fees and expenses of counsel) incurred by the
Buyer in the preparation, negotiation, execution and/or delivery of any
documents requested by the Seller, Facility Lender or Investor, and provided by
the Buyer, pursuant to this Article. The rights of the Facility Lender or
Investor will be set forth in a collateral assignment, estoppel agreement,
consent agreement or similar instrument delivered at the closing of any Facility
financing or any investment and will include the following provisions:

                         30.5.1      Right
  to Cure Defaults. Facility Lender or Investor shall have the right, but
  not the obligation, to perform any act required to be performed by the Seller
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

under this Agreement to prevent or cure a default by the
Seller, and such act performed by Facility Lender or Investor shall be as
effective to prevent or cure a default as if done by the Seller. Seller shall
provide the Buyer with a notice identifying the agent or trustee of any Facility
Lender or any Investor and providing appropriate contact information for any
Facility Lender or Investor. Following receipt of such notice, Buyer shall
provide notice of the occurrence of any default or Event of Default described in
this Agreement to the agent or trustee of any Facility Lender or Investor, and
the Buyer will accept a cure performed by the agent or trustee of any Facility
Lender or Investor and will negotiate in good faith with the agent or trustee of
any Facility Lender and Investor as to the cure period(s) that will be allowed
for any Facility Lender or Investor to cure any the Seller default or Event of
Default hereunder and the Buyer will accept a cure performed by any Facility
Lender or Investor, so long as the cure is accomplished within the applicable
cure period so agreed to by the Buyer and any Facility Lender or Investor. 

                         30.5.2     
Right to Assume Agreement. If the Seller defaults under any financing or
investment documents, any Facility Lender or Investor may (but shall not be
obligated to) assume, or cause its designee to assume, all of the interests,
rights, and obligations of the Seller thereafter arising under this Agreement.
Notwithstanding any such assumption, the Seller shall not be released or
discharged from and shall remain liable for any and all obligations to the Buyer
arising or accruing under this Agreement. 

                         30.5.3      No
Obligation to Perform. Buyer agrees that no Facility Lender or Investor
shall be obligated to perform any obligation or be deemed to incur any liability
or obligation provided in this Agreement on the part of the Seller or shall have
any obligation or liability to the Buyer with respect to this Agreement except
to the extent any Facility Lender or Investor has assumed the obligations of the
Seller under this Agreement pursuant to this Article; provided that the
Buyer shall nevertheless be entitled to exercise all of its rights under this
Agreement against the Seller in the event that the Seller, Facility Lender or
Investor fails to perform the Seller’s obligations under this Agreement. 

                         30.5.4      Notice
of Facility Lender or Investor Action. Within ten (10) Business Days
following the Seller’s receipt of each written notice from a Facility Lender or
an Investor of a default, or of Facility Lender’s or Investor’s intent to
exercise any remedies, under the Financing Documents or any investment
agreement, Seller shall deliver a copy of such notice to the Buyer. 

          30.6     
Subcontracting. Seller may subcontract its duties or obligations under
this Agreement without the prior written consent of the Buyer, provided, that no
such subcontract shall relieve the Seller of any of its duties or obligations
under this Agreement. 

          30.7      Right
  of First Offer upon Sale of Facility Assets. 

                         30.7.1      Facility
  Assets. If, at any time during the Term, Seller intends to sell the assets
  comprising all or substantially all of the Facility (the “Facility Assets”)
  to a person or entity that is not an Affiliate of Seller, Seller shall first
  offer the Facility Assets to Buyer. Seller’s offer to the Buyer shall set
  forth, in writing and in reasonable detail, 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

substantially similar terms and conditions of the offer being
proposed by the Seller to the other person or entity. Seller shall promptly
answer any questions that Buyer may have concerning the offered terms and
conditions and shall meet with Buyer to discuss the offer.

                         30.7.2      Buyer’s
Rejection of Offer; Revival of Offer. If Buyer does not provide notice of
its intent to accept the offered terms and conditions within thirty (30) days
after receiving each of the Seller’s offers made under 30.7.1, Seller may in its
sole discretion enter into an agreement to sell the Facility Assets to a third
party in compliance with the requirements of this Article 30 and on terms and
conditions satisfactory to Seller in its sole discretion. Seller may elect not
to proceed with the sale of the Facility Assets.

                         30.7.3      Buyer’s
Acceptance of Offer. If Buyer provides notice of its intent to accept the
offer made by Seller under this Section, the Parties shall negotiate in good
faith to enter into a definitive sales agreement that incorporates the terms and
conditions of Seller’s offer. The definitive agreement shall be subject to each
Party’s management and regulatory approvals. If within thirty (30) days of
Buyer’s acceptance of the offer, a written term sheet setting forth the major
terms of the definitive sales agreement, including a timeline to complete
negotiations of the definitive sales agreement, has not been executed by an
officer of the Buyer and Seller, then either Party may terminate the
negotiations without further obligation to the other Party.

                         30.7.4     
Limit on Right of First Offer. The right of first offer set forth in this
Section shall apply only if Seller sells all or substantially all of the assets
comprising the Facility in an asset sale to a third party. It shall not apply to
changes in the membership of Seller or any other reorganization, change of
control or other transaction directly or indirectly affecting Seller or an
Affiliate of Seller. 

ARTICLE 31 
MODIFICATION 

          No
modification to this Agreement shall be valid unless it is in writing and signed
by both Parties and subsequently approved by the Commission. 

ARTICLE 32 
TAXES 

          Each
Party shall pay before delinquency all taxes and other governmental charges
which, if failed to be paid when due, could result in a lien upon the Facility
or the Interconnection Facilities. 

ARTICLE 33 
NOTICES 

          All
  written notices under this Agreement shall be directed as follows and shall
  be considered delivered when faxed, e-mailed and confirmed with deposit in the
  U.S. Mail, first-class, postage prepaid, as follows: 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

	 	To Seller: 	Raft River Energy I LLC. 
	 	  	Attn: CEO, U.S. Geothermal Inc. 
	 	  	1509 Tyrell Lane, Suite B 
	 	 	Boise, ID 83706 
	 	  	Phone: 208-424-1027 
	 	  	Fax: 208-424-1030 
	 	  	Email: dkunz@usgeothermal.com 
	 	  	  
	 	  	  
	 	             with a copy
      to: 	Raft River Energy I LLC. 
	 	  	Attn: CFO, U.S. Geothermal Inc. 
	 	  	1509 Tyrell Lane, Suite B 
	 		Boise, ID 83706 
	 	  	Phone: 208-424-1027 
	 	  	Fax: 208-424-1030 
	 	  	Email: khawkley@usgeothermal.com 
	 	  	  
	 	Facility Lender: 	To be identified by the Seller when applicable.
    
	 	  	  
	 	  	  
	 	  	  
	 	To Buyer: 	Idaho Power Company 
	 	  	Attn: Senior Vice President, Power Supply

	 	  	P.O. Box 70 
	 	 	Boise, ID 83707 
	 	  	Fax: 208-388-6936 
	 	  	Email: jimmiller@idahopower.com 
	 	  	  
	 	               
         with a copy to: 	Idaho Power Company 
	 	  	Attn: Legal Department 
	 	  	P.O. Box 70 
	 		Boise, ID 83707 
	 	  	Fax: 208-388-6936 
	 	  	Email: Bkline@idahopower.com

By giving notice to the other Party, either Party may from time
to time change the address(es) to which notices or copies are to be sent to it
under this Agreement. 

