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RESEARCH AND DEVELOPMENT AGREEMENT

This Research And Development Agreement ("Agreement")
is entered into effective as of January 1, 2003, by and between Clean Energy
USA, Inc., a Delaware corporation ("Clean Energy"); and
McSheahan Enterprises Ltd., a British Columbia corporation ("McSheahan"),
with reference to the following facts:

RECITALS:

WHEREAS, Clean Energy and/or its parent
corporation, Clean Energy Combustion Systems, Inc., a Delaware corporation
("CECSI") is the owner or licensee of a suite of proprietary
mid- and high-frequency oscillating valveless combustion technologies including,
without limitation, its pulse blade combustion and vortex technologies
(collectively referred to in this agreement as the "High-Frequency
Combustion Technologies"), which Clean Energy believes to be more
energy-efficient, and to emit significantly lower levels of pollutants, than
conventional steady-state combustion;

WHEREAS, Clean Energy desires McSheahan to
perform on an exclusive basis, and McSheahan desires to provide on an exclusive
basis, continued research on the High-Frequency Combustion Technologies and
product development services with respect to selected commercial applications of
the High-Frequency Combustion Technologies, on a cost-plus basis;

WHEREAS, in performing research and development
services for Clean Energy, McSheahan will become privy to certain confidential
and proprietary information concerning the High-Frequency Combustion
Technologies, as well as other matters pertaining to the business of Clean
Energy; and

WHEREAS, McSheahan desires to set forth in this
Agreement certain covenants for the benefit of the Clean Energy and its
affiliates including, without limitation, covenants by McSheahan and its
affiliates that they will not divulge Confidential Information (as that term is
defined below) of Clean Energy and its affiliates and/or retain or transfer
Proprietary Work Product (as that term is defined below) of the Clean Energy and
its affiliates.

NOW, THEREFORE, in consideration of the mutual
covenants and promises contained herein, and for valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
to this Agreement (collectively "parties" and individually a
"party") agree as follows:

AGREEMENT:

1. DEFINITIONSUnless defined in other sections of this
  Agreement, capitalized terms shall have the definitions set forth below in
  this section 1:
  "Affiliate" means any person
  controlling, controlled by, or under common control with a party.
  "Authorized Person" means:
  (1) the principal investigators of McSheahan in connection with its evaluation
  of the commercial application of the High-Frequency Combustion Technologies,
  including the conduct of tests or studies; (2) the principal negotiators of
  McSheahan in connection with negotiations leading to any business transaction
  relating to the use of the High-Frequency Combustion Technologies by McSheahan,
  including any investment in Clean Energy, and (3) the attorneys, advisors,
  accountants and other professional agents of McSheahan utilized in connection
  with the foregoing.
  "Confidential Information" means
  any information, matter or thing of a secret, confidential or private nature,
  whether or not so denominated, and whether disclosed orally or in written or
  electronic medium or by access leading to observation or otherwise, which: (1)
  relates to the High-Frequency Combustion Technologies in general or the
  Proprietary Work Product or High-Frequency Combustion Research And Product
  Engineering Projects in particular, including information connected with the
  business or methods of operation of Clean Energy or its affiliates, including
  CECSI. "Confidential Information" shall be broadly defined and
  includes, by way of example and not limitation, technical, scientific,
  financial, business, personal and other information, including: (i) general
  business information relating to management, finances and accounting,
  products, research, development, manufacturing, marketing, sales,
  distribution, and business plans and strategies; and (ii) scientific and
  technical information including computer programs and systems, methods,
  techniques, formats, operations, know-how, experience, skill, trade secrets,
  formulations, processes, methods, practices, ideas, devices, discoveries,
  inventions, scientific and test data and results, compilations of information
  or data, copyrights, publications, reports, plans, designs, patterns,
  schematics, specifications and drawings. For purposes of the preceding
  sentence, the term "trade secrets" shall mean the broadest and most
  inclusive interpretation of "trade secrets" as defined by applicable
  law.
  "Controlled Persons" means:
  (1) the officers, directors, employees, shareholders, partners, joint
  ventures, affiliates, subsidiaries, divisions, successors, assigns, heirs,
  consultants, attorneys, accountants, lenders, insurers and other agents and
  representatives of McSheahan; and (2) any other person to whom McSheahan
  discloses any Confidential Information.
