Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - US Geothermal Inc. - Exhibit 10.2

AMENDED AND RESTATED

OPERATING AGREEMENT

OF

RAFT RIVER ENERGY I LLC

A Delaware Limited Liability Company

 

As of August 9, 2006

*** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
  DOCUMENT HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
  PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

TABLE OF CONTENTS

	ARTICLE I. ORGANIZATION OF COMPANY 	2 
	 	  	  	  
	 	Section 1.1 	Organization; Continuation; Compliance. 	2 
	 	Section 1.2 	Name 	2 
	 	Section 1.3 	Property of the Company 	2 
	 	Section 1.4 	Place of Business. 	2 
	 	Section 1.5 	Purpose 	2 
	 	Section 1.6 	Powers 	2 
	 	Section 1.7 	Registered Agent 	3 
	 	Section 1.8 	Term of Existence 	3 
	 	Section 1.9 	Liability to Third Parties 	3 
	 	Section 1.10 	Separateness Covenants 	3 
	 	 	  	  
	ARTICLE II. DEFINITIONS, RULES OF CONSTRUCTION 	4 
	 	 	  	  
	 	 	ARTICLE III. MEMBERS 	12 
	 	 	  	  
	 	Section 3.1 	Members. 	12 
	 	Section 3.2 	Membership Interest; Units 	13 
	 	Section 3.3 	Authority of Members 	13 
	 	 	  	  
	ARTICLE IV. MEETINGS OF MEMBERS 	13 
	 	 	  	  
	 	Section 4.1 	Place of Meetings 	13 
	 	Section 4.2 	Meetings 	13 
	 	Section 4.3 	Notice 	14 
	 	Section 4.4 	Waiver of Notice 	14 
	 	Section 4.5 	Quorum. 	14 
	 	Section 4.6 	Voting. 	14 
	 	Section 4.7 	Conduct of Meetings 	16 
	 	Section 4.8 	Action by Written Consent. 	16 
	 	Section 4.9 	Proxies 	17 
	 	 	  	  
	ARTICLE V. MANAGEMENT OF THE COMPANY 	17 
	 	 	  	  
	 	Section 5.1 	Management of Business 	17 
	 	Section 5.2 	Number and Election of Managers. 	18 
	 	Section 5.3 	General Powers of Managers; Activities. 	18 
	 	Section 5.4 	Limitations on Powers of Managers. 	18 
	 	Section 5.5 	Place of Meetings 	18 
	 	Section 5.6 	Regular Meetings 	19 
	 	Section 5.7 	Special Meetings 	19 
	 	Section 5.8 	Quorum of and Action by Managers. 	19 
	 	Section 5.9 	Compensation. 	19 

	 	Section 5.10
      	Resignation and Removal.
      	19 
	 	Section 5.11 	Vacancies. 	20 
	 	Section 5.12
      	Action by Written Consent.
      	20 
	 	Section 5.13 	Other Business. 	20 
	 	Section 5.14
      	Standard of Care; Liability
      	20 
	 	Section 5.15 	Appointment and Authority of President 	21 
	 	Section 5.16
      	Execution of Company Documents.
      	21 
	 	Section 5.17 	Operating Budget 	21 
	 	 	  	  
	ARTICLE VI. BOOKS AND RECORDS;
      TAX MATTERS 	21 
	 	 	  	  
	 	Section 6.1 	Bank Accounts; Investments 	21 
	 	Section 6.2
      	Records Required by Act;
      Right of Inspection 	22 
	 	Section 6.3 	Books and Records of Account 	22 
	 	Section 6.4
      	Other Information Rights
      	22 
	 	Section 6.5 	Audits 	23 
	 	Section 6.6
      	Fiscal Year. 	23 
	 	Section 6.7 	Tax Matters. 	23 
	 	 	  	  
	ARTICLE VII. RESTRICTIONS ON
      TRANSFERABILITY; ADMISSION OF NEW MEMBERS 	27 
	 	 	  	  
	 	Section 7.1 	Transfers. 	27 
	 	Section 7.2
      	Admission of Transferee
      as Member 	27 
	 	Section 7.3 	Admission of Additional Members 	28 
	 	 	  	  
	ARTICLE VIII. CAPITAL OF THE
      COMPANY 	28 
	 	 	  	  
	 	Section 8.1 	Capital Contributions 	28 
	 	Section 8.2
      	Further Required Capital
      Contributions 	28 
	 	Section 8.3 	Return of Capital Contributions 	29 
	 	Section 8.4
      	In-Kind Contributions 	29 
	 	Section 8.5 	Interest 	29 
	 	Section 8.6
      	Loans From Members 	29 
	 	 	  	  
	ARTICLE IX.
      CAPITAL ACCOUNTS, PROFITS AND LOSSES AND ALLOCATIONS 	29 
	 	 	  	  
	 	Section 9.1
      	Capital Accounts 	29 
	 	Section 9.2 	Profits and Losses. 	30 
	 	 	  	  
	ARTICLE X. APPLICATIONS AND
      DISTRIBUTIONS OF AVAILABLE CASH 	34 
	 	 	  	  
	 	Section 10.1 	Applications and Distributions. 	34 
	 	Section 10.2
      	Liquidation 	35 
	 	Section 10.3 	Withholding Taxes 	35 

 ii 

	ARTICLE XI. DISSOLUTION 	35 
	 	 	  	  
	 	Section 11.1 	Dissolution Events. 	35 
	 	 	  	  
	ARTICLE XII. LIQUIDATION 	36 
	 	 	  	  
	 	Section 12.1 	Responsibility for Winding Up 	36 
	 	Section 12.2 	Distribution of Assets Upon Winding Up 	36 
	 	 	  	  
	ARTICLE XIII. INDEMNIFICATION; EXCULPATION 	37 
	 	 	  	  
	 	Section 13.1 	Indemnification of Members 	37 
	 	Section 13.2 	Indemnification of Managers, Officers, Employees and Agents
      	37 
	 	Section 13.3 	Exculpation. 	38 
	 	 	  	  
	ARTICLE XIV. MISCELLANEOUS 	38 
	 	 	  	  
	 	Section 14.1 	Governing Law. 	38 
	 	Section 14.2 	Binding Effect; Entire Agreement. 	38 
	 	Section 14.3 	Creditor’s Interest in the Company 	39 
	 	Section 14.4 	Headings. 	39 
	 	Section 14.5 	Amendments. 	39 
	 	Section 14.6 	Severability. 	39 
	 	Section 14.7 	Incorporation by Reference 	39 
	 	Section 14.8 	Variation of Pronouns 	39 
	 	Section 14.9 	No Third-Party Beneficiaries 	39 
	 	Section 14.10 	Counterpart Execution; Facsimile Signatures 	39 
	 	Section 14.11 	Confidentiality and Disclosure. 	39 
	 	Section 14.12 	Amendment and Restatement. 	41 
	 	Section 14.13 	Notices. 	42 
	 	Section 14.14 	Conference Telephone Meetings. 	42 

	Schedules 	  
	 	 
	Schedule 1 	Members, Membership Interests
      and Information for Purposes of Providing Notice  
	 	
	Schedule 2 	List of Approved Affiliate
      Transactions and Agreements 
	 	 
	Schedule 3 	Initial List of Managers of
      the Company 
	 	 
	Schedule 4 	Projected Distributable Free
      Cash 
	 	 
	Schedule 5 	Member A Capital Contributions
      

iii

	Schedule 6	Conditions Precedent to Funding
      
	 	 
	Schedule 7 	Transfer Plan 
	 	 
	Schedule 8 	Scheduled REC Income Amounts
      

	Exhibits 	  
	 	 
	Exhibit A 	Map of Site 

iv

AMENDED AND RESTATED 
OPERATING AGREEMENT

                    THIS
AMENDED AND RESTATED OPERATING AGREEMENT of RAFT RIVER ENERGY I LLC, a Delaware
limited liability company (the “Company”), is dated this 9th
day of August, 2006 (the “Effective Date”), and is effective as of
the Effective Time (as defined herein), by and among the Company, RAFT RIVER I
HOLDINGS, LLC, a Delaware limited liability company, in its capacity as a member
(“Member A”), and U.S. GEOTHERMAL INC., an Idaho corporation in its
capacity as a member (“Member B”).

RECITALS

                    WHEREAS,
the Company was formed by virtue of its Certificate of Formation filed with the
Secretary of State of the State of Delaware on August 18, 2005; 

                    WHEREAS,
prior to the date hereof, the Company has been governed by the Operating
Agreement of the Company, effective as of January 4, 2006 (the “Original
Operating Agreement”), between Member B and the Company;

                    WHEREAS,
the Company was formed for the sole purpose of engaging in the activities and
transactions contemplated by the Project Documents, including to acquire, own,
maintain, manage, operate, improve, develop, finance, pledge, encumber,
mortgage, sell, lease, dispose and otherwise deal with (publicly or privately
and whether with unrelated third parties or with affiliated entities) phase I of
a geothermal power generation project with 13 MW nameplate to be located on the
Site in the Raft River Geothermal Resource Area in Cassia County, Idaho (the
“Project”);

                    WHEREAS,
pursuant to a Membership Admission Agreement, by and among the Company, Member A
and Member B (the “Admission Agreement”), Member A purchased 500 units in
the Company on the terms and subject to the conditions set forth in the
Admission Agreement and was admitted to the Company as a member of the Company;
and

                    WHEREAS,
the parties hereto desire for the Original Operating Agreement to be amended and
restated as stated herein in order to, among other things, reflect the admission
of Member A as a member of the Company and the conversion, as of the Effective
Time, of Member A’s 500 units in the Company into 500 Class A Units and Member
B’s 500 units in the Company into 500 Class B Units, each having the rights and
preferences set forth herein.

                    NOW,
THEREFORE, in consideration of the declarations herein contained, the Members
and the Company agree as follows:

AGREEMENT

ARTICLE I.
ORGANIZATION OF COMPANY

                    Section
1.1      Organization; Continuation;
Compliance.

                    Pursuant
to the Delaware Limited Liability Company Act, Title 6 Del. Code §18-101, et
seq. (as it may be amended from time to time, the “Act”), the Company was
formed on August 18, 2005 by virtue of the filing of its Certificate of
Formation with the Delaware Secretary of State. The parties hereby ratify the
execution, delivery and filing of the Certificate with the Secretary of State of
the State of Delaware by the Initial Member. The Members hereby continue the
Company as a limited liability company pursuant to the Act. Each of Member A and
Member B shall continue as a member of the Company upon its execution of a
counterpart signature page to this Agreement. The affairs of the Company shall
be governed by this Agreement and the laws of the State of Delaware.

                    Section
1.2      Name.

                    The
  name of the Company is Raft River Energy I LLC, or such other name as the Managers
  may from time to time hereafter designate.

                    Section
1.3      Property of the Company.

                    All
business of the Company shall be conducted in the Company name. Company Property
shall be deemed to be owned by the Company as an entity, and no Member or
Manager, individually or collectively, shall have any ownership interest in such
Company Property or any portion thereof. Title to any or all Company Property
may be held in the name of the Company or one or more nominees, as the Managers
may determine. All Company Property shall be recorded as the property of the
Company on its books and records, irrespective of the name in which legal title
to such Company Property is held.

                    Section
1.4      Place of Business.

                    The
address of the office at which all of the records of the Company shall be kept
and principal place of business of the Company shall be 1509 Tyrell Lane, Suite
B, Boise, Idaho 83706 or such other place or places as may be determined by the
Managers.

                    Section
1.5      Purpose.

                    The
purpose of the Company shall be strictly limited to activities and transactions
contemplated in the Recitals and all activities necessary, suitable, convenient
or incidental thereto.

                    Section
1.6      Powers.

                    The
Company shall possess and may exercise all of the powers and privileges granted
by the Act or by any other Law of the State of Delaware or by this Agreement (if
not 

prohibited by the Act), together with any powers incidental
thereto, so far as such powers and privileges are necessary, suitable or
convenient to the conduct, promotion or attainment of the business purposes or
activities of the Company.

                    Section
1.7      Registered Agent.

                    The
Company’s registered office in the State of Delaware is located at Corporation
Trust Center, 1209 Orange Street, in the City of Wilmington, County of New
Castle, Delaware 19801. The registered agent of the Company for service of
process at such address is The Corporation Trust Company.

                    Section
1.8      Term of Existence.

                    The
Company commenced upon the filing of its Certificate with the Secretary of State
of the State of Delaware and shall continue indefinitely until such time as it
shall be dissolved, wound up and terminated under the provisions of Article XI
hereof.

                    Section
1.9      Liability to Third Parties.

                    Except
as required by the Act, the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and no Member, Manager, officer,
employee, representative or agent of the Company shall be obligated personally
for any such debt, obligation or liability of the Company solely by reason of
being a Member or acting as a Manager, officer, employee, representative or
agent of the Company.

                    Section
1.10      Separateness Covenants.

                    (a)      The
Company shall:

                    (i)      Preserve
its existence as an entity duly organized, validly existing and in good standing
under the laws of the State of Delaware;

                    (ii)     Not
commingle Company Property with those of any Member;

                    (iii)    Maintain
books and records for the Company separate from any other Person;

                    (iv)    Conduct
  the Company’s own business in its own name; 

  

                      
  (v) Prepare its own financial statements; 

  

                      
  (vi) Pay the Company’s own liabilities out of its own funds;

                    (vii)  
Observe all Company formalities expressly required by this Agreement or the
Act;

                    (viii)      Maintain
an arm’s-length relationship between the Company, on the one hand, and each
Member and any Person affiliated with any Member, on the other hand;

                    (ix)     
Not guarantee or become obligated for the debts of any other Person or hold out
the Company’s credit as being available to satisfy the obligations of other
Persons;

                    (x)      Not
acquire obligations or securities of any Member;

                    (xi)    Use
stationery, invoices, and checks for all material Company business that
separately identifies the Company;

                    (xii)    Not
pledge Company Property for the benefit of any other Person or make any loans or
advances to any other Person except in accordance with the terms of this
Agreement and/or the Project Documents;

                    (xiii) 
 Identify the Company as a separate entity in all material written
undertakings with third parties; and

                    (xiv)   
Correct any known misunderstanding as to its status as a separate entity.

                    (b)      Nothing
in Section 1.10(a) shall be construed as limiting, restricting or being
breached by anything contemplated by Section 6.7 hereof.

ARTICLE II.
DEFINITIONS, RULES OF
CONSTRUCTION

                    In
addition to terms otherwise defined herein, the following terms are used herein
as defined below:

                    “Act”
means the Delaware Limited Liability Company Act, and any successor statute, as
amended from time to time.

                    “Admission
Agreement” has the meaning set forth in the Recitals.

                    “Affiliate”
means, when used with reference to a specific Person (or when not referring to a
specific Person shall mean an Affiliate of a Member), any Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with such specific Person.

                    “After-Tax
Basis” means, for purposes of determining a Member’s after-tax return from
its investment in the Company, the return the Member realizes from cash
distributions from the Company increased or decreased by increases or decreases
in the Member’s Tax liability (or net Tax benefit) resulting from allocations of
the Company’s Net Profits and Net Losses. Solely, for this purpose: (i) each
Member shall be assumed to be subject to Tax at the highest marginal Federal
income tax rate applicable to corporations; (ii) each dollar 

of Renewable Electricity Production Credits allocated to such
Member shall be treated as a dollar of cash distributed to the Member; and (iii)
each Member shall be deemed to fully utilize any Net Losses allocated to such
Member in the year in which such Net Losses are allocated. Member A’s
determination of its After-Tax Basis, as certified in writing by its Tax
Manager, shall be conclusive for purposes of this Agreement, absent manifest
error.

                    “Agreement”
means this Amended and Restated Operating Agreement, which shall govern the
operation of the Company and which may be amended or supplemented from time to
time in writing only in accordance with this Agreement.

                    “Applicable
Law” means, in respect of any Person, all provisions of constitutions, laws,
statutes, rules, regulations, treaties, directives, decrees, guidelines, orders
and other determinations of any governmental authority or regulatory or
self-regulatory body applicable to such Person or any of its property, including
without limitation, zoning ordinances and the requirements of all Environmental
Laws, environmental permits, all disclosure and other requirements of ERISA, the
requirements of OSHA, and all orders, decisions, judgments and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it or any of its property is subject or bound.

                    “Available
Cash” means, for any fiscal period, the excess, if any, of (A) the sum of
(1) all cash receipts of the Company during that fiscal period from whatever
source and (2) any cash reserves of the Company existing at the start of that
fiscal period, less (B) the sum of (1) all cash amounts paid or payable (without
duplication) in that fiscal period on account of any expenses of any type
whatsoever incurred in connection with the Company’s business (including, but
not limited to, capital expenditures, operating expenses, taxes, amortization
and interest on any debt of the Company), and (2) any cash reserves maintained
consistent with the Operating Budget for the working capital, capital
expenditures and future needs of the Company.

                    “Bankruptcy”
means, with respect to any Person, if such Person (i) makes an assignment for
the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii)
is adjudged a bankrupt or insolvent, or has entered against it an order for
relief, in any bankruptcy or insolvency proceeding, (iv) files a petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation or similar relief under any statute, law or
regulation, (v) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of this nature, (vi) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the Person or of all or any
substantial part of its properties, or (vii) if one hundred and twenty (120)
days after the commencement of any proceeding against the Person seeking
reorganization, arrangement, composition, readjustment, liquidation or similar
relief under any statute, law or regulation, the proceeding has not been
dismissed, or if within ninety (90) days after the appointment without such
Person’s consent or acquiescence of a trustee, receiver or liquidator of such
Person or of all or any substantial part of its properties, the appointment is
not vacated or stayed, or if within ninety (90) days after the expiration of any
such stay, the appointment is not vacated. The foregoing definition of
“Bankruptcy” is intended to replace and shall supersede and replace the
definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the
Act.

                    “Book
Value” means, for any Company Property, its adjusted basis for Federal
income tax purposes, except that the initial Book Value of any asset contributed
by a Member to the Company will equal the agreed gross fair market value of the
asset, and the Book Value will thereafter be adjusted consistently with Section
1.704 -1(b)(2)(iv)(g) of the Treasury Regulations for revaluations under
Section 9.1(b) and for Depreciation for that asset.

                    “Business
Day” means a day other than Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close.

                    “Capital
Account” has the meaning set forth in Section 9.1.

                    “Capital
Contribution” means, for any Member, the amount of cash and value of other
property contributed or deemed contributed to the Company by that Member in
accordance with Article VIII.

                    “Certificate
of Formation” means the Certificate of Formation of Raft River Energy I LLC
filed with the Secretary of State of the State of Delaware on August 18,
2005.

                    “Class
A Distribution Deficiency” means, with respect to any Distribution Date, the
excess, if any, of (1) the sum of (a) the Projected Distributable Free Cash with
respect to Member A with respect to such Distribution Date and (b) all Projected
Distributable Free Cash with respect to Member A with respect to prior
Distribution Dates over (2) the sum of (a) all actual Available Cash distributed
to Member A with respect to such Distribution Date and (b) all prior Available
Cash distributed to Member A with respect to prior Distribution Dates.

                    “Class
A Initial Allocation Period” means all Fiscal Years of the Company,
commencing with the Fiscal Year in which the Effective Date occurs and ending
with and including the Fiscal Year in which the tenth anniversary of the Placed
In Service Date.

                    “Class
A Managers” has the meaning specified in Section 5.2(a).

                    “Class
A Target Yield” shall be realized when Member A has received (1) cash
distributions on the Class A Units in an aggregate amount equal to the aggregate
Capital Contributions of Member A and (2) additional cash distributions on the
Class A Units which, together with the amount of any tax benefits allocated to
Member A (whether or not used) resulting from allocations of the Company’s Net
Losses (including Renewable Electricity Production Credits), are sufficient to
provide Member A with an annualized *** internal rate of return, determined on
an After-Tax Basis, with respect to such Capital Contributions (taking into
account the timing and amount of such Capital Contributions, cash distributions
and allocations, as the case may be).

                    “Class
A Units” means the Units designated as the Class A Units, with the rights
and preferences specified by this Agreement.

                    “Class
B Initial Distribution Amount” means, for any Fiscal Year in the Class B
Initial Distribution Period, ***.

                    “Class
B Initial Distribution Period” means the 48 calendar month period commencing
with the first full calendar month after the Placed In Service Date.

                    “Class
B Managers” has the meaning specified in Section 5.2(a).

                    “Class
B Units” means the Units designated as the Class B Units, with the rights
and preferences specified by this Agreement.

                    “Code”
means the Internal Revenue Code of 1986, as amended.

                    “Company
Minimum Gain” has the meaning set forth in Sections 1.704 -2(b)(2) and 1.704
-2(d) of the Treasury Regulations for “partnership minimum gain.”

                    “Company
Property” means all interests, properties, whether real or personal, assets
and rights of any type owned or held by the Company, whether owned or held by
the Company at the date of its formation or thereafter acquired.

                    “Confidential
Information” means (a) any information (oral or written) furnished by or on
behalf of any of the Members concerning it or its owners, members, partners,
officers, directors, employees, agents, representatives, advisors or Affiliates,
or the Company, (b) any materials prepared in connection with Meetings of the
Members or Meetings of the Managers and (c) the Project Documents;
provided, that the term “Confidential Information” shall not include any
information that (i) was already known by or in the possession of the receiving
Person prior to the furnishing of such information by the disclosing Person,
(ii) was or is in the public domain (either prior to or after the furnishing of
such document or information) through no fault of such receiving Person and not
in violation of this Agreement, (iii) was acquired by such receiving Person from
another source (if such receiving Person was not aware at the time of such
acquisition that such source was under an obligation of confidentiality with
respect to such information) or (iv) is independently developed by the receiving
Person without use of Confidential Information.

                    “Depreciation”
means, for any Fiscal Year, all non-cash deductions allowable under the Code,
including all deductions attributable to depreciation or cost recovery with
respect to Company Property, including any improvements made thereto and any
tangible personal property located therein, or amortization of the cost of any
intangible property or other assets acquired by the Company that have a useful
life exceeding one year; except that, with respect to any Company
Property whose tax basis differs from its Book Value at the beginning of that
Fiscal Year or other period, Depreciation means an amount that bears the same
ratio to such beginning Book Value as the depreciation, amortization or other
cost recovery deduction for such period for such asset for Federal income tax
purposes bears to its adjusted tax basis as of the beginning of such Fiscal
Year. However, if the Federal income tax depreciation, amortization or other
cost recovery deduction for such Fiscal Year is zero, Depreciation will be
determined using any method selected by the Managers, in their sole
discretion.

                    “Distribution
Date” shall mean the fifteenth day immediately following the end of each
Fiscal Quarter and any other day so designated by the Managers (or, if any such
day is not a Business Day, then the following Business Day).

                    “Drilling
Contract” means the Daywork Drilling Contract, dated as of May 25, 2006, by
and between the Union Drilling, Inc. and U.S. Geothermal, Inc. (as may be
amended, restated, supplemented, otherwise modified or replaced), which is to be
assigned by Member B to the Company as contemplated by the Transfer Plan.

                    “Effective
Time” has the meaning set forth in the Admission Agreement.

                    “Energy
Sales Agreement” means the Firm Energy Sales Agreement, dated as of December
29, 2004, between Idaho Power Corporation and Member B (as may be amended,
restated, supplemented, otherwise modified or replaced), which is to be assigned
by Member B to the Company as contemplated by the Transfer Plan.

                    “EPC
Contract” means the Engineering, Procurement and Construction Contract,
dated as of December 5, 2005, between Ormat Nevada, Inc. and Member B (as may be
amended, restated, supplemented, otherwise modified or replaced), which is to be
assigned by Member B to the Company as contemplated by the Transfer Plan.

                    
“First Distribution Period” means the period beginning on (and including)
the Effective Time and ending on (and including) the last day of the fiscal
quarter during which Member A has realized the Class A Target Yield.

                    “Fiscal
Quarter” has the meaning set forth in Section 6.6.

                    “Fiscal
Year” has the meaning set forth in Section 6.6.

                    “GAAP”
means United States generally accepted accounting principles as in effect from
time to time.

                    “Guarantee”
means any guarantee, credit support, assurance against loss or similar
obligation of the Company with respect to an obligation of any other Person.

                    “Indebtedness”
means (i) any obligation of the Company for borrowed money and any obligation of
the Company evidenced by bonds, debentures, notes or other similar instruments;
and (ii) any capitalized lease liability of the Company (to the extent required
by GAAP to be included on the balance sheet of the Company).

                    “Initial
Member” means Member B.

                    “Interconnection
Agreement” means the Interconnection and Wheeling Agreement, dated as of
March 9, 2006, by and between the Company and Raft River Rural Electric
Cooperative, Inc. (as may be amended, restated, supplemented, otherwise modified
or replaced).

                    “Lien”
means any mortgage, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, lien (statutory or otherwise), adverse claim or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including any conditional sale or other title
retention agreement, any financing lease involving 

substantially the same economic effect as any of the foregoing
and the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction.

                    “Majority
Vote” means, (i) with respect to actions to be taken by Members, the
affirmative vote or consent of Members holding, in aggregate, more than 50% of
the Units then outstanding, and (ii) with respect to actions to be taken by the
Managers, the affirmative vote or consent of Managers holding more than 50% of
the Manager Voting Interests.

                    “Manager
Voting Interests” means, with respect to (i) each Class A Manager, one (1)
vote and (ii) each Class B Manager, one (1) vote.

                    “Master
Services Agreements” means (i) the Master Service Agreement, dated as of
June 26, 2006, by and among the Company, Baker Hughes Oilfield Operations, Inc.
and Baker Petrolite Corporation, (ii) the Master Service Agreement, dated as of
July 17, 2006, by and between the Company and Weatherford International, Inc.,
(iii) any other master services agreement that the Company may enter into with
respect to contracting work, services, supplies and equipment rental in
furtherance of or pertaining to development of the Facility and (iv) any
agreement entered into under a master agreement referred to in clause (i), (ii)
or (iii).

                    “Member”
means, at any time, any Person to whom Units are issued by the Company in
exchange for capital contributions in such amounts and at such times as
determined by the Managers and any Person who then owns a Unit and is admitted
as a Member in accordance with this Agreement.

                    “Member
Minimum Gain” means an amount, with respect to each Member Nonrecourse
Liability, equal to the Company Minimum Gain that would result if such Member
Nonrecourse Liability were treated as a Nonrecourse Liability, determined in
accordance with Section 1.704 -2(i)(3) of the Treasury Regulations.

