CONFIDENTIAL


                                    AGREEMENT


BETWEEN:          UNIVERSITE  DU  QUEBEC  A  TROIS-RIVIERES,  a  corporate  body
                  incorporated  by virtue of the laws of  Quebec,  with its head
                  office at 3351, boul. Des Forges, Trois-Rivieres (Quebec), G9A
                  5H7,  herein  represented  by Mr. Denis Mayrand and Mr. Lucien
                  Bedard, hereinafter referred to as the "University"

AND:              HYDROGEN  ENGINE  CENTER,  a corporate  body  incorporated  by
                  virtue of the laws of Iowa,  with its head  office at 602 East
                  Fair Street,  Algona,  Iowa 50511,  herein  represented by Ted
                  Hollinger, hereinafter referred to as the "Company" or "HEC"

Hereinafter referred to as the "Parties"

IN  CONSIDERATION  OF THE MUTUAL  COVENANTS  AND PROMISES  CONTAINED  HEREIN THE
PARTIES AGREE AS FOLLOWS:

1.       OBJECT

1.1 The present  Agreement  governs the  realization  at the University of tasks
described in the research proposal entitled  Development of multi-fuel  internal
combustion  engines for  stationary  electrical  power  generation,  hereinafter
designated  as  "the  Project",  which  constitutes  Appendix  1 of the  present
Agreement.

1.2 The scientific  direction of the Project is the responsibility of, Dr. Tapan
Bose director of the Hydrogen  research  Institute,  hereinafter  the "Principal
Investigator".

1.3 The  reports or services  to be  rendered  as well as the  timetable  of the
realization of each of the stages of the Project are described in Appendix 1.

2.       DURATION OF THE AGREEMENT

The Agreement  takes effect on,  February 1, 2005, and ends on January 31, 2015,
for a total duration of ten (10) years, unless sooner terminated pursuant to the
terms of this Agreement

The parties  agree to meet one (1) year prior to the  expiration  of the capture
period  to  negotiate  in good  faith for a renewal  of the  Agreement  However,
nothing in this paragraph or this Agreement obligates either party to renew this
Agreement, enter into any other Agreements or grant any other licenses now or in
the future.
<PAGE>


3.       FINANCING AND PAYMENT CONSIDERATIONS

3.1      Upon the  execution  by the  University  of the tasks it has  agreed to
         within  the  Project,  Company  shall  pay it the  sum of 20  000$,  in
         Canadian currency, and 10 000$ in kind.

         This amount shall be paid in instalments, by cheque to the order of the
         University, according to the following invoicing schedule:

         o    at the Agreement's signature: 5 000$;
         o    completion of task 1 of Appendix 1: 5 000$;
         o    completion of task 3 of Appendix 1: 5 000$;
         o    at the end of Project  (after  delivery  of the final  report):
              5000$;

3.2      These amounts are payable within thirty (30) days following  receipt of
         the University's invoicing.

4.       EQUIPMENT AND SUPPLIES

         The equipment and supplies purchased by the University for the purposes
         of the Project remain its property.

5.       CONFIDENTIALITY

         5.1 Confidential  information is any information provided in writing or
         in any other form,  marked with the word  "Confidential  " or "Secret",
         and  must  include  a  disclosure  date.  When  provided  orally,   the
         Confidential   Information  must  be  confirmed  in  writing  within  a
         reasonable  period of time,  marked  with the word,  "confidential"  or
         "secret" and dated.

5.2      The Company and  University  recognize  that either  Party may disclose
         Confidential  Information  to the  other  in  order  to  allow  for the
         realization of the Project.  The Party  receiving  disclosure  will not
         obtain rights or interests  therein and such  transfer of  Confidential
         Information  shall not be  construed as a grant of any right or license
         with respect to the information  delivered,  these rights remaining the
         property of the disclosing Party.

5.3      Each Party agrees:

5.3.1    to use the Confidential  Information  solely for the purposes mentioned
         in this Agreement,  unless prior written consent has been obtained from
         the Party owning the Confidential Information;

5.3.2    not  to  disclose  the  Confidential  Information  or  allow  it  to be
         disclosed to a third party. In addition,  each Party agrees to restrict
         disclosure of the Confidential  Information within its own organization
         to those employees, administrators, managers or agents who specifically
         need to know this Confidential  Information for the purposes set out by
         this Agreement and who agree to respect all the obligations;

                                      -2-
<PAGE>

5.3.3    not to reproduce nor use the Confidential Information to produce, sell,
         have produced or have sold marketable products or technologies unless a
         license to this effect takes place between the Parties;

5.3.4    to give back the Confidential Information to the other Party, following
         written  request to this effect,  after it has finished its  evaluation
         and to destroy any copy or transcript, in whole or in part, that it may
         have made of the Confidential Information;

5.3.5    to handle the Confidential  Information in the same manner and with the
         same  diligence  that it applies to its own  Confidential  Information,
         including all reasonable care required.