ARTICLE 34 
ADDITIONAL TERMS AND CONDITIONS

          This
Agreement includes the following appendices, which are attached hereto and
included by reference: 

	 	Appendix A 	Contract Prices 
	 	Appendix B 	Facility and Point of Delivery 
	 	Appendix C 	Sample Form of Seller Guaranty
    
	 	Appendix D 	90% - 110% Performance Requirements
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

	 	Appendix E 	Net Energy Shortfall Price and
      Annual Cap 
	 	Appendix F 	Engineering Certificates 
	 	Appendix G 	Environmental Attributes
      Ownership and Pricing 
	 	Appendix H 	Communications 

ARTICLE 35 
SEVERABILITY 

          The
  invalidity or unenforceability of any term or provision of this Agreement shall
  not affect the validity or enforceability of any other terms or provisions and
  this Agreement shall be construed in all other respects as if the invalid or
  unenforceable term or provision were omitted, unless the deletion of such provision
  or provisions would result in such a material change so as to cause completion
  of the transactions contemplated herein to be unreasonable. 

ARTICLE 36 
CONFIDENTIAL BUSINESS INFORMATION 

          36.1     
Definition. The following constitutes “Confidential Business
Information,” whether oral or written: (1) Parties' proposals and negotiations
before the Effective Date concerning this Agreement, and (2) information that a
Party stamps or otherwise identifies as “confidential” or “proprietary” before
disclosing it to the other Party. Notwithstanding the foregoing, “Confidential
Business Information” does not include (A) information that was publicly
available at the time of the disclosure thereof by one Party to the other, other
than as a result of a disclosure by the receiving Party in breach of this
Article; (B) information that becomes publicly available through no fault of the
receiving Party after the time of the disclosure by the disclosing Party to the
receiving Party; (C) information that was rightfully in the possession of the
receiving Party (without confidential or proprietary restriction) at the time of
disclosure or that becomes available to the receiving Party from a source not
subject to any restriction against disclosing such information to the receiving
Party; and (D) information that the receiving Party independently developed
without a violation of this Agreement. The Confidential Business Information
specified in item (1) above shall be considered the Confidential Business
Information of both Seller and Buyer and, therefore, exceptions (C) and (D)
above shall not apply to such information. 

          36.2      Duty
  to Maintain Confidentiality. Each Party agrees not to disclose Confidential
  Business Information of the other Party to any other person (other than its
  Affiliates, counsel, consultants, lenders, prospective lenders, purchasers,
  investors, contractors constructing or providing services to the Facility (including
  but not limited to turbine suppliers), employees, officers and directors who
  agree to be bound by the provisions of this Article), without the prior written
  consent of the other Party, provided that either Party may disclose Confidential
  Business Information if and to the extent such disclosure is required (1) by
  any Requirements of Law, (2) in order for the Buyer to receive regulatory recovery
  of expenses related to the Agreement, (3) pursuant to an order of a court or
  regulatory agency or (4) in order to enforce this Agreement or to seek approval
  of this Agreement. In addition, Seller may include information concerning the
  

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

terms or conditions of this Agreement in financial statements
  to the extent that such information is required to be included in financial
  statements prepared with respect to the Facility, Seller or any Affiliate of
  the Seller in accordance with generally accepted accounting principles consistently
  applied. In the event a Party is required by Requirements of Law or by a court
  or regulatory agency to disclose Confidential Business Information, such Party
  shall to the extent possible notify the other Party at least three (3) Business
  Days in advance of such disclosure and the other Party may seek an appropriate
  protective order or waive compliance with the confidentiality terms of this
  Agreement. In that event, the Party required by Requirements of Law or by a
  court or regulatory agency to disclose Confidential Business Information will
  cooperate fully with the other Party in seeking a protective order or other
  assurance that confidential treatment will be accorded to the Confidential Business
  Information. 

          36.3     
Irreparable Injury; Remedies. Each Party agrees that violation of the
terms of this Article constitutes irreparable harm to the other, and that the
harmed Party may seek any and all remedies available to it at law or in equity,
including but not limited to injunctive relief. 

ARTICLE 37 
REPRESENTATIONS AND WARRANTIES 

          37.1      Seller’s
Representations, Warranties and Covenants. Seller hereby represents and
warrants as follows: 

                         37.1.1      Seller
is a limited liability company, organized and existing under the laws of the
State of Delaware, with a principal place of business at 1509 Tyrell Lane, Suite
B, Boise, ID 83706. Seller is qualified to do business in each other
jurisdiction where the failure to so qualify would have a material adverse
effect on the business or financial condition of the Seller; and the Seller has
all requisite power and authority to conduct its business, to own its
properties, and to execute, deliver, and perform its obligations under this
Agreement. 

                         37.1.2     
The execution, delivery, and performance of its obligations under this Agreement
by the Seller have been duly authorized by all necessary corporate action, and
do not and will not: 

          37.1.2.1     
require any consent or approval by any governing body of the Seller, other than
that which has been obtained and is in full force and effect (evidence of which
shall be delivered to the Buyer upon its request); 

          37.1.2.2      violate
  any provision of law, rule, regulation, order, writ, judgment, injunction, decree,
  determination, or award currently in effect having applicability to the Seller
  or violate any provision in any formation documents of the Seller, the violation
  of which could have a material adverse effect on the ability of the Seller to
  perform its obligations under this Agreement; 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

          37.1.2.3     
result in a breach or constitute a default under the Seller’s formation
documents or bylaws, or under any agreement relating to the management or
affairs of the Seller or any indenture or loan or credit agreement, or any other
agreement, lease, or instrument to which the Seller is a party or by which the
Seller or its properties or assets may be bound or affected, the breach or
default of which could reasonably be expected to have a material adverse effect
on the ability of the Seller to perform its obligations under this Agreement; or

          37.1.2.4      result
in, or require the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest, or other charge or encumbrance of any nature
(other than as may be contemplated by this Agreement) upon or with respect to
any of the assets or properties of the Seller now owned or hereafter acquired,
the creation or imposition of which could reasonably be expected to have a
material adverse effect on the ability of the Seller to perform its obligations
under this Agreement. 

                         37.1.3      This
Agreement is a valid and binding obligation of the Seller. 

                         37.1.4      The
execution and performance of this Agreement will not conflict with or constitute
a breach or default under any contract or agreement of any kind to which the
Seller is a party or any judgment, order, statute, or regulation that is
applicable to the Seller or the Facility. 

          37.2      Seller’s
Disclaimer of Certain Representations and Warranties. NOTWITHSTANDING ANY
OTHER PROVISION OF THIS AGREEMENT, 

                         37.2.1      SELLER
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THE SALE OF NET ENERGY AND ENVIRONMENTAL AND RENEWABLE ENERGY
CREDITS. 

                         37.2.2      SELLER
MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, REGARDING THE
CURRENT OR FUTURE EXISTENCE OF ANY ENVIRONMENTAL AND RENEWABLE ENERGY CREDITS
UNDER THIS AGREEMENT OR OTHERWISE OR THEIR CHARACTERIZATION OR TREATMENT UNDER
APPLICABLE LAW OR OTHERWISE. 

          37.3      Buyer’s
Representations, Warranties and Covenants. Buyer hereby represents and
warrants as follows: 

                         37.3.1      Buyer
  is a corporation duly organized, validly existing and in good standing under
  the laws of the State of Idaho and is qualified in each other jurisdiction where
  the failure to so qualify would have a material adverse effect upon the business
  or financial condition of the Buyer; and the Buyer has all requisite power and
  authority to conduct its business, to own its properties, and to execute, deliver,
  and perform its obligations under this Agreement. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

                         37.3.2      Upon
the execution, delivery, and performance of its obligations under this Agreement
by the Buyer will have been duly authorized by all necessary corporate action,
and do not and will not: 

          37.3.2.1      require
any consent or approval of the Buyer’s Board of Directors, or shareholders,
other than that which has been obtained and is in full force and effect
(evidence of which shall be delivered to the Seller upon its request); 

          37.3.2.2      violate
any provision of law, rule, regulation, order, writ, judgment, injunction,
decree, determination, or award currently in effect having applicability to the
Buyer or violate any provision in any corporate documents of the Buyer, the
violation of which could have a material adverse effect on the ability of the
Buyer to perform its obligations under this Agreement; 

          37.3.2.3      result
in a breach or constitute a default under the Buyer’s corporate charter or
bylaws, or under any agreement relating to the management or affairs of the
Buyer, or any indenture or loan or credit agreement, or any other agreement,
lease, or instrument to which the Buyer is a party or by which the Buyer or its
properties or assets may be bound or affected, the breach or default of which
could reasonably be expected to have a material adverse effect on the ability of
the Buyer to perform its obligations under this Agreement; or 

          37.3.2.4      result
in, or require the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest, or other charge or encumbrance of any nature
(other than as may be contemplated by this Agreement) upon or with respect to
any of the assets or properties of the Buyer now owned or hereafter acquired,
the creation or imposition of which could reasonably be expected to have a
material adverse effect on the ability of the Buyer to perform its obligations
under this Agreement. 