                    “Member
Nonrecourse Liability” has the meaning set forth in Section 1.704 -2(b)(4)
of the Treasury Regulations for “partner nonrecourse liability”.

                    “Net
Losses” has the meaning set forth in Section 9.2(a). 

                    “Net
Profits” has the meaning set forth in Section 9.2(a).

                    “Nonrecourse
Deductions” has the meaning set forth in Sections 1.704 -2(b)(1) and 1.704
-2(c) of the Treasury Regulations.

                    “Nonrecourse
Liability” has the meaning set forth in Section 1.704 -2(b)(3) of the
Treasury Regulations.

                    “Notification;
Notice” means a notice permitted or required to be given to any Person
hereunder. Each such Notification or Notice must be given in the manner provided
in Section 14.13.

                    “O&M
Agreement” means that certain Management Services Agreement, dated as of the
date hereof, between the Company and the Operator.

                    “Operating
Budget” has the meaning set forth in Section 5.17.

                    “Operator”
means Raft River Services, LLC, in its capacity as Operator of the Project, and
any successor operator appointed from time to time in accordance with this
Agreement and the O&M Agreement.

                    “Party”
means each party to this agreement.

                    “Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership or other entity.

                    “Phase
II” has the meaning set forth in Section 5.13.

                    “Pipeline
Construction Contract” means the Construction Contract, dated as of May 22,
2006, by and between the Company and IBI d/b/a Industrial Builders (as may be
amended, restated, supplemented, otherwise modified or replaced).

                    “Placed
In Service Date” is the date that the Facility is “placed in service” for
Federal income tax purposes under Section 45 of the Code.

                    “Power
Line Construction Contract” means the Construction Contract for Well
Distribution Lines, dated as of May 16, 2006, by and between the Company and
Raft River Rural Electric Cooperative, Inc. (as may be amended, restated,
supplemented, otherwise modified or replaced).

                    “Power
Transmission Agreement” means the Service Agreement for Point-to-Point
Transmission Service, dated as of June 24, 2005, by and between the United
States of America, Department of Energy (acting by and through the Bonneville
Power Administration) and U.S. Geothermal, Inc. (as may be amended, restated,
supplemented, otherwise modified or replaced), which is to be assigned by Member
B to the Company as contemplated by the Transfer Plan.

                    “Project”
has the meaning set forth in the Recitals.

                    “Project
Documents” means the following documents: this Agreement, the Admission
Agreement, the O&M Agreement, the Drilling Contract, the Energy Sales
Agreement, the EPC Contract, the Interconnection Agreement, the Master Services
Agreements, the Pipeline Construction Contract, the Power Line Construction
Contract, the Power Transmission Agreement, the Project Permits, the REC Sale
Agreement, the Revolver Agreement, the Site Leases and any other contracts to
which the Company is or becomes party to in connection with the Project.

                    “Project
Permits” means all of the permits listed on the Transfer Plan.

                    “Projected
Distributable Free Cash” means, for any Distribution Date, the amount set
forth on Schedule 4. 

                    “REC
Income” means proceeds realized from the sale or transfer of: (i)
characteristics or attributes of energy generated by the Project such as
renewable or “green” characteristics, including pursuant to the REC Sale
Agreement; or (ii) emission allowances, along with any governmental payments or
subsidies (other than Renewable Electricity Production Credits).

                    “Renewable
Electricity Production Credits” means any qualifying tax credits claimed by
Member A under Section 38 of the Code with respect to electricity produced and
sold by the Company from geothermal energy at a qualified facility as described
in Section 45 of the Code. 

                    “REC
Sale Agreement” means that Renewable Energy Credit Purchase and Sale
Agreement, dated as of July 29, 2006, by and between the Company and Holy Cross
Energy, a Colorado cooperative electric association, with respect to the sale
and purchase of Renewable Electricity Production Credits.

                    “Revolver
Agreement” means that certain Revolving Credit Agreement, dated as of the
date hereof, between U.S. Geothermal and the Company.

                    “Second
Distribution Period” means the period beginning on (and including) the first
day after the last day of the First Distribution Period and ending on (and
including) the date that is on the twentieth anniversary of the Placed In
Service Date; provided that during such twenty year period, Member B has
achieved for one complete Fiscal Quarter more than 30 MW of total net electrical
generation capacity from geothermal resources in the United States under its
ownership or control (or has put such owned or controlled geothermal resources
to an alternative use for one complete Fiscal Quarter that a third party
financial or engineering firm, or other independent qualified expert (the
identity of whom is to be agreed upon by Member A and Member B, and failing such
agreement within thirty (30) days from the time that Member B proposes such an
alternative use, that a “Big Four” accounting firm) agrees is as good or better,
from a financial perspective for Member B, than ownership or control of more
than 30 MW of total net electrical generation capacity); provided,
further, that in the event that the standard in the first proviso is not
met within such twenty (20) year period, the Second Distribution Period will end
on (and include) the first date following the twentieth anniversary of the
Placed In Service Date upon which the standard in the first proviso is met.

                    “Site”
means the project site located in Cassia County, Idaho, approximately 40 miles
southeast of Burley, the county seat. The project site encompasses 660 acres,
divided into two parcels, both located in Township 15 South Range 26 East, Boise
Meridian. The first parcel, which contains the office complex and three
geothermal production wells, is 240 acres and is located in Sections 22 and 23.
The second parcel, 320 acres, is located in Section 25 and contains one
production well and two injection wells. The company also holds seven additional
leases. The first parcel covers 160 acres and includes the RRGE#2 geothermal
production well. The second parcel encompasses private geothermal rights. This
description of the Site is qualified by reference to the map of the Site
attached hereto as Exhibit A.

                    “Site
Leases” means all of the leases listed on the Transfer Plan.

                    “Tax
Correspondence” means all written and oral communications from the Internal
Revenue Service (or other taxing authority) relating to any item of income,
gain, loss or deduction arising with respect to any activities or assets of the
Company, whether communicated with respect to an audit or otherwise.

                    “Tax
Matters Member” has the meaning set forth in Section 6.7(a).

                    “Taxable
Year” has the meaning set forth in Section 6.7(f)(i).

                    “Third
Distribution Period” means the period beginning on (and including) the first
day after the Second Distribution Period.

                    “Transfer
Plan” means the plan attached as Schedule 7 hereto pursuant to which
certain assets and contracts will be transferred or assigned by Member B to the
Company.

                    “Treasury
Regulations” means the Federal income tax regulations issued by the U.S.
Treasury Department under the Code, as in effect on the date hereof.

                    “Unit”
means, with respect to any Member at any time, the ownership interest of such
Member in the Company at such time. Such interest includes, without limitation,
(a) all rights of a Member to receive distributions of revenues, allocations of
income and loss and distributions of liquidation proceeds under this Agreement
and (b) all management rights, voting rights and rights to consent. Each Unit
shall represent a 1% ownership interest in the Company.

                    Words
used herein, regardless of the number and gender used, shall be deemed and
construed to include any other number, singular or plural, and other gender,
masculine, feminine or neuter, as the context requires. References to any act,
statute or regulation means such act, statute or regulations as amended at the
time and include any successor legislation or regulations. References to any
agreement or instrument means such agreement or instrument as amended or
modified from time to time in accordance therewith and herewith. For purposes of
this Agreement, unless the context clearly requires otherwise, (a) the words
“include,” “includes” and “including” shall be deemed to be followed by the
words “without limitation,” (b) the word “or” is not exclusive and (c) the words
“herein,” “hereof,” “hereby,” “hereto” and “hereunder” and words of similar
import shall refer to this Agreement as a whole and not to any particular
provisions hereof. Except as otherwise stated, reference to Articles, Sections,
Schedules, Exhibits and Annexes mean the Articles and Sections of, and the
Schedules, Exhibits and Annexes to, this Agreement. The Schedules, Exhibits and
Annexes hereto are hereby incorporated by reference into and shall be deemed a
part of this Agreement.

ARTICLE III. 
MEMBERS

                    Section
3.1      Members.

                    The
Members of the Company as of the Effective Time are Member A and Member B, and
the addresses of, and other information needed for purposes of providing notice
to, such Members are as set forth on Schedule 1, which shall be revised
from time to time as needed in order to keep such information current. As of the
Effective Time, there are no other 

Members of the Company and no other Person has any right to
take part in the ownership of the Company.

                    Section
3.2      Membership Interest; Units.

                    (a)      Each
Member shall be entitled to the number and class of Units set forth opposite
such Member’s name on Schedule 1. The Company shall not issue any
certificates evidencing any Units.

                    (b)      Each
Unit shall constitute a “security” within the meaning of, and governed by,
Article 8 of (i) the Uniform Commercial Code (including Section 8-102(a)(15)
thereof) as in effect from time to time in the State of Delaware (6 Del.
C. § 8-101, et seq.) (the “UCC”), and (ii) the Uniform
Commercial Code of any other applicable jurisdiction that now or hereafter
substantially includes the 1994 revisions to Article 8 thereof as adopted by the
American Law Institute and the National Conference of Commissioners on Uniform
State Laws and approved by the American Bar Association on February 14, 1995.
Each Member hereby agrees that its interest in the Company and its Unit for all
purposes shall be personal property. Notwithstanding any provision of this
Agreement to the contrary, to the extent that any provision of this Agreement is
inconsistent with any non-waivable provision of Article 8 of the UCC, such
provision of Article 8 of the UCC shall control.

                    Section
3.3      Authority of Members.

                    Other
than as may be authorized by the Managers, no Member has the authority or power
to act for or on behalf of the Company, to do any act that would be binding on
the Company or to incur any expenditures on behalf of the Company.

ARTICLE IV. 
MEETINGS OF MEMBERS

                    Section
4.1      Place of Meetings.

                    All
meetings of Members shall be held at the principal office of the Company or at
such other place as may be designated by the Managers or by the Members calling
the meeting.

                    Section
4.2      Meetings.

                    (a)      An
annual meeting of Members for the transaction of such business as may properly
come before the meeting shall be held at such place, on such date and at such
time as the Managers shall determine.

                    (b)     
Special meetings of Members for any proper purpose of purposes may be called at
any time by any Manager or by the holders of a majority of either of the Class A
Units or Class B Units then outstanding.

                    Section
4.3      Notice.

                    A
Notification of all meetings, stating the place, date and time of the meeting
and in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days before the meeting to each Member.

                    Section
4.4      Waiver of Notice.

                    Attendance
of a Member at a meeting shall constitute a waiver of Notification of the
meeting, except where such Member attends for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened. Notification of a meeting may also be waived in
writing. Attendance at a meeting is not a waiver of any right to object to the
consideration of matters required to be included in the Notification of the
meeting but not so included, if the objection is expressly made at the
meeting.

                    Section
4.5      Quorum.

                    The
presence, either in person or by proxy, of Members holding at least a majority
of the outstanding Units of each class is required to constitute a quorum at any
meeting of the Members.

                    Section
4.6      Voting.

                    (a)      All
Members shall be entitled to vote on any matter submitted to a vote of the
Members. Members may vote either in person or by proxy at any meeting. Each
Member shall be entitled to one (1) vote for each Unit held by such Member.

                    (b)     With
respect to any matter other than a matter for which the affirmative vote of
Members owning a specified percentage of the Units is required by the Act, the
Certificate of Formation or this Agreement, the affirmative Majority Vote of the
Members at a meeting at which a quorum is present shall be the act of the
Members.

                    (c)      Notwithstanding
any other provision contained in this Agreement to the contrary, no act shall be
taken, sum expended, decision made, obligation incurred or power exercised by
the Company, or any officer or Manager on behalf of the Company, in each case
without the approval of Members holding at least (A) 51% of the Class A Units
then outstanding and (B) 51% of the Class B Units then outstanding, each class
voting or consenting, as the case may be, separately, with respect to any of the
following:

                    (i)      any
amendment, termination, modification or waiver of any provisions of this
Agreement;

                    (ii)     the
redemption or other acquisition of any Units by the Company;

                    (iii)    any
  split, combination or reclassification of any Units or other limited liability
  company interests in the Company then outstanding;

                    (iv)      the
incurrence of any Indebtedness, the creation of any Lien or the issuance of any
Guarantee by the Company; provided, however, that this clause (iv)
shall not apply to (A) any incurrence of Indebtedness under the Revolver
Agreement during the First Distribution Period or (B) any other incurrence of
Indebtedness, creation of any Lien or issuance of any Guarantee during the First
Distribution Period or the Third Distribution Period if (1) the Member which
would hold a minority of the applicable voting rights (absent this clause (iv))
is given the right to review the applicable documents, and to consult with and
make suggestions to the other Member (such suggestions to be reasonably
considered by such other Member) in connection with such Indebtedness, Lien or
Guarantee (as the case may be) and (2) the Member which would hold a majority of
the applicable voting rights (absent this clause (iv)) enters into an agreement
or other arrangement with the other Member pursuant to which such other Member
is fully compensated for the economic cost of any reduction in amounts
distributed to it hereunder which are attributable to debt service expenses
relating to such Indebtedness; and provided further that, unless
otherwise agreed by the holders of the Class B Units, any Indebtedness incurred
prior to the beginning of the Third Distribution Period shall state that it
matures, or is prepayable without penalty, at or prior to the beginning of the
Third Distribution Period;

                    (v)     
filing or consenting to the filing of any bankruptcy, insolvency or
reorganization case or proceeding with respect to the Company, or the
institution of any proceedings with respect to the Company under any applicable
insolvency law or otherwise seeking relief with respect to the Company under any
laws relating to the relief from debts or the protection of debtors
generally;

                    (vi)    
seeking or consenting to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or any similar official for the Company or a
substantial portion of its properties;

                    (vii)    making
any assignment for the benefit of the creditors of the Company;

                    (viii)  
  the engagement in any activities not contemplated or permitted by 

  

   Section 1.5;

                    (ix)    
the engagement in any transaction or entry into any agreement with any Member or
Affiliate of any Member, or the amendment, modification or waiver of any
provisions of any transactions or existing agreements with any Member or any
Affiliate of any Member; provided, however, that this clause (ix)
shall not apply to (A) entry into any transaction or agreement listed on
Schedule 2 or (B) during the Third Distribution Period, entry into any
transaction or agreement, or any amendment, modification or waiver of any
transaction or agreement, with any Member or Affiliate of a Member if (1) the
terms of such agreement, transaction, amendment, modification or waiver are no
less favorable to the Company than could be obtained by it at the relevant time
in arm’s-length dealings with a Person that is not a Member, an Affiliate of a
Member or an Affiliate of the Company, and (2) each of the Members shall have
been 

given written notice of such agreement,
transaction, amendment, modification or waiver (and the terms thereof) at least
15 Business Days prior thereto;

                    (x)      the
sale, lease or other disposition by the Company of any material portion of the
Company Property; provided, however, that this clause (x) shall
not apply to any sale of Company Property during the Third Distribution Period
if such sale (1) is for cash, (2) is for no less than fair market value
(determined pursuant to an appraisal conducted by an independent expert with
respect to the market for similar property (the cost of which shall be borne by
Member B) at a time no more than ninety (90) days prior to such sale date) and
(3) is not made to any Affiliate of Member B;

                    (xi)    
the amendment, modification or waiver of any provision of the O&M Agreement
or the appointment of a replacement Operator; provided, however,
that this clause (xi) shall not apply to (1) any termination of the O&M
Agreement in accordance with its terms, or (2) prior to the Third Distribution
Period, appointment of any replacement of the Operator upon or following a
termination of the O&M Agreement by the Company pursuant to Section 9.2 of
the O&M Agreement;

                    (xii)   
the termination, amendment, modification or waiver of, or any consent under any
Project Document; provided, however, that this clause (xii) shall not
apply to (A) any termination, amendment, modification or waiver of, or any
consent under, the O&M Agreement or any other agreement between the Company
and Member B or any Affiliate of Member B or (B) any amendment or modification
of any other Project Document to the extent that the O&M Agreement expressly
permits the Operator to make such amendment or modification with out the consent
of the Company;

                    (xiii)   the
appointment or hiring of any officer or employee; or

                    (xiv)   
the agreement to do any of the foregoing.

                    Section
4.7      Conduct of Meetings.

                   The
Managers shall have full power and authority concerning the manner of conducting
any meeting of the Members, including the determination of Persons entitled to
vote, the existence of a quorum, the satisfaction of the requirements of this
Article IV, the conduct of voting, the validity and effectiveness of any
proxies and the determination of any controversies, votes or challenges arising
in connection with or during the meeting or voting. The Managers shall designate
a Person to serve as chairperson of any meeting and shall further designate a
Person to take minutes of any meeting. The chairperson of the meeting shall have
the power to adjourn the meeting from time to time, without notice, other than
announcement of the time and place of the adjourned meeting. Upon the resumption
of such adjourned meeting, any business may be transacted that might have been
transacted at the meeting as originally called.

                    Section
4.8      Action by Written Consent.

                    Any
action that may be taken at a meeting of the Members may be taken without a
meeting if a consent in writing, setting forth the action to be taken, shall be
signed and dated by the Members having not less than the minimum number of votes
that would be necessary to 

authorize or take such action at a meeting at which all Units
entitled to vote thereon were present and voted. Such consent shall have the
same force and effect as a vote of the signing Members at a meeting duly called
and held pursuant to this Article IV. No prior notice from the signing
Members to the Company or other Members shall be required in connection with the
use of a written consent pursuant to this Section 4.8. Notification of
any action taken by means of a written consent of Members shall, however, be
sent within a reasonable time after the date of the consent by the Company to
all Members who did not sign the written consent, but in any event, such
Notification shall be sent no later than five (5) Business Days after such
action is taken.

                    Section
4.9      Proxies.

                    A
Member may vote either in person or by proxy executed in writing by the Member.
A facsimile, telegram, telex, cablegram or similar transmission by the Member or
a photographic, photostatic, facsimile or similar reproduction of a writing
executed by the Member shall be treated as an execution in writing for purposes
of this Section 4.9. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Company before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers who shall decide
all questions touching upon the qualification of voters, the validity of the
proxies and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairperson of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. A proxy shall be revocable unless the proxy
form conspicuously states that the proxy is irrevocable and the proxy is coupled
with an interest. Should a proxy designate two or more Persons to act as
proxies, unless such instrument shall provide to the contrary, a majority of
such Persons present at any meeting at which their powers thereunder are to be
exercised shall have and may exercise all the powers of voting or giving
consents thereby conferred, or if only one be present, then such powers may be
exercised by that one; or, if an even number attend and a majority do not agree
on any particular issue, the Company shall not be required to recognize such
proxy with respect to such issue if such proxy does not specify how the Units
that are the subject of such proxy are to be voted with respect to such
issue.

ARTICLE V.
MANAGEMENT OF THE COMPANY

                    Section
5.1      Management of Business.

                    Except
as otherwise expressly provided in this Agreement, the powers of the Company
shall be exercised by or under the authority of, and the business and affairs of
the Company shall be managed under the direction of, the Management Committee.
Each of the Managers is hereby designated a “manager” of the Company within the
meaning of Section 18-101(10) of the Act.

                    Section
5.2      Number and Election of Managers.

                    (a)     
At all times that this Agreement remains in effect, the Management Committee
shall consist of four Managers of the Company. During the First Distribution
Period, the Managers of the Company shall be elected as follows: (i) three (3)
Managers shall be elected by the holders of the Class A Units voting separately
as a class and (ii) one (1) Manager shall be elected by the holders of the Class
B Units voting separately as a class. The initial Managers of the Company shall
be as set forth on Schedule 3. During the Second Distribution Period, the
Managers of the Company shall be elected as follows: (i) two (2) Managers shall
be elected by the holders of the Class A Units voting separately as a class and
(ii) two (2) Managers shall be elected by the holders of the Class B Units
voting separately as a class. During the Third Distribution Period, the Managers
of the Company shall be elected as follows: (i) one (1) Manager shall be elected
by the holders of the Class A Units voting separately as a class and (ii) three
(3) Managers shall be elected by the holders of the Class B Units voting
separately as a class References herein to the “Class A Managers” mean
the Managers elected by the holders of the Class A Units and references herein
to the “Class B Managers” means the Managers elected by the holders of
the Class B Units.

                    (b)     
In any election of Managers, each Member shall vote its respective Units in such
manner as necessary to cause the election of the Managers designated in
accordance with the provisions of Section 5.2(a). There shall be no
cumulative voting with respect to the election of Managers.

                    Section
5.3      General Powers of Managers;
Activities.

                    (a)      Except
as may otherwise be expressly provided in this Agreement, the Managers shall
have complete and exclusive discretion in the management and control of the
business and affairs of the Company, including the right to make and control all
ordinary and usual decisions concerning the business and affairs of the Company.
The Managers shall, subject to Section 4.6(c), possess all power, on
behalf of the Company, to do or authorize the Company or to direct the officers
of the Company, on behalf of the Company, to do all things necessary or
convenient to carry out the business and affairs of the Company.

                    (b)      The
Managers shall devote so much of their time to the affairs of the Company and
the conduct of the Company business as they, in their sole judgment, shall
reasonably determine to be required and shall not be obligated to do or perform
any act or thing in connection with the business of the Company not expressly
set forth herein.

                    Section
5.4      Limitations on Powers of
Managers.

                    The
enumeration of powers in this Agreement shall not limit the general or implied
powers of the Managers or any additional powers provided by law.

                    Section
5.5      Place of Meetings.

                    Meetings
of the Managers may be held either within or without the State of Delaware at
whatever place is specified in the call of the meeting. In the absence of
specific designation, the meetings shall be held at the principal office of the
Company. The Managers 

shall designate one of the Managers to be the chair of the
Management Committee, and the chair will preside at meetings of the
Managers.

                    Section
5.6      Regular Meetings.

                    The
Managers shall meet at least once per Fiscal Year. No notice need be given to
Managers of regular meetings for which the Managers have previously agreed upon
a time and place for the meeting.

                    Section
5.7      Special Meetings.

                    Special
meetings of the Managers may be held at any time upon the request of the Chief
Executive Officer of the Company (if any) or any Manager. A Notification of any
special meeting shall be sent to the last known address of each Manager at least
five (5) Business Days in advance of the meeting. Notification of the time,
place and purpose of such meeting may be waived in writing before or after such
meeting and shall be equivalent to the giving of a Notification. Attendance of a
Manager at such meeting shall also constitute a waiver of Notification thereof,
except where such Manager attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Managers need be specified in the
Notification or waiver of Notification of such meeting.

                    Section
5.8      Quorum of and Action by
Managers.

                    The
presence, in person or by proxy, of at least one (1) Manager elected by the
holders of the Class A Units voting separately as a class and at least one (1)
Manager elected by the holders of the Class B Units voting separately as a class
shall constitute a quorum for the transaction of business at any meeting of the
Managers. Except as otherwise expressly set forth in this Agreement, any action
to be taken or approved by the Managers hereunder must be taken or approved by
the Managers, and any action so taken or approved shall constitute the act of
the Managers.

                    Section
5.9      Compensation.

                    The
Managers shall serve without compensation. Managers shall be entitled to
reimbursement for their reasonable out-of-pocket expenses incurred in attending
any meeting.

                    Section
5.10      Resignation and Removal.

                    Any
Manager may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein, or if no time is specified, at
the time of its receipt by the Company. Any Managers serving as such by
designation of specified class of Members pursuant to Section 5.2 may be
removed, either for or without cause, only upon the affirmative vote of such
class of Members.

                    Section
5.11      Vacancies.

                    If
any Manager ceases to serve as such, his replacement shall be elected by the
holders of Units entitled to elect such former Manager pursuant to the
procedures set forth in Section 5.2.

                    Section
5.12      Action by Written Consent.

                    Any
action that may be taken at a meeting of the Managers may be taken without a
meeting if a consent in writing, setting forth the action to be taken, shall be
signed and dated by all of those Persons entitled to vote at that meeting, and
such consent shall have the same force and effect as a unanimous vote of
Managers at a meeting duly called and held. No notice shall be required in
connection with the use of a written consent pursuant to this Section
5.12.

                    Section
5.13      Other Business.

                    The
Managers and Members may engage in or possess an interest in other business
ventures of every kind and description, independently or with others, including,
without limitation, the development, construction and operation of a separate
geothermal power generation project near the Project (referred to herein as
“Phase II”). Neither the Company nor any Member shall have any right, by
virtue of this Agreement or the Company relationship created hereby, in or to
such other ventures or activities of the Managers or any other Member or any of
their respective Affiliates, or to the income or proceeds derived therefrom, and
the pursuit of such ventures, even if competitive with the business of the
Company, shall not be deemed wrongful or improper.

                    Section
5.14      Standard of Care; Liability.

                    NOTWITHSTANDING
ANY PROVISION TO THE CONTRARY ELSEWHERE IN THIS AGREEMENT, TO THE EXTENT THAT,
AT LAW OR IN EQUITY, THE MANAGEMENT COMMITTEE OR ANY MEMBER HAS ANY DUTIES
(FIDUCIARY OR OTHERWISE) AND LIABILITIES RELATING THERETO TO THE COMPANY OR
ANOTHER MEMBER OF THE COMPANY, (A) NEITHER THE MANAGEMENT COMMITTEE NOR ANY
MEMBER SHALL BE LIABLE TO THE COMPANY OR THE OTHER MEMBERS FOR ACTIONS TAKEN BY
THE MANAGEMENT COMMITTEE, ANY MEMBER OR ANY OF THEIR AFFILIATES IN RELIANCE UPON
THE PROVISIONS OF THIS AGREEMENT, (B) EACH MANAGER IS EXPRESSLY PERMITTED TO
SERVE AS A MANAGER OR DIRECTOR OF ANY OTHER ENTITY, INCLUDING OTHER ENTITIES IN
THE SAME OR SIMILAR INDUSTRIES, (C) EACH MEMBER AND EACH MANAGER IS PERMITTED TO
EXPLORE AND DEVELOP BUSINESS OPPORTUNITIES OUTSIDE OF THE COMPANY, EVEN IF SUCH
OPPORTUNITIES MAY COMPETE WITH THE ACTIVITIES OF THE COMPANY, (D) NO MANAGER OR
MEMBER IS REQUIRED, BY VIRTUE OF THEIR POSITION AS A MANAGER OR MEMBER, TO
PRESENT BUSINESS OPPORTUNITIES IN THE GEOTHERMAL INDUSTRY OR UTILIZING
GEOTHERMAL RESOURCES TO THE MANAGEMENT COMMITTEE OR THE COMPANY BEFORE PURSUING
SUCH OPPORTUNITIES IN ANY CAPACITY OR ON BEHALF OF ANY OTHER ENTITY, AND 

(E) THE DUTIES (FIDUCIARY OR OTHERWISE) OF THE MANAGEMENT
COMMITTEE, EACH MANAGER AND EACH MEMBER ARE INTENDED TO BE MODIFIED AND LIMITED
TO THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT, AND NO IMPLIED COVENANTS,
FUNCTIONS, RESPONSIBILITIES, DUTIES, OBLIGATIONS OR LIABILITIES SHALL BE READ
INTO THIS AGREEMENT, OR OTHERWISE EXIST AGAINST THE MANAGEMENT COMMITTEE OR ANY
MEMBER.