  "High-Frequency Combustion Research And
  Product Engineering Projects" is defined in section 2.
  "Proprietary Work Product" means
  any written or tangible property relating to the High-Frequency Combustion
  Research And Product Engineering Projects used, developed or acquired by
  McSheahan under this Agreement, whether or not such property also qualifies as
  Confidential Information. Proprietary Work Product shall be broadly defined
  and shall include, by way of example and not limitation, all test-bench,
  prototype and production burner units and parts and components thereof
  relating to the High-Frequency Combustion Research And Product Engineering
  Projects worked on or developed by McSheahan Enterprises under this Agreement,
  all engineering and other designs, drawings, schematics, and patterns relating
  to High-Frequency Combustion Research And Product Engineering Projects, all
  information, data and results of experiments, investigations, tests and trials
  relating to High-Frequency Combustion Research And Product Engineering
  Projects, and all compilations, reports, records, memoranda, notes, notebooks,
  files, lists, literature, correspondence, spread sheets, computer programs and
  software, computer print outs, other written and graphic records, and the
  like, whether originals, copies, duplicates or summaries thereof, affecting or
  relating to the High-Frequency Combustion Research And Product Engineering
  Projects.
2. EXCLUSIVE PROVISION OF
  RESEARCH AND DEVELOPMENT SERVICESDuring the term of this Agreement Clean Energy
  shall tender to McSheahan on an exclusive basis, and McSheahan shall perform
  for Clean Energy on an exclusive basis, all research projects relating to the
  High-Frequency Combustion Technologies, and all product development services
  with respect to selected commercial applications of the High-Frequency
  Combustion Technologies (collectively, the "High-Frequency Combustion
  Research And Product Engineering Projects") as may be required by
  Clean Energy or its affiliates, including CECSI. All research and development
  services performed by McSheahan under this Agreement shall be rendered on a
  cost-plus basis as more particularly described below in section 4.
  Unless otherwise consented to by Clean Energy, McSheahan shall prepare project
  budgets and project timetables for each research project, and Clean Energy
  shall approve the foregoing. Notwithstanding the foregoing, research and
  development activities conducted by Clean Energy's joint venture partners or
  licensees shall not be subject to the foregoing exclusivity requirement.NON-DELEGATIONThe duties and obligations of McSheahan
    under this Agreement are personal to it, and cannot be assigned or delegated
    to any other party without the prior written consent of Clean Energy.
    Notwithstanding the foregoing, McSheahan may assign its rights and delegate
    its obligations under this Agreement to a company either wholly-controlled
    by McSheahan or by Barry A. Sheahan.
3. NON-DELEGATION
4. BILLINGSAND
  PAYMENTSMcSheahan shall invoice Clean Energy from
  time-to-time for services provided calculated on a calendar month basis as
  follows:
  (1) "Base Research and Development
  Expenditures", defined as McSheahan's actual direct costs to perform
  research and development activities for Clean Energy under this Agreement,
  principally wages (other than any amounts payable to Barry A. Sheahan), casual
  labor or contract fees, materials and supplies, fabrication and other approved
  outside services, including research and development consultants;
  (2) "Research and Development Overhead",
  defined as the agreed portion of McSheahan's indirect costs, including prorata
  share of premises, office, administrative and support expenditures, to be
  charged to Clean Energy, which the parties agree shall be an amount equal 20%
  of Base Research and Development Expenditures for the period; and
  (3) "Contract Mark-up", defined
  as the consideration for McSheahan to provide the research and development
  services, which shall be an amount equal to as 10% of the sum of Base Research
  and Development Expenditures.