5.4      Company  recognizes  that  the  University  is a  public  teaching  and
         research   institution   and  cannot  be  held   accountable   for  any
         unintentional   breach  of  confidentiality.   The  University  agrees,
         however,  to protect  the  Confidential  Information  by using the same
         degree  of  care  that  it  takes  to  protect  its  own   Confidential
         Information.

5.5      The Parties recognize that the following  information is not subject to
         this Agreement when:

5.5.1    the  information is currently in the public domain or becomes a part of
         the public domain through no fault of the Parties;

5.5.2    a Party was legally in possession of the information  before  receiving
         it from the other Party and did not  acquire it directly or  indirectly
         from the latter;

5.5.3    the  information  was legally  provided to the Party in good faith by a
         third party at arm's length;

5.5.4    the disclosure was necessary by virtue of a law, regulation or by order
         of a court.

5.6      The  obligations of the Parties by virtue of the present  article shall
         continue  to have full  effect for three (3) years after the end of the
         Agreement.

5.7      The Parties agree that the terms and  conditions of this  Agreement are
         confidential.

6.       DISCLOSURE OF RESULTS

6.1      The Parties  recognize that the disclosure of information  for teaching
         and research purposes is part of the University's role.  However,  they
         agree that the premature  disclosure of certain results may put at risk
         their  potential   commercial   value.   Disclosure   includes  theses,
         memorandums,  scientific articles,  seminars and other written and oral
         presentations.

                                      -3-
<PAGE>

 6.2     The  University  reserves  the right to  authorize  students to prepare
         masters  as  well as  doctoral  theses  regarding  the  Results  of the
         Project,  and as the  case  may  be,  to  request  outside  experts  to
         evaluate, as members of the jury, said theses.

 6.3     Any disclosure of results must nonetheless be authorized  beforehand in
         writing  by  the  Principal  Investigator  as  well  as  the  Company's
         representative, according to the following provisions:

6.3.1    the University submits to Company any projected information  disclosure
         regarding  the  Project,  at least  forty-five  (45)  days  before  its
         presentation or publication;

6.3.2    if Company does not contest this  disclosure in writing  within fifteen
         (15) days of the  reception of the  projected  disclosure,  it shall be
         presumed  to have  given  its  approval  and the  University  may  then
         disclose the information;

6.3.3    if Company contests the projected disclosure, in writing and within the
         aforementioned   time  period,  the  Parties  must  then  negotiate  an
         acceptable version of the projected  disclosure,  including the date of
         disclosure in that case, within the above-mentioned forty-five (45) day
         time period of subparagraph

6.3.4    Company  cannot  refuse  to give  its  approval  unless  the  projected
         disclosure puts at risk the protection and potential  commercial  value
         of the Project's  Results.  In the event that such proposed  disclosure
         involves the disclosure of any invention that Company or University may
         wish to evaluate  for  patenting,  Company or the  University  agree to
         defer any such disclosure or publication for an adequate period of time
         but no longer than six (6) months from the date the  material was first
         submitted to allow for the preparation and filing of any desired patent
         applications.  The disclosure shall be authorized as soon as the patent
         application is completed.

6.3.5    Subject to the respect of the provision of article 5 (Confidentiality),
         any postponed disclosure cannot exceed six (6) months following the end
         of the Agreement.

7.       OWNERSHIP OF PROJECT RESULTS

7.1      Project  Results  include,  without  limitation,   copyrights,   rights
         stemming from inventions,  including know-how,  technical  information,
         models,  patterns,   designs,   drawings  and  plans,   specifications,
         prototypes,  software  and other  documents,  fine-tuned  or  developed
         within  the  context  of the  Project  in  accordance  with  the  tasks
         described  in Appendix 1 and which may or may not be  subjected  to any
         form of intellectual property protection.

7.2      All  titles  and  rights on the  Project  Results  shall  belong to the
         University.  Article 8 (Commercial Exploitation) defines the conditions
         giving access to the commercial exploitation of the Project Results.

                                      -4-
<PAGE>


8.       COMMERCIAL EXPLOITATION OF THE RESULTS

8.1      The   University   grants   to   Company,    an   exclusive    license,
         non-transferable,  worldwide, with the right to sublicense with respect
         to the rights granted to the University in this  Agreement,  to use the
         Project Results.  The term of the license shall expire  considering the
         following conditions whether the Projects results are patentable or not
         patentable.

         o    If the Project Results are patentable, the license shall remain in
              full force and effect  until  January 31, 2015 upon the respect of
              the conditions provided in paragraph 8.4;

         o    If the Project  Results  are not  patentable,  the  license  shall
              remain in full force and effect until January 31, 2010. I4EC shall
              have the option to extend the license  until January 31, 2015 upon
              written  notice  to the  University  given no  later  than six (6)
              months  prior to the last day of the initial term and after having
              demonstrated to the University,  commercially  reasonable  efforts
              and diligence to proceed with the  development,  manufacture,  and
              sale of the Project Results and to diligently develop a market for
              the Project Results.