                    Section
5.15      Appointment and Authority of
Officers.

                    Subject
to Section 4.6(c)(xiii), the Management Committee shall have the right to
appoint officers of the Company. The scope of any such officer’s power and
authority shall be as expressly set forth in a resolution of the Managers, and
no officer shall have greater power or authority than the Management Committee.
Without the requisite prior approval of the Members in respect thereof, no
officer shall, on behalf of the Company, authorize, engage in or enter into any
of the transactions or actions specified in Section 4.6(c). The
Management Committee shall have the right to modify or limit the authority of,
or remove, and officer of the Company at any time, either for or without
cause.

                    Section
5.16      Execution of Company
Documents.

                    When
the taking of such action has been authorized by the Managers, the President of
the Company or any other person specifically authorized by the Managers, as the
case may be, may execute any contract, agreement, instrument, certificate or
other document on behalf of the Company and may execute and file on behalf of
the Company with the Secretary of State of the State of Delaware any document,
certificate or instrument, including without limitation any (i) certificate of
amendment to the Company’s Certificate of Formation, (ii) one or more restated
certificates of formation, (iii) certificate of merger or consolidation or (iv)
upon the dissolution and completion of winding up of the Company, certificate of
dissolution.

                    Section
5.17      Operating Budget.

                    The
annual budget of the Company and any modification, amendment or supplement
thereto shall be established for each year pursuant to the O&M Agreement
(the “Operating Budget”).

ARTICLE VI.
BOOKS AND RECORDS; TAX MATTERS

                    Section
6.1      Bank Accounts; Investments.

                    Capital
Contributions, revenues and any other Company funds shall be deposited by the
Company in a bank account established in the name of the Company, or shall be
invested by the Company, at the direction of the Managers, in furtherance of the
purpose of the Company set forth in Section 1.5. No other funds shall be
deposited into Company bank accounts or commingled with Company investments.
Funds deposited in the Company’s bank accounts may be withdrawn only to be
invested in furtherance of the Company’s purposes, to pay Company debts or
obligations or to be distributed to the Members pursuant to this Agreement.

                    Section
6.2      Records Required by Act; Right of
Inspection.

                    (a)     
During the term of the Company’s existence and for a period of four (4) years
thereafter, there shall be maintained in the Company’s principal office all
records required to be kept pursuant to the Act, including a current list of the
names, addresses and Units held by each of the Members (including the dates on
which each of the Members became a Member), copies of this Agreement and the
Certificate of Formation, including all amendments or restatements, and correct
and complete books and records of account of the Company.

                    (b)      On
written request, a Member may examine and copy, at any reasonable time, for any
purpose reasonably related to such Member’s interest as a Member of the Company,
and at the Member’s expense, records required to be maintained under the Act and
such other information regarding the business, affairs and financial condition
of the Company as is reasonable for the Member to examine and copy. Upon written
request by any Member made to the Company at the address of the Company’s
principal office, the Company shall provide to the Member without charge true
copies of this Agreement and the Certificate of Formation and all amendments or
restatements.

                    Section
6.3      Books and Records of Account.

                    The
Company shall maintain adequate books and records of account that shall be
maintained on the accrual method of accounting and on a basis consistent with
GAAP and appropriate provisions of the Code, containing, among other entries, a
Capital Account for each class of Units held by each Member. The Company shall
also maintain books for the purpose of registering the transfer of Units.

                    Section
6.4      Other Information Rights.

                    The
Company shall furnish to each Member:

                    (a)      Within
twenty (20) days after the end of each calendar month and forty-five (45) days
after the end of each calendar quarter (other than for the month and calendar
quarter ending simultaneously with the end of the Company’s Fiscal Year), an
unaudited balance sheet of the Company as at the end of such month and unaudited
statements of income and of changes in cash flow of the Company for such month
and for the current Fiscal Year to the end of such month setting forth in
comparative form the Company’s financial statements for the corresponding
periods for the prior Fiscal Year, if any, including a comparison to the then
current budget, all in reasonable detail.

                    (b)      Within
ninety (90) days after the end of each Fiscal Year, an audited balance sheet of
the Company as of the end of such year and audited statements of income and of
changes in cash flow of the Company for such year, including comparisons to the
corresponding periods in prior years, prepared in accordance with GAAP
consistently applied.

                    (c)      No
later than sixty (60) days prior to the start of each new Fiscal Year, the
Operating Budget approved by the Management Committee, which Operating Budget
shall be in reasonable detail and contain a projected financial statement for
such fiscal year on a monthly 

basis, and operating goals for the Project, and promptly after
preparation from time to time, any revisions to the forecasts contained therein.

                    (d)      Notice
of any noncompliance by the Company with any Applicable Law that could
reasonably be likely to have a material adverse affect on the business, assets,
financial condition, prospects or results of operations of the Company.

                    (e)      Any
other financial or other information available to the officers of the Company as
any Member reasonably requests.

                    Section
6.5      Audits.

                    The
fiscal year-end financial statements to be delivered pursuant to Section
6.4(a) shall be audited. The audit shall be performed by
PricewaterhouseCoopers LLP or such other accounting firm approved by the
Management Committee.

                    Section
6.6      Fiscal Year.

                    The
fiscal year of the Company shall be as required under the Code (the “Fiscal
Year”). Initially the Fiscal Year shall be the period commencing on the day
following the last Friday of November and ending on the last Friday of November
of the next succeeding calendar year. Each Fiscal Year shall consist of four
quarters (each, a “Fiscal Quarter”) ending on the last Friday in
February, May, August and November of each fiscal year.

                    Section
6.7      Tax Matters.

                    (a)     
Member A is hereby designated Tax Matters Member for the Company in accordance
with the definition of “tax matters partner” set forth in Section 6231 of the
Code and shall be so designated in each Federal information return filed on
behalf of the Company in the First Distribution Period and the Second
Distribution Period; Member B is hereby designated Tax Matters Member for the
Company, with respect to Taxable Years commencing during the Third Distribution
Period only, in accordance with the definition of “tax matters partner” set
forth in Section 6231 of the Code and shall be so designated in each Federal
information return filed on behalf of the Company in the Third Distribution
Period. The Member so designated for the Company at any time shall be referred
to herein as the “Tax Matters Member”. The Tax Matters Member shall not
be liable to the Company or any Member or Affiliate of the Company or any Member
for any act or omission taken or suffered by it in such capacity in good faith
and in the belief that such act or omission is in or is not opposed to the best
interests of the Company and shall, to the fullest extent permitted by law, be
indemnified by the Company in respect of any claim based upon such act or
omission; provided, however, that such act or omission does not
constitute gross negligence, fraud or willful misconduct.

                    (b)      The
Tax Matters Member shall promptly deliver to each Member copies of all written
Tax Correspondence and shall promptly advise each Member of the content of any
substantive verbal Tax Correspondence. The Tax Matters Member shall use all
reasonable efforts to provide each Member and its attorneys the opportunity to
attend any such conversations, and shall keep each Member advised of all
developments with respect to any proposed adjustments that come to the Tax
Matters Member’s attention. In addition, the Tax 

Matters Member shall (x) provide to each Member draft copies of
any substantive correspondence or filing to be submitted by the Tax Matters
Member to the IRS (or other taxing authority), including, without limitation,
with respect to any tax contest (a “Written Submission”), at least 14
Business Days prior to the date the Written Submission is required to be
submitted, (y) shall consider in good faith changes or comments to the Written
Submission requested by other Members, and shall consult with such other Members
with respect to such changes and comments; provided, however, that if the
Tax Matters Member and the other Members, acting reasonably, cannot agree on the
changes or comments to the Written Submission, the Tax Matters Member’s changes
or comments shall control, and (z) shall provide to each Member a final copy of
the Written Submission. The Tax Matters Member shall provide each Member with
notice reasonably in advance of any scheduled meetings or conferences (including
telephone conferences) with respect to any tax contest, and such other Members
and their counsel will have the right to attend any such scheduled meetings or
conferences. The Tax Matters Member will take such reasonable actions, including
providing powers of attorney, as may be necessary for each Member and its
counsel to attend such meetings and conferences. Each Member shall provide the
Tax Matters Member with written comments to drafts of Written Submissions
delivered pursuant to this Section 8.1(b) within seven (7) Business Days of
receipt of such drafts. Each Member shall be deemed to have no comments if the
Tax Matters Member has not received such Member’s written comments within seven
(7) Business Days of receipt of such drafts.

                    (c)     
The Tax Matters Member agrees that it will not take the following actions
without each Member’s consent (such consent not to be unreasonably withheld,
delayed or conditioned):

                    (i)      Settling
or proposing a settlement with the IRS regarding a tax contest;

                    (ii)     
Terminating an extension of the statute of limitations regarding the Company’s
tax year;

                    (iii)   
Seeking technical advice or otherwise involving IRS personnel outside the audit
team or using procedures (e.g., a Pre-Filing Agreement or Industry Issue
Resolution Program) outside the normal audit procedures with respect to a tax
contest; and

                    (iv)    
If a tax contest results in a deficiency, choosing the forum for appeals or
litigation, and settling or proposing a settlement for such a controversy.

                    (d)      At
the Company’s expense, the Tax Matters Member shall cause Ernst & Young LLP
(or such other “Big Four” accounting firm mutually acceptable to Member A and
Member B) to prepare the Federal income tax returns for the Company and all
other tax and information returns of the Company, including state and local tax
returns. The Tax Matters Member may extend the time for filing any such tax
returns as provided for under applicable statutes. Each Member shall provide
such information, if any, as may be reasonably needed by such accounting firm
for purposes of preparing such tax returns, provided that such
information is readily available from regularly maintained accounting records.
At least thirty (30) days prior 

to filing the Federal and state income tax returns and
information returns of the Company, the Tax Matters Member shall deliver to the
Members for their review a copy of the Company’s Federal and state income tax
returns and information returns in the form proposed to be filed for each
Taxable Year, and shall incorporate all reasonable changes or comments to such
proposed tax returns and information returns requested by Members at least ten
days prior to the filing date for such returns. Notwithstanding the foregoing,
in the event the Tax Matters Member and another Member have a disagreement with
respect to such tax returns, such disagreement, to the extent the parties are
not able to reach agreement, shall be resolved by Ernst & Young LLP or
another “Big Four” accounting firm mutually acceptable to Member A and Member B,
whose costs shall be shared equally by Member A and Member B and whose
determination shall be final. After taking into account any such changes
described above, the Tax Matters Member shall cause the Company to timely file,
taking into account any applicable extensions, such tax returns. Within twenty
(20) days after filing such Federal and state income tax returns and information
returns of the Company, the Tax Matters Member shall cause the Company to
deliver to each Member a copy of the Company’s Federal and state income tax
returns and information returns as filed for each Taxable Year, together with
any additional tax-related information in the possession of the Company that
such Member may reasonably and timely request in order to properly prepare its
own income tax returns.

                    (e)     
The Operator, to the extent that Company funds are available, shall cause the
Company to pay any taxes payable by the Company (it being understood that the
expenses of preparation and filing of the tax returns, and the amounts of taxes,
are expenses of the Company and not of the Tax Matters Member); provided
that the Tax Matters Member shall not be required to cause the Company to pay
any tax so long as the Company (under the direction of the Tax Matters Member as
described above) is in good faith and by appropriate legal proceedings
contesting the validity, applicability or amount thereof and such contest does
not materially endanger any right or interest of the Company.

                    (f)      To
the extent that the Company may, or is required to, make elections for Federal,
state or local income or other tax purposes, such elections shall be made by the
Tax Matters Member. The Tax Matters Member agrees to cause the Company to make
the following elections for tax purposes:

                    (i)      To
adopt an annual accounting period ending on the last Friday in November as its
taxable year (the “Taxable Year”), unless otherwise required by law;

                    (ii)    
To adopt the accrual method of accounting;

                    (iii)  
 To compute the allowance for depreciation utilizing the shortest life and
fastest method permissible under the Modified Accelerated Cost Recovery System
or other applicable depreciation system, for tax purposes only;

                    (iv)    
To amortize organization expenditures, if any, over a sixty (60) month period in
accordance with Code Section 195(b) and any similar state statute;

                    (v)      To
amortize start-up expenditures, if any, over a sixty (60) month period in
accordance with Code Section 709(b) and any similar state statute;

                    (vi)    
To make such other elections as it may deem advisable to reduce Company taxable
income to the maximum extent possible and to take deductions in the earliest
Taxable Year possible; and

                    (vii)   
To make the election provided under Code Section 754 and any corresponding
provision of applicable state law at the request of any Member.

                    (g)      To
the extent permitted by law, the Members agree to report their tax items with
respect to, and arising from, their interests in the Company in a manner that is
consistent with the Company’s tax returns.

                    (h)     
Notwithstanding any other provisions of this Agreement, the provisions of this
Section 6.7 shall survive the dissolution of the Company or the
termination of any Member’s interest in the Company and shall remain binding on
all Members for a period of time necessary to resolve with the Internal Revenue
Service (“IRS”) or any applicable state or local taxing authority all
matters (including litigation) regarding the U.S. Federal, state and local
income taxation, as the case may be, of the Company or any Member with respect
to the Company.

                    (i)      The
Company shall take all steps necessary to be treated as a partnership for U.S.
federal income tax purposes. The Company shall not make an election or take any
action that would cause the Company to be excluded from the application of the
provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar
provision of applicable state law, and no provision of this Agreement shall be
construed to sanction or approve such election or action. No election shall be
made for the Company to be treated as a corporation, or an association taxable
as a corporation, under the Code or any provision of any state or local tax
laws.

                    (j)     
It is the intent of the Members that the Company and the Company Property be
managed so as to ensure that the Members of the Company shall be entitled to
claim the Renewable Electricity Production Credits provided under Sections
38(b)(8) and 45 of the Code with respect to all electricity sold by the Company
during the 10-year period set forth in Section 45(a)(2)(A)(ii) of the Code in
proportion with their allocation of Net Profits and Net Losses under Article
IX. No Member shall act in any manner that is inconsistent with the
allocation of the Renewable Electricity Production Credits set forth in this
Agreement.

                    (k)      The
Company and Member B hereby represent, warrants and covenant to Member A as
follows:

                    (i)      At
all times prior to the date hereof, the Company will have had a single owner and
will not have made an election to be treated as a corporation under Treasury
Regulations Section 301.7701 -3;

                    (ii)    
Member B will not claim an energy credit under Section 48 with respect to the
operations of the Company;

                    (iii)  
Neither Member B nor the Company has or will receive: (a) any grants from the
United States, a State, or a political subdivision of a State for use in
connection with the transactions contemplated hereby; (b) proceeds of an issue
of State or 

local government obligations used to
provide financing for the transactions contemplated hereby the interest on which
is exempt from tax under Section 103; (c) any subsidized energy financing
provided (directly or indirectly) under a Federal, State or local program
provided in connection with the transactions contemplated hereby; or (d) any
credit allowable with respect to any property or business in connection with the
transactions contemplated hereby (other than the Renewable Energy Production
Credits);

                    (iv)      Member
B expects to have adequate assets, other than its interest in the Company, to
satisfy its obligations, if any, under Section 9.2(f)(ii) of this Agreement;
and

                    (v)     
Neither Member B nor the Company is directly or indirectly related to the Idaho
Power Company in any capacity.

ARTICLE VII.
RESTRICTIONS ON TRANSFERABILITY;
ADMISSION OF NEW MEMBERS

                    Section
7.1      Transfers.

                    (a)      Member
A may sell, transfer, assign, pledge, encumber, hypothecate or otherwise dispose
of (a “Transfer”) all or any of its Units without the approval of any
other Member; provided, however, that if any such Transfer is to
be made during the First Distribution Period prior to the full funding of the
Capital Contributions contemplated to be made by Member A pursuant to Section
8.1, such Transfer may only be made if (i) Member A remains obligated with
respect to such Capital Contributions, or (ii) Member B has consented in writing
to such Transfer (which consent may not be unreasonably withheld, delayed or
conditioned). Notwithstanding the foregoing, Member A may not Transfer all or
any of its Units to a Competitor unless (1) the O&M Agreement has been
terminated in accordance with its terms or (2) neither Member B nor any
Affiliate of Member B is the Operator.

                    (b)      Member
B shall not Transfer any Class B Unit except as provided in this Section
7.1(b). During the First Distribution Period, Member B may sell its Class B
Units with the written consent of Member A, which consent may be given or
withheld, conditioned or delayed, by Member A in its sole discretion;
provided, however, that if neither Member B nor any of its Affiliates is
then acting as the Operator of the Project, then Member B may sell its Class B
Units with the written consent of Member A, which consent shall not be
unreasonably withheld, delayed or conditioned. At any time after the First
Distribution Period, Member B may sell its Class B Units with the written
consent of Member A, which consent shall not be unreasonably withheld, delayed
or conditioned.

                    Section
7.2      Admission of Transferee as
Member.

                    A
transferee of a Unit desiring to be admitted as a Member must execute and
deliver to the Company a counterpart of, or an agreement adopting, this
Agreement, in form and substance satisfactory to the Company. Subject to
compliance with Section 7.1, upon such execution and delivery, such
transferee shall be admitted as a Member and the transferee shall 

have, to the extent of the Unit transferred, the rights and
powers and shall be subject to the restrictions and liabilities of a Member
under this Agreement, the Certificate of Formation and the Act. The transferee
shall also be liable, to the extent of the Unit transferred, for the unfulfilled
obligations, if any, of the transferor Member to make Capital Contributions, but
shall not be obligated for liabilities unknown to the transferee at the time
such transferee was admitted as a Member and that could not be ascertained from
this Agreement. Whether or not the transferee of a Unit becomes a Member, the
transferor Member shall not be released from any liability to the Company under
this Agreement, the Certificate of Formation or the Act.

                    Section
7.3      Admission of Additional
Members.

                    Additional
Members of the Company may only be added if the addition of any such proposed
additional Member is approved in writing, prior to such admission, by all of the
then-existing Members and, in each such case, such proposed additional Member
satisfies the requirements of Section 7.2. All Units issued following the
date hereof shall be either Class A Units or Class B Units, or a new class of
Units, as shall be agreed at such time among the Members.

ARTICLE VIII. 
CAPITAL OF THE COMPANY

                    Section
8.1      Capital Contributions on or Prior to
the Effective Time.

                    Member
A and Member B have made the following Capital Contributions in the aggregate
amounts set forth below prior to or on the Effective Time:

	Member 	Capital Contribution (Cash) 
	Member A 	$ 100 
	Member B 	$ 5,000,000 
	  	  
	  	  
	Member 	Capital Contribution
      (Property) 
	Member A 	$ 0 
	Member B 	$ 882,803

                    Section
8.2      Further Required Capital
Contributions.

                    Following
the Effective Time, Member A irrevocably agrees to make the Capital
Contributions in the amounts and on the dates indicated on Schedule 5
attached hereto (each a “Capital Call”); provided, that Member
A shall not be required to make any Capital Call until each of the conditions
precedent identified on Schedule 6 attached hereto have been satisfied or
waived by Member A; and, provided, further, that Member B may
reallocate the amounts indicated on Schedule 5 among the scheduled times
(so long as the aggregate amount of Capital Calls made by Member A and scheduled
to be made by Member A does not exceed $34,170,000) by giving written notice to
Member A at least ten (10) Business Days prior to the date scheduled for a
Capital Call. 

                    Following
the Effective Time, Member B shall make or cause to be made all of the transfers
listed in the Transfer Plan under the heading “Transfer Required” as Capital
Contributions of property, to be valued as described in Section 8.4.

                    Neither
Member A nor Member B shall be obligated to make any Capital Contributions other
than such Member’s Capital Contribution set forth in Section 8.1 and this
Section 8.2. Each Party agrees that no additional Capital Contributions
or Capital Calls may be made without the consent of all Parties to this
Agreement.

                    Section
8.3      Return of Capital
Contributions.

                    Except
as otherwise provided herein or in the Act, no Member shall have the right to
withdraw, or receive any return of, all or any portion of such Member’s Capital
Contribution.

                    Section
8.4      In-Kind Contributions.

                    The
fair market value of contributions of property, other than cash, made under this
Article VIII shall be the value agreed upon by the Members.

                    Section
8.5      Interest.

                    No
interest shall be paid by the Company on Capital Contributions or on balances in
Members’ Capital Accounts.

                    Section
8.6      Loans From Members.

                    Loans
by a Member to the Company shall not be considered Capital Contributions. If any
Member shall advance funds to the Company in excess of the amounts required
hereunder to be contributed by such Member to the capital of the Company, the
making of such advances shall not result in any increase in the amount of the
Capital Account of such Member. The amounts of any such advances shall be a debt
of the Company to such Member and shall be payable or collectible only out of
the Company Property in accordance with the terms and conditions upon which such
advances are made. The repayment of loans from a Member to the Company upon
liquidation shall be subject to the order of priority set forth in Section
12.2.

ARTICLE IX.
CAPITAL ACCOUNTS, PROFITS AND LOSSES
AND ALLOCATIONS

                    Section
9.1      Capital Accounts.

                    (a)      The
Company shall maintain a capital account for each Member in accordance with
Section 704 of the Code and the Treasury Regulations thereunder (each, a
“Capital Account”). Each Member’s Capital Account as of the Effective
Date will equal its Capital Contributions made under Article VIII as of
such date.

                    (b)     
The Capital Account of each Member will be increased by (i) the amount of any
cash and the agreed Book Value of any property (net of liabilities encumbering
the 

property), as of the date of contribution, contributed as a
Capital Contribution to the capital of the Company by that Member upon the
agreement of all of the parties to this Agreement, as contemplated by Section
8.2, (ii) the amount of any Net Profits allocated to that Member, (iii) any
items of income specially allocated to that Member under this Article IX,
(iv) that Member’s pro rata share (determined in the same manner as that
Member’s share of Net Profits pursuant to Section 9.2) of income of the
Company that is exempt from tax. The Capital Account of each Member will be
decreased by (i) the amount of any Net Losses allocated to that Member, (ii) the
amount of distributions to that Member, (iii) any deductions specially allocated
to that Member under this Article IX, and (iv) that Member’s pro
rata share (determined in the same manner as that Member’s share of Net
Losses pursuant to Section 9.2) of any other expenditures of the Company
that are not deductible in computing Company Net Profits or Net Losses and which
are not chargeable to capital account. In all respects, the Member’s Capital
Accounts will be determined in accordance with the detailed capital accounting
rules set forth in Section 1.704 -1(b)(2)(iv) of the Treasury Regulations and
will be adjusted upon the occurrence of certain events as provided in Section
1.704 -1(b)(2)(iv)(f) of the Treasury Regulations.

                    (c)     
A transferee of all (or a portion) of a Unit will succeed to the Capital Account
(or portion of the Capital Account) attributable to the transferred
Interest.

                    Section
9.2      Profits and Losses.

                    (a)      The
net profits and net losses of the Company (“Net Profits” and “Net
Losses”) will be the net income or net loss (including capital gains and
losses and percentage depletion deductions under Section 613 of the Code),
respectively, of the Company determined for each Fiscal Year in accordance with
the accounting method followed for federal income tax purposes, except that in
computing Net Profits and Net Losses, all depreciation and cost recovery
deductions will be deemed equal to Depreciation and gains or losses will be
determined by reference to Book Value rather than tax basis. Whenever a
proportionate part of the Net Profits or Net Losses is allocated to a Member,
every item of income, gain, loss, deduction or credit entering into the
computation of such Net Profits or Net Losses or arising from the transactions
with respect to which such Net Profits or Net Losses were realized will be
credited or charged, as the case may be, to such Member in the same proportion;
except that “recapture income,” if any, will be allocated to the Members who
were allocated the corresponding Depreciation deductions.

                    (b)     
If any Member transfers all or any part of its Interest during any Fiscal Year
or its Interest is increased or decreased, Net Profits and Net Losses
attributable to that Interest for that Fiscal Year (except as otherwise provided
below) will be apportioned between the transferor and transferee or computed as
to such Members, as the case may be, in accordance with the method selected by
the Managers, as long as such apportionment is permissible under the Code and
applicable regulations thereunder.

                    (c)      During
each Fiscal Year during the First Distribution Period (and in any event until
the end of the Class A Initial Allocation Period, if longer than the First
Distribution Period), Net Profits or Net Losses shall be allocated *** to Member
A and *** to Member B.

                    (d)      Subject
to, and after giving effect to, Section 9.2(f), during each Fiscal Year
after the end of the period described in Section 9.2(c), Net Profits and
Net Losses shall be allocated as follows:

                    (i)      Net
Profits for any Fiscal Year shall be allocated in the following order and
priority:

          (A)      First,
Net Profits shall be allocated to the Members in an amount equal to the excess,
if any, of (x) the cumulative Net Losses allocated to each Member pursuant to
Section 9.2(d)(ii) for all prior Fiscal Years beginning after the period
described in Section 9.2(c), over (y) the cumulative Net Profits
allocated to each such Member pursuant to this Section 9.2(d)(i)(A) for
all such prior Fiscal Years. Such amounts shall be allocated among the Members
in proportion to previous allocations of Net Losses so as to offset such
allocations of Net Losses that have not been previously offset by allocations
pursuant to this Section 9.2(d)(i)(A), in reverse order to that in which
such Net Losses were originally allocated.

          (B)      Second,
any remaining Net Profits shall be allocated to the Members in an amount equal
to the excess, if any, of (x) the cumulative distributions to Members of
Available Cash pursuant to Section 10.1(c) for the current Fiscal Year
and all prior Fiscal Years beginning after the end of the period described in
Section 9.2(c), over (y) the cumulative Net Profits allocated to Members
pursuant to this Section 9.2(d)(i) for all such prior Fiscal Years. Such
amounts shall be allocated among the Members in proportion to their relative
cumulative distributions for which allocations have not previously been made
pursuant to this Section 9.2(d)(i)(B).