  All invoices shall be paid by Clean Energy within
  thirty days of presentation.USE OF OFFICE SPACEDuring the term of this Agreement, Clean
    Energy shall be permitted to share the office portion of McSheahan's
    premises and all furniture and equipment located therein. McSheahan shall
    invoice Clean Energy for its pro-rata share of common expenses for these
    premises, including rent, utilities and maintenance, with such charges being
    added to the Research and Development Overhead charged to Clean Energy
    pursuant to section 4.GRANTS AND TAX CREDITSMcSheahan shall have the right and the
    obligation to apply for and make use of any grants or tax credits available
    to support any research and development activities under this Agreement,
    including British Columbia research tax credits. Notwithstanding the
    preceding sentence but subject to the following sentence, McSheahan agrees
    that it shall apply the proceeds of any grants or tax credits received in
    connection with High-Frequency Combustion Research And Product Engineering
    Projects to pay down the net balance of any loans or advances made by Clean
    Energy or its affiliates to McSheahan including, without limitation, the
    loan originally owed to Clean Energy by Clean Energy Technologies (Canada),
    Inc. which loan McSheahan assumed on even date herewith. Notwithstanding the
    preceding sentence, should there be amounts payable by Clean Energy to
    McSheahan at the time of receipt of the grant or tax credit, or prospective
    amounts payable in connection with pending High-Frequency Combustion
    Research And Product Engineering Projects, then the grant or tax credit
    shall be first applied against payment of that amount, as an intervening
    credit against, the loans or advances due Clean Energy.
  By way of illustration, assume that McSheahan
  receives $250 in grant or tax credit proceeds, and at that time McSheahan owes
  Clean Energy $500 in loans and advances, Clean Energy owes McSheahan $100 in
  unpaid invoices, and $50 will become due from Clean Energy to McSheahan with
  respect to pending High-Frequency Combustion Research And Product Engineering
  Projects. In such event, (i) the first $100 of the grant or tax credit
  proceeds shall be deemed to have been paid to Clean Energy as a credit against
  payment of the outstanding balance of the loans and advances and then, in
  turn, forwarded by Clean Energy to McSheahan as a cash payment against the
  $100 in unpaid invoices, (ii) the next $50 of the grant or tax credit proceeds
  shall also be deemed to have been paid to Clean Energy as a credit against
  payment of the outstanding balance of the loans and advances and then, in
  turn, forwarded by Clean Energy to McSheahan as a cash payment (advance)
  against the prospective cost of completing the pending High-Frequency
  Combustion Research And Product Engineering Projects; and (iii) the $100
  balance of the grants or tax credits shall then be paid in cash to Clean
  Energy as a payment against the outstanding balance of loans and advances.TERMThis Agreement shall have a term of three
    years, and thereafter will renew automatically for one or more additional
    one year terms unless either party gives at least six (6) months prior
    written notice during a pending term or renewal period of their intent not
    to renew this Agreement. Notwithstanding the immediately preceding sentence,
    upon McSheahan's payment in full of all loans and advances due to Clean
    Energy, either party shall have the right to terminate this Agreement upon
    four (4) months prior written notice during a pending term or renewal
    period. Also notwithstanding the foregoing, either party shall have the
    right to terminate this Agreement for cause, including failure of any party
    to perform its obligations hereunder.USE OF CONFIDENTIAL INFORMATION AND PROPRIETARY
    WORK PRODUCTMcSheahan covenants that
  it shall use the Confidential Information and the Proprietary Work Product
  solely for the purposes described in section 2 for the benefit of Clean
  Energy and its affiliates. Nothing contained in this Agreement shall be
  construed as an express or implied license or permission for McSheahan to use
  the Confidential Information or Proprietary Work Product for any purpose other
  than that stated in this section, or as a grant or transfer by Clean Energy to
  McSheahan of any proprietary right or interest in the Confidential Information
  or Proprietary Work Product. McSheahan covenants that it will not contact any
  joint venture partners, consultants, advisors, vendors, suppliers and
  customers of Clean Energy or its affiliates without the prior written
  notification to and approval by Clean Energy.OWNERSHIP OF PROPRIETARY WORK PRODUCT
  McSheahan agrees that the Proprietary Work
  Product shall be the proprietary to Clean Energy, and that Clean Energy shall
  have full right, title and interest with respect to all of that property.NON-DISCLOSUREMcSheahan acknowledges
  that the Confidential Information is not generally known to the public or to
  other persons who are able to obtain economic value from its use, transmission
  or other disclosure, and the Confidential Information derives independent
  economic value thereby. Except as authorized by this Agreement, McSheahan
  agrees for itself and, to the full extent that execution of this Agreement
  renders it legally possible, each and every of its Controlled Persons, that
  they: (1) shall take all efforts reasonably necessary to maintain the
  secrecy and confidentiality of the Confidential Information and to otherwise
  comply with the terms of this Agreement; (2) shall not disclose the
  Confidential Information to any person or entity other than an Authorized
  Person without Clean Energy's prior written consent; (3) shall restrict access
  to the Confidential Information on a "need-to-know" basis to those
  of its Authorized Persons who clearly need such access in order to perform
  McSheahan's obligations under this Agreement, and shall instruct each of those
  Authorized Persons of their obligations under this Agreement; and (4) shall
  not, without the prior written consent of Clean Energy, use for its own
  benefit (except for the sole purpose of performing McSheahan's obligations
  under this Agreement), publish, duplicate, replicate or otherwise disclose to
  or discuss with others, or permit the use by others for their benefit or to
  the detriment of the providing party, any of the Confidential Information.