                         37.3.3      This
Agreement is a valid and binding obligation of the Buyer. 

                         37.3.4      The
execution and performance of this Agreement will not conflict with or constitute
a breach or default under any contract or agreement of any kind to which the
Buyer is a party or any judgment, order, statute, or regulation that is
applicable to the Buyer. 

                         37.3.5     
  To the best knowledge of the Buyer, all approvals, authorizations, consents,
  or other action required by any Governmental Authority to authorize the Buyer’s
  execution, delivery and performance of this Agreement have been duly obtained
  and are in full force and effect. 

	POWER PURCHASE AGREEMENT
      – RAFT RIVER ENERGY –09/20/07) 

 

APPENDIX A TO 

POWER PURCHASE AGREEMENT

BETWEEN 
RAFT ENERGY I LLC 
AND

IDAHO POWER COMPANY 

CONTRACT PRICES (MILLS/KWH)

	  	  	 
    	 
    	 
    	 
    	Monthly Price (Seasonalized) 	 	 	 	 
    	 
    	 
    	 
    
	  	  	JAN 	FEB 	MAR 	APR 	MAY 	JUN 	JUL 	AUG 	SEP 	OCT 	NOV 	DEC 
	Calendar 	Annual 	  	  	  	  	  	  	  	  	  	  	  	  
	Year 	Rate 	100.00% 	100.00% 	73.50% 	73.50% 	73.50% 	100.00% 	120.00% 	120.00% 	100.00% 	100.00% 	120.00% 	120.00% 
	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	2007 	52.50
    	52.50
    	52.50
    	38.59
    	38.59
    	38.59
    	52.50
    	63.00
    	63.00
    	52.50
    	52.50
    	63.00
    	63.00
    
	2008 	53.60
    	53.60
    	53.60
    	39.40
    	39.40
    	39.40
    	53.60
    	64.32
    	64.32
    	53.60
    	53.60
    	64.32
    	64.32
    
	2009 	54.73
    	54.73
    	54.73
    	40.23
    	40.23
    	40.23
    	54.73
    	65.68
    	65.68
    	54.73
    	54.73
    	65.68
    	65.68
    
	2010 	55.88
    	55.88
    	55.88
    	41.07
    	41.07
    	41.07
    	55.88
    	67.06
    	67.06
    	55.88
    	55.88
    	67.06
    	67.06
    
	2011 	57.05
    	57.05
    	57.05
    	41.93
    	41.93
    	41.93
    	57.05
    	68.46
    	68.46
    	57.05
    	57.05
    	68.46
    	68.46
    
	2012 	58.25
    	58.25
    	58.25
    	42.81
    	42.81
    	42.81
    	58.25
    	69.90
    	69.90
    	58.25
    	58.25
    	69.90
    	69.90
    
	2013 	59.47
    	59.47
    	59.47
    	43.71
    	43.71
    	43.71
    	59.47
    	71.36
    	71.36
    	59.47
    	59.47
    	71.36
    	71.36
    
	2014 	60.72
    	60.72
    	60.72
    	44.63
    	44.63
    	44.63
    	60.72
    	72.86
    	72.86
    	60.72
    	60.72
    	72.86
    	72.86
    
	2015 	62.00
    	62.00
    	62.00
    	45.57
    	45.57
    	45.57
    	62.00
    	74.40
    	74.40
    	62.00
    	62.00
    	74.40
    	74.40
    
	2016 	63.30
    	63.30
    	63.30
    	46.53
    	46.53
    	46.53
    	63.30
    	75.96
    	75.96
    	63.30
    	63.30
    	75.96
    	75.96
    
	2017 	64.63
    	64.63
    	64.63
    	47.50
    	47.50
    	47.50
    	64.63
    	77.56
    	77.56
    	64.63
    	64.63
    	77.56
    	77.56
    
	2018 	65.99
    	65.99
    	65.99
    	48.50
    	48.50
    	48.50
    	65.99
    	79.19
    	79.19
    	65.99
    	65.99
    	79.19
    	79.19
    
	2019 	67.38
    	67.38
    	67.38
    	49.52
    	49.52
    	49.52
    	67.38
    	80.86
    	80.86
    	67.38
    	67.38
    	80.86
    	80.86
    
	2020 	68.79
    	68.79
    	68.79
    	50.56
    	50.56
    	50.56
    	68.79
    	82.55
    	82.55
    	68.79
    	68.79
    	82.55
    	82.55
    

	PAGE 1 OF 2 - APPENDIX
      A TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

APPENDIX A (Continued)

	  	  	 
    	 
    	 
    	 
    	Monthly Price (Seasonalized) 	 	 	 	 
    	 
    	 
    	 
    
	  	  	JAN 	FEB 	MAR 	APR 	MAY 	JUN 	JUL 	AUG 	SEP 	OCT 	NOV 	DEC 
	Calendar 	Annual 	  	  	  	  	  	  	  	  	  	  	  	  
	Year 	Rate 	100.00% 	100.00% 	73.50% 	73.50% 	73.50% 	100.00% 	120.00% 	120.00% 	100.00% 	100.00% 	120.00% 	120.00% 
	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	2021 	69.20
    	69.20
    	69.20
    	50.86
    	50.86
    	50.86
    	69.20
    	83.04
    	83.04
    	69.20
    	69.20
    	83.04
    	83.04
    
	2022 	69.62
    	69.62
    	69.62
    	51.17
    	51.17
    	51.17
    	69.62
    	83.54
    	83.54
    	69.62
    	69.62
    	83.54
    	83.54
    
	2023 	70.04
    	70.04
    	70.04
    	51.48
    	51.48
    	51.48
    	70.04
    	84.05
    	84.05
    	70.04
    	70.04
    	84.05
    	84.05
    
	2024 	70.46
    	70.46
    	70.46
    	51.79
    	51.79
    	51.79
    	70.46
    	84.55
    	84.55
    	70.46
    	70.46
    	84.55
    	84.55
    
	2025 	70.88
    	70.88
    	70.88
    	52.10
    	52.10
    	52.10
    	70.88
    	85.06
    	85.06
    	70.88
    	70.88
    	85.06
    	85.06
    
	2026 	71.31
    	71.31
    	71.31
    	52.41
    	52.41
    	52.41
    	71.31
    	85.57
    	85.57
    	71.31
    	71.31
    	85.57
    	85.57
    
	2027 	71.74
    	71.74
    	71.74
    	52.73
    	52.73
    	52.73
    	71.74
    	86.09
    	86.09
    	71.74
    	71.74
    	86.09
    	86.09
    
	2028 	72.17
    	72.17
    	72.17
    	53.04
    	53.04
    	53.04
    	72.17
    	86.60
    	86.60
    	72.17
    	72.17
    	86.60
    	86.60
    
	2029 	72.60
    	72.60
    	72.60
    	53.36
    	53.36
    	53.36
    	72.60
    	87.12
    	87.12
    	72.60
    	72.60
    	87.12
    	87.12
    