          (C)      Third,
in all Fiscal Years during the Second Distribution Period, any remaining Net
Profits shall be allocated *** to Member A and *** to Member B.

          (D)     
Fourth, in all Fiscal Years during the Third Distribution Period, any remaining
Net Profits shall be allocated *** to Member B and *** to Member A.

                    (ii)     
Net Losses for any Fiscal Year shall be allocated in the following order and
priority:

          (A)      First,
Net Losses shall be allocated to the Members in an amount equal to the excess,
if any, of (x) the cumulative Net Profits allocated to each Member pursuant to
Section 9.2(d)(i)(C) or (D) for all prior Fiscal Years beginning
after the period described in Section 9.2(c), over (y) the cumulative Net
Losses allocated to each Member pursuant to this Section 9.2(d)(ii)(A)
for all such prior Fiscal Years. Such amount shall be allocated among the
Members in proportion to previous 

allocations of Net Income so as to
offset previous allocations of Net Income not previously offset by allocations
pursuant to this Section 9.2(d)(ii)(A), in reverse order to that in which
such Net Income was previously allocated.

          (B)      Second,
any remaining Net Losses shall be allocated to the Members in proportion to and
to the extent of the Members’ positive Capital Account balances.

          (C)      Third,
in all Fiscal Years during the Second Distribution Period, any remaining Net
Losses shall be allocated *** to Member A and *** to Member B.

          (D)      Fourth,
in all Fiscal Years during the Third Distribution Period, any remaining Net
Losses shall be allocated *** to Member B and *** to Member A.

                    (e)      Notwithstanding
anything to the contrary in Sections 9.2(a), (b), (c) and
(d) hereof, if and to the extent the Tax Matters Member determines that
an allocation of depreciation, depletion or other item of tax loss or deduction
to Member A would cause Member A’s Capital Account to fall below zero (or, if
Member A’s Capital Account is less than zero before such allocation, would
increase the amount by which Member A’s Capital Account is less than zero), only
the portion of such item or items that can be allocated to Member A without
causing Member A’s Capital Account to fall below zero (or to increase the amount
by which Member A’s Capital Account is less than zero) shall be allocated to
Member A. The remainder of any such item or items shall be allocated to Member
B.

               (f)      Notwithstanding
Sections 9.2(c), (d) and (e) hereof,

                    (i)      For
federal income tax purposes (but not for purposes of crediting or charging
Capital Accounts), Depreciation or gain or loss realized by the Company with
respect to any property that was contributed to the Company or that was held by
the Company at a time when the Book Value of the Company Property was adjusted
in accordance with the third sentence of Section 9.1(b) will, in
accordance with Section 704(c) of the Code and Sections 1.704 -1(b)(2)(iv)(d)
and (f) of the Treasury Regulations, be allocated among the Members in a manner
which takes into account the differences between the adjusted basis for federal
income tax purposes to the Company of its interest in such property and the fair
market value of such interest at the time of its contribution or revaluation.
The Company shall adopt the traditional method with curative allocations as
specified in Section 1.704 -3(c) of the Treasury Regulations with respect to
allocations governed by Section 704(c) of the Code or such other method selected
by the Tax Matters Member; and

                    (ii)     
If any Member receives an adjustment, allocation or distribution that causes
such Member to have a deficit Capital Account balance as of the liquidation of
such Member’s Units (taking into account all capital account adjustments for the
Fiscal Year during which such liquidation occurs, other than those adjustment
made as a 

result of this Section
9.2(f)(ii)), such Member shall be unconditionally obligated to restore the
amount of such deficit balance to the partnership by the end of such Fiscal Year
(or, if later, within 90 days after the date of such liquidation), which amount
shall, upon liquidation of the partnership, be paid to creditors of the
partnership or distributed to other partners in accordance with their positive
capital balances (in accordance with Article XII). This provision is
intended and shall be interpreted to comply with the requirements of Section
1.704 -1(b)(2)(ii)(b)(3) of the Treasury Regulations.

                    (iii)     
To the extent and in the manner provided in Section 1.704 -2(f) of the Treasury
Regulations, if there is a net decrease in Company Minimum Gain during any
Fiscal Year each Member shall be specially allocated items of Company income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Member’s share of the net decrease in Company Minimum Gain, determined in
accordance with Section 1.704 -2(g) of the Treasury Regulations. This Section
9.2(f)(iii) is intended to comply with the minimum gain chargeback
requirement in Section 1.704 -2(f) of the Treasury Regulations and shall be
interpreted consistently therewith.

                    (iv)      To
the extent and in the manner provided in Section 1.704 -2(i)(4) of the Treasury
Regulations, if there is a net decrease in Member Minimum Gain attributable to a
Member Nonrecourse Liability during any Fiscal Year, each Member who has a share
of the Member Minimum Gain attributable to such Member Nonrecourse Liability
shall be specially allocated items of Company income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Member’s share
of the net decrease in Member Minimum Gain attributable to such Member
Nonrecourse Liability, determined in accordance with Section 1.704 -2(i)(4) of
the Treasury Regulations. The items to be so allocated shall be determined in
accordance with Sections l.704-2(i)(4) and 1.704 -2(j)(2) of the Treasury
Regulations. This Section 9.2(f)(iv) is intended to comply with
the minimum gain chargeback requirement in Section 1.704 -2(i)(4) of the
Treasury Regulations and shall be interpreted consistently therewith.

                    (v)      Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to Member A and
Member B in accordance with the Members’ interest in Available Cash for such
year.

                    (vi)      Any
Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated
to the Member who bears the economic risk of loss with respect to the Member
Nonrecourse Liability to which such Nonrecourse Deductions are attributable in
accordance with Section 1.704 -2(i)(1) of the Treasury Regulations.

                    (g)      All
Renewable Energy Production Credits generated by the Company, together with any
other Tax credits generated by the Company, shall be allocated in the same
manner in which Net Profits and Net Losses for such Fiscal Year are allocated
pursuant to this Article IX.

                    (h)      Notwithstanding
anything in this Section 9.2 to the contrary, in any Fiscal Year, all
items of gross income of the Company attributable to the receipt of REC Income
by the Company shall be allocated, and all Available Cash which results from
such REC Income in that Fiscal Year shall be distributed, (i) *** to Member A
and *** to Member B, up to the amount of REC Income for such Fiscal Year
identified on Schedule 8, and (ii) *** to Member A and *** to Member B
with regard to any REC Income which exceeds the applicable scheduled amount as
set forth on Schedule 8 for any Fiscal Year and with regard to any REC
Income earned in a Fiscal Year for which no corresponding amount appears on
Schedule 8.

                    (i)      Notwithstanding
anything in this Section 9.2 to the contrary, the allocations made
pursuant to this Article IX are intended to comply with Section 704(b) of
the Code and the Treasury Regulations promulgated thereunder. The parties hereto
shall work together to amend this Agreement (including this Article IX
and Article X), if necessary, to comply with this Section
9.1(h).

ARTICLE X.
APPLICATIONS AND DISTRIBUTIONS OF
AVAILABLE CASH

                    Section
10.1      Applications and
Distributions.

                    (a)     
The Company will distribute Available Cash for each Fiscal Year (other than the
Fiscal Year in which the Company liquidates) in accordance with Section
10.1(b) or (c), as applicable; provided that the Managers may
reserve amounts for potential or pending litigation and other actual or
potential liabilities in such amounts and for such period of time (not to exceed
five (5) years from the final sale of Interests) as the Managers deem
appropriate. Subject to this Section 10.1(a), the Company will make any
such distributions to the Members in accordance with Section 10.1(b) or
(c), as applicable. In applying the terms of Sections 10.1(b) and
(c), (i) until a particular priority has been satisfied in full, no
amounts will be distributable under any junior priority, (ii) the Members
identified at each level of priority shall receive distributions at the same
time without preference or priority of one Member over another until all Members
at that level have received the full amount to which they are entitled and
before any distributions are made or paid to any Members for amounts in a lower
level of priority and (iii) all amounts distributable under a particular
priority will be prorated among the Members in the manner specified within the
priority, and the method of proration applied to each dollar distributable in
that priority will be the same until that priority is satisfied in full.

                    (b)      Except
as otherwise provided in Section 9.2(h), Available Cash with respect to
any Fiscal Quarter during the Class B Initial Distribution Period will be
distributed on each Distribution Date in accordance with the following order of
priorities:

                    (i)      First,
in the event that as of any Distribution Date there is a Class A Distribution
Deficiency greater than ***, *** to Member A until the Class A Distribution
Deficiency is *** or less;

                    (ii)      Second,
*** to Member B until Member B has received the Class B Initial Distribution
Amount with respect to such Fiscal Year (in the event that 

Available Cash with respect to any such
Fiscal Year is less than the Class B Initial Distribution Amount with respect to
such year, Member B shall not be entitled to any such shortfall in subsequent
Fiscal Years); and

                    (iii)
Third, *** to Member A.

                    (c)     
Except as otherwise provided in Section 9.2(h), Available Cash with
respect to any Fiscal Quarter after the Class B Initial Distribution Period will
be distributed on each Distribution Date in accordance with the following order
of priorities:

                    (i)      First,
in the event that as of any Distribution Date there is a Class A Distribution
Deficiency greater than ***, all Available Cash will be distributed to Member A
until the Class A Distribution Deficiency is *** or less.

                    (ii)      Second,
*** to Member A and *** to Member B until the Class A Target Yield has been
realized;

                    (iii)      Third,
in all Fiscal Quarters prior to and including the last day of the Second
Distribution Period, *** to Member A and *** to Member B; and

                    (iv)      Fourth,
in any Fiscal Quarter after the Fiscal Year in which the first day of the Third
Distribution Period occurs, *** to Member B and *** to Member A.

                    Section
10.2      Liquidation.

                    In
the event of the sale or other disposition of all or substantially all the
Company Property, the Company will be dissolved and the proceeds of the sale or
disposition will be distributed to the Members in liquidation as provided in
Article XII.

                    Section
10.3      Withholding Taxes.

                    The
Managers may withhold or cause to be withheld from any Member’s distributions
from the Company any amounts on account of taxes or similar charges, if any, as
are required to be withheld by applicable law. Any amounts withheld by the
Company pursuant to this Section 10.3, shall be timely remitted by the
Company to the appropriate taxing authority. Any amounts withheld or offset by
the Managers in accordance with this Section 10.3 will nevertheless, for
purposes of this Agreement, be treated as if they had been distributed to the
Member from which they are withheld.

ARTICLE XI. 
DISSOLUTION

                    Section
11.1      Dissolution Events.

                    (a)      The
Company shall dissolve and commence winding up upon the first to occur of the
following: (i) after the written direction of the Managers, (ii) the termination
of the legal existence of the last remaining member of the Company or the
occurrence of any other 

event which terminates the continued membership of the last
remaining member of the Company in the Company unless the Company is continued
without dissolution in a manner permitted by this Agreement or the Act or (iii)
the entry of a decree of judicial dissolution under Section 18-802 of the Act.
Upon the occurrence of any event that causes the last remaining member of the
Company to cease to be a member of the Company (other than upon continuation of
the Company without dissolution upon (i) an assignment by such member of all of
its limited liability company interest in the Company and the admission of the
transferee pursuant to this Agreement, or (ii) the resignation of such member
and the admission of an additional member of the Company pursuant to this
Agreement), to the fullest extent permitted by law, the personal representative
of such member is hereby authorized to, and shall, within ninety (90) days after
the occurrence of the event that terminated the continued membership of such
member in the Company, agree in writing (i) to continue the Company and (ii) to
the admission of the personal representative or its nominee or designee, as the
case may be, as a substitute member of the Company, effective as of the
occurrence of the event that terminated the continued membership of such member
in the Company.

                    (b)     
Notwithstanding any other provision of this Agreement, the Bankruptcy of a
Member shall not cause such Member to cease to be a member of the Company and
upon the occurrence of such an event, the Company shall continue without
dissolution.

                    (c)      Notwithstanding
anything herein to the contrary, the Company shall comply with any applicable
requirements of the Act pertaining to the winding up of the affairs of the
Company and the final distribution of its assets. Upon the completion of the
winding up, liquidation and distribution of the assets, the Company shall be
terminated when the Certificate is cancelled in the manner required by the Act.
The existence of the Company as a separate legal entity shall continue until
cancellation of the Certificate as provided in the Act.

ARTICLE XII. 
LIQUIDATION

                    Section
12.1      Responsibility for Winding Up.

                    Upon
dissolution of the Company pursuant to Article XI, the Managers, or the
authorized representative of the Managers, shall be responsible for overseeing
the winding up and liquidation of the Company and shall take full account of the
Company’s liabilities and assets.

                    Section
12.2      Distribution of Assets Upon Winding
Up.

                    Upon
the winding-up of the Company, the assets will be distributed as follows: 

                    (a)     
to the payment of expenses of the liquidation;

                    (b)      to
the payment of debts and liabilities of the Company, including debts and
liabilities owed to Members (other than liabilities for distributions to Members
and former members under Section 18-601 or Section 18-604 of the Act) to the
extent permitted by applicable law, in order of priority as provided by
applicable law;

                    (c)     
to the setting up of any reserves that the Managers or the liquidating trustee,
as the case may be, determines are reasonably necessary for the payment of any
contingent or unforeseen liabilities or obligations of the Company or the
Members;

                    (d)      to
the payment of debts and liabilities of the Company owed to Members to the
extent not paid under Section 12.2(b); and

                    (e)     
to the Members in accordance with their positive Capital Account balances after
giving effect to the allocations provided in Article IX for such
year.

ARTICLE XIII.
INDEMNIFICATION; EXCULPATION 

                    Section
13.1      Indemnification of Members.

                    To
the fullest extent not prohibited by law, the Company shall indemnify and hold
harmless each Member from and against any and all losses, claims, demands,
costs, damages, liabilities (joint and several), expenses of any nature
(including attorneys’ fees and disbursements), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits, or
proceedings, civil, criminal, administrative or investigative, in which a Member
may be involved, or threatened to be involved, as a party or otherwise, arising
out of or incidental to any business of the Company transacted or occurring
while a Member was a Member, regardless of whether the Member continues to be a
Member of the Company at the time any such liability or expense is paid or
incurred, unless such act or failure to act was the result of willful
misfeasance, gross negligence or fraud of such Member.

                    Section
13.2      Indemnification of Managers,
Officers, Employees and Agents.

                    Each
person who was or is made a party or is threatened to be made a party to or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a “proceeding”) by reason of
the fact that he or she is or was serving as a Manager, officer, employee or
agent of the Company or, at the request of the Company, another limited
liability company or of a corporation, partnership, joint venture, trust or
other enterprise, including a service with respect to an employee benefit plan
(hereinafter an “indemnitee”), whether the basis of such a proceeding is alleged
action in an official capacity as a Manager, officer, employee or agent or in
any other capacity while serving as a Manager, officer, employee or agent, shall
be indemnified and held harmless by the Company to the fullest extent authorized
by the Act, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the Company
to provide broader indemnification rights than such law permitted the Company to
provide prior to such amendment), against all expense, liability and loss
(including attorneys’ fees, judgments fines, excise taxes or penalties and
amounts paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith, unless such act or failure to act was the result of
willful misfeasance, gross negligence or fraud of such indemnitee.

                    Section
13.3      Exculpation.

                    (a)      No
Member, Manager or officer shall be liable to the Company for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Member, Manager or officer in good faith on behalf of the Company.

                    (b)     
No Member, Manager or officer shall be liable to the Members or to the Company
for any act or failure to act on behalf of the Company, unless such act or
failure to act resulted from the willful misfeasance, gross negligence or the
fraud of such Person. 

                    (c)      Each
Member, Manager and officer shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters such Member or
Manager reasonably believes are within such Person’s professional or expert
competence.

                    (d)      Each
Manager may consult with counsel and accountants in respect of the affairs of
the Company at the Company’s sole expense and shall be fully protected and
justified in any action or inaction which is taken in good faith in accordance
with the advice or opinion of such counsel or accountants.

                    (e)      Notwithstanding
the foregoing, the provisions of this Section 13.3 shall not be construed
so as to relieve (or attempt to relieve) a Member, Manager or officer of any
liability, to the extent (but only to the extent) that such liability may not be
waived, modified or limited under Applicable Law, but shall be construed so as
to effectuate the provisions of this Section 13.3 to the fullest extent
permitted by law.

ARTICLE XIV. 
MISCELLANEOUS

                    Section
14.1      Governing Law.

                    The
laws of the State of Delaware shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights, obligations and
duties of the Members and Managers hereunder, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.

                    Section
14.2      Binding Effect; Entire Agreement.

                    Except
as otherwise provided in this Agreement, every covenant, term, and provision of
this Agreement shall be binding upon and inure to the benefit of the Members and
their respective legal representatives, successors, transferees, and assigns.
This Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof.

                    Section
14.3      Creditor’s Interest in the
Company.

                    No
creditor who makes a loan to the Company shall have or acquire at any time as a
result of making the loan any direct or indirect interest in the profits,
capital or property of the Company, other than such interest as may be accorded
to a secured creditor.

                    Section
14.4      Headings.

                    Article
and other headings contained in this Agreement are for reference purposes only
and are not intended to describe, interpret, define, or limit the scope, extent
or intent of this Agreement or any provision hereof.

                    Section
14.5      Amendments.

                    This
Agreement may only be amended with the written consent of the Members.

                    Section
14.6      Severability.

                    Every
provision of this Agreement is intended to be severable. If any term or
provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity or legality of the
remainder of this Agreement.

                    Section
14.7      Incorporation by Reference.

                    Every
schedule, exhibit or other appendix attached to this Agreement and referred to
herein is hereby incorporated into this Agreement by reference.

                    Section
14.8      Variation of Pronouns.

                    All
pronouns and any variations thereof shall be deemed to refer to masculine,
feminine, or neuter, singular or plural, as the identity of the Person or
Persons may require.

                    Section
14.9      No Third-Party Beneficiaries.

                    No
term or provision of this Agreement is intended to or shall be for the benefit
of any Person, firm, corporation or other entity not a party hereto, and no such
other Person, firm, corporation or other entity shall have any right or cause of
action hereunder.

                    Section
14.10      Counterpart Execution; Facsimile
Signatures.

                    This
Agreement may be executed in any number of counterparts pursuant to original or
facsimile copies of signatures with the same effect as if the relevant party had
signed the same document pursuant to original signatures. All counterparts shall
be construed together and shall constitute one agreement.

                    Section
14.11      Confidentiality and
Disclosure.

                    (a)      Each
Party agrees (on behalf of itself and each of its Affiliates, members,
directors, officers, employees and representatives) that, except as may
otherwise be agreed by the 

Party disclosing Confidential Information, the Party receiving
Confidential Information will hold in complete confidence, in accordance with
its customary procedures for handling confidential information and in accordance
with safe and sound practices, and not disclose it to any other Person;
provided, that the receiving Party may disclose Confidential
Information:

                    (i)      to
those of its and its Affiliates’ officers, directors, employees, counsel,
auditors, accountants, examiners, consultants, advisors and sources of financing
(collectively, the “Representatives”) who need to know such Confidential
Information for the purpose of discussing, advising with respect to or
evaluating the Project or the Company or an investment in the Project or the
Company (it being understood and agreed that the receiving Party shall have
advised such persons of their obligations concerning the confidentiality of all
client affairs and information and shall instruct such persons to maintain the
confidentiality of such Confidential Information);

                    (ii)     
as may be required by a rule or other requirement of a securities regulator, a
stock exchange or a self-regulatory organization;

                    (iii)     
in or pursuant to any offering statement or similar document provided to
purchasers or potential purchasers of any direct or indirect ownership interests
in the Company;

                    (iv)     
in an action or proceeding brought in pursuit of its rights or in the exercise
of its remedies under this Agreement or any other Project Document;

                    (v)      to
any rating agency or potential lender to the Company or the Party;

                    (vi)      to
any potential purchaser of output of the Project or the output of Phase II or
other geothermal projects in which Member B is a participant, provided
that any such potential purchaser has agreed to confidentiality undertakings
with respect thereto under a confidentiality agreement that is at least as
restrictive as this agreement in all applicable respects;

                    (vii)      to
any provider or potential provider of hedging or risk management in connection
with any transaction related to the transactions contemplated by the Project
Documents; and

                    (viii)     
as requested or required in connection with a judicial, administrative or
regulatory proceeding in which a Party or a partner, officer, member, director,
employee or Affiliate thereof is involved, pursuant to a court order or subpoena
or regulatory or government inquiry or demand or as otherwise by law or
regulation.

In the event that the receiving Party receives a request to
disclose any Confidential Information under clause (viii) in the prior sentence,
it will (a) promptly notify the disclosing Party thereof (to the extent
permitted by law or regulation and reasonably practicable) so that the
disclosing Party may seek a protective order or otherwise seek to resist or
narrow such request and (b) if the receiving Party is nonetheless required to
make such disclosure or if it is advised by its counsel that such disclosure is
necessary, it will take reasonable steps, at disclosing Party’s request and 

expense, to attempt to obtain or help the disclosing Party
obtain an order or other reliable assurance that confidential treatment will be
accorded to such portion of the disclosed information.

                    (b)     
Each Member agrees to consult with the other Members before issuing any press
release or otherwise making any public or press statement with respect to this
Agreement and the transactions contemplated hereby and the Project and, except
as may be necessary for such Member or any of its Affiliates to comply with the
requirements of Applicable Law or of any stock exchange or self-regulatory
organization, agrees not to issue any such press release or make any such public
or press statement without the prior written approval of the other Members,
which shall not be unreasonably withheld; provided, that written approval
shall be deemed to be given by any Member that fails to respond within five days
of receiving the notice of intention from a Member to issue a press release or
make any public or press statement with respect to this Agreement and the
transactions contemplated hereby and the Project.

                    (c)      Notwithstanding
anything herein to the contrary, any Member (and any owner, member, partner,
director, officer, employee, agent, representative, adviser of any Member, and
any Affiliate of the foregoing) may disclose to any and all Persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and the Project and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure; provided, that any such information
relating to the Federal income tax treatment or tax structure shall remain
subject to the provisions of this Section 14.11 (and the foregoing sentence
shall not apply) to the extent reasonably necessary to enable any Person to
comply with applicable securities laws. For this purpose, “tax treatment” means
Federal income tax treatment and “tax structure” is limited to any facts
relevant to the Federal income tax treatment of the transactions.

                    (d)      Notwithstanding
any of the foregoing in this Section 14.11, in connection with any
offering of securities by Member B or an affiliate (the “Issuer”), in
which Member A or an affiliate (the “GS Entity”) is involved as
underwriter, dealer, agent or other similar participant, nothing in this
agreement shall (i) prevent either the Issuer or the GS Entity from complying
with all applicable disclosure laws, regulations and principles in connection
with such offering or sale of securities, (ii) restrict the ability of the GS
Entity to consider information for due diligence purposes or to share
information with other underwriters participating in such offering or sale of
securities, (iii) prevent the GS Entity from retaining documents or other
information in connection with due diligence or (iv) prevent the GS Entity from
using any such documents or other information in investigating or defending
itself against claims made or threatened by purchasers, regulatory authorities
or others in connection with such an offering or sale of securities.

                    Section
14.12      Amendment and Restatement.

                    This
Agreement is an amendment and restatement, in its entirety, of the Original
Operating Agreement, and from and after the Effective Date as of the Effective
Time the Original Operating Agreement shall be without further force or
effect.

                    Section
14.13      Notices.

                    Unless
otherwise provided herein, any offer, acceptance, election, approval, consent,
certification, request, waiver, notice or other communication required or
permitted to be given hereunder (collectively referred to as a “Notice”),
shall be in writing and delivered (a) in person, (b) by registered or certified
mail with postage prepaid and return receipt requested or (c) by recognized
overnight courier service with charges prepaid, directed to the intended
recipient at the address of such Member, as set forth on Schedule 1
hereto or at such other address as any Member hereafter may designate by giving
Notice to the Members and the Managers in accordance with this Section
14.13. A Notice or other communication will be deemed delivered on the
earliest to occur of (i) its actual receipt when delivered in person, (ii) the
fifth Business Day following its deposit in registered or certified mail, with
postage prepaid, and return receipt requested or (iii) the second Business Day
following its deposit with a recognized overnight courier service.

                    Section
14.14      Conference Telephone
Meetings.

                    Meetings
of the Members or the Managers may be held by means of conference telephone or
similar communications equipment so long as all Persons participating in the
meeting can hear each other. Participation in a meeting by means of conference
telephone shall constitute presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business thereat on the ground that the meeting is not
lawfully called or convened.

[SIGNATURE PAGES FOLLOW]

                    IN
WITNESS WHEREOF, the undersigned have duly executed this Amended and Restated
Operating Agreement of Raft River Energy I LLC as of August 9, 2006.

	 	MEMBER A: 
	 		 
	 	RAFT RIVER I HOLDINGS, LLC 
	 		 
	 	By: 	/s/ Joseph
      Slamm  
	 		Name: Joseph Slamm  
	 		Title: Vice President
	 		 
	 	MEMBER B: 
	 		 
	 	U.S. GEOTHERMAL INC. 
	 		 
	 	By: 	/s/ Kerry
      Hawkley
	 		Name: Kerry Hawkley
	 		Title: CFO
	 		  
	 	COMPANY: 
	 		 
	 	RAFT RIVER ENERGY I LLC 
	 		 
	 	By: 	/s/ Daniel
      Kunz 
	 		Name: Daniel Kunz 
	 		Title: President

Schedule 1

  Members, Membership Interests and Information for Purposes of Providing
  Notice

	  	  	Percentage of 	  
	  	  	Class Outstanding 	  
	Member 	Membership Interest 	  	Notice Details 
	  	  	  	  
	A 	500 Class A Units 	100% of 	Raft River I Holdings, LLC 
	  	  	Class A Units 	c/o The Goldman Sachs Group 
	  	  	Outstanding 	85 Broad Street 
	  	  	  	New York, New York 10004 
	  	  	  	Attention: Charles Cognata 
	  	  	  	  
	  	  	  	Tel. No.: (212) 902-1000 
	  	  	  	  
	  	  	  	  
	B 	500 Class B Units 	100% of 	U.S. Geothermal Inc. 
	  	  	Class B Units 	1509 Tyrell Lane Suite B 
	  	  	Outstanding 	Boise, Idaho 83706 
	  	  	  	Attention: President 
	  	  	  	  
	  	  	  	Tel. No.: (208) 424-1027 
	  	  	  	Fax No.: (208) 424-1030 

Schedule 2

  List of Approved Affiliate Transactions and Agreements

 

	1. 	 Any agreement to which an Affiliate of a Member is a
        party that is specifically listed in the definition of “Project Documents”
        (without regard to the reference to “other contracts to which the
        Company is or becomes party”).