  McSheahan covenants that each of its Authorized Persons will execute for the
  benefit of Clean Energy a confidentiality agreement containing effectively the
  same provisions and protections contained in this Agreement.
  EXCEPTIONS
  The obligation of confidentiality set forth above
  in section 10 shall not apply to the extent that McSheahan:
  is required to disclose information under
      applicable law, regulation or order of a governmental agency; provided,
      however, that McSheahan has (i) first given prompt written notice to Clean
      Energy of its obligation to make such disclosure and the particulars of
      the disclosure, (ii) afforded Clean Energy a reasonable and effective
      opportunity to appear and make such application to the applicable
      governmental agency as it may deem necessary and appropriate to prevent or
      limit that disclosure, and (iii) cooperated diligently with Clean Energy
      and in good faith if Clean Energy elects to contest the disclosure sought;is required to disclose information by a
      court of competent jurisdiction by way of subpoena or other process or
      order; provided, however, that McSheahan has: (i) first given prompt
      written notice to Clean Energy of the proceeding in which such disclosure
      is sought and the particulars of the disclosure, (ii) afforded Clean
      Energy a reasonable and effective opportunity to appear and make such
      application to the court as it may deem necessary and appropriate to
      prevent or limit that disclosure, such as an order quashing such
      disclosure or a protective order, and (iii) cooperated diligently with
      Clean Energy and in good faith if E& elects to contest the disclosure
      sought;can demonstrate by clear and convincing
      evidence that the disclosed information was at the time of disclosure
      already in the public domain or has since come into the public domain
      other than as a result of actions or failure to act by McSheahan or any of
      its Controlled Persons;can demonstrate by clear and convincing
      evidence that the disclosed information was rightfully known to McSheahan
      or was otherwise in its possession (as shown by its written records) prior
      to the date of disclosure under this Agreement;can demonstrate by clear and convincing
      evidence that McSheahan independently developed the disclosed information
      (as shown by its written records) without access to Clean Energy or
      reliance upon the Confidential Information or Proprietary Work Product; orcan demonstrate by clear and convincing
      evidence that McSheahan received the disclosed information on an
      unrestricted basis from a source other than Clean Energy which source is
      not under a duty of confidentiality to Clean Energy.For purposes of this Agreement, specific
  disclosures made to McSheahan (such as, by was of illustration and not
  limitation, "600 to 800 cycles per second" or "$50,000"),
  shall not be deemed to be within the exceptions listed above merely because
  such specific disclosure is embraced by a general disclosure (such as, by was
  of illustration and not limitation, "400 to 800 cycles per second"
  or "$40,000 to $80,000") that is in the public domain or in
  the possession of McSheahan. In addition, any combination of features
  disclosed by Clean Energy shall not be deemed to be within the exceptions
  listed above merely because individual features are separately in the public
  domain or in the possession of McSheahan, but shall be within the exceptions
  only if the combination itself and its principle of operation are in the
  public domain or in the possession of McSheahan as provided in the exceptions
  listed above.
5. USE OF OFFICE SPACE
6. GRANTS AND TAX CREDITS
7. TERM
8. USE OF CONFIDENTIAL INFORMATION AND PROPRIETARY
    WORK PRODUCT
9. OWNERSHIP OF PROPRIETARY WORK PRODUCT
10. 