8.2      As  consideration  for  the  rights  granted,  HEC  shall  pay  to  the
         University the following fees and royalties:

         o    upon  completion  of the tasks in  Appendix 1 HEC will pay a three
              percent  (3%)  royalty  on gross  revenues  from  sales of Project
              Results.  The royalty  payment will be made  quarterly and will be
              due by the 20th day after the completion of each calendar quarter.

8.3      Gross revenues means all sales  revenues,  receipts and monies received
         by NEC and its affiliated  companies from the sale or other transfer of
         the Project Results.

8.4      1-IEC  shall   reimburse  the  University  for  any  and  all  expenses
         reasonably   incurred  by  the   University  in  connection   with  the
         preparation,  filing and  prosecution  of all patent  applications  and
         maintenance of patents for the Project Results.

8.5      On or before  the  twentieth  (20th) day after the  completion  of each
         calendar  quarter  during the Contract  Term,  HEC shall deliver to the
         University a written statement, certified to be true and correct by the
         Chief  Financial  Officer of HEC,  setting forth the Gross revenue from
         sales for each Project  Results during the preceding  calendar  quarter
         and a  calculation  of the Royalties  payable under this  Agreement for
         such period.

8.6      Not more  than once in any 12 month  period,  the  University  may have
         HEC's relevant books and records for the prior 12-month period audited,
         by an independent  certified  public  accounting firm of the University


                                      -5-
<PAGE>

         choosing and  reasonably  acceptable  to HEC, to verify the accuracy of
         HEC's royalty  payments.  The independent  certified public  accounting
         firm must enter into a confidentiality  agreement reasonably acceptable
         to HEC and may not  disclose any  information  learned in the course of
         such audit other than the existence and amount of underpayment, if any.
         Such audit must be conducted  during HEC's normal  business  hours in a
         manner  that does not  unduly  interfere  with  HEC's  normal  business
         activities. If any audit discloses underpayment of royalties, HEC shall
         promptly  pay the  University  the  royalties  due plus  interest at an
         annual rate of 6%. The  University is  responsible  for all expenses it
         incurs in  connection  with any audit  unless  the audit  discloses  an
         underpayment  of royalties  in excess of 15%, in which case,  HEC shall
         promptly reimburse the University for all of such audit expenses.

9.       INDEMNITY AND LIABILITY

9.1      Company  undertakes to indemnify and hold harmless the University,  its
         trustees,  officers,  agents  and  employees  from  any and all  direct
         liability,  direct loss or direct  damage they may suffer as the result
         of claims,  demands, costs or judgments,  and to take up their defence,
         with regard to any action or lawsuit  arising out of the  activities to
         be carried  out  pursuant to the Project or from the use by the actual.
         or eventual  holders of rights granted to Company by virtue of articles
         7 (Ownership) and 8 (Commercial Exploitation) of this Agreement

9.2      The University  undertakes to indemnify and hold harmless Company,  its
         trustees, officers, agents and employees of any and all liability, loss
         or damage they may suffer as the results of claims,  demands,  costs or
         judgments,  and to take up their defence,  with regard to any action or
         lawsuit  arising out of injuries  (including  death) to the individuals
         participating  in the Program and under the  administrative  control of
         the   University   (including   individuals   hired  by  the  Principal
         Investigator   to  realize   certain  tasks  related  to  the  Program)
         concerning  damages to the property of the  University  or Company,  by
         these  individuals,  within the  realization of the Program  (including
         within the premises leased by the  University,  or which have been lent
         by third parties not part of this Agreement).

9.3      As the case may be,  the  University  undertakes  to  assume  the civil
         liability  which  devolves  to an  individual  hired  by the  Principal
         Investigator  to realize  certain tasks related to the Project,  in the
         case of bodily, material or moral injury caused by this individual,  as
         long as said damages result from the execution of the Agreement.

10.      TERMINATION OF AGREEMENT

10.1     A Party is in default if one or another of its  obligations  set out in
         this  Agreement  is not  carried  out when  required  by virtue of this
         Agreement  and this Party has not remedied  this default  within thirty
         (30) days of  receiving  a written  notice  from the other  Party.  The
         Agreement is then automatically terminated and considered terminated at
         the date of the notice.