	2030 	73.04
    	73.04
    	73.04
    	53.68
    	53.68
    	53.68
    	73.04
    	87.65
    	87.65
    	73.04
    	73.04
    	87.65
    	87.65
    
	2031 	73.48
    	73.48
    	73.48
    	54.01
    	54.01
    	54.01
    	73.48
    	88.18
    	88.18
    	73.48
    	73.48
    	88.18
    	88.18
    
	2032 	73.92
    	73.92
    	73.92
    	54.33
    	54.33
    	54.33
    	73.92
    	88.70
    	88.70
    	73.92
    	73.92
    	88.70
    	88.70
    
	2033 	74.36
    	74.36
    	74.36
    	54.65
    	54.65
    	54.65
    	74.36
    	89.23
    	89.23
    	74.36
    	74.36
    	89.23
    	89.23
    
	2034 	74.81
    	74.81
    	74.81
    	54.99
    	54.99
    	54.99
    	74.81
    	89.77
    	89.77
    	74.81
    	74.81
    	89.77
    	89.77
    

Notes –

Annual escalation included in the annual rate from 2007 through
2020 is 2.1% 

Annual escalation included in the annual rate from 2021 through
term of the agreement 0.6% 

Contract Term is 25 Contract Years from the Operation Date, this
  table may include years that are not included in the 25 Contract Year term.
  

	PAGE 2 OF 2 - APPENDIX
      A TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

APPENDIX B 
TO 
POWER PURCHASE AGREEMENT

BETWEEN 
RAFT RIVER ENERGY I LLC 
AND 
IDAHO POWER
COMPANY 

FACILITY AND POINT OF DELIVERY 

	B-1 	
      DESCRIPTION OF FACILITY 

		
      The Facility is the Raft River Geothermal Power Plant,
      Unit #1 (RRGPP-1). The RRGPP-1 is an Ormat OECTM water-cooled, closed-loop,
      Rankine cycle geothermal power plant using pentane as the working fluid,
      and auxiliary equipment. The Facility includes two Ormat turbines (one HP
      (high pressure) and one LP (low pressure) turbine) coupled to a single
      generator with a gross nameplate rating of 18 MW, and a generator voltage
      of 12.47 kV. Power will be delivered to the Transmitting Entity on the
      high side of the 34.5kV step-up transformer through the Idaho Power
      Metering. Each turbine discharges to a 2-shell condenser and is fed by a
      2-shell vaporizer with a 2-shell pre- heater and two feed pumps using
      geothermal fluid as the heat source. The HP turbine has a
      desuperheater/economizer between the turbine and the condenser. Cooling
      water will be supplied by two circulating water pumps in the basin of a
      four-cell counterflow cooling tower. The Facility is protected by a fire
      water system comprising fire water pumps, pipes, monitors, and so on.
      Geothermal fluid will be delivered to the Facility from four or more
      geothermal production wells. Residual geothermal fluid will be reinjected
      via two or more injection wells. 

	  	
       

	B-2 	
      LOCATION OF FACILITY 

		
      The Facility is located at: Section 23, Township 15
      South, Range 26 East, Cassia County, Idaho. Approximately 15 miles SE of
      Malta, ID. The area is commonly known as the Raft River Geothermal
      Resource Area and is the site of a former 5 MW DOE binary geothermal power
      plant test site. 

	  	
       

	B-3 	
      SCHEDULED FIRST ENERGY AND OPERATION DATE
  

	  	
      Seller has selected November 15, 2007 as the estimated
      First Energy Date. 

		
      Seller has selected February 1, 2008, or 60 days after
      Commission Approval, whichever is later, as the estimated Scheduled
      Operation Date. 

		
      In making these selections, Seller recognizes that
      adequate testing of the Facility and completion of all requirements in
      Articles 3 and 4 of this Agreement must be completed

	PAGE 1 OF 2 - APPENDIX
      B TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

	  	
      prior to the project being granted a First Energy Date
      and then an Operation Date. 

	  	
       

	B-4 	
      POINT OF DELIVERY 

		
      “Point of Delivery” means, unless otherwise agreed by
      both Parties, the point of interconnection between the Buyer’s electrical
      system and the Transmitting Entity at the Minidoka dam substation.
  

	  	
       

	B-5 	
      LOSSES 

		
      An energy loss calculation may be required for energy
      losses associated with transformation and transmission of the Facility’s
      generated energy, measured in kWh, occurring from the Metering Point to
      the Point of Delivery. The Losses will be a summation of the calculated,
      agreed to, or measured Losses of the following components. The Losses
      calculation shall be set at 5% of the energy measured at the Metering
      Point for each of the two components identified below until such time as
      the Seller has provided the Buyer with details of other Losses
      calculations and the Buyer has agreed to the Losses calculations as
      provided by the Seller. 

a. Metering Point to the Bridge
Substation – 

Any Losses calculations or
arrangements must be in compliance with any and all Transmission Agreement(s)
and/or transmission arrangements. If the Seller elects to purchase the Losses,
the Losses associated with this component will be zero (0). If Losses are not
purchased by the Seller, then the Seller will provide the Buyer with the Losses
calculation.

b. Bridge Substation to the Point of
Delivery –

Any Losses calculations or arrangements
  must be in compliance with any and all Transmission Agreement(s) and/or transmission
  arrangements. If the Seller elects to purchase the Losses, the Losses associated
  with this component will be zero (0). If Losses are not purchased by the Seller,
  then the Seller will provide the Buyer with the Losses calculation.

	PAGE 2 OF 2 - APPENDIX
      B TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

APPENDIX C 
TO 
POWER PURCHASE AGREEMENT

BETWEEN 
RAFT RIVER ENERGY I LLC 
AND 
IDAHO POWER
COMPANY 

 

SAMPLE FORM OF SELLER GUARANTY 

($750,000) 

____________ __, 200_ 

Idaho Power Company 
PO Box 70 
Boise, Idaho 83707

Fax: _________________

Ladies and Gentlemen: 

          The
  ____________________ (the “Guarantor”), a corporation duly organized
  under the laws of the State of ____________ is the ____________ of Raft River
  Energy I LLC, a limited liability company duly organized under the laws of the
  State of _________ (the “Company”). Guarantor understands and acknowledges
  that Idaho Power Company, an Idaho corporation (“Buyer”), has entered
  into that certain Power Purchase Agreement between the Company and Buyer dated
  as of the effective date hereof (the “Power Purchase Agreement”).
  For value received, and under the provisions of the Power Purchase Agreement,
  Guarantor hereby unconditionally and, subject to the provisions of the fifth
  and sixth paragraphs hereof, irrevocably guarantees the prompt and complete
  payment as and when due, whether by acceleration or otherwise, of the payment
  obligations, whether now in existence or hereafter arising, under the Power
  Purchase Agreement (which guaranty, along with the other terms and conditions
  set forth herein, is hereafter referred to as the “Guaranty”). This
  Guaranty is one of payment and not of collection. Capitalized terms used but
  not defined in this Guaranty have the meaning given to them in the Power Purchase
  Agreement. 

          The
  maximum aggregate liability of the Guarantor in respect of amounts claimed by
  Buyer under or pursuant to this Guaranty shall at no time exceed an amount equal
  to seven  

	PAGE 1 OF 3 - APPENDIX
      C TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

hundred fifty thousand Dollars ($750,000); provided, however,
that Guarantor also guaranties payment in full (that is, without limitation as
to amount) of any reasonable out-of-pocket legal fees, costs and/or expenses,
whether at trial, on appeal or in any arbitration, by Buyer in connection with
prevailing in enforcing the terms of this Guaranty. 

          The
Guarantor hereby waives notice of acceptance of this Guaranty and notice of any
obligation or liability to which it may apply, and waives presentment, demand
for payment, protest, notice of dishonor or non-payment of any such obligation
or liability, suit or the taking of other action by Buyer against, and any other
notice to, the Company, the Guarantor or others.