11. EXCEPTIONS
12. is required to disclose information under
      applicable law, regulation or order of a governmental agency; provided,
      however, that McSheahan has (i) first given prompt written notice to Clean
      Energy of its obligation to make such disclosure and the particulars of
      the disclosure, (ii) afforded Clean Energy a reasonable and effective
      opportunity to appear and make such application to the applicable
      governmental agency as it may deem necessary and appropriate to prevent or
      limit that disclosure, and (iii) cooperated diligently with Clean Energy
      and in good faith if Clean Energy elects to contest the disclosure sought;
13. is required to disclose information by a
      court of competent jurisdiction by way of subpoena or other process or
      order; provided, however, that McSheahan has: (i) first given prompt
      written notice to Clean Energy of the proceeding in which such disclosure
      is sought and the particulars of the disclosure, (ii) afforded Clean
      Energy a reasonable and effective opportunity to appear and make such
      application to the court as it may deem necessary and appropriate to
      prevent or limit that disclosure, such as an order quashing such
      disclosure or a protective order, and (iii) cooperated diligently with
      Clean Energy and in good faith if E& elects to contest the disclosure
      sought;
14. can demonstrate by clear and convincing
      evidence that the disclosed information was at the time of disclosure
      already in the public domain or has since come into the public domain
      other than as a result of actions or failure to act by McSheahan or any of
      its Controlled Persons;
15. can demonstrate by clear and convincing
      evidence that the disclosed information was rightfully known to McSheahan
      or was otherwise in its possession (as shown by its written records) prior
      to the date of disclosure under this Agreement;
16. can demonstrate by clear and convincing
      evidence that McSheahan independently developed the disclosed information
      (as shown by its written records) without access to Clean Energy or
      reliance upon the Confidential Information or Proprietary Work Product; or
17. can demonstrate by clear and convincing
      evidence that McSheahan received the disclosed information on an
      unrestricted basis from a source other than Clean Energy which source is
      not under a duty of confidentiality to Clean Energy.
18. RETURNMcSheahan covenants for itself and, to the full
  extent that execution of this Agreement renders it legally possible, each and
  every of its Controlled Persons, that they shall return to Clean Energy
  promptly upon its request, without cost, charge or reimbursement: (1) any and
  all Confidential Information (including Proprietary Work Product) used,
  acquired or developed by McSheahan and its Controlled Persons, including
  copies and duplicates thereof, and (2) any and all notes, summaries,
  compilations, analyses, results and derivations made from or with respect to
  Confidential Information (including Proprietary Work Product), whether in hard
  or electronic form. Notwithstanding the foregoing, McSheahan may rely upon the
  reasonable advice of their legal counsel as to what notes and summaries
  Confidential Information (including Proprietary Work Product) for purposes of
  this section 12.
19. INDEMNIFICATIONMcSheahan covenants to indemnify Clean Energy for
  any and all "losses" (as that term is defined below) directly or
  indirectly incurred byClean Energy, whether foreseeable or
  unforeseeable, and whether meritorious or not meritorious, based upon or
  related to or arising from, whether directly or indirectly, the breach or
  threatened breach by McSheahan of any of its representations, warranties,
  obligations, covenants or agreements under this Agreement. The term "losses"
  means any losses, liabilities, damages, judgments, deficiencies, assessments,
  penalties, settlements, and legal and other costs and/or expenses of any kind
  or nature whatsoever including, without limitation, "fees and costs"
  associated with any "action or proceeding." The term "action
  or proceeding" shall have the same definition as set forth in section
  14(d)(ii) below, and the term "fees and costs" shall
  refer to those items described in section 14(d)(iv) below.MISCELLANEOUS
20. MISCELLANEOUS
21. Preparation of
      Agreement; Costs and Expenses. Each party acknowledges that: (1)
      he, she or it had the advice of, or sufficient opportunity to obtain the
      advice of, legal counsel separate and independent of legal counsel for any
      other party hereto; (2) the terms of the transactions contemplated by this
      Agreement are fair and reasonable to such party; and (3) such party has
      voluntarily entered into the transactions contemplated by this Agreement
      without duress or coercion. Each party further acknowledges that such
      party was not represented by the legal counsel of any other party hereto
      in connection with the transactions contemplated by this Agreement, nor
      was he, she or it under any belief or understanding that such legal
      counsel was representing his, her or its interests. Except as expressly
      set forth in this Agreement, each party shall pay all legal and other
      costs and expenses incurred or to be incurred by such party in negotiating
      and preparing this Agreement; in performing due diligence or retaining
      professional advisors; in performing any transactions contemplated by this
      Agreement; or in complying with such party's covenants, agreements and
      conditions contained herein. Each party agrees that no conflict, omission
      or ambiguity in this Agreement, or the interpretation thereof, shall be
      presumed, implied or otherwise construed against any other party to this
      Agreement on the basis that such party was responsible for drafting this
      Agreement.Cooperation. Each party agrees,
      without further consideration, to cooperate and diligently perform any
      further acts, deeds and things, and to execute and deliver any documents
      that may be reasonably necessary or otherwise reasonably required to
      consummate, evidence, confirm and/or carry out the intent and provisions
      of this Agreement, all without undue delay or expense.