	 	 
	2. 	 Any agreement to which an Affiliate of a Member is a
        party that is specifically contemplated in the Transfer Plan.

Schedule 3

  Initial List of Managers of the Company

 

ELECTED BY HOLDERS OF THE CLASS A UNITS 

  Milton Millman 

  Barry Sklar 

  Andrew B. Fontein

ELECTED BY HOLDERS OF THE CLASS B UNITS 

  Daniel Kunz

Schedule 4

  Projected Distributable Free Cash

	Quarter Ending 	Projected Distributable Free Cash ($)
    
	August 31, 2006 	*** 
	November 30, 2006 	*** 
	February 28, 2007 	*** 
	May 31, 2007 	*** 
	August 31, 2007 	*** 
	November 30, 2007 	*** 
	February 29, 2008 	*** 
	May 31, 2008 	*** 
	August 31, 2008 	*** 
	November 30, 2008 	*** 
	February 28, 2009 	*** 
	May 31, 2009 	*** 
	August 31, 2009 	*** 
	November 30, 2009 	*** 
	February 28, 2010 	*** 
	May 31, 2010 	*** 
	August 31, 2010 	*** 
	November 30, 2010 	*** 
	February 28, 2011 	*** 
	May 31, 2011 	*** 
	August 31, 2011 	*** 
	November 30, 2011 	*** 
	February 29, 2012 	*** 
	May 31, 2012 	*** 
	August 31, 2012 	*** 
	November 30, 2012 	*** 
	February 28, 2013 	*** 
	May 31, 2013 	*** 
	August 31, 2013 	*** 
	November 30, 2013 	*** 
	February 28, 2014 	*** 
	May 31, 2014 	*** 
	August 31, 2014 	*** 
	November 30, 2014 	*** 
	February 28, 2015 	*** 
	May 31, 2015 	*** 
	August 31, 2015 	*** 
	November 30, 2015 	*** 
	February 29, 2016 	*** 
	May 31, 2016 	*** 

	Quarter Ending 	Projected Distributable Free Cash ($)
    
	August 31, 2016 	*** 
	November 30, 2016 	*** 
	February 28, 2017 	*** 
	May 31, 2017 	*** 
	August 31, 2017 	*** 
	November 30, 2017 	*** 
	February 28, 2018 	*** 
	May 31, 2018 	*** 
	August 31, 2018 	*** 
	November 30, 2018 	*** 
	February 28, 2019 	*** 
	May 31, 2019 	*** 
	August 31, 2019 	*** 
	November 30, 2019 	*** 
	February 29, 2020 	*** 
	May 31, 2020 	*** 
	August 31, 2020 	*** 
	November 30, 2020 	*** 
	February 28, 2021 	*** 
	May 31, 2021 	*** 
	August 31, 2021 	*** 
	November 30, 2021 	*** 
	February 28, 2022 	*** 
	May 31, 2022 	*** 
	August 31, 2022 	*** 
	November 30, 2022 	*** 
	February 28, 2023 	*** 
	May 31, 2023 	*** 
	August 31, 2023 	*** 
	November 30, 2023 	*** 
	February 29, 2024 	*** 
	May 31, 2024 	*** 
	August 31, 2024 	*** 
	November 30, 2024 	*** 
	February 28, 2025 	*** 
	May 31, 2025 	*** 
	August 31, 2025 	*** 
	November 30, 2025 	*** 
	February 28, 2026 	*** 
	May 31, 2026 	*** 
	August 31, 2026 	*** 
	November 30, 2026 	*** 
	February 28, 2027 	*** 
	May 31, 2027 	*** 
	August 31, 2027 	*** 

	Quarter Ending 	Projected Distributable Free Cash ($)
    
	November 30, 2027 	*** 

Schedule 5

  Member A Capital Contributions

	Date to be Made 	Amount of Capital Contribution ($) 
	October 2, 2006 	10,170,000 
	January 2, 2007 	5,908,000 
	April 2, 2007 	7,535,000 
	July 2, 2007 	3,613,000 
	October 1, 2007 	6,944,000 

Schedule 6

  Conditions Precedent to Funding

          The
  following conditions precedent shall have been satisfied, or waived by Member
  A, before Member A is required to make any Capital Contribution contemplated
  by Section 8.2 of the Amended and Restated Operating Agreement.

	3. 	 There is not in effect any order or law prohibiting,
        restraining or making illegal the Capital Contributions.

	 	 
	4. 	 The following actions shall have taken place:

a     . The
  assets identified in the Transfer Plan shall have been contributed to the Company;

b.      All consents of third parties
  set forth in the Transfer Plan shall have been received, and shall be in form
  and substance reasonably satisfactory to Member A; 

c.      The
  leases between the Company and U.S. Geothermal Inc. with respect to (i) water
  rights and (ii) geothermal rights, in each case at the Site, shall have been
  authorized, executed and delivered by the parties thereto in form and substance
  reasonably satisfactory to Member A, and shall have been recorded in the real
  property records in Cassia County, Idaho, or in such other jurisdiction as may
  be required by the laws of the State of Idaho in order to provide the Company
  with a proper recording of its leasehold interest;

d.      U.S.
  Geothermal Inc. shall have pledged all of its rights and interests under the
  leases between the Company and U.S. Geothermal Inc. with respect to (i) water
  rights and (ii) geothermal rights, in each case at the Site, to the Company
  in support of the Guaranty, dated as of August 9, 2006, by U.S. Geothermal Inc.
  of the Operator’s obligations under the O&M Agreement in favor of the
  Company (the “Guaranty”);

e.      A
  “back-to-back” agreement with respect to the Drilling Contract shall
  have been entered into by and between U.S. Geothermal Inc. and the Company in
  form and substance reasonably satisfactory to Member A; and

f.      Member B shall have delivered
  to Member A the final Pro Forma Policy of Title Insurance issued by Commonwealth
  Land Title Insurance Company, which shall be in form and substance reasonably
  satisfactory to Member A.

	5. 	 The well improvement work described in the Drilling
        Bid Proposal and Daywork Drilling Contract between U.S. Geothermal Inc.
        and Union Drilling, Inc. dated May 25, 2006 (the “Drilling Program”)
        shall have been completed and GeothermEx, Inc. shall have certified to
        the Company that the production and injection capacity resulting from
        completion of the Drilling Program is sufficient to run the Facility at
        a minimum of 10 MW net output.

	 	 
	6. 	 The Operator shall not have defaulted in any material
        obligation under the O&M Agreement, and U.S. Geothermal Inc. shall
        not have defaulted in any obligation under the Guaranty, and in each case,
        any such default shall be continuing.

	 	 
	7. 	 The principal amount of loans outstanding under the
        Revolver Agreement shall not be in excess of $15 million.

	 	 
	8. 	 Member A shall have received the executed opinion of
        its tax counsel in form and substance satisfactory to Member A.

	 	 
	9. 	 Member A shall have received the executed opinions of
        Stoel Rives covering such matters as Member A may reasonably request,
        and Member B shall have received the executed opinions of Sullivan &
        Cromwell LLP covering such matters as Member B may reasonably request,
        each dated on the first date on which Member A is required to make a Capital
        Contribution under Section 8.2 and in form and substance satisfactory
        to the receiving Party.

Schedule 7 Transfer Plan

Transfers From US Geothermal Inc to Raft River Energy I LLC

	TRANSFER REQUIRED 	  	  	  	  	  
	  	  	  	  	  	Recording 
	Geothermal Leases 	Dated 	Consent 	Party 	Notes 	Required 
	Stewart 	12/1/04 	none 	Reid S and Ruth O Stewart 	  	  
	Crank 	6/28/03 	none 	Janice Crank and the children of Paul Crank 	  	Yes 
	Newbold 	3/1/04 	none 	Jay Newbold 	  	Yes 
	Doman 	6/23/05 	none 	Dale and Rhonda B Doman 	  	Yes 
	Glover 	1/25/06 	none 	Phil Glover 	  	Yes 
	  	  	  	  	  	  
	Contracts 	  	  	  	  	  
	Power Purchase 	12/29/04 	yes 	Idaho Power Company 	Reasonable 	  
	Agreement 	  	  	  	  	  
	Power Plant Supply EPC 	12/5/05 	yes 	Ormat Nevada 	Reasonable 	  
	12 MW Power 	6/24/05 	notice 	Bonneville Power Administration
    	30 to 60 days 	  
	Transmission Agreement 	  	  	  	  	  
	Drilling Contract 	5/25/06 	yes 	Union Drilling 	Reasonable 	  
	Permits 	  	  	  	  	  
	Geothermal Resource 	  	  	  	  	  
	Permits 	  	  	  	  	  
	43-GR-19 (RRGE-1) 	4/21/05 	none 	Idaho Department of Water Resources
    	  	  
	43-GR-20 (RRGE-2) 	4/21/05 	none 	Idaho Department of Water Resources 	  	  
	43-GR-21 (RRGE-3) 	4/21/05 	none 	Idaho Department of Water Resources
    	  	  
	43-GR-22 (RRGE-4) 	4/21/05 	none 	Idaho Department of Water Resources 	  	  
	43-GR-23 (RRGE-5) 	4/21/05 	none 	Idaho Department of Water Resources
    	  	  
	43-GR-24 (RRGE-6) 	4/21/05 	none 	Idaho Department of Water Resources 	  	  
	43-GR-25 (RRGE-7) 	4/21/05 	none 	Idaho Department of Water Resources
    	  	  
	MW-1 	4/21/05 	none 	Idaho Department of Water Resources 	  	  
	MW-2 	4/21/05 	none 	Idaho Department of Water Resources
    	  	  
	MW-3 	4/21/05 	none 	Idaho Department of Water Resources 	  	  
	 MW-4 	4/21/05 	none 	Idaho Department of Water Resources
    	  	  
	MW-5 	4/21/05 	none 	Idaho Department of Water Resources 	  	  
	MW-6 	4/21/05 	none 	Idaho Department of Water Resources
    	  	  
	MW-7 	4/21/05 	none 	Idaho Department of Water Resources 	  	  
	Injection Well Permits 	  	  	  	  	  
	43-W001001 	6/3/05 	none 	Idaho Department of Water Resources 	  	  
	43-W001002 	6/3/05 	none 	Idaho Department of Water Resources
    	  	  
	Conditional Use Permit 	4/21/05 	none 	Cassia County 	  	  
	Capital Transfers 	  	  	  	  	  
	2005 Capital Investment 	$ 882,803 	none 	Engineering, Reports, Studies, Design 	  	  
	Items 	  	  	  	  	  
	14 wells 	$ 480,911 	none 	Book Value 	  	  
	  	$ 1,363,714 	  	  	  	  
	           NO TRANSFER
      REQUIRED 	  	  	  	  
	       TO
      BE SIGNED BY RAFT RIVER ENERGY I LLC 	  	  	  
	Transmission 	3/9/06 	none 	Raft River Rural Electric Coop 	  	  
	Interconnect Services 	  	  	  	  	  
	Pipeline Crossing 	6/1/06 	none 	Raft River Highway District 	  	  
	Easement 	  	  	  	  	  
	Pipeline Construction and 	5/22/06 	none 	Industrial Builders 	  	  
	Installation 	  	  	  	  	  
	Transmission Line 	Pending 	none 	Raft River Rural Electric Coop 	  	  
	Construction Contract 	  	  	  	  	  
	Well Distribution Line 	5/16/06 	none 	Raft River Rural Electric Coop 	  	  
	Contract 	  	  	  	  	  
	Well Distribution Line 	Pending 	none 	Raft River Rural Electric Coop 	  	  
	O&M Contract 	  	  	  	  	  
	Drilling Services Contract 	7/17/06 	none 	Weatherford Services 	  	  
	Drilling Equipment and 	7/26/06 	none 	Baker Hughes/Baker Petrolite 	  	  

	Supply 	  	  	  	  
	PERMITS HELD BY Raft River Energy I LLC
    	  	  
	Idaho Air Quality Permit 	5/26/06 	none 	Idaho Dept of Environmental Quality
    	  
	to Construct 	  	  	  	  
	Authorization to reuse 	Pending 	none 	Idaho Dept of Environmental Quality
    	  
	Cooling Water 	  	  	  	  
	Cassia County Building 	Pending 	  	Cassia County 	  
	permit 	  	  	  	  
	AGREEMENT TO BE COMPLETED
    	  	  	  
	Non Exclusive Surface Easment 	  	  	  
	US Geothermal Inc 	Pending 	none 	US Geothermal Inc 	Yes 
	     Water Rights Lease 	  	  	  	  
	US Geothermal Inc 	Pending 	none 	US Geothermal Inc 	Yes 
	     Geothermal Lease 	  	  	  	  
	US Geothermal Inc 	Pending 	none 	US Geothermal Inc 	Yes 

Schedule 8

  Scheduled REC Income Amounts

	Fiscal Year 	$/MWh 
	2008 	*** 
	2009 	*** 
	2010 	*** 
	2011 	*** 
	2012 	*** 
	2013 	*** 
	2014 	*** 
	2015 	*** 
	2016 	*** 
	2017 	*** 

Exhibit A Map of SiteFiled by Automated Filing Services Inc. (604) 609-0244 - US Geothermal Inc. - Exhibit 10.3

	
       

       

	
      MANAGEMENT SERVICES AGREEMENT 

       

	
      Dated as of August 9, 2006 

       

	
      between 

       

	
      RAFT RIVER ENERGY I LLC 

       

	
      and 

       

	
      U.S. GEOTHERMAL SERVICES, LLC 

      *** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT
        HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
        PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

       

TABLE OF CONTENTS

	 	  	  	Page 
	ARTICLE I AGREEMENT AND DEFINITIONS
      	2 
	 	SECTION 1.1 	Agreement. 	2 
	 	SECTION 1.2 	Definitions 	2 
	ARTICLE II SERVICES 	8 
	 	SECTION 2.1 	Appointment 	8 
	 	SECTION 2.2 	Services. 	8 
	 	SECTION 2.3 	Personnel. 	10 
	 	SECTION 2.4 	Standards for Performance of Services. 	11 
	 	SECTION 2.5 	Authority of Operator 	11 
	 	SECTION 2.6 	General Limitations 	11 
	ARTICLE III ITEMS TO BE FURNISHED
      BY OWNER 	12 
	 	SECTION 3.1 	Access 	12 
	 	SECTION 3.2 	Manuals and Drawings 	13 
	 	SECTION 3.3 	Cooperation. 	13 
	ARTICLE IV REPORTING AND INSPECTION
      	13 
	 	SECTION 4.1 	Accounts and Reports 	13 
	 	SECTION 4.2 	Inspections 	14 
	 	SECTION 4.3 	Books and Records 	14 
	ARTICLE V BUDGET 	14 
	 	SECTION 5.1 	Initial Budget 	14 
	 	SECTION 5.2 	Annual O&M Budget Process 	15 
	ARTICLE VI COMPENSATION AND
      REIMBURSEMENT 	16 
	 	SECTION 6.1 	Management Fee. 	16 
	 	SECTION 6.2 	Reimbursement of O&M Costs 	17 
	 	SECTION 6.3 	Year-End Adjustments to Management Fee.
      	17 
	 	SECTION 6.4 	Ledger Amounts 	19 
	 	SECTION 6.5 	Manner and Time of Payment 	19 
	 	SECTION 6.6 	Accounting and Audit Right 	19 
	ARTICLE VII COMPLETION 	20 
	 	SECTION 7.1 	Undertakings. 	20 
	 	SECTION 7.2 	Completion Funds. 	20 
	ARTICLE VIII INSURANCE 	20 
	 	SECTION 8.1 	Liability Insurance to be Provided by Operator
      	20 

i

TABLE OF CONTENTS

	 	  	  	Page 
	 	 	 	 
	 	SECTION 8.2 	Certificates 	22 
	 	SECTION 8.3 	Revisions and Deductibles. 	22 
	 	SECTION 8.4 	Form and Content 	22 
	 	SECTION 8.5 	Owner May Obtain Insurance. 	22 
	 	 	 	 
	ARTICLE IX TERM AND TERMINATION 	23 
	 	 	 	 
	 	SECTION 9.1 	Term. 	23 
	 	SECTION 9.2 	Termination by Owner. 	23 
	 	SECTION 9.3 	Termination by Operator 	24 
	 	SECTION 9.4 	Rights Upon Termination 	24 
	 	SECTION 9.5 	Suspension of Services 	25 
	 	 	 	 
	ARTICLE X INDEMNIFICATION 	25 
	 	 	 	 
	 	SECTION 10.1 	By Operator. 	25 
	 	SECTION 10.2 	By Owner. 	26 
	 	SECTION 10.3 	Indemnification Notices. 	26 
	 	SECTION 10.4 	Limitations of Liability. 	26 
	 	 	 	 
	ARTICLE XI EVENT OF FORCE MAJEURE 	27 
	 	 	  	  
	ARTICLE XII CONFIDENTIALITY 	27 
	 	 	 	 
	 	SECTION 12.1 	Confidential Information 	27 
	 	SECTION 12.2 	Consultation 	28 
	 	SECTION 12.3 	Tax Treatment and Structure 	29 
	 	SECTION 12.4 	Securities Offering. 	29 
	 	 	 	 
	ARTICLE XIII MISCELLANEOUS PROVISIONS 	29 
	 	 	 	 
	 	SECTION 13.1 	Representations and Warranties. 	29 
	 	SECTION 13.2 	Relationship of Parties 	30 
	 	SECTION 13.3 	Amendments 	31 
	 	SECTION 13.4 	No Waiver. 	31 
	 	SECTION 13.5 	Counterparts. 	31 
	 	SECTION 13.6 	Assignment and Subcontracting 	31 
	 	SECTION 13.7 	Notices 	32 
	 	SECTION 13.8 	Governing Law 	33 
	 	SECTION 13.9 	Resolution of Disputes. 	33 
	 	SECTION 13.10 	Survival. 	33 
	 	SECTION 13.11 	Partial Invalidity 	34 
	 	SECTION 13.12 	Documents 	34 
	 	SECTION 13.13 	Not For Benefit of Third Parties 	34 
	 	SECTION 13.14 	Cooperation and Further Assurances. 	34 
	 	SECTION 13.15 	Headings 	34 

ii

	  	EXHIBITS 
	  	  
	Exhibit A 	Reimbursable O&M Costs
      
	Exhibit B 	Annual O&M Budget for Fiscal
      Year 2006 and Fiscal Year 2007 
	Exhibit C 	Pro Forma O&M Budget for
      Fiscal Years 2008 to 2028 
	Exhibit D 	Map of Site 
	  	  
	  	SCHEDULES 
	  	  
	Schedule 6.1 	Management Fee 
	Schedule 6.3 	Expected Revenues 

1

MANAGEMENT SERVICES AGREEMENT

          THIS
MANAGEMENT SERVICES AGREEMENT, dated as of August 9, 2006 (the “Effective
Date”), by and between Raft River Energy I LLC, a Delaware limited liability
company (“Owner”), and U.S. Geothermal Services, LLC, a Delaware limited
liability company (“Operator”).

RECITALS

          WHEREAS,
Owner will own a power generating facility located at the Site (as defined
herein) (the “Facility”); and

          WHEREAS,
Operator Parent and Ormat Nevada, Inc., a Delaware corporation (“EPC
Contractor”), are parties to the EPC Contract (as defined herein); and

          WHEREAS,
Operator Parent will assign its rights and obligations under the EPC Contract to
Owner pursuant to the Transfer Plan (as defined in the LLC Operating Agreement);
and

          WHEREAS,
Operator Parent and Idaho Power Company, an Idaho corporation (“IPCo”),
are parties to a Firm Energy Sales Agreement (the “Energy Sales
Agreement”), concerning the sale of electric energy from the Facility to
IPCo; and

          WHEREAS,
Operator Parent will assign its rights and obligations under the Energy Sales
Agreement to Owner pursuant to the Transfer Plan (as defined in the LLC
Operating Agreement); and

          WHEREAS,
Owner wishes to retain Operator to perform certain services as more fully
described below; and

          WHEREAS,
Operator agrees to provide such services on the terms and conditions set forth
in this Agreement; and

          WHEREAS,
Operator Parent expects to derive benefit, directly or indirectly, from Owner’s
retention of Operator to provide the services contemplated herein.

          NOW,
THEREFORE, in consideration of the agreements herein contained and other good
and valuable consideration, the parties hereby agree as follows.

1

ARTICLE I

AGREEMENT AND DEFINITIONS

          SECTION
1.1      Agreement.

          The
purpose of this Agreement is to define the terms under which Operator shall
provide the Services for Owner. Operator shall perform the Services hereunder as
an independent contractor. Legal title to all property purchased by Operator
under the terms of this Agreement shall pass immediately to and vest in Owner
upon the passage of title from the vendor or supplier thereof to Operator.

          SECTION
1.2      Definitions.

          Unless
otherwise required by the context in which any capitalized term appears,
capitalized terms used in this Agreement shall have the definitions specified in
this Section 1.2. Capitalized terms used but not defined herein shall have the
respective meanings ascribed to such terms in the LLC Operating Agreement. The
singular shall include the plural and the masculine shall include the feminine
and neuter, as the context requires. References to “Articles,”
“Sections,” “Schedules” or “Exhibits” shall be to Articles,
Sections, Schedules or Exhibits of this Agreement, unless otherwise expressly
provided. All references herein to any agreements shall be to such agreement as
amended and supplemented or modified to the date of reference. All references to
a particular entity shall include a reference to such entity’s successors and
permitted assigns. The words “herein,” “hereof” and
“hereunder” shall refer to this Agreement as a whole and not to any
particular section or subsection of this Agreement. “Includes” or
“including” shall mean “including without limitation.”

          “Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with such first Person. The term “control” (including with
correlative meanings, the terms “controlled by” and “under common
control with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise;
provided that solely for the purposes of this Agreement, Operator and its
Affiliates (determined as provided above, but excluding Owner) shall not be
considered to be Affiliates of Owner.

          “Agreement”
means this Management Services Agreement, including all Exhibits and Schedules
hereto. 

          “Annual
O&M Budget” means the annual budget of O&M Costs approved by Owner
Management Committee as contemplated by Article V.

          “Applicable
Law” means any law, statute, ordinance, rule, regulation or permit issued by
a Governmental Authority, and any ruling, judgment, order, decree or other
requirement having 

2

the force of law, including any official interpretation of any
of the foregoing, of or by any Governmental Authority, as in effect from time to
time, which is applicable to either party, its respective properties and
businesses or the transactions contemplated by this Agreement.

          “Bankruptcy”
means, with respect to any Person, a situation in which (i) such Person shall
file a voluntary petition in bankruptcy or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer or consent seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief for itself under the present or future applicable federal,
state or other statute or law relative to bankruptcy, insolvency, or other
relief for debtors, or shall seek or consent to or acquiesce in the appointment
of any trustee, receiver, conservator or liquidator of such Person or of all or
any substantial part of its properties (the term “acquiesce” as used in
this definition, includes the failure to file a petition or motion to vacate or
discharge any order, judgment or decree within 45 days after entry of such
order, judgment or decree); a court of competent jurisdiction shall enter an
order, judgment or decree approving a petition filed against such Person seeking
a reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
act, or any other present or future applicable federal, state or other statute
or law relating to bankruptcy, insolvency, or other relief for debtors, and such
Person shall acquiesce in the entry of such order, judgment or decree or such
order, judgment or decree shall remain unvacated and unstayed for 45 days from
the date of entry thereof, or any trustee, receiver, conservator or liquidator
of such Person or of all or any substantial part of its property shall be
appointed without the consent or acquiescence of such Person and such
appointment shall remain unvacated and unstayed for 45 days whether or not
consecutive; (ii) such Person shall admit in writing its inability to pay its
debts as they mature; (iii) such Person shall give notice to any Governmental
Authority of insolvency or pending insolvency, or suspension or pending
suspension of operations; or (iv) such Person shall make an assignment for the
benefit of creditors or take any other similar action for the protection or
benefit of creditors.

          “Budgeted
Amount for Completion” means the aggregate Capital Contributions of the
Members under the LLC Operating Agreement plus any liquidated damages recovered
from any Person under a Construction Contract.

          “Business
Day” means any day other that a Saturday, Sunday or any other day on which
banks in the City of New York, New York are required or authorized by law to be
closed.

          “Confidential
  Information” means (a) any information (oral or written) furnished
  by or on behalf of any of the Members concerning it or its owners, members,
  partners, officers, directors, employees, agents, representatives, advisors
  or Affiliates, or the Company, and (b) any materials prepared in connection
  with Meetings of the Members or Meetings of the Directors; provided,
  that the term “Confidential Information” shall not include any information
  that (i) was already known by or in the possession of the receiving Person prior
  to the furnishing of such information by the disclosing Person, (ii) was or
  is in the public domain (either prior to or after the furnishing of such document
  or information) through no fault of such receiving Person and not in violation
  of this Agreement, (iii) was acquired by such receiving Person from another

 3

source (if such receiving Person was not aware at the time of
such acquisition that such source was under an obligation of confidentiality
with respect to such information) or (iv) is independently developed by the
receiving Person without use of Confidential Information.

          “Construction
Contracts” means the EPC Contract, the Drilling Contract, the
Interconnection Agreement, the Master Services Agreements, the Pipeline
Construction Contract, the Power Line Construction Contract and all other
contracts relevant to the build-out and construction of the Facility.

          “Deferred
Amount” has the meaning set forth in Section 6.1(b) .

          “Drilling
Contract” means the Daywork Drilling Contract, dated as of May 25, 2006, by
and between the Union Drilling, Inc. and U.S. Geothermal, Inc. (as may be
amended, restated, supplemented, otherwise modified or replaced).

          “Effective
Date” has the meaning set forth in the Recitals to this Agreement.