          Buyer
may at any time and from time to time without notice to or consent of the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder: (1) agree with the Company to make any change in the terms of any
obligation or liability of the Company to Buyer, including any modification or
amendment to the Power Purchase Sales Agreement, (2) take or fail to take any
action of any kind in respect of any security for any obligation or liability of
the Company to Buyer, (3) exercise or refrain from exercising any rights against
the Company or others, (4) fail to first take action against the Company for
amounts due under the Power Purchase Agreement, and/or (5) compromise or
subordinate any obligation or liability of the Company to Buyer including any
security therefore. Any other suretyship defenses are hereby waived by the
Guarantor. 

          This
Guaranty shall terminate on the earlier to occur of (i) the substitution of an
alternate form of Seller Performance Assurance in accordance with the Power
Purchase Agreement; and (ii) the later of (A) the termination or expiration of
the Power Purchase Agreement and (B) the satisfaction of all obligations of the
Company under the Power Purchase Agreement. Notwithstanding the foregoing, the
Guarantor further agrees that if at any time payment, or any part thereof, of
any of the obligations guaranteed hereunder, is rescinded, is demanded to be
returned and/or must otherwise be restored or returned by Buyer in connection
with the bankruptcy, insolvency, dissolution, reorganization or similar
proceeding of the Company, this Guaranty shall continue to be effective or be
reinstated as the case may be; provided that this Guaranty may not be reinstated
for any reason after its termination under clause (i) of this paragraph. 

          Guarantor
may not assign its rights nor delegate its obligations under this Guaranty, in
whole or in part, without prior written consent of Buyer, and any purported
assignment or delegation absent such consent is void, except for an assignment
and delegation of all of the Guarantor’s rights and obligations hereunder in
whatever form the Guarantor determines may be appropriate to a partnership,
corporation, trust or other organization in whatever form that succeeds to all
or substantially all of the Guarantor’s assets and business and that assumes
such obligations by contract, operation of law or otherwise. Upon any such
delegation and assumption of obligations, the Guarantor shall be relieved of and
fully discharged from all obligations hereunder, whether such obligations arose
before or after such delegation and assumption. 

          In
  the event any payment owing to Buyer under the Power Purchase Agreement or under
  this Guaranty is not promptly and completely paid as and when due, any indebtedness
  of Company to Guarantor and any payment or distribution right held by Guarantor
  against the Company shall be subordinated to the due and unpaid indebtedness
  to Buyer until paid in full.

	PAGE 2 OF 3 - APPENDIX
      C TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

Guarantor shall have no right of subrogation until the
Company’s due and unpaid indebtedness to Buyer is paid in full. 

          This
Guaranty constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between Guarantor and Buyer with
respect to the subject matter hereof. This Guaranty may not be modified except
pursuant to a written instrument signed by Buyer and Guarantor. The execution,
delivery and performance of this Guaranty have been duly authorized by all
requisite corporate action on the part of the Guarantor. The provisions of this
Guaranty are severable, and if any clause or provision shall be held invalid or
unenforceable in whole or in part, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, and shall not
affect the validity or enforceability of any other clause or provision. 

          THIS
GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
GUARANTOR AGREES TO THE EXCLUSIVE JURISDICTION OF COURTS LOCATED IN THE STATE
OF , UNITED STATES OF AMERICA, OVER ANY DISPUTES ARISING UNDER OR
RELATING TO THIS GUARANTY. 

Very truly yours, 

_________________________________________
 

By:   _____________________________________

           Authorized Officer 

	PAGE 3 OF 3 - APPENDIX
      C TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

APPENDIX D 

TO 

POWER PURCHASE AGREEMENT BETWEEN 

RAFT RIVER ENERGY I LLC 

AND 

IDAHO POWER COMPANY 

 

90%-110% PERFORMANCE REQUIREMENTS 

          1.     
Determination of Surplus Energy Price. The Buyer shall pay the
Contract Price for Net Energy that is not determined to be Surplus Energy as
defined below from the Seller’s Facility in accordance with the Agreement. For
Surplus/Shortfall Energy only, the Buyer shall pay the Surplus Energy Price,
which shall be calculated in accordance with this Appendix and used in lieu of
the Contract Price solely with respect to the Surplus/Shortfall Energy as
defined in this Appendix. 

          2.      Definitions.
  The following defined terms (as indicated by initial capitalization)
  shall have the meaning given to them in this Appendix.

          “Surplus
Energy Price” – For all Surplus/Shortfall Energy, Buyer shall pay to the
Seller the current month’s Market Energy Price or the Contract Price specified
in Appendix A of this Agreement, whichever is lower. 

          “Surplus/Shortfall
Energy” is defined as either (1) Net Energy produced by the Seller’s
Facility and delivered to Buyer pursuant to this Agreement during the calendar
month to the extent such Net Energy exceeds one hundred ten percent (110%) of
the monthly Net Energy Target for the corresponding calendar month specified
pursuant to this Appendix, or (2) if the Net Energy produced by the Seller’s
Facility and delivered to Buyer pursuant to this Agreement during the calendar
month is less than ninety percent (90%) of the monthly Net Energy Target for the
corresponding calendar month specified pursuant to this Appendix, then all Net
Energy delivered by the Facility to the Buyer’s electrical system for that given
month. 

          “Initial
Date” – is defined as the first day of the calendar month following the date
on which the Seller fails to timely cure a default as determined under Section
7.4.2 and the terms and conditions within this Appendix are therefore
implemented in lieu of Sections 7.4 and 7.5 of the Agreement. 

          “Initial
  Year” – is defined as twelve (12) calendar months starting with
  the Initial Date. 

	PAGE 1 OF 2 - APPENDIX
      D TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

          “Net
Energy Target” is defined as the monthly Net Energy that the Seller intends
to produce and deliver to the Point of Delivery as specified pursuant to this
Appendix. 

          “Initial
Year Monthly Net Energy Targets” – This term shall have the meaning given to
it in Section 3 below. 

          3.      Monthly
  Net Energy Targets. Seller shall provide the Buyer with the monthly
  Net Energy Targets for the Initial Year within thirty (30) days after the Initial
  Date (the “Initial Year Monthly Net Energy Targets”).
  If the Seller does not provide the Initial Year Monthly Net Energy Targets as
  specified, ninety percent (90%) of the Facility’s nameplate rating multiplied
  by the hours for each month will be used to establish each month’s Net
  Energy Target for the Initial Year (subject to adjustment under Section 5 of
  this Appendix).

          4.      Ongoing
Monthly Net Energy Targets – Beginning at the end of the ninth
(9th) month following the Initial Date and every three (3) months
thereafter, the Seller shall provide Buyer with a minimum of three additional
calendar months of Net Energy Targets. This information will be provided to
Buyer by written notice in accordance with Article 33, no later than the fifth
(5th) day following the end of the previous month. If the Seller does
not provide the Ongoing Monthly Net Energy Targets in a timely manner, Buyer
will use the monthly production (actual or, if actual numbers are not available,
calculated as contemplated in Section 9.3) for the same three (3) months period
in the preceding year. 

          5.      Seller’s
Adjustment of Net Energy Target(s) – Except as provided herein,
beginning with the end of the third (3rd) month after the Initial
Date and at the end of every third(3rd) month thereafter, the Seller
may not revise the immediate next three (3) months of previously provided
Net Energy Targets. Notwithstanding the foregoing, by written notice given to
Buyer in accordance with Article 33, no later than 5:00 pm of the fifth
(5th) day following the end of the previous month, the Seller may
revise all other previously-provided Net Energy Targets 

          6.     
Credits to Net Energy Target – Buyer shall adjust the applicable
month’s Net Energy Target to reflect the same reduction as has occurred in the
actual Net Energy deliveries if Net Energy deliveries by the Seller to the Buyer
are reduced as a result of: 

          (a)      Force
majeure affecting the Seller, Buyer, Interconnection Provider or
Transmitting Entity. 