22. Cooperation
23. Interpretation.Survival. All representations and
          warranties made by any party in connection with any transaction
          contemplated by this Agreement shall, irrespective of any
          investigation made by or on behalf of any other party hereto, survive
          the execution and delivery of this Agreement, and the performance or
          consummation of any transaction described in this Agreement.Entire Agreement/No Collateral
          Representations. Each party expressly acknowledges and agrees that
          this Agreement, and the agreements and documents referenced herein:
          (1) are the final, complete and exclusive statement of the agreement
          of the parties with respect to the subject matter hereof; (2)
          supersede any prior or contemporaneous agreements, memorandums,
          proposals, commitments, guaranties, assurances, communications,
          discussions, promises, representations, understandings, conduct, acts,
          courses of dealing, warranties, interpretations or terms of any kind,
          whether oral or written (collectively and severally, the "prior
          agreements"), and that any such prior agreements are of no
          force or effect except as expressly set forth herein; and (3) may not
          be varied, supplemented or contradicted by evidence of prior
          agreements, or by evidence of subsequent oral agreements. No prior
          drafts of this Agreement, and no words or phrases from any prior
          drafts, shall be admissible into evidence in any action or suit
          involving this Agreement.Amendment; Waiver; Forbearance.
          Except as expressly provided herein, neither this Agreement nor any of
          the terms, provisions, obligations or rights may be amended, modified,
          supplemented, augmented, rescinded, discharged or terminated (other
          than by performance), except by a written instrument or instruments
          signed by all of the parties to this Agreement. No waiver of any
          breach of any term, provision or agreement, or of the performance of
          any act or obligation under this Agreement, or of any extension of
          time for performance of any such act or obligation, or of any right
          granted under this Agreement, shall be effective and binding unless
          such waiver shall be in a written instrument or instruments signed by
          each party claimed to have given or consented to such waiver. Except
          to the extent that the party or parties claimed to have given or
          consented to a waiver may have otherwise agreed in writing, no such
          waiver shall be deemed a waiver or relinquishment of any other term,
          provision, agreement, act, obligation or right granted under this
          Agreement, or of any preceding or subsequent breach thereof. No
          forbearance by a party in seeking a remedy for any noncompliance or
          breach by another party hereto shall be deemed to be a waiver by such
          forbearing party of its rights and remedies with respect to such
          noncompliance or breach, unless such waiver shall be in a written
          instrument or instruments signed by the forbearing party.Remedies Cumulative. The remedies of
          each party under this Agreement are cumulative and shall not exclude
          any other remedies to which such party may be lawfully entitled.Severability. If any term or
          provision of this Agreement or the application thereof to any person
          or circumstance shall, to any extent, be determined to be invalid,
          illegal or unenforceable under present or future laws, then, and in
          that event: (1) the performance of the offending term or provision
          (but only to the extent its application is invalid, illegal or
          unenforceable) shall be excused as if it had never been incorporated
          into this Agreement, and, in lieu of such excused provision, there
          shall be added a provision as similar in terms and amount to such
          excused provision as may be possible and be legal, valid and
          enforceable; and (2) the remaining part of this Agreement (including
          the application of the offending term or provision to persons or
          circumstances other than those as to which it is held invalid, illegal
          or unenforceable) shall not be affected thereby, and shall continue in
          full force and effect to the fullest legal extent.No Reliance Upon Prior Representation.