          “Energy
Sales Agreement” means the Firm Energy Sales Agreement, dated as of December
29, 2004, between Idaho Power Corporation and Owner (as assignee of Operator
Parent) (as may be amended, restated, supplemented, otherwise modified or
replaced).

          “EPC
Contract” means that certain Engineering, Procurement and Construction
Contract between Owner (as assignee of Operator Parent) and the EPC Contractor,
dated as of December 5, 2005, relating to the construction and testing of the
Facility (as may be amended, restated, supplemented, otherwise modified or
replaced).

          “EPC
Contractor” has the meaning set forth in the Recitals to this Agreement.

          “Event
of Force Majeure” has the meaning set forth in Article X.

          “Expenditure”
has the meaning set forth in Section 2.6(c) .

          “Facility”
has the meaning set forth in the Recitals to this Agreement.

          “Facility
Documents” means the following documents: this Agreement, the LLC Operating
Agreement, the Construction Contracts, the Energy Sales Agreement, the
Interconnection Agreement, the Master Services Agreements, the Power
Transmission Agreement, the Project Permits, the Site Leases and any other
contracts to which Owner is or becomes party in connection with the Facility or
the Site.

          “Final
Completion” means that all construction is completed, the Facility is fully
operational, as certified by an independent engineer’s certification, the Placed
in Service Date has occurred and the conditions to acceptance of energy set
forth in Article IV of the Energy Sales Agreement (or any replacement thereof)
have been satisfied.

4

          “Final
Completion Date” is December 31, 2007.

          “Fiscal
Quarter” means each Fiscal Quarter of Owner, as determined pursuant to the
LLC Operating Agreement.

          “Fiscal
Year” means the Fiscal Year of Owner, as determined pursuant to the LLC
Operating Agreement.

          “Force
Majeure” shall mean acts, events or occurrences beyond the reasonable
control of Operator or Owner which delay or otherwise prevent Operator or Owner
from timely performing its respective obligations under this Agreement (other
than an obligation to pay money), including fires; floods; epidemics; lightning;
earthquakes; quarantine; blockade; governmental acts, orders or injunctions;
war; insurrection or civil strife; strikes or labor disputes; provided
that strikes by any labor employed by Operator or any sub-contractor at the
Site, or lockouts or other labor disputes at the Site, will not constitute force
majeure events; sabotage; unusual delays in transportation; explosion; and any
other similar acts, events or occurrences, but only to the extent such acts,
events or occurrences are beyond the reasonable control of Operator or Owner
despite its prudent and diligent efforts to prevent, avoid, delay or mitigate
such acts, events or occurrences. Such acts, events or occurrences shall not
include those that are the result of willful or negligent actions or inactions
of either party.

          “Governmental
Approvals” means any authorization, consent, concession, license, permit,
waiver, privilege or approval from, or filing with, or notice to, or
certification from any Governmental Authority.

          “Governmental
Authority” means any government of the United States, any state of the
United States or any political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any other governmental or quasi-governmental
entity, instrumentality, agency, authority or commission and any self-regulatory
organization or securities exchange in each case, having jurisdiction or
authority over the matter in question.

          “Indemnifiable
Expenses” shall mean liabilities, obligations, losses (excluding loss of
anticipated profits), damages, penalties, claims (including claims involving
liability in tort, for strict liability or otherwise), actions, suits,
judgments, costs, expenses and disbursements (including legal fees and expenses
and costs of investigation) of any kind and nature whatsoever.

          “Indemnitee”
has the meaning set forth in Section 9.3.

          “Indemnitor”
has the meaning set forth in Section 9.3.

          “Interconnection
Agreement” means the Interconnection and Wheeling Agreement, dated as of
March 9, 2006, by and between Owner and Raft River Rural Electric Cooperative,
Inc. (as may be amended, restated, supplemented, otherwise modified or
replaced).

5

          “IPCo”
has the meaning set forth in the Recitals to this Agreement.

          “Ledger
Amount” has the meaning set forth in Section 6.4.

          “LLC
Operating Agreement” means the Amended and Restated Operating Agreement of
Owner, dated as of August 9, 2006.

          “Management
Fee” has the meaning set forth in Section 6.1(a) .

          “Master
Services Agreements” means (i) the Master Service Agreement, dated as of
June 26, 2006, by and among the Company, Baker Hughes Oilfield Operations, Inc.
and Baker Petrolite Corporation, (ii) the Master Service Agreement, dated as of
July 17, 2006, by and between the Company and Weatherford International, Inc.,
(iii) any other master services agreement that the Company may enter into with
respect to contracting work, services, supplies and equipment rental in
furtherance of or pertaining to development of the Facility and (iv) any
agreement entered into under a master agreement referred to in clause (i), (ii)
or (iii).

          “Member”
and “Members” has the meaning ascribed thereto in the LLC Operating
Agreement.

          “O&M
Costs” means all operating and maintenance costs of any type, kind or nature
reasonably incurred by Operator in owning, leasing, operating and maintaining
the Facility.

          “Operating
Procedures” means the Operating Procedures delivered by Operator from time
to time pursuant to Section 2.2(a) .

          “Operator
Parent” means U.S. Geothermal Inc., an Idaho corporation. 

          “Owner”
means Raft River Energy I LLC, a Delaware limited liability company. 

          “Owner
Management Committee” means the Management Committee of Owner.

          “Operator
Parent Guarantee” means that certain secured Guarantee, dated as of the date
hereof, by and between Operator Parent and Owner, pursuant to which the full and
punctual performance by the Operator hereunder, including the payment of all
obligations when due, is guaranteed for the benefit of Owner.

          “Party”
means each party to this agreement.

          “Person”
means any individual, corporation, company, partnership, joint venture, trust,
Governmental Authority or unincorporated organization.

          “Pipeline
Construction Contract” means the Construction Contract, dated as of May 22,
2006, by and between the Owner and IBI d/b/a Industrial Builders (as may be
amended, restated, supplemented, otherwise modified or replaced).

6

          “Placed
In Service Date” is the date that the Facility is “placed in service” for
Federal income tax purposes under Section 45 of the Code.

          “Power
Line Construction Contract” means the Construction Contract for Well
Distribution Lines, dated as of May 16, 2006, by and between the Owner and Raft
River Rural Electric Cooperative, Inc. (as may be amended, restated,
supplemented, otherwise modified or replaced).

          “Prime
Rate” shall mean the rate equal to the prime commercial lending rate
publicly published from time to time by the Wall Street Journal. For purposes of
this Agreement, any change in the Prime Rate shall be effective on the date such
change in the Prime Rate is announced.

          “Project”
has the meaning set forth in the LLC Operating Agreement. 

          “Project
Permits” has the meaning set forth in the LLC Operating Agreement. 

          “Proposed
Budget” has the meaning set forth in Section 5.2.

          “Renewable
Electricity Production Credits” has the meaning set forth in the LLC
Operating Agreement.

          “Second
Distribution Period” has the meaning set forth in the LLC Operating
Agreement.

          “Services”
has the meaning set forth in Section 2.2.

          “Site”
means the project site located in Cassia County, Idaho, approximately 40 miles
southeast of Burley, the county seat. The project site encompasses 660 acres of
fee land divided into two parcels, both located in Township 15 South Range 26
East, Boise Meridian. The first parcel, which contains the office complex and
three geothermal production wells, is 240 acres and is located in Sections 22
and 23. The second parcel, 320 acres, is located in Section 25 and contains one
production well and two injection wells. The company also holds seven additional
leases. The first parcel covers 160 acres and includes the RRGE#2 geothermal
production well. The second parcel encompasses private geothermal rights. This
description of the Site is qualified by reference to the map of the Site
attached hereto as Exhibit D.

          “Spare
Parts” means the spare parts which a prudent operator would hold in order to
operate the Facility in a good, workmanlike, and commercially reasonable
manner.

          “Semi-Annual
Management Fee” has the meaning set forth in Section 6.4.

          “Term”
has the meaning set forth in Section 9.1.

7

ARTICLE II

SERVICES

          SECTION
2.1      Appointment.

          Owner
hereby appoints and retains to provide the Services during the term of this
Agreement on the terms and conditions set forth in this Agreement. Operator
hereby accepts such appointment and agrees to perform the Services in accordance
with the terms and conditions of this Agreement.

          SECTION
2.2      Services.

          Subject
to the LLC Operating Agreement and any limitations or restrictions adopted by
the Owner Management Committee in accordance therewith, and subject to Sections
2.4 and 2.6, Operator shall perform or cause to be performed the following
development, construction, management, administrative and other support services
in connection with the operation of the Facility and the day-to-day business of
Owner relating to the Facility (collectively, the “Services”):

(a)      Development and
Construction of the Facility. Operator shall be responsible for managing the
development and construction of the Facility in accordance with all Applicable
Laws and overseeing the implementation and performance of the Construction
Contracts.

8

(b)      Operation of the
Facility. Operator shall be responsible for operating and maintaining the
Facility in accordance with all Applicable Laws, the LLC Operating Agreement,
the Facility Documents, applicable warranty and insurance requirements, and
prudent industry standards (including all Applicable Laws and standards relating
to safety, the environment and security). As soon as practicable, and in any
event no less than three months prior to the Placed In Service Date, Operator
shall deliver to Owner detailed Operating Procedures that Operator deems
necessary or appropriate to perform its obligations contemplated by this Section
2.2. Such Operating Procedures shall provide for preventative and ordinary
maintenance of the Facility, inventory control (including an inventory of Spare
Parts) and tracking of equipment history. Owner shall have the right to approve
of any Operating Procedures delivered by Operator, and, if Owner does not
approve such procedures, Owner and Operator shall mutually agree on a set of
Operating Procedures. Subject to Owner’s reasonable approval, Operator shall
prepare and deliver to Owner from time to time any amendment or modification to
the Operating Procedures that Operator may deem necessary in its performance of
its obligations under this Section 2.2. Operator shall comply with its Operating
Procedures. Notwithstanding anything herein to the contrary, no approval by
Owner of, or failure by Owner to object to, any Operating Procedures shall be
deemed to modify, or to waive any nonperformance by Owner of, any of Owner’s
obligations under this Agreement.

(c)     
General Management and Administration. Operator shall be responsible for
the day-to-day management and administration of Owner’s business relating to the
Facility.

(d)      Administration of
Facility Documents. Operator shall represent Owner and shall administer and
perform, on Owner’s behalf, Owner’s obligations and responsibilities under and
consistent with each of the Facility Documents. Without limiting the generality
of the foregoing, Operator shall be responsible for giving any notices required
from Owner under the Facility Documents, and for procuring, maintaining and
administering claims under any and all insurance required to be maintained by
Owner pursuant to any of the Facility Documents. Operator shall not represent
Owner and shall not administer or perform, on Owner’s behalf, any corporate,
organizational or other such internal matters of Owner (including with respect
to matters identified in Section 4.6(c) of the LLC Operating Agreement). 

(e)     
Billing and Collection of Revenues. Operator shall implement and maintain
billing and collection procedures in respect of all accounts receivable and
other amounts due Owner under each of the Facility Documents.

(f)      Bank Accounts and Disbursement
  of Funds. Operator shall establish and maintain in the name of Owner one
  or more bank accounts as may be required or convenient in the reasonable judgment
  of Operator in connection with the business of Owner relating to the Facility.
  Operator shall not commingle Owner funds or bank accounts with Operator funds
  or bank accounts. Operator is authorized to make disbursements and withdrawals
  from such accounts in order to pay all O&M Costs, including any payments
  required

9

under any of the Facility Documents and
any insurance premiums, accountants’ fees and other professional services fees,
taxes, license fees, property taxes or assessments. Operator shall notify Owner
of the need to make deposits to and withdrawals from any such accounts and
otherwise inform Owner of disbursements of funds which need to be approved or
authorized from any such accounts.

(g)      Accounting and
Documentation. Operator shall provide full bookkeeping and accounting
(including tax accounting) services to Owner and shall, upon request by Owner,
prepare (for signature by Owner) and submit all necessary accounting and
(subject to Section 6.7 of the LLC Operating Agreement) tax documentation,
certifications, filings and notices required to be submitted by Owner pursuant
to the Facility Documents or Applicable Law. Nothing in this Section 2.2(g)
shall give Operator the right to use any accounting firm other than those
indicated in Section 6.5 of the LLC Operating Agreement with respect to the
preparation of audited financial statements and Section 6.7 of the LLC Operating
Agreement with respect to preparation and filing of tax returns.

(h)      Licenses and
Permits. Operator shall monitor and maintain compliance with all required
permits, licenses and Governmental Approvals obtained by or for Owner in
connection with the operation of the Facility or otherwise. Where permits must
be obtained, modified or renewed by Owner and such responsibility cannot been
delegated to another Person, Operator shall prepare any application, filing or
notice related thereto, shall cause such materials to be submitted to, and shall
represent Owner in contacts with, the appropriate Governmental Authority, and
shall perform all ministerial or administrative acts necessary for timely
issuance and the continued effectiveness thereof. Copies of all permits,
licenses and Governmental Approvals obtained by or for Owner shall be maintained
by Operator at its offices.

(i)     
Public Relations. Operator shall be responsible for all public and
community relations matters of Owner relating to the Facility or the Facility
Documents. For the avoidance of doubt, Operator shall administer all public and
community relations matters in accordance with the provisions of Article XII of
this Agreement.

(j)      Other Assistance.
Operator shall provide any other assistance or services reasonably requested by
Owner in connection with the Facility or in connection with the management or
administration of any of the Facility Documents.

          SECTION
2.3      Personnel.

          Operator
shall provide and make available, or cause to be provided and made available, as
necessary, all professional, supervisory, managerial, administrative and other
personnel as are necessary to perform the Services, which personnel may be
employees of Operator, Affiliates of Operator or third parties, but in no event
shall be employees of Owner. Such personnel shall be qualified and experienced
in the duties to which they are assigned. The working hours, rates of 

10

compensation and all other matters relating to the employment
of individuals employed by Operator or its Affiliates in the performance of the
Services shall be determined solely by Operator or its respective Affiliates but
shall be substantially similar to the rates of compensation and other matters
for employees of Operator that perform similar functions for Operator’s own
account.

          SECTION
2.4      Standards for Performance of
Services.

          Operator
shall perform the Services in a prudent and efficient manner, in accordance with
all Applicable Laws, licenses and prudent industry standards, and in accordance
with the applicable terms and conditions of the LLC Operating Agreement and the
Facility Documents. Operator shall incur or authorize costs on behalf of Owner
hereunder only in accordance with requirements of the LLC Operating Agreement
and the Facility Documents. 

          SECTION
2.5      Authority of Operator.

          Owner
hereby authorizes Operator to do on behalf of Owner, in Owner’s name, all things
which are necessary, proper or desirable to perform the obligations of Owner
under the Facility Documents, subject to any covenant or other restriction
applicable to Owner or Operator under this Agreement, the LLC Operating
Agreement or any Facility Document.

          SECTION
2.6      General Limitations.

          Notwithstanding
anything in this Agreement to the contrary, other than as provided for in the
Annual O&M Budget or otherwise approved in writing by Owner, Operator shall
not (and shall not permit any of its employees, agents, representatives,
Affiliates or sub-contractors to):

(a)      Disposition of
Assets. sell, lease, pledge, mortgage, encumber, convey, create any lien on,
or make any license, exchange or other transfer or disposition of any property
or assets of Owner (a “Disposition”), including any property or assets
purchased by Operator pursuant hereto; provided that this clause (a)
shall not apply to (i) any sale or similar disposition of any obsolete asset
which is no longer used or useful in the operation of the Facility or is being
replaced in accordance herewith or (ii) other sales or dispositions not
exceeding $100,000 in any 12 month period;

(b)      Contracts. make,
enter into, execute, amend, terminate, waive, modify or supplement any contract
or agreement (including any Facility Document) on behalf of or in the name of
Owner; provided that this clause (b) shall not apply to any contract or
agreement (i) to the extent it effects a Disposition permitted under clause (a)
above or an Expenditure permitted under clause (c) below or (ii) any change
order under the EPC Contract if the aggregate cost of the changes contemplated
thereby does not exceed $100,000 and the aggregate cost of the changes
contemplated thereby and by other change orders agreed to pursuant to this
clause (ii) for the preceding 12 month period do not exceed $200,000;

11

(c)      Expenditures.
make any expenditure on behalf of or in the name of Owner (an
“Expenditure”), or consent or agree to make an Expenditure;
provided that (i) this clause (c) shall not apply to an Expenditure made to
a Person that is not Operator or an Affiliate of Operator if such Expenditure
does not exceed the amount specified for such purpose in the applicable Annual
O&M Budget by more than 10% or is approved of by Owner (such approval not to
be unreasonably withheld, delayed or conditioned) and (ii) in the event of an
emergency affecting the safety of natural persons, endangering the Facility or
the property of third parties or resulting in a risk that is reasonably expected
to cause a suspension in the operation of the Facility, the Operator shall,
without approval from Owner, take all actions as may be reasonable and necessary
to prevent, avoid, or mitigate injury, damage, loss or suspension, and shall, as
soon as practicable, report any relevant injury, damage or loss, including
Operator’s response thereto, to Owner;

(d)      Other Actions. take
or agree to take any other action or actions that individually or in the
aggregate could reasonably be expected to result in a material adverse effect on
Owner or the Facility;

(e)      Disputes and
Settlements. settle, compromise, assign, pledge, transfer or release, or
consent to the compromise, assignment, pledge, transfer or release of, any
claim, action, suit, debt, demand or judgment against or due (directly or
indirectly, through an indemnity, reimbursement arrangement or otherwise) by
Owner, or submit any such claim, dispute or controversy to arbitration or
judicial process, or stipulate in respect thereof to a judgment, or consent to
the same; provided that Operator may, without approval from Owner, take
any such action with respect to a dispute involving, in the aggregate, less than
$100,000 (unless such dispute involves an Affiliate of Operator); or

(f)      Limitation on
Transactions. engage in any other transaction on behalf of Owner that is
either not permitted pursuant to this Agreement, the LLC Operating Agreement or
the Facility Documents or not related to the Facility.

ARTICLE III

ITEMS TO BE FURNISHED BY OWNER

          SECTION
3.1      Access.

          Owner
shall provide Operator with access to the Facility as may be necessary for
Operator’s performance of its obligations hereunder; provided that if
Operator needs any such access which is not available through existing ownership
interests, leases and licenses held by Owner, Operator shall notify Owner
thereof and shall take such commercially reasonable steps as shall be required
to obtain such access. 

12

          SECTION
3.2      Manuals and Drawings.

          Owner
shall deliver to Operator copies of any and all Facility operating and
maintenance manuals, and any drawings record books and vendor manuals, in the
possession of Owner, other than any such manuals, drawings or record books that
have been provided by Operator or by the EPC Contractor through Operator.

          SECTION
3.3      Cooperation.

          Owner
shall cooperate with any reasonable request of Operator in the performance of
Services hereunder.

ARTICLE IV

REPORTING AND INSPECTION

          SECTION
4.1      Accounts and Reports.

          Operator
shall furnish or cause to be furnished to Owner and each Member the following
reports:

(a)      Within 15 days after the
end of each calendar month, a report, in form and substance reasonable
satisfactory to Owner, containing (i) a summary of the operations and the
financial results of operations during such month (or, prior to the commencement
of operation of the Facility, a summary of the construction or testing progress
during such month, in each case together with a comparison to the schedule for
construction and testing contemplated by the EPC Contract), and (ii) a table of
the actual O&M Costs during such month compared to the then current Annual
O&M Budget.

(b)     
Within 45 days after the end of each calendar quarter, (i) an unaudited balance
sheet of Owner as at the end of such month and unaudited statements of income
and of changes in cash flow of Owner for such quarter and for the year-to-date
period ended on the last day of such quarter, in each case prepared in
accordance with GAAP consistently applied and setting forth in comparative form
Owner’s financial statements for the corresponding periods for the prior Fiscal
Year, if any. Such quarterly financial statements shall be certified on behalf
of Operator by the chief financial officer of Operator stating that, to the best
of his or her knowledge, such statements are consistent with the books and
records of Owner, have been prepared in accordance with GAAP consistently
applied (except as noted and other than as stated in the accompanying notes) and
fairly present the financial condition of Owner at the date thereof and for the
periods covered thereby, subject to changes resulting from year-end adjustments
and accruals.

(c)      Within 90 days after the
  end of each Fiscal Year, an audited balance sheet of Owner as of the end of
  such year and audited statements of income and of changes in cash flow of Owner
  for such year, including comparisons to the prior year, prepared in 

13

accordance with GAAP consistently
applied. Owner’s annual financial statements shall be certified by a nationally
or regionally recognized accounting firm selected by the Owner Management
Committee.

(d)      No later than 30 days prior
to the start of each new Fiscal Year, projections and a proposed budget for such
new Fiscal Year, all in reasonable detail and prepared on a monthly basis, and
promptly after the preparation thereof, any revisions to such projections.

(e)      As promptly as practicable,
any notice or written assertion of noncompliance by Owner with any Applicable
Law or Facility Document which could reasonably be expected to result in a
material adverse effect on the business, assets, condition (financial or other),
results of operations or prospects of Owner.

(f)      Any other financial or
other information available as any Member shall reasonably request.

          SECTION
4.2      Inspections.

          Owner
and its Members (with the assistance of consultants, assistants and agents as
they shall deem proper) shall have full right to inspect the Facility (including
meters) and the Site at any time upon reasonable notice to Operator,
provided that the proposed time for inspection does not, in Operator’s
reasonable judgment, materially interfere with the performance of the Services
in accordance herewith, in which case the Operator shall advise as to what time
an inspection may be conducted without materially interfering with the
performance of the Services in accordance herewith. Operator agrees to cooperate
with Owner and its Members (and their consultants, assistants and agents), and
assist them in any such inspection of the Facility or Site. Operator
acknowledges that IPCo may have certain rights to inspect the Facility pursuant
to the Energy Sales Agreement, and Operator agrees to cooperate with any such
inspections.

          SECTION
4.3      Books and Records.

          Owner
and its Members shall have the right to inspect Operator’s financial accounts,
books and records (including meter records) relating to the operation of the
Facility at any time upon reasonable notice, and Operator shall retain all such
information for a minimum of five years, or for such longer period as Owner may,
in writing, reasonably request. 

ARTICLE V

BUDGET

          SECTION
5.1      Initial Budget.

          The
Annual O&M Budget is attached to this Agreement as Exhibit B for (i) the
months in Fiscal Year 2006 from the date hereof to Fiscal Year end and (ii)
Fiscal Year 2007.

14

          SECTION
5.2      Annual O&M Budget Process.

(a)      Not
later than sixty (60) days prior to the beginning of each Fiscal Year during the
term hereof, commencing with Fiscal Year 2008, Operator shall deliver to Owner a
budget for such Fiscal Year (the “Proposed Budget”). The Proposed Budget
shall provide reasonable detail regarding the O&M Costs that Operator
expects to incur for each month during such Fiscal Year, including a provision
for required reserves. Such Proposed Budget shall be accompanied by Operator’s
forecast of the expected output for the Facility during each such month
(including the expected revenue associated therewith) and an indication of any
scheduled outages due to regular maintenance. Such Proposed Budget shall also be
accompanied by an estimate of O&M Costs and expected output for each of the
three Fiscal Years after the Fiscal Year to which the Proposed Budget
relates.

(b)      Not later than thirty (30)
days after its receipt of a Proposed Budget, Owner shall request a meeting of
the Owner Management Committee to review such Proposed Budget. Operator agrees
to cooperate with any reasonable request of the Owner Management Committee or
any Member relating to its review of a Proposed Budget. The Owner Management
Committee may approve of a Proposed Budget as presented or, in consultation with
Operator, may approve of another budget with respect to expected O&M Costs.
The budget for any Fiscal Year, as so approved by the Owner Management
Committee, shall be the Annual O&M Budget for such Fiscal Year;
provided that if a budget is not approved by the Owner Committee for any
Fiscal Year as of the commencement of such Fiscal Year, or if the budget as so
approved does not apply to specified categories of O&M Costs, then (until a
budget, or the relevant portion thereof, for such Fiscal Year is approved by the
Owner Management Committee) the Annual O&M Budget for such Fiscal Year shall
be deemed to be the Annual O&M Budget for the preceding Fiscal Year (if no
portion of a budget was approved), or shall be deemed to include the specific
categories of O&M Costs from the preceding Annual O&M Budget (if the
budget as approved did not approve particular categories of O&M Costs), as
the case may be, with each relevant O&M Cost category being adjusted to give
effect to any increases in insurance premiums, utility charges and similar third
party expenses over which Operator has no control (but still subject to
Operator’s obligations under Section 2.4) .

(c)      From
time to time during any Fiscal Year, but not more than 2 times in any Fiscal
Year (exclusive of any request for approved specific Expenditures under Section
2.6(c)), Operator may notify Owner of proposed modifications to specific items
in the then-applicable Annual O&M Budget. Any such notice shall include
reasonable detail regarding the proposed modification and the reasons therefore.
Any such modification which is approved by the Owner Management Committee shall
be deemed to be part of the Annual O&M Budget, effective upon such
approval.

15

ARTICLE VI

COMPENSATION AND REIMBURSEMENT

          SECTION
6.1      Management Fee.

(a)      Subject to the provisions
of Sections 6.3 and 6.4 hereof, during the term of this Agreement, Owner shall
pay Operator a monthly fee equal to the amount scheduled for such period on
Schedule 6.1 hereto (the “Management Fee”).

(b)      If, within fifteen (15)
days after the end of any calendar month, the amount of cash available to Owner
from the conduct of its business relating to the Facility, after taking into
account any amounts set aside by Owner as operating or other reserves, shall not
be sufficient to pay all costs and expenses necessary to operate and maintain
the Facility and conduct the business and affairs of Owner related to the
Facility incurred during or in respect of such month (including all costs
reimbursable, and the Management Fee payable, to Operator hereunder in respect
of such month), Operator shall defer, and Owner shall not be required to pay
currently, that portion of the Management Fee for such month which is equal to
the amount of such deficiency (a “Deferred Amount”). The Deferred Amount
shall not accrue interest. So long as any Deferred Amount shall remain unpaid
and be outstanding, (i) Owner shall not make any distribution of cash to the
Members and (ii) the amount of cash available to Owner from the conduct of its
business relating to the Facility, after taking into account any amounts set
aside by Owner as operating or other reserves, at the end of any calendar month
shall be applied as follows: first, to pay all costs and expenses
necessary to operate and maintain the Facility and conduct the business and
affairs of Owner related to the Facility incurred during or in respect of such
month, including all costs reimbursable, and the Management Fee payable (to the
extent such Management Fee is not deferred pursuant to the second preceding
sentence), to Operator hereunder in respect of such month; and,
thereafter, to pay to Operator any then outstanding Deferred Amounts in
the order in which such Deferred Amounts were incurred until such Deferred
Amounts have been paid in full. Any Deferred Amount remaining unpaid after such
application of funds shall continue to accrue and be payable until the same
shall have been paid in full in accordance with the preceding sentence.