          (b)      Curtailment
of the Seller’s Net Energy deliveries other than for Seller’s default; or 

          (c)      Buyer’s
  default under this Agreement.

 

	PAGE 2 OF 2 - APPENDIX
      D TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

APPENDIX E 

TO 

POWER PURCHASE AGREEMENT BETWEEN 

RAFT RIVER ENERGY I LLC 

AND 

IDAHO POWER COMPANY 

NET ENERGY SHORTFALL PRICE AND ANNUAL CAP

Net Energy Shortfall Price The Net Energy
Shortfall Price shall be (1) the mathematical average of the individual twelve
(12) monthly Market Energy Cost values of the applicable Annual Guaranteed
Output period or (2) one hundred fifty percent (150%) of the Annual Rate
specified in Appendix A for the Calendar Year which corresponds to that of the
first month of the Annual Guaranteed Output period, whichever is less, minus the
Annual Rate as specified in Appendix A for the Calendar Year which corresponds
to that of the first month of the Annual Guaranteed Output period. If this Net
Energy Shortfall Price calculation results in a value less than zero (0) then
the result will be zero (0). 

Example 1

          A Net
Energy Shortfall occurs for the year of March 1, 2009 through February 28, 2010

                         Annual
Rate                                         
 54.73 mills/kWh 

          
Mathematical average of the 12 monthly Market Energy Cost values for the period
of March 1, 2009 through February 28, 2010 

                                                                                                           40.00
mills/kWh 

          150%
of the Annual
Rate                                    54.73
* 150% = 82.10 mills/kWh 

          Net
Energy Shortfall Price calculation

The average Market Energy Cost (40.00)
is less than 150% of the Annual Rate (82.10) . Therefore the Net Energy
Shortfall Price calculation is equal to:

Market Energy Cost (40.00) minus
Annual Rate (54.73) = -14.73 

As the calculation results in a value
  less than 0, (-14.73) the Net Energy Shortfall price is 0.

 

	PAGE 1 OF 3 - APPENDIX
      E TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

Example 2

          A Net
Energy Shortfall occurs for the year of March 1, 2009 through February 28, 2010

                    Annual
Rate                                    54.73
mills/kWh 

          
Mathematical average of the 12 monthly Market Energy Cost values for the period
of March 1, 2009 through February 28, 2010 

                                                                                                               
75.00 mills/kWh 

          150%
of the Annual
Rate                                        
54.73 * 150% = 82.10 mills/kWh 

          Net
Energy Shortfall Price calculation

The average Market Energy Cost (75.00)
is less than 150% of the Annual Rate (82.10) . Therefore the Net Energy
Shortfall Price calculation is equal to:

Market Energy Cost (75.00) minus
Annual Rate (54.73) = 20.27 

20.27 is the Net Energy Shortfall
Price

Example 3

          A Net
Energy Shortfall occurs for the year of March 1, 2009 through February 28, 2010

                    Annual
Rate                                    
 54.73 mills/kWh 

          
Mathematical average of the 12 monthly Market Energy Cost values for the period
of March 1, 2009 through February 28, 2010 

                                                                                                                   98.00
mills/kWh 

          150%
of the Annual
Rate                                          
 54.73 * 150% = 82.10 mills/kWh 

          Net
Energy Shortfall Price calculation

The average Market Energy Cost (98.00)
is greater than 150% of the Annual Rate (82.10) . Therefore the Net Energy
Shortfall Price calculation is equal to:

150% of Annual Rate (82.10) minus
Annual Rate (54.73) = 27.37 

27.37 is the Net Energy Shortfall Price

	PAGE 2 OF 3 - APPENDIX
      E TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

Net Energy Shortfall Damages Cap

	Contract 
Year 
	Net Energy 
Shortfall
      
Damages Cap 	

	Contract 
Year 
	Net Energy 
Shortfall
      
Damages Cap 
	  	  	 	  	  
	1 	$0.00 	 	14 	$415,270 
	2 	$0.00 	 	15 	$427,728 
	3 	$300,000 	 	16 	$440,560 
	4 	$309,000 	 	17 	$453,777 
	5 	$318,270 	 	18 	$467,390 
	6 	$327,818 	 	19 	$481,412 
	7 	$337,653 	 	20 	$495,854 
	8 	$347,782 	 	21 	$500,000 
	9 	$358,216 	 	22 	$500,000 
	10 	$368,962 	 	23 	$500,000 
	11 	$380,031 	 	24 	$500,000 
	12 	$391,432 	 	25 	See Note 1 
	13 	$403,175 	 	  	  

Note 1 – The Net Energy Shortfall Damages Cap in the final
  year shall be $500,000 prorated to the number of months in the Annual Output
  Forecast. 

	PAGE 3 OF 3 - APPENDIX
      E TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

APPENDIX F 

TO 
POWER PURCHASE AGREEMENT 
BETWEEN

RAFT RIVER ENERGY I LLC 
AND 
IDAHO POWER COMPANY

ENGINEERING CERTIFICATIONS 

 

 

 

Continued on next page

	PAGE 1 OF 7 - APPENDIX
      F TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

ENGINEER'S CERTIFICATION 

OF 

OPERATIONS & MAINTENANCE POLICY 

          The
undersigned _____________________________________, on behalf of himself and
_______________________________________, hereinafter collectively referred to as
"Engineer," hereby states and certifies to the Seller as follows:

          1.      That
Engineer is a Licensed Professional Engineer in good standing.

          2.      That
  Engineer has reviewed the Power Purchase Agreement, hereinafter "Agreement,"
  between Idaho Power as Buyer, and Raft River Energy I LLC as Seller, dated _________________________.

          3.      That
the geothermal power production Facility which is the subject of the Agreement
and this statement is identified as the Raft River Geothermal Generation Unit #1
and is hereinafter referred to as the "Facility."

          4.      That
the Facility is located in Section ____ Township _______, Range ________, Boise
Meridian, _____________County, Idaho.

          5.      That
Engineer recognizes that the Agreement provides for the Facility to furnish
electrical energy to Idaho Power for a twenty five (25) year period.

          6.     
That Engineer has substantial experience in the design, construction and
operation of electric power plants of the same type as this Facility.

          7.      The
  Engineer will identify any material economic relationship to the Design Engineer
  of this Facility.

	PAGE 2 OF 7 - APPENDIX
      F TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

          8.      That
Engineer has reviewed and/or supervised the review of the Policy for Operation
and Maintenance ("O&M") for this Facility and it is his professional opinion
that, provided said Facility has been designed and built to appropriate
standards, adherence to said O&M Policy will result in the Facility's
producing at or near the design electrical output, efficiency and plant factor
for a twenty five (25) year period.

          9.     
That Engineer recognizes that Idaho Power, in accordance with Article 3 and 4 of
the Agreement, is relying on Engineer's representations and opinions contained
in this Statement.

          10.      That
Engineer certifies that the above statements are complete, true and accurate to
the best of his knowledge and therefore sets his hand and seal below.

 

 

By   
______________________________

 

 

(P.E. Stamp) 

 

 

Date ______________________________

	PAGE 3 OF 7 - APPENDIX
      F TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

ENGINEER’S CERTIFICATION 
OF
ONGOING OPERATIONS AND
MAINTENANCE 

          The
undersigned ____________________________________, on behalf of himself and
___________________________________ hereinafter collectively referred to as
“Engineer,” hereby states and certifies to the Seller as follows: 

          1.      That
Engineer is a Licensed Professional Engineer in good standing. 

          2.     
That Engineer has reviewed the Power Purchase Agreement, hereinafter
"Agreement," between Idaho Power as Buyer, and Raft River Energy I LLC as
Seller, dated _________________________

          3.      That
the geothermal power production Facility which is the subject of the Agreement
and this statement is identified as the Raft River Geothermal Generation Unit #1
and is hereinafter referred to as the "Facility."