                                      -6-
<PAGE>

10.2     In the event of the death,  departure  or  physical  incapacity  of the
         Principal Investigator,  one of the Parties may terminate the Agreement
         totally or partially, upon a sixty (60) day written notice to the other
         Party;  within this delay, the Parties may agree on the necessary means
         to terminate  the Project.  The case  arising,  the Agreement is deemed
         terminated from the date of the notice.

10.3     The Agreement  automatically  ends and the University is freed from its
         obligations   therein  if  Company   declares   bankruptcy  or  becomes
         insolvent,  is placed under receivership in favor of its creditors,  or
         if an order is rendered or a resolution  adopted for the liquidation of
         its  assets,  or it if  avails  itself  of any  law  or ant  concerning
         insolvent or bankrupt debtors;

10.4     In the event of termination of the Agreement,  all of the  University's
         expenses and all its reasonable obligations which relate to the Project
         until the date of the  termination  of the Agreement must be reimbursed
         to the  University,  to the extent that these expenses and  obligations
         were incumbent on the University by virtue of Appendix 1.

10.5     The  University  shall  conserve  the  property  rights of the  Results
         obtained up to the date of the  termination  of the  Agreement  and the
         University shall be freed from all its obligations toward Company.

11.      ACT OF GOD

         One of the Parties can not be held responsible with regard to the other
         as a result of any default or delay by virtue of the present  Agreement
         caused by circumstances  beyond its control,  without  limitation,  the
         death of the Principal  Investigator,  natural disasters,  fires, wars,
         employment conflicts or certain governmental measures.

12.      GOVERNING LAW

         This Agreement  must be interpreted in accordance  with the laws of the
         Province of Quebec.

13.      COMPLETENESS OF AGREEMENT

         The Parties agree that this Agreement  contains the complete and unique
         representation of the understanding  reached between them regarding the
         Project.  The latter  replaces  and puts an end to all  representation,
         negotiation or proposal regarding the object of the present Agreement.

                                      -7-
<PAGE>

14.      EXTENSION OF PROVISIONS

         Articles 3 (Financing), 5 (Confidentiality), and 9 (Indemnification and
         Liability)  will  continue at the end of this  Agreement in addition to
         the articles that are maintained by virtue of the law.

15.      VARIOUS PROVISIONS

15.1     The preamble and appendices form an integral part of this Agreement.

15.2     This Agreement is non-transferable and no right or obligation contained
         in it can. be assigned  or  transferred  in any way by one Party or the
         other.  The case  arising,  the  rights and  obligations  of one of the
         Parties  in  virtue  of  this  Agreement  also  bind  their  respective
         successors and assignees.

15.3     No Party can retain the  personalized  services  of an  employee of the
         other  Party  for  the  accomplishment  of  tasks  provided  for in the
         Project,  unless  prior  written  consent  has been  obtained  from its
         employer.

15.4     This  Agreement  does  not make one of the  Parties,  the  agent of the
         other, nor its legal representative,  joint venture partner, associate,
         employee  or  clerk.   It  thus  creates  no  fiduciary  nor  mandatory
         relationship between the parties.

15.5     Each of the Parties  recognizes  and agrees that it has no authority to
         assume nor create any obligation in the other's name,, either expressly
         or implicitly, except that which is strictly and expressly provided for
         in this Agreement.  Each of the Parties also recognizes and agrees that
         it has no  authority  to bind the  other in any way,  nor to incur  the
         other's liability.

15.6     No  omission  on the part of one or  another  of the  Parties to assert
         their rights  resulting from  nonrespect or violation of this Agreement
         and no  acceptance of payments can be considered as a waiver of rights.
         No  provision  of this  Agreement  is presumed to have been waived by a
         Party unless this Party has formulated this waiver in writing.

15.7     In the event that any provision of this Agreement or its application is
         declared  not valid,  this will not affect  the  validity  of the other
         provisions and the Parties remain bound.

15.8     This Agreement can only be modified by a document written and signed by
         all Parties of the present Agreement.

15.9     For the purposes of the present  Agreement,  the Parties elect domicile
         in the judicial district of Trois-Rivieres.


                                      -8-
<PAGE>


IN WITNESS OF WHICH THE PARTIES  HEREIN HAVE SIGNED THIS  AGREEMENT ON THE DATES
AND AT THE LOCATIONS INDICATED:

 For Company:

 /s/ Theodore Hollinger                        2-22-05
 ------------------------------               -----------------------
 Theodore Hollinger




For the University:

/S/ Denis Mayrand                             12-03-05 (March 12)
-----------------------------                 -----------------------
Denis Mayrand

/s/ Lucien Bedard                             02-03-05 (March 2)
-----------------------------                 -----------------------
Lucien Bedard