(c)      In the event that the
Facility is not “placed in service” for U.S. Federal income tax purposes under
Section 45 of the Code prior to *** (or such later date as is required to
qualify the Project for Renewable Electricity Production Credits), the
Management Fee in each period following such date, as reflected on Schedule 6.1
hereto, will be reduced by *** percent (***%), and Owner shall only be required
to pay Operator a Management Fee for each such affected period equal to ***
percent (***%) of the amount otherwise scheduled for such period on Schedule 6.1
hereto. On the first day of the Second Distribution Period, the Management Fee
for all periods thereafter shall revert to the full amount scheduled for such
period on Schedule 6.1 hereto.

16

          SECTION
6.2      Reimbursement of O&M
Costs.

          Operator
shall reimburse itself for its payment of O&M Costs permitted under this
Agreement as scheduled for such period on Exhibit A hereto, in each case out of
Owner’s bank accounts established as contemplated by Section 2.2(f) .

          SECTION
6.3      Semi-Annual Adjustments to Management
Fee.

(a)      Within 60 days following
the end of each of the Owner’s second Fiscal Quarters and the end of each of the
Owner’s Fiscal Years:

	 	(i) 	
      The aggregate dollar amount of budgeted O&M Costs as
      reflected in the Annual O&M Budget for the relevant two Fiscal Quarter
      period shall be subtracted from the aggregate dollar amount of expected
      revenues from sales of energy produced by the Facility for that two Fiscal
      Quarter period, as set forth on Schedule 6.3 hereto; the difference, which
      shall be a positive number, shall be called “Expected
    Profit”.

	 	 	 
	 	(ii) 	
      The aggregate dollar amount of actual O&M Costs for
      that two Fiscal Quarter period shall be subtracted from the actual
      revenues from sales of energy produced by the Facility for that two Fiscal
      Quarter period; if the difference is a positive number, the result shall
      be called “Actual Profit”, if the difference is a negative number,
      the result shall be called “Actual Loss”.

	 	 	 
	 	(iii) 	
      The result obtained following the calculations required
      by paragraph (i) shall be compared to the result obtained following the
      calculations required by paragraph (ii).

(b)      In
the event that, for any two Fiscal Quarter period, Actual Profit exceeds
Expected Profit, then Owner shall pay to Operator a bonus. The bonus shall have
three components and shall be calculated as follows:

	 	(i) 	
      For the first *** by which the actual result exceeds the
      expected result, in dollars, the first component of the bonus shall equal
      the product of the difference between the actual result and the expected
      result, in dollars, multiplied by *** percent (***%);
plus

	 	 	 
	 	(ii) 	
      If the difference between the actual result and the
      expected result, in dollars, is more than ***, the second component of the
      bonus shall equal the product of the difference between the actual result
      and ***, in dollars, multiplied by *** percent (***%); provided
      that this second component of the bonus shall in no event exceed ***;
      and provided, further, that in the event that Owner intends
      to enter into any amendment of or replacement for the Energy Sales
      Agreement as it exists as of August 9, 2006, to
allow

17

	 		
      for the sale of greater than 10 average MW per month from
      the Facility, Owner shall provide Operator with advance notice of its
      intention, Operator shall propose adjustments to this second bonus
      component to the Owner’s Management Committee within ten (10) days of
      receiving such notice, and the Owner’s Management Committee shall have
      agreed with Operator on adjustments to this second bonus component prior
      to entering into such amendment of or replacement for the Energy Sales
      Agreement; plus

	 	 	 
	 	(iii) 	
      If the difference between the actual result and the
      expected result, in dollars, is more than ***, the third component of the
      bonus shall equal ((A) minus (B)) multiplied by (C), where (A) means the
      difference between the actual result and ***, in dollars, (B) means the
      dollar amount that constitutes the second component of the bonus (if any),
      and (C) means *** percent (***%).

The bonus component set forth in clause
(ii) shall be effective from the date of this Agreement. The bonus components
set forth in clauses (i) and (iii) shall first be effective for the two Fiscal
Quarter period immediately following the four year anniversary of the Placed In
Service Date (i.e., the date that is 48 months from the Placed In Service
Date) and shall not be payable in respect of any two Fiscal Quarter period prior
to the four year anniversary of the Placed In Service Date.

(c)      In the event that, for any
two Fiscal Quarter period: (A) Expected Profit exceeds Actual Profit or (B)
there is Actual Loss when there was Expected Profit, then Operator shall pay to
Owner:

	 	(i) 	
      if the absolute value of the difference between the
      actual result and the expected result, in dollars, is less than or equal
      to ***, then Operator shall pay to Owner an amount equal to the product of
      the absolute value of the difference between the actual result and the
      expected result, in dollars, multiplied by *** percent (***%);
  and

	 	 	 
	 	(ii) 	
      if the absolute value of the difference between the
      actual result and the expected result, in dollars, is in excess of ***,
      then Operator shall pay to Owner an amount equal to absolute value of the
      difference between the actual result and the expected result, in
      dollars.

Clause (ii) shall be effective from the
date of this Agreement; however, no payment obligation shall arise under
clause (i) before the two Fiscal Quarter period immediately following the four
year anniversary of the Placed In Service Date (i.e., the date that is 48
months from the Placed In Service Date).

18

(d)      In the event that Actual
Profit equals Expected Profit, then no additional payment shall be due.

          SECTION
6.4      Ledger Amounts.

          Notwithstanding
the amount that would be payable in respect of two Fiscal Quarter period by
Operator to Owner by operation of Section 6.3(c), Operator shall not be required
to make a payment in respect of that two Fiscal Quarter period in excess of the
Management Fee for that two Fiscal Quarter period, as determined by aggregating
the monthly Management Fee payments made to Operator in each month of that two
Fiscal Quarter period as set forth on Schedule 6.1 (the “Semi-Annual
Management Fee”). If the amount that would be payable in respect of any two
Fiscal Quarter by Operator to Owner by operation of Section 6.3(c) at the end of
such two Fiscal Quarter period exceeds the Semi-Annual Management Fee for that
period, the excess amount shall be recorded in a ledger to be maintained by the
Owner and added to all other such excess amounts for any prior periods (the
“Ledger Amount”). The Ledger Amount shall be (i) set-off against
Management Fees to be paid to Operator in future periods and (ii) set-off
against any amount that would be payable by Owner to Operator in any future
period by operation of Section 6.3(b), or any combination of the applications
contemplated by clauses (i) and (ii), until the Ledger Amount is extinguished in
full.

          SECTION
6.5      Manner and Time of Payment.

(a)      If any amount due under
Section 6.1, 6.2 or 6.3 is not paid within five Business Days after the due date
therefor (other than where funds sufficient to pay such amounts are available in
Owner’s bank accounts established as contemplated by Section 2.2(f)), such
amount shall accrue interest each day from (and including) such due date to (but
not including) the date on which such amount is paid at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365
days or 366 days, as the case may be) equal to the Prime Rate plus two percent
(2%).

(b)      Notwithstanding the
foregoing, no amount shall be payable to Operator under Sections 6.1, 6.2 or
6.3, and no interest shall accrue under Section 6.5(a), for so long as Operator
is in default with respect to any of its material obligations hereunder or such
amount is being disputed in accordance with Section 13.9.

          SECTION
6.6      Accounting and Audit Right.

          Operator
shall keep and maintain, in accordance with GAAP consistently applied, all
necessary books, records, accounts and other documents sufficient to accurately
and completely reflect all Management Fees, bonuses, O&M Costs and other
reimbursable costs and expenses incurred pursuant to this Agreement. Such
records shall include receipts, memoranda, vouchers and accounts of every kind
and nature, as well as complete summaries and reports setting forth all
reimbursable man hours expended, payroll incurred and the monthly salary and
hourly rate of each and every employee whose payroll costs are included as costs
hereunder. Owner, any 

19

Member, and any representative of or firm of independent
auditors retained by Owner or any Member, shall have access, upon not less than
five (5) days advance written notice, to all such records maintained by
Operator, for the purposes of auditing and verifying such costs claimed to be
due and payable hereunder. Owner shall have the right to reproduce any such
records, and Operator shall keep and preserve all such records until the close
of the calendar year that is two (2) years from and after the year in which such
costs were incurred.

ARTICLE VII

COMPLETION

          SECTION
7.1      Undertakings.

          Operator
agrees to take all actions necessary or appropriate to cause Final Completion to
occur by the Final Completion Date. The foregoing obligation of Operator shall
be absolute and unconditional; provided that Owner shall not be obligated
to pay any amount pursuant to this Section 7.1 which Owner would not be
obligated to pay pursuant to Section 7.2. No amendment, invalidity, breach or
unenforceability of any of the Construction Contracts, or waiver of rights
thereunder, by any party thereto, shall affect, impair, release or constitute a
defense to any of Operator’s obligations hereunder.

          SECTION
7.2      Completion Funds.

          Operator
agrees to pay to Owner an amount necessary and sufficient to cause Final
Completion to occur by the Final Completion Date, or as soon as reasonably
practicable thereafter, to the extent that the aggregate dollar amount
ultimately needed to cause Final Completion to occur, as determined by Owner,
exceeds the Budgeted Amount for Completion. Operator hereby agrees that it has
an unconditional obligation, after the Budgeted Amount for Completion has been
fully utilized, to pay any and all such amounts necessary to cause Final
Completion to occur. 

ARTICLE VIII

INSURANCE

          SECTION
8.1      Liability Insurance to be Provided by
Operator.

          Without
limiting the generality of Section 2.2(c), during the term of this Agreement,
Operator shall maintain in effect the following insurance in the following
amounts:

20

	 	Worker’s Compensation 	Statutory 
	 	  	  
	 	Employer’s Liability 	$1,000,000 bodily injury 
	 	  	each accident 
	 	  	$1,000,000 bodily injury by 
	 	  	disease, policy limit 
	 	  	$1,000,000 bodily injury by 
	 	  	disease, each employee 
	 	Commercial General 	$1,000,000 combined single 
	 	           
             Liability including: 	limit per occurrence 
	 	           
             Contractual Liability 	$2,000,000 in the aggregate 
	 	           
             Product/Completed Operation Liability 	  
	 	           
             Independent Contractor Liability 	  
	 	           
             XCU Hazards Liability 	  
	 	  	  
	 	Comprehensive Automobile 	$1,000,000 combined single 
	 	           
             Liability 	limit per occurrence 
	 	           
             Covering Owned, Leased or 	  
	 	           
             Rented Vehicles 	  
	 	  	  
	 	Excess Liability (Umbrella) 	$5,000,000 per occurrence 
	 	  	and in the aggregate 
	 	  	  
	 	All Risk of Physical Loss or Damage 	Up to replacement cost 
	 	  	  
	 	Business Interruption Insurance 	Limit to be equal to one year 
	 	  	at commercially reasonable 
	 	  	terms 

          If
any insurance required to be maintained by Operator hereunder ceases to be
reasonably available and commercially feasible in the commercial insurance
market, Operator shall provide written notice to Owner, accompanied by a
certificate from an independent insurance advisor of recognized national
standing, certifying that such insurance is not reasonably available and
commercially feasible in the commercial insurance market for plants of similar
type. Upon receipt of such notice, subject to Section 8.5, Operator shall use
commercially reasonable efforts to obtain other insurance which would provide
commercially feasible protection against the risk to be insured and Owner shall
not unreasonably withhold its consent to modify such requirement.

          Operator
shall further contractually require its subcontractors to carry Worker’s
Compensation and appropriate Commercial General Liability coverages during their
on-site operations.

21

          SECTION
8.2      Certificates.

          Upon
request, Operator shall furnish certificates of insurance to Owner evidencing
the insurance required pursuant to this Article VIII.

          SECTION
8.3      Revisions and Deductibles. 

          None
of the policies required to be carried under this Agreement shall be materially
revised or canceled without the prior written consent of Owner. Any deductible
payable by Operator under such insurance policies shall be reimbursed by Owner
unless the loss was caused by the failure of the Operator to perform the
Services in accordance with Section 2.4 or was due to the negligence or willful
misconduct of Operator.

          SECTION
8.4      Form and Content.

          All
policies, binders, or interim insurance contracts with respect to insurance
maintained by Operator pursuant to this Article VIII shall: 

(a)      be
placed with insurance companies acceptable to Owner; 

(b)     
designate Operator and Owner as additional insured’s (except for Worker’s
Compensation and Employer’s Liability insurance coverage); such insurance will
be primary and not excess or contributing in respect of any other insurance
available to Operator, Owner, or any additional insureds; 

(c)      waive
any right of subrogation of the insurers thereunder against Owner or Operator
and any right of the insurers to any set off or counterclaim or any other
deduction whether by attachment or otherwise, in respect of any liability of any
such person insured under such policy; and 

(d)      provide that not less than
thirty (30) days’ prior written notice shall be given to all named insureds in
the event of cancellation, termination or material change in the policies
whether initiated by Operator or the issuer or underwriter of such
insurance.

          SECTION
8.5      Owner May Obtain Insurance.

          In
the event Operator fails to maintain the policies of insurance required to be
maintained under this Article VIII, Owner may, at its option, provide such
insurance and charge the cost thereof to Operator; provided that such
action by Owner shall not release Operator of its obligations to maintain such
insurance.

22

ARTICLE IX

TERM AND TERMINATION

          SECTION
9.1      Term.

          The
term of this Agreement shall commence on the Effective Date and shall terminate
upon the earlier of (i) August 9, 2028, and (ii) mutual agreement of Owner and
Operator (the “Term”).

          SECTION
9.2      Termination by Owner.

          Owner
may terminate this Agreement as follows (in each case without prejudice to any
other right it may have resulting from any breach or default hereunder by
Operator):

(a)      Owner may terminate this
Agreement upon notice to Operator in the event (i) of the Bankruptcy of
Operator, (ii) that Operator Parent (a) fails to comply with or perform any
agreement or obligation under the Operator Parent Guarantee and any applicable
grace period has elapsed or (b) disaffirms, disclaims, repudiates or rejects, in
whole or in part, or challenges the validity of, the Operator Parent Guarantee,
(iii) that the Operator Parent Guarantee expires, is terminated or fails and
ceases to be in full force and effect (other than in accordance with its terms)
prior to the stated Term of this Agreement and satisfaction of all obligations
of the Operator under this Agreement or (iv) that a representation made or
repeated, or deemed to be made or repeated by Operator Parent in the Operator
Parent Guarantee proves to have been incorrect or misleading in any material
respect when made or repeated, or deemed to have been made or repeated. 

(b)      Owner may terminate this
Agreement upon five days’ prior notice to Operator if Operator: (i) fails to
comply with the performance standards set forth in the first sentence of Section
2.4 of this Agreement; (ii) fails to make prompt payment to the EPC Contractor
or to any subcontractor for equipment, supplies or labor, (iii) defaults in any
material obligation under this Agreement and fails to cure such default within
thirty (30) days of receipt of notice thereof from Owner); provided that
if such default does not involve solely the payment of money and can be cured
within an additional 60 days, then so long as Operator is diligently pursuing
such cure and such default does not create any material risk of injury to
natural persons or property, such additional 60-day period, or (iv) Operator
Parent ceases to be a Member, Operator ceases to be a wholly-owned subsidiary of
Operator Parent or the guarantee of Operator’s obligations provided by Operator
Parent on the date hereof ceases to be in full force and effect.

(c)      Owner may terminate this
Agreement upon thirty days’ prior notice to Operator, in the event (i) Owner (or
Operator, on behalf of Owner) sells, transfers, conveys, or otherwise disposes
of all or substantially all of the Facility or (ii) the Energy Sales Agreement
is terminated prior to its stated expiration date and not immediately
replaced.

23

          SECTION
9.3      Termination by Operator.

          Operator
may terminate this Agreement as follows (in each case without prejudice to any
other right it may have resulting from any breach or default hereunder by
Owner):

(a)     
Operator may terminate this Agreement upon ten business days’ prior notice to
Owner if Owner: defaults in any material obligation under this Agreement and
fails to cure such default within thirty (30) days of receipt of written notice
thereof from Operator; provided that if such default does not involve
solely the payment of money and can be cured within an additional 60 days, then
so long as Owner is diligently pursuing such cure, such additional 60-day
period.

(b)     
Operator may terminate this Agreement upon ninety (90) days’ prior notice to
Owner in the event that Operator Parent ceases to be a Member (other than as a
result of any voluntary transfer by Operator Parent under the LLC Operating
Agreement).

          SECTION
9.4      Rights Upon Termination.

(a)      Upon any expiration or
termination of this Agreement:

	 	(i) 	
      Operator shall deliver all Facility materials and
      documents to Owner in accordance with Section 13.12, and shall cooperate
      with Owner and any entity engaged by Owner in replacement of Operator in
      the transfer of the operations of the Facility to Owner or a new operator
      of the Facility designated by Owner. Without limiting the foregoing,
      Operator shall train personnel of Owner or the new operator to operate the
      Facility and provide Owner and the new operator with information, data and
      assistance necessary for the safe and efficient operation and maintenance
      of the Facility (including the Operating Procedures, the prior operating
      history of the Facility and other details relevant to the management of
      the Facility); provided that Operator shall not have to undertake
      such training for more than ninety (90) days and, during such period,
      Operator shall be entitled to half of all Management Fees it would have
      been entitled to had this Agreement not been terminated. Operator shall
      leave the Facility with a full inventory of Spare Parts (located at the
      Site) and in good operating condition, normal wear and tear excepted.
      Operator shall maintain insurance in accordance with the terms of this
      Agreement until the date Operator vacates the Facility; provided
      that Operator shall not terminate or cancel any such insurance without
      providing thirty (30) days advance notice of such termination or
      cancellation to Owner. Operator shall execute all documents and take all
      other reasonable steps requested by Owner which may be required to assign
      to and vest in Owner all rights, benefits, interests and titles in
      connection with such contracts or obligations.

24

	 	(ii) 	
      Operator shall provide Owner with the non-exclusive right
      to continue to use any and all patented and/or proprietary information of
      Operator that Owner reasonably deems necessary to perform the Services.
      Furthermore, Owner shall have the right to take possession of all of the
      equipment and supplies located at the Facility for the purposes of
      performing the Services and may employ any other person, firm, corporation
      or other entity to perform the Services by whatever method provided
      herein.

	 	 	 
	 	(iii) 	
      Operator shall, at Owner’s request and at Owner’s
      expense, assist Owner in preparing an inventory of all material,
      equipment, Spare Parts and supplies in use or in storage at the Facility;
      assign to Owner all subcontracts and other contractual agreements as may
      be designated by Owner; and remove from the Site all such equipment,
      supplies, and rubbish as Owner may reasonably request.

	 	 	 
	 	(iv) 	
      In the event of any termination, Owner shall pay all
      amounts then due to Operator, including fees, bonuses and any unreimbursed
      O&M costs advanced by Operator then due. Notwithstanding the
      foregoing, Owner shall have the right to set off any amounts Operator owes
      to Owner in making such payment.

(b)      Expiration or termination
of this Agreement shall not relieve any party hereto of liability which has
accrued or arisen prior to the date of such expiration or termination.

          SECTION
9.5      Suspension of Services.

          Owner
by written notice may require Operator to suspend all or a portion of the
Services for a specified period of time. During such suspension, Owner will not
seek to replace Operator or hire any other party to provide services without
Operator’s consent. In the event any Services are suspended by Owner or by an
event of Force Majeure, Operator shall be relieved of any obligations hereunder,
to the extent such obligations are affected by such suspension. During the
period of suspension or Event of Force Majeure, Operator shall minimize
expenditures to control costs and activities of Operator during the suspension
or Event of Force Majeure.

ARTICLE X

INDEMNIFICATION

          SECTION
10.1      By Operator.

          Operator
shall indemnify, defend and hold harmless Owner and the Members, and all of
their respective officers, directors, employees, agents and representatives, and
their Affiliates (other than any Affiliate of Operator), from and against any
and all Indemnifiable Expenses arising out of or resulting from (i) the gross
negligence or willful misconduct of Operator or any 

25

contractor or subcontractor retained by it, or any its
officers, directors, agents, employees or personnel of any of them, or (ii) a
breach of this Agreement by Operator.

          SECTION
10.2      By Owner.

          Owner
shall indemnify, defend and hold harmless Operator, its Affiliates and all of
their respective officers, directors, employees, agents, partners, shareholders
and representatives from and against any and all Indemnifiable Expenses arising
out of or resulting from the development, construction, operation and management
of the Facility; except to the extent such Indemnifiable Expenses arise out of
or result from Operator’s gross negligence, willful misconduct or breach of this
Agreement.

          SECTION
10.3      Indemnification Notices.

          Whenever
a party entitled to indemnification under Section 10.1 or 10.2 of this Agreement
(an “Indemnitee”) shall learn of a claim which, if allowed (whether
voluntarily or by a judicial or quasi-judicial tribunal or agency), would
entitle such Indemnitee to indemnification under Section 9.1 or 9.2 of this
Agreement, before paying the same or agreeing thereto, the Indemnitee shall
promptly notify the party required to pay such indemnification (the
“Indemnitor”) in writing of all material facts within the Indemnitee’s
knowledge with respect to such claim and the amount thereof; provided
that the Indemnitee’s right to indemnification shall be diminished by the
failure to give prompt notice only to the extent that the Indemnitee’s failure
to give such notice was prejudicial to the interests of the Indemnitor. If,
prior to the expiration of twenty (20) days from the giving of such notice, the
Indemnitor shall request, in writing, that such claim not be paid, the
Indemnitee shall not pay the same, provided that the Indemnitor proceeds
promptly to settle or litigate, in good faith, such claim. The Indemnitee shall
have the right to participate in any such negotiation, settlement or litigation;
provided that if any such claim to which such negotiation, settlement or
litigation relates involves amounts in excess of the limitation on liability set
forth in Section 9.1, then the Indemnitor shall not settle or compromise such
claim unless approved by the Indemnitee. The Indemnitee shall not be required to
refrain from paying any claim which has matured by a court judgment or decree,
unless an appeal is duly taken therefrom and execution thereof has been stayed,
nor shall it be required to refrain from paying any claim where the delay to pay
such claim would result in the foreclosure of a lien upon any of the property of
the Indemnitee, or where any delay in payment would cause the Indemnitee an
economic loss, unless the Indemnitor shall have agreed to compensate the
Indemnitee for such loss.

          SECTION
10.4      Limitations of Liability.

          Notwithstanding
any provision in this Agreement to the contrary, neither party, nor their
respective Affiliates, nor any of their respective officers, directors,
employees, agents, shareholders, partners or representatives, shall have any
liability in tort, contract or otherwise to any other party or its Affiliates
for (i) any consequential or indirect loss or damage, including loss of
revenues, loss of profits, cost of capital, loss of goodwill, increased
operating costs or (ii) 

26

any other special, punitive or incidental damages whatsoever
arising out of or resulting from this Agreement.

ARTICLE XI

EVENT OF FORCE MAJEURE

          Neither
party shall be considered in default in the performance of its obligations under
this Agreement to the extent that the performance of any such obligation is
prevented or delayed by any Force Majeure. The party claiming Force Majeure
shall give written notice to the other party of any Force Majeure within a
reasonable period of time not to exceed ten (10) days after the party claiming
the Force Majeure has knowledge of such event. Such notice shall specify the
length of interruption of performance of obligations expected to be occasioned
by such event and any additional costs expected to be incurred by Operator by
reason of such event and shall substantiate the same to the reasonable
satisfaction of Owner. The party claiming Force Majeure shall provide the other
party with periodic supplemental notices during the period that the Force
Majeure continues. Such supplemental notices shall keep the other party informed
of any change, development, progress or other relevant information concerning
the Force Majeure event. The party claiming Force Majeure shall use diligent and
prudent efforts to avoid and minimize the effects of such Force Majeure, but
Operator shall not be required to subcontract the Services or to work additional
hours for which premium time is payable or to schedule additional work shifts if
such contracting, additional hours or additional shifts would not have been
required prior to the occurrence of such Force Majeure. Notwithstanding the
foregoing, Operator shall take such action if Owner shall agree to pay all
reasonable applicable additional charges with respect thereto (less any
insurance proceeds received by Operator in respect thereof) and the Services
directed to be performed are not prohibited by any applicable labor contract or
law.

ARTICLE XII

CONFIDENTIALITY

          SECTION
12.1      Confidential Information.

          Each
Party agrees (on behalf of itself and each of its Affiliates, members,
directors, officers, employees and representatives) that, except as may
otherwise be agreed by the Party disclosing Confidential Information, the Party
receiving Confidential Information will hold in complete confidence, in
accordance with its customary procedures for handling confidential information
and in accordance with safe and sound practices, and not disclose it to any
other Person; provided, that the receiving Party may disclose
Confidential Information:

(a)      to those of its and its
Affiliates’ officers, directors, employees, counsel, auditors, accountants,
examiners, consultants, advisors and sources of financing who need to know such
Confidential Information for the purpose of discussing, advising with respect to
or

27

evaluating the Project, the Owner (or
any member thereof) or the Operator or an investment in the Project, the Owner
(or any member thereof) or the Operator (it being understood and agreed that the
receiving Party shall have advised such persons of their obligations concerning
the confidentiality of all client affairs and information and shall instruct
such persons to maintain the confidentiality of such Confidential
Information);

(b)      as may be required by a
rule or other requirement of a securities regulator, a stock exchange or a
self-regulatory organization;

(c)      in or pursuant to any
offering statement or similar document provided to purchasers or potential
purchasers of any direct or indirect ownership interests in the Owner (or any
member thereof) or the Operator;

(d)      in an
action or proceeding brought in pursuit of its rights or in the exercise of its
remedies under this Agreement or any other Facility Document;

(e)      to any rating agency or
potential lender to the Owner (or any member thereof) or the Operator;

(f)      to
any provider or potential provider of hedging or risk management in connection
with any transaction related to the transactions contemplated by the Facility
Documents; and

(g)      as requested or required in
connection with a judicial, administrative or regulatory proceeding in which a
Party or a partner, officer, member, director, employee or Affiliate thereof is
involved, pursuant to a court order or subpoena or regulatory or government
inquiry or demand or as otherwise by law or regulation.