          4.     
That the Facility is located in Section ____ Township _______, Range ________,
Boise Meridian, _____________County, Idaho.

          5.      That
Engineer recognizes that the Agreement provides for the Facility to furnish
electrical energy to Idaho Power for a twenty five (25) year period. 

          6.      That
Engineer has substantial experience in the design, construction and operation of
electric power plants of the same type as this Facility. 

          7.      The
Engineer shall identify any material economic relationship to the Design
Engineer of this Facility.

          8.      That
  Engineer has made a physical inspection of said Facility, its operations and
  maintenance records since the last previous certified inspection. It is Engineer’s
  professional opinion, based on the Facility’s appearance, that its ongoing
  O&M has been substantially in 

	PAGE 4 OF 7 - APPENDIX
      F TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

accordance with said O&M Policy; that it is in reasonably
good operating condition; and that if adherence to said O&M Policy
continues, the Facility will continue producing at or near its design electrical
output, efficiency and plant factor, within the limits of the geothermal
reservoir capability of the Facility for the remaining ______ years of the
Agreement. 

          9.     
That Engineer recognizes that Idaho Power, in accordance with Article 3 and 4 of
the Agreement, is relying on Engineer’s representations and opinions contained
in this Statement. 

          10.      That
Engineer certifies that the above statements are complete, true and accurate to
the best of his knowledge and therefore sets his hand and seal below. 

 

 

By   
______________________________

 

 

(P.E. Stamp) 

 

 

Date ______________________________

	PAGE 5 OF 7 - APPENDIX
      F TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

ENGINEER'S CERTIFICATION 
OF
DESIGN & CONSTRUCTION
ADEQUACY 

          The
undersigned _____________________________________, on behalf of himself and
_______________________________________, hereinafter collectively referred to as
"Engineer", hereby states and certifies to Idaho Power as follows:

          1.      That
Engineer is a Licensed Professional Engineer in good standing.

          2.      That
Engineer has reviewed the Power Purchase Agreement, hereinafter "Agreement,"
between Idaho Power as Buyer, and Raft River Energy I LLC as Seller, dated
_________________________.

        3.      That
the geothermal power production Facility which is the subject of the Agreement
and this statement is identified as the Raft River Geothermal Generation Unit #1
and is hereinafter referred to as the "Facility."

          4.      That
the Facility is located in Section ____ Township _______, Range ________, Boise
Meridian, _____________County, Idaho.

          5.      That
Engineer recognizes that the Agreement provides for the Facility to furnish
electrical energy to Idaho Power for a twenty five (25) year period. 

          6.      That
Engineer has substantial experience in the design, construction and operation of
electric power plants of the same type as this Facility.

          7.     
The Engineer shall identify any material economic relationship to the Design
Engineer of this Facility and has made the analysis of the plans and
specifications independently.

          8.      That
  Engineer has reviewed the engineering design and construction of the Facility,
  including the civil work, electrical work, generating equipment, prime mover

	PAGE 6 OF 7 - APPENDIX
      F TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

conveyance system, Seller furnished Interconnection Facilities
and other Facility facilities and equipment. 

          9.      That
the Facility has been constructed in accordance with said plans and
specifications, all applicable codes and consistent with Prudent Electrical
Practices as that term is described in the Agreement. 

          10.      That
the design and construction of the Facility is such that with reasonable and
prudent operation and maintenance practices by Seller, the Facility is capable
of performing in accordance with the terms of the Agreement and with Prudent
Electrical Practices for a _________(______) year period. 

          11.      That
Engineer recognizes that Idaho Power, in accordance with Article 3 and 4 of the
Agreement, in interconnecting the Facility with its system, is relying on
Engineer's representations and opinions contained in this Statement.

          12.      That
Engineer certifies that the above statements are complete, true and accurate to
the best of his knowledge and therefore sets his hand and seal below.

 

 

By   
______________________________
                                                         
(P.E. Stamp) 

 

 

Date ______________________________

	PAGE 7 OF 7 - APPENDIX
      F TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

APPENDIX G 

TO 
POWER PURCHASE AGREEMENT 
BETWEEN

RAFT RIVER ENERGY I LLC 
AND 
IDAHO POWER COMPANY

ENVIRONMENTAL ATTRIBUTES OWNERSHIP AND PRICING 

During the Initial Term of this agreement:

For Calendar Year 2007 – The Buyer will not have
any ownership rights to any Environmental Attributes produced in 2007. 

For calendar years of 2008 through 2017 – The
Buyer will not have any ownership rights to (1) the first 7,300
Environmental Attributes produced each month and (2) 25% of all monthly
Environmental Attributes exceeding the 7,300 specified above in item 1. However,
the Buyer will have all rights to any and all Environmental Attributes exceeding
87,600 during any calendar year.

At the end of each month, the Buyer will be granted all
ownership rights to the remaining Environmental Attributes associated with the
previous month’s actual Net Energy. 

For calendar years of 2018 through the end of the Initial
  Term of this Agreement expires -At the end of each month, Idaho
  Power will be granted all ownership rights to 51 percent of the total Environmental
  Attributes associated with the previous month’s actual Net Energy. 

	PAGE 1 OF 1 - APPENDIX
      G TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

APPENDIX H 

TO 
POWER PURCHASE AGREEMENT 
BETWEEN

RAFT RIVER ENERGY I LLC 
AND 
IDAHO POWER
COMPANY

COMMUNICATIONS 

Buyer Contact Information 

Idaho Power Company 
1221 West Idaho Street 
Boise, ID
83702 
Telephone:      (208) 388-2200 

Mr. Karl Bokenkamp 
General Manager
Power Supply Operations & Planning

Telephone:           (208)
388-2482

Email:                     KBokenkamp@IdahoPower.com

Mr. Mel Chick 
Supervisor
Generation Dispatch

Telephone:           (208)
388-6476

Email:                     MChick@IdahoPower.com

Mr. David Churchman 
Manager Power
Operations

Telephone:           (208)
388-5626

Email:                     DChurchman@IdahoPower.com

Mr. Travis Prairie 

  Leader, Transaction Specialist 

  Telephone:           (208)
  388-2988 

  Email:                    
  TPrairie@IdahoPower.com

	PAGE 1 OF 2 - APPENDIX
      H TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPC

Seller Contact Information 

Raft River Energy I LLC 
1509 Tyrell Lane, Suite B

Boise, ID 83706 
Phone: (208) 424-1024 
Fax: (208) 424-1030 

For Contract Matters: 
CEO, U.S. Geothermal Inc. 
Attn:
Daniel J. Kunz 
Phone: (208) 424-1027 
E-mail: dkunz@usgeothermal.com 

24-Hour Project Operational
Contact 

Name: Facility Operator 
Telephone
Number: (208) 645-2600 
Cell Phone:
___________________________________
E-Mail:
_______________________________________
Fax: (208) 645-2341 

Project On-site Contact
Information 

President U.S. Geothermal Services LLC
  

  Attn: Chris Harriman 

  Telephone Number: (208) 645-2600 

  Cell Phone: (208) 431-1081 

  E-Mail: charriman@usgeothermal.com 

	PAGE 2 OF 2 - APPENDIX
      H TO POWER PURCHASE AGREEMENT – RAFT RIVER ENERGY I/IPCFiled by Automated Filing Services Inc. (604) 609-0244 - Upstream Biosciences Inc. - Exhibit 10.18

 

	100 – 570 West 7th Avenue 
	Vancouver, BC Canada V5Z 4S6 
	[t]  778.995.5429 
	[f]  604.675.8178 

	                                                                                                      	August        
       , 2007 
	Dr. Art Cherkasov 	  
	JTAT Consulting 	  
	B5 – 1070 West 7th Avenue 	  
	Vancouver, B.C. 	  
	V6H 1B3 	  

	RE: 	Consulting Services Agreement
  

Dear Dr. Cherkasov –

As discussed your role in Upstream Biosciences Inc. (“Upstream”
or the “Company”) has changed to reflect your ongoing participation in
scientific work upon the successful acquisition of Pacific Pharma Technologies
Inc. 

For consideration of the mutual commitments and
acknowledgements made herein, Upstream and Dr. Art Cherkasov of the JTAT
Consulting agree to the following consulting arrangement.

	Consultant: 	
      ‘JTAT Consulting’ through Dr. Art Cherkasov
  

	  	
      

	Company: 	
      Upstream Biosciences Inc. 

	  	
      

	Services: 	
      Consulting services to assist Company in the
      commercialization of its inventory of chemical compounds for bioactive
      applications. Such consulting services shall include you assistance in the
      establishment of standard industrial drug discovery and optimization
      pipeline. Such pipeline will include standard ‘off-the-shelve’ commercial
      and freely available software modules, databases and protocols. Consultant
      will also be involved into educating and supervising Upstream scientific
      personnel in their independent work in the area of computer-aided drug
      design, optimization of existing compounds/scaffolds using cheminformatics
      methods, and other tasks as identified by Upstream senior management as
      required from time to time. No direct research work will be required from
      Consultant and no scientific results will be generated by Consultant for
      the Company as “works made for hire”. 

	  	
      

		
      Consultant will have no claim on results produced by
      Company’s employees trained under Consultant supervision. Company can
      claim patents based upon such research work conducted by Company’s
      employees. 

	 	
       

		
      In necessary, Consultant will also assist Company is
      patent filings around the world (as long as Consultant is not required to
      pay for the cost of such patent work). 

	  	
      

	The Goal: 	
      Establishing of Company’s in-house research pipeline for
      computer-aided drug design and training of Company’s highly qualified
      personnel. 

	  	
      

		
      This Agreement shall only be modified in a writing signed
      by the parties and shall be binding on the parties' and their heirs,
      administrators, successors, and assigns. This Agreement will be governed
      by British Columbia law, Canada. 

Page 1 of 3

	Advisory Board: 	
      Dr. Cherkasov shall be a member of the Company’s
      Scientific Advisory Board and provide advice to Company from time to time.
      Consultant shall not hold any other role in Company (as an officer or a
      director). 

	  	
       
	
       

	Payment: 	
      Company shall pay Consultant for these Services.
      Consultant shall receive a “Scientific Consulting Fee” as follows:
  

	  	
                     
                       Cash:
      
	
      CDN$50,000 per calendar year (including GST), payable
      monthly 

	  	
                                
            Common shares: 
	
      the equivalent of CDN$50,000 per calendar year. This
      amount will 

		
      be calculated based upon the closing price for Upstream
      common share price as quoted on the OTCBB at the end of each calendar
      month, and will be rounded upwards to the closest whole common share. This
      amount will be payable cumulatively in 2 transactions – after 6 month and
      after 12 months. The shares will be restricted for 1 year. 

	  	
       
	
       

	Minimum Time 	
       
	
       

	Commitment: 	
      Consultant will ensure that he will dedicate a minimum of
      two (2) working days per week (including Saturday), consisting of a
      minimum of eight (8) hours per working day during the entire term of this
      Agreement. 

	  	
       
	
       

	Independent 	
       
	
       

	Contractor: 	
      Consultant acknowledges he is an independent contractor
      and not an employee of Company. Consultant shall use his own equipment for
      all such Consulting Services and shall be free to determine the most
      appropriate way to optimize the Company’s compounds. Company is only
      interested in the results of such work. 

	  	
       
	
       

	Company 	
       
	
       

	Representation: 	
      All costs of test work shall be at Company’s sole cost.
      

	  	
       
	
       

	Term: 	
      This Agreement commences on the Effective Date (noted
      below) and shall expire three (3) calendar years from the Effective Date.
      It may be renewed and extended annually upon mutual consent of the
      parties. 

	  	
       
	
       

	Confidentiality: 	
      The Consultant may disclose to the Company any
      information that the Consultant would normally freely disclose to other
      members of the scientific community at large, whether by publication, by
      presentation at seminars, or in informal scientific discussions. In
      providing consulting services to the Company pursuant to this Agreement,
      the Consultant may acquire information that pertains to the Company's
      products, processes, equipment, programs, developments, or plans that is
      both (i) disclosed or made known by the Company to the Consultant and (ii)
      identified as "proprietary" by the Company at any time ("Proprietary
      Information"). The Consultant agrees not to disclose any Proprietary
      Information to third parties without prior written consent of the Company.
      Proprietary Information subject to this paragraph does not include
      information that: (i) is or later becomes available to the public through
      no breach of this Agreement by the Consultant; (ii) is obtained by the
      Consultant from a third party who had the legal right to disclose the
      information to the Consultant; (iii) is already in the possession of the
      Consultant on the date this Agreement becomes effective; or (iv) is
      required to be disclosed by law, government regulation, or court order.
      

	  	
       
	
       

	UBC: 	
      Consultant is an employee of the University of British
      Columbia (UBC). Consultant hereby agrees to conform with all UBC rules and
      regulations (including the rules to report all consulting agreements such
      as this to UBC, which may also lead to Consultant sharing contingent
      payments and fees earned herein with UBC). 

	  	
       
	
       

	Indemnity: 	
      Consultant is responsible for informing UBC of this
      Agreement and obtaining all necessary consents and approvals. Consultant
      hereby indemnifies Upstream Biosciences Inc., against any and all claims
      by UBC to Upstream. 

	  	
       
	
       

	  	
       
	
       

	Representations. 	
      Consultant represents that it is not required to maintain
      any licenses and registrations under federal or any state regulations
      necessary to perform the services set forth herein. Consultant
      acknowledges that, to the best of its knowledge, the performance of the
      services set forth under this Agreement will not violate any rule or
      provision of any regulatory agency having jurisdiction over Consultant.
      

Page 2 of 3

		
      To the extent permitted by law, Consultant will
      indemnity, defend, and hold harmless Upstream Biosciences Inc. against any
      losses, claims, damages, or liabilities to which they may become subject
      under this Consulting Agreement and Consultant’s requirement to ensure UBC
      rules and regulations are satisfied. 

	  	
       

	General: 	
      If any term or provision of this Agreement or the
      application thereof to any person or circumstances shall, to any extent,
      be invalid and unenforceable, the remainder of this agreement or the
      application of such term or provision to persons or circumstances other
      than those to which it is held invalid or unenforceable, shall not be
      affected thereby, and each term and provision of this agreement shall be
      valid and be enforceable. 

	  	
       

	Termination: 	
      Company may terminate this Agreement immediately with
      cause anytime after a period of one calendar year from the Effective Date.
      Company may terminate this agreement at any time without cause after a
      period of one calendar year from the Effective Date, with sixty (60) days
      notice. Upon termination however the obligations above under sections
      “Payment”, “Acquisition of Company”, “Confidentiality”, “Indemnity” and
      “Ownership of Work” shall survive any such termination.

The undersigned agree to the terms and conditions of this
agreement and hereby acknowledge they have authority to enter this agreement.
This agreement becomes effective immediately upon the acquisition of Pacific
Pharma Technologies Inc. by Upstream (the “Effective Date”).

	UPSTREAM BIOSCIENCES INC. 	  
	100 – 570 West 7th Avenue 	DR. ART CHERKASOV 
	Vancouver, BC Canada V5Z 4S6 	  
	[t] 778.995.5429 	JTAT Consulting 
	[f] 604.675.8178 	  
	  	  
	  	  
	  	  
	/s/ Joel Bellenson 	/s/ Dr. Art Cherkasov 
	Joel Bellenson, CEO 	Dr. Art Cherkasov 
	Authorized Signatory 	  

Page 3 of 3

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