In the event that the receiving Party
receives a request to disclose any Confidential Information under clause (g) in
the prior sentence, it will (i) promptly notify the disclosing Party thereof (to
the extent permitted by law or regulation and reasonably practicable) so that
the disclosing Party may seek a protective order or otherwise seek to resist or
narrow such request and (ii) if the receiving Party is nonetheless required to
make such disclosure or if it is advised by its counsel that such disclosure is
necessary, it will take reasonable steps, at disclosing Party’s request and
expense, to attempt to obtain or help the disclosing Party obtain an order or
other reliable assurance that confidential treatment will be accorded to such
portion of the disclosed information.

          SECTION
12.2      Consultation.

          Each
  Party agrees to consult with the other Party before issuing any press release
  or otherwise making any public or press statement with respect to this Agreement,
  the transactions contemplated hereby and the Facility and the Site and, except
  as may be necessary for such Party or any of its Affiliates to comply with the
  requirements of Applicable Law or of any stock exchange or self-regulatory organization,
  agrees not to issue any such press release or make any 

28

such public or press statement without the prior written
approval of the other Party, which shall not be unreasonably withheld;
provided, that written approval shall be deemed to be given by any Party
that fails to respond within five days of receiving the notice of intention from
a Party to issue a press release or make any public or press statement with
respect to this Agreement, the transactions contemplated hereby and the Facility
and the Site.

          SECTION
12.3      Tax Treatment and Structure.

          Notwithstanding
anything herein to the contrary, any Party (and any owner, member, partner,
director, officer, employee, agent, representative, adviser of any Party, and
any Affiliate of the foregoing) may disclose to any and all Persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to it relating to such tax treatment
and tax structure; provided, that any such information relating to the
U.S. federal income tax treatment or tax structure shall remain subject to the
provisions of this Article XII (and the foregoing sentence shall not apply) to
the extent reasonably necessary to enable any Person to comply with applicable
securities laws. For this purpose, “tax treatment” means U.S. federal income tax
treatment and “tax structure” is limited to any facts relevant to the U.S.
federal income tax treatment of the transactions.

          SECTION
12.4      Securities Offering.

          Notwithstanding
any of the foregoing in this Article XII, in connection with any offering of
securities by Owner or Operator or an Affiliate thereof (the “Issuer”),
in which Goldman, Sachs & Co. or an Affiliate thereof (the “GS
Entity”) is involved as underwriter, dealer, agent or other similar
participant, nothing in this agreement shall (i) prevent either the Issuer or
the GS Entity from complying with all applicable disclosure laws, regulations
and principles in connection with such offering or sale of securities, (ii)
restrict the ability of the GS Entity to consider information for due diligence
purposes or to share information with other underwriters participating in such
offering or sale of securities, (iii) prevent the GS Entity from retaining
documents or other information in connection with due diligence or (iv) prevent
the GS Entity from using any such documents or other information in
investigating or defending itself against claims made or threatened by
purchasers, regulatory authorities or others in connection with such an offering
or sale of securities.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

          SECTION
13.1      Representations and Warranties.

          Each
party, as and to the extent specified below, makes the following representations
and warranties, as of the Effective Date, to the other party:

29

(a)     
Corporate Status and Authorization. Such party is validly formed,
existing and in good standing under the laws of the jurisdiction of its
organization. Such party has all necessary power and authority to enter into and
perform its obligations under this Agreement.

(b)     
Authorization. The execution, delivery and performance by such party of
this Agreement, and the consummation of the transactions contemplated hereby,
have been authorized by all necessary corporate action on the part of such party
and do not require any authorization or approval of any director, officer,
member or Owner of such party that has not been given or obtained.

(c)      Validity.
This Agreement has been duly executed and delivered by such party and
constitutes the valid and binding obligation of such party, enforceable against
such party in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and by general principles of
equity.

(d)      No Conflict. The
execution and delivery of this Agreement and the performance by such party in
accordance with its terms do not and will not:

          (i)      violate
or conflict with the constitutive documents of such party;

          (ii)      violate
or conflict with any Applicable Law or any order, decree, judgment, consent,
license, permit or other approval of any court or other Governmental Authority
which is binding on such party or the property of such party; or

          (iii)      violate,
result in a default under or result in the termination, acceleration or
mandatory prepayment of (with or without the giving of notice, the passage of
time or both) any obligation under any contract or indebtedness to which such
party is a party or, by which such party or any of its properties are bound.

          SECTION
13.2      Relationship of Parties.

          Operator
shall be an independent contractor with respect to the performance of the
Services hereunder. Nothing in this Agreement shall be construed to create
between the parties an association, trust, partnership, joint venture or similar
business association or relationship, or impose any trust or partnership or
similar duty on any party. In no event shall any party represent to any other
Person that any such association, trust, partnership, joint venture or similar
business association or relationship has been formed. Except as expressly
provided herein, nothing in this Agreement shall be construed so as to make any
party an agent of the other party, and no agent or representative of either
party has or shall have the authority to make, and the parties shall not be
bound by or be liable for, any statement, representation, promise, agreement or
other binding commitment of any kind on behalf of any other party.

30

          SECTION
13.3      Amendments.

          No
amendment, modification or other variation of any of the terms of this Agreement
will be effective unless it is made or confirmed in writing and signed by or on
behalf of each of the parties. Any waiver by any party of any right under this
Agreement or of any failure to perform or breach hereof by any other party shall
be in writing and signed by the waiving party. No such waiver shall be construed
as a waiver of any continuing or succeeding breach of any provision of this
Agreement, a waiver or modification of such provision itself, or a waiver or
modification of any right under this Agreement, unless the instrument
constituting the waiver so states. Any amendment, modification or variation of
this Agreement on behalf of Owner shall not be effective under this Agreement
unless approved by the Owner Management Committee.

          SECTION
13.4      No Waiver.

          Failure
of any party at any time to require another party’s performance of any
obligation under this Agreement shall not affect the right of any party to
require performance of that or any other obligation hereunder at any other time.
No delay or forbearance of any party in exercising any right or remedy under
this Agreement shall affect the ability of that party subsequently to exercise
such right or to pursue any remedy, nor shall such delay or forbearance
constitute a waiver of any other right or remedy.

          SECTION
13.5      Counterparts.

          This
Agreement shall become legally binding when both parties sign and deliver any
one or more copies of this Agreement, each of which shall be deemed an original
and all of which together shall constitute one and the same agreement.

          SECTION
13.6      Assignment and
Subcontracting.

(a)     
Assignment. Operator shall not assign all or any part of its interest in
this Agreement without the prior written consent of Owner.

(b)     
Subcontractors. Operator shall have the right to have any of the Services
performed by subcontractors pursuant to written subcontracts between Operator
and such subcontractors with respect to the Services to be performed hereunder.
Notwithstanding the foregoing, Operator shall not subcontract the day to day
control of the operation or maintenance of the Facility without the prior
written consent of Owner. No subcontractor is intended to be nor shall be deemed
a third-party beneficiary of this Agreement. Operator shall cause to be
assignable to Owner all subcontracts entered into by Operator with
subcontractors that obligate Operator to make aggregate expenditures in respect
thereof in excess of $20,000 in any calendar year. Operator guarantees
compliance by its subcontractors (except any subcontractors who are responsible
for performing warranty work on equipment used in the Facility) with the terms
and conditions of this Agreement 

31

to the same extent as if the services to be performed by such
subcontractor were performed by Operator’s own employees.

          SECTION
13.7      Notices.

(a)      Any
notice to be given under this Agreement shall be in writing. A notice may be
delivered personally to a party or sent by pre-paid letter or facsimile
transmission to the address or relevant number given below or to such other
address or facsimile as may be notified from time to time:

If to Owner:

	 	Name: 	Raft River Energy I, LLC 
	 	Address: 	1509 Tyrell Lane, Suite B 
	 	  	Boise, Idaho 83706 
	 	  	  
	 	Attention: 	President 
	 	Tel. No.: 	(208) 424-1027 
	 	Fax No.: 	(208) 424-1030 

with a copy to each Member at its
address provided for in the LLC Operating Agreement.

	 	If to Operator: 	  
	 	  	  
	 	Name: 	U.S. Geothermal Services, LLC 
	 	Address: 	1509 Tyrell Lane, Suite B 
	 	  	Boise, Idaho 83706 
	 	  	  
	 	Attention: 	President 
	 	Tel. No.: 	(208) 424-1027 
	 	Fax No.: 	(208) 424-1030 

          (b)     
A notice shall be deemed to have been served: (i) if personally delivered, at
the time of delivery; (ii) if mailed, two working days after the envelope
containing the notice was delivered into the custody of the postal authorities;
and if communicated by facsimile transmission, at the time of the transmission;
except that where, in the case of personal delivery to an address or
transmission by facsimile, delivery or transmission occurs after 4:00 p.m. (EST)
on a Business Day or on a day which is not a Business Day in the place of
receipt, service shall be deemed to occur at 9:00 p.m. (EST) on the next
following Business Day in that place, and for this purpose.

          (c)      In
  proving service, it shall be sufficient to prove that personal delivery was
  made or that the envelope containing the notice was properly addressed and delivered
  into the custody of postal authorities, authorized to accept the same, or if
  sent by facsimile, by receipt of

 32

automatic confirmation of transmission or answerback;
provided that a notice shall not be deemed to be served if communicated
by facsimile transmission which is not legible in all material respects;
provided, further, that such transmission shall be deemed to be served as
of the end of the next Business Day following the transmission if a request for
retransmission is not made before the end of the next Business Day following the
transmission.

          SECTION
13.8      Governing Law.

          This
Agreement will be governed by and construed in accordance with the laws of the
State of New York (including Section 5-1401 of the New York General Obligations
Law), but excluding, to the greatest extent a New York Court would permit, any
rule of law that would cause the application of the laws of any jurisdiction
other than the State of New York.

          SECTION
13.9      Resolution of Disputes.

          Owner
and Operator desire that this Agreement operate between them fairly and
reasonably. If during the term of this Agreement a dispute arises between Owner
and Operator, or a question of interpretation arises hereunder, then Owner and
Operator shall promptly confer and exert their best efforts in good faith to
reach a reasonable and equitable resolution of the issue. Any dispute the
parties are unable to settle within thirty (30) days after notice from one party
to the other party that a dispute exists, or such longer time as the parties may
mutually agree, will be submitted to non-binding mediation. The parties shall
then select a qualified individual to mediate the dispute, and the selected
mediator, in consultation with the parties, shall establish the date of, and
procedures with respect to, the mediation. In the event the parties are unable
to agree upon the selection of a person to serve as mediator within ten (10)
days after the dispute is submitted to mediation procedures, each party shall,
within ten (10) days thereafter, identify a person such party believes has the
qualifications and experience to mediate a dispute of the nature of the dispute
in question, and the persons so identified by the parties shall select the
mediator. The parties shall then proceed expeditiously with the mediation of the
dispute. In the event the dispute is not resolved by mediation, the parties
shall have the right to pursue any legal remedies available to them. Unless
otherwise agreed in writing, Operator shall continue to provide the Services,
and the parties shall continue to make payments, in accordance with this
Agreement during any dispute under this Agreement.

          SECTION
13.10      Survival.

          Notwithstanding
anything to the contrary in this Agreement, expiration or termination of this
Agreement shall be without prejudice to any liability or obligation of any party
arising on or prior to the date of such expiration or termination, which
liabilities and obligations shall expressly survive expiration or termination of
this Agreement. In addition, the provisions set forth in Articles IX, X, XII and
XIII shall survive the expiration or termination of this Agreement.

33

          SECTION
13.11      Partial Invalidity.

          The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of its other provisions. Following a
determination by a court of competent jurisdiction that any provision of this
Agreement is invalid or unenforceable, the parties shall negotiate in good faith
new provisions that, as far as legally possible, most nearly reflect the intent
of the parties originally expressed herein and that restore this Agreement as
nearly as possible to its original intent and effect.

          SECTION
13.12      Documents.

          All
Facility materials and documents prepared or developed for Owner by Operator or
its Affiliates, employees, or representatives in connection with the performance
of the Services, including all records, documents, reports, files, and accounts,
together with any materials and documents furnished to Operator by Owner, shall
be delivered to Owner immediately or as soon as practicable at Owner’s principal
place of business upon expiration or termination of this Agreement;
provided that Operator may retain copies for its own files. If Operator
wishes to dispose of any such materials and documents prior to the expiration or
termination of this Agreement, Operator shall so advise Owner, and if Owner
objects to such disposal it shall so notify Operator and shall designate to
Operator a place for delivery of such materials and documents to Owner.

          SECTION
13.13      Not For Benefit of Third Parties.

          Except
as otherwise expressly provided herein or in any consent to assignment as
contemplated by Section 13.6, this Agreement and each and every provision
thereof is for the exclusive benefit of Owner and Operator, and their respective
successors and permitted assigns, and is not for the benefit of any third
party.

          SECTION
13.14      Cooperation and Further
Assurances.

          The
parties shall cooperate with each other with respect to the subject matter of
and activities contemplated by this Agreement, and each party shall take such
further actions and execute such further instruments or documents as any other
party reasonably shall request from time to time to implement the purposes of
this Agreement.

          SECTION
13.15      Headings.

          The
headings of this Agreement are for reference only and shall not be deemed to
form part of the text or be used in the construction or interpretation of this
Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

34

          IN
WITNESS WHEREOF, the representatives of the parties have executed this Agreement
as of date set forth above.

	 	RAFT RIVER ENERGY I LLC 
	 	 	  
	 	By:	/s/ Daniel Kunz 
	 	 	Name: Daniel Kunz 
	 	 	Title: President
	 	 	  
	 	 	  
	 	 	  
	 	U.S. GEOTHERMAL SERVICES, LLC 
	 	 	  
	 	By:	 /s/ Daniel Kunz 
	 	 	Name: Daniel Kunz 
	 	 	Title: President

EXHIBIT A

  REIMBURSABLE O&M COSTS

                    The
  following costs and expenses incurred by Operator shall be reimbursable by Owner
  in accordance with Section 6.2 of this Agreement and in accordance with the
  budget for the applicable Fiscal Year and, after the Placed in Service Date,
  the operating plan.

                   Part
  1. Costs and related expenses reasonably incurred by Operator in the development,
  construction, operation and maintenance of the Facility, as the case may be,
  and in accordance with its established personnel policies, including salaries
  and wages of the personnel engaged in the performance of or in support of the
  Services, plus the actual rate for payroll additives to cover all employee benefits
  and allowances for vacation, sick leave, holiday, employee insurance and social
  and retirement benefits, all payroll taxes, premiums for insurance, worker’s
  compensation and employer’s liability insurance, and all other insurance
  premiums measured by payroll costs, and other contributions and benefits imposed
  by any applicable law or regulation.

                   Part
  2. All other direct costs reasonably incurred in the performance of the Services,
  including, but not limited to, such costs as: 

	(i) 	 costs incurred for travel and subsistence of personnel
        engaged in performance of the Services;

	 	 
	(ii) 	 costs of all materials, supplies, equipment, temporary
        facilities and hand tools not owned by the workers, used or consumed in
        the performance of the Services and remaining the property of Operator;

	 	 
	(iii) 	 costs of all materials, supplies, and equipment incorporated
        and utilized in the Facility;

	 	 
	(iv) 	 reproduction costs and the cost of computer time, including
        relaxed operator time, and the use of standard programs at standard rates
        (all other computer programming or outside computer related services to
        be provided at actual cost);

	 	 
	(v) 	 minor expenses such as telegrams, long distance telephone
        calls, telephone service, and similar petty cash items;

	 	 
	(vi) 	 sales, use or similar taxes related to the Facility
        or the performance of the obligations hereunder imposed by any governmental
        authority;

	 	 
	(vii) 	 losses and expenses, not compensated by insurance or
        otherwise, incurred by Operator in connection with the performance of
        the Services hereunder; provided

Exhibit A-1

		 that Owner shall bear no obligation to reimburse Operator
        for losses and expenses resulting from the negligence or misconduct of
        Operator;

	 	 
	(viii) 	 costs and expenses of attorneys, accountants and other
        professionals;

	 	 
	(ix) 	 costs of any and all insurance required by this Agreement;

	 	 
	(x) 	 royalties payable by Owner, as lessee, under geothermal
        leases necessary to the operation of the Facility; and

	 	 
	(xi) 	 any and all other direct costs and expenses not specifically
        set forth herein incurred incidental to the performance of the Services.

Exhibit A-2

EXHIBIT B

  ANNUAL O&M BUDGET FOR 

  SHORT FISCAL YEAR AND

  FISCAL YEAR ONE

Exhibit B-1

EXHIBIT C 

  PRO FORMA O&M

  BUDGET FOR FISCAL YEARS 2008-2028

	Quarter Ending 	Projected Expenses 
	August 31, 2006 	*** 
	November 30, 2006 	*** 
	February 28, 2007 	*** 
	May 31, 2007 	*** 
	August 31, 2007 	*** 
	November 30, 2007 	*** 
	February 29, 2008 	*** 
	May 31, 2008 	*** 
	August 31, 2008 	*** 
	November 30, 2008 	*** 
	February 28, 2009 	*** 
	May 31, 2009 	*** 
	August 31, 2009 	*** 
	November 30, 2009 	*** 
	February 28, 2010 	*** 
	May 31, 2010 	*** 
	August 31, 2010 	*** 
	November 30, 2010 	*** 
	February 28, 2011 	*** 
	May 31, 2011 	*** 
	August 31, 2011 	*** 
	November 30, 2011 	*** 
	February 29, 2012 	*** 
	May 31, 2012 	*** 
	August 31, 2012 	*** 
	November 30, 2012 	*** 
	February 28, 2013 	*** 
	May 31, 2013 	*** 
	August 31, 2013 	*** 
	November 30, 2013 	*** 
	February 28, 2014 	*** 
	May 31, 2014 	*** 
	August 31, 2014 	*** 
	November 30, 2014 	*** 
	February 28, 2015 	*** 
	May 31, 2015 	*** 
	August 31, 2015 	*** 
	November 30, 2015 	*** 
	February 29, 2016 	*** 
	May 31, 2016 	*** 
	August 31, 2016 	*** 

Exhibit C-1

	Quarter Ending 	Projected Expenses 
	November 30, 2016 	*** 
	February 28, 2017 	*** 
	May 31, 2017 	*** 
	August 31, 2017 	*** 
	November 30, 2017 	*** 
	February 28, 2018 	*** 
	May 31, 2018 	*** 
	August 31, 2018 	*** 
	November 30, 2018 	*** 
	February 28, 2019 	*** 
	May 31, 2019 	*** 
	August 31, 2019 	*** 
	November 30, 2019 	*** 
	February 29, 2020 	*** 
	May 31, 2020 	*** 
	August 31, 2020 	*** 
	November 30, 2020 	*** 
	February 28, 2021 	*** 
	May 31, 2021 	*** 
	August 31, 2021 	*** 
	November 30, 2021 	*** 
	February 28, 2022 	*** 
	May 31, 2022 	*** 
	August 31, 2022 	*** 
	November 30, 2022 	*** 
	February 28, 2023 	*** 
	May 31, 2023 	*** 
	August 31, 2023 	*** 
	November 30, 2023 	*** 
	February 29, 2024 	*** 
	May 31, 2024 	*** 
	August 31, 2024 	*** 
	November 30, 2024 	*** 
	February 28, 2025 	*** 
	May 31, 2025 	*** 
	August 31, 2025 	*** 
	November 30, 2025 	*** 
	February 28, 2026 	*** 
	May 31, 2026 	*** 
	August 31, 2026 	*** 
	November 30, 2026 	*** 
	February 28, 2027 	*** 
	May 31, 2027 	*** 
	August 31, 2027 	*** 
	November 30, 2027 	*** 

Exhibit C-2

EXHIBIT D MAP OF SITE

Exhibit D-1

SCHEDULE 6.1 

  MANAGEMENT FEE

	Quarter Ending 	Scheduled Management O&M Fee 
	August 31, 2006 	*** 
	November 30, 2006 	*** 
	February 28, 2007 	*** 
	May 31, 2007 	*** 
	August 31, 2007 	*** 
	November 30, 2007 	*** 
	February 29, 2008 	*** 
	May 31, 2008 	*** 
	August 31, 2008 	*** 
	November 30, 2008 	*** 
	February 28, 2009 	*** 
	May 31, 2009 	*** 
	August 31, 2009 	*** 
	November 30, 2009 	*** 
	February 28, 2010 	*** 
	May 31, 2010 	*** 
	August 31, 2010 	*** 
	November 30, 2010 	*** 
	February 28, 2011 	*** 
	May 31, 2011 	*** 
	August 31, 2011 	*** 
	November 30, 2011 	*** 
	February 29, 2012 	*** 
	May 31, 2012 	*** 
	August 31, 2012 	*** 
	November 30, 2012 	*** 
	February 28, 2013 	*** 
	May 31, 2013 	*** 
	August 31, 2013 	*** 
	November 30, 2013 	*** 
	February 28, 2014 	*** 
	May 31, 2014 	*** 
	August 31, 2014 	*** 
	November 30, 2014 	*** 
	February 28, 2015 	*** 
	May 31, 2015 	*** 
	August 31, 2015 	*** 
	November 30, 2015 	*** 
	February 29, 2016 	*** 
	May 31, 2016 	*** 
	August 31, 2016 	*** 

Schedule 6.1 -1

	Quarter Ending 	Scheduled Management O&M Fee 
	November 30, 2016 	*** 
	February 28, 2017 	*** 
	May 31, 2017 	*** 
	August 31, 2017 	*** 
	November 30, 2017 	*** 
	February 28, 2018 	*** 
	May 31, 2018 	*** 
	August 31, 2018 	*** 
	November 30, 2018 	*** 
	February 28, 2019 	*** 
	May 31, 2019 	*** 
	August 31, 2019 	*** 
	November 30, 2019 	*** 
	February 29, 2020 	*** 
	May 31, 2020 	*** 
	August 31, 2020 	*** 
	November 30, 2020 	*** 
	February 28, 2021 	*** 
	May 31, 2021 	*** 
	August 31, 2021 	*** 
	November 30, 2021 	*** 
	February 28, 2022 	*** 
	May 31, 2022 	*** 
	August 31, 2022 	*** 
	November 30, 2022 	*** 
	February 28, 2023 	*** 
	May 31, 2023 	*** 
	August 31, 2023 	*** 
	November 30, 2023 	*** 
	February 29, 2024 	*** 
	May 31, 2024 	*** 
	August 31, 2024 	*** 
	November 30, 2024 	*** 
	February 28, 2025 	*** 
	May 31, 2025 	*** 
	August 31, 2025 	*** 
	November 30, 2025 	*** 
	February 28, 2026 	*** 
	May 31, 2026 	*** 
	August 31, 2026 	*** 
	November 30, 2026 	*** 
	February 28, 2027 	*** 
	May 31, 2027 	*** 
	August 31, 2027 	*** 
	November 30, 2027 	*** 

Schedule 6.1 -2

SCHEDULE 6.3 

  PROJECTED REVENUES

	Quarter Ending 	Projected Revenues 
	August 31, 2006 	*** 
	November 30, 2006 	*** 
	February 28, 2007 	*** 
	May 31, 2007 	*** 
	August 31, 2007 	*** 
	November 30, 2007 	*** 
	February 29, 2008 	*** 
	May 31, 2008 	*** 
	August 31, 2008 	*** 
	November 30, 2008 	*** 
	February 28, 2009 	*** 
	May 31, 2009 	*** 
	August 31, 2009 	*** 
	November 30, 2009 	*** 
	February 28, 2010 	*** 
	May 31, 2010 	*** 
	August 31, 2010 	*** 
	November 30, 2010 	*** 
	February 28, 2011 	*** 
	May 31, 2011 	*** 
	August 31, 2011 	*** 
	November 30, 2011 	*** 
	February 29, 2012 	*** 
	May 31, 2012 	*** 
	August 31, 2012 	*** 
	November 30, 2012 	*** 
	February 28, 2013 	*** 
	May 31, 2013 	*** 
	August 31, 2013 	*** 
	November 30, 2013 	*** 
	February 28, 2014 	*** 
	May 31, 2014 	*** 
	August 31, 2014 	*** 
	November 30, 2014 	*** 
	February 28, 2015 	*** 
	May 31, 2015 	*** 
	August 31, 2015 	*** 
	November 30, 2015 	*** 
	February 29, 2016 	*** 
	May 31, 2016 	*** 
	August 31, 2016 	*** 

Schedule 6.3 -1

	Quarter Ending 	Projected Revenues 
	November 30, 2016 	*** 
	February 28, 2017 	*** 
	May 31, 2017 	*** 
	August 31, 2017 	*** 
	November 30, 2017 	*** 
	February 28, 2018 	*** 
	May 31, 2018 	*** 
	August 31, 2018 	*** 
	November 30, 2018 	*** 
	February 28, 2019 	*** 
	May 31, 2019 	*** 
	August 31, 2019 	*** 
	November 30, 2019 	*** 
	February 29, 2020 	*** 
	May 31, 2020 	*** 
	August 31, 2020 	*** 
	November 30, 2020 	*** 
	February 28, 2021 	*** 
	May 31, 2021 	*** 
	August 31, 2021 	*** 
	November 30, 2021 	*** 
	February 28, 2022 	*** 
	May 31, 2022 	*** 
	August 31, 2022 	*** 
	November 30, 2022 	*** 
	February 28, 2023 	*** 
	May 31, 2023 	*** 
	August 31, 2023 	*** 
	November 30, 2023 	*** 
	February 29, 2024 	*** 
	May 31, 2024 	*** 
	August 31, 2024 	*** 
	November 30, 2024 	*** 
	February 28, 2025 	*** 
	May 31, 2025 	*** 
	August 31, 2025 	*** 
	November 30, 2025 	*** 
	February 28, 2026 	*** 
	May 31, 2026 	*** 
	August 31, 2026 	*** 
	November 30, 2026 	*** 
	February 28, 2027 	*** 
	May 31, 2027 	*** 
	August 31, 2027 	*** 
	November 30, 2027 	*** 

Schedule 6.3 -2

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