          Each party acknowledges that: (1) no other party has made any oral
          representation or promise which would induce them prior to executing
          this Agreement to change their position to their detriment, to
          partially perform, or to part with value in reliance upon such
          representation or promise; and (2) such party has not so changed its
          position, performed or parted with value prior to the time of the
          execution of this Agreement, or such party has taken such action at
          its own risk.Headings; References; Incorporation;
          Gender; Statutory References. The headings used in this Agreement
          are for convenience and reference purposes only, and shall not be used
          in construing or interpreting the scope or intent of this Agreement or
          any provision hereof. References to this Agreement shall include all
          amendments or renewals thereof. All cross-references in this
          Agreement, unless specifically directed to another agreement or
          document, shall be construed only to refer to provisions within this
          Agreement, and shall not be construed to be referenced to the overall
          transaction or to any other agreement or document. Any Exhibit
          referenced in this Agreement shall be construed to be incorporated in
          this Agreement by such reference. As used in this Agreement, each
          gender shall be deemed to include the other gender, including neutral
          genders appropriate for entities, if applicable, and the singular
          shall be deemed to include the plural, and vice versa, as the context
          requires. Any reference to statutes or laws will include all
          amendments, modifications, or replacements of the specific sections
          and provisions concerned.Time is of the Essence.
          It is expressly understood and agreed that time of performance is
          strictly of the essence with respect to each and every term,
          condition, obligation and provision hereof and that the failure to
          timely perform any of the terms, conditions, obligations or provisions
          hereof by any party shall constitute a material breach and a
          noncurable (but waivable) default under this Agreement by the party so
          failing to perform.
24. Survival
25. Entire Agreement/No Collateral
          Representations
26. Amendment; Waiver; Forbearance
27. Remedies Cumulative
28. Severability
29. No Reliance Upon Prior Representation
30. Headings; References; Incorporation;
          Gender; Statutory References
31. Time is of the Essence

Enforcement

1. Applicable Law
2. Consent to
          Jurisdiction; Service of Process. Any "action or
          proceeding" (as such term is defined below) arising out of or
          relating to this Agreement shall be filed in and heard and litigated
          solely before the British Columbia Supreme Court, with venue at the
          Vancouver Registry of the British Columbia Supreme Court; provided,
          however,the foregoing shall not: (1) limit the rights of any
          party to enforce any judgment issued by the British Columbia Supreme
          Court in any other jurisdiction; or (2) limit the rights of any party
          who has otherwise accepted jurisdiction in the Province of British
          Columbia as provided above to enforce this Agreement in any other
          jurisdiction against any other party who has failed or refused to
          answer or to appear in any action or proceeding brought before the
          British Columbia Supreme Court (notwithstanding the terms of this
          section). Each party generally and unconditionally accepts the
          exclusive jurisdiction of such courts and venue therein; consents to
          the service of process in any such action or proceeding by certified
          or registered mailing of the summons and complaint in accordance with
          the notice provisions of this Agreement; and waives any defense or
          right to object to venue in said courts based upon the doctrine of
          "forum non conveniens." The term "action or
          proceeding" is defined as any and all claims, suits, actions,
          hearings, arbitrations or other similar proceedings, including appeals
          and petitions therefrom, whether formal or informal, governmental or
          non-governmental, or civil or criminal.
3. Consent to
          Specific Performance and Injunctive Relief and Waiver of Bond or
          Security. McSheahan acknowledges that Clean Energy may, as a
          result of the breach by McSheahan of its covenants and obligations
          under this Agreement, sustain immediate and long-term substantial and
          irreparable injury and damage which cannot be reasonably or adequately
          compensated by damages at law. Consequently, McSheahan agrees that in
          the event of the breach or threatened breach of its covenants and
          obligations hereunder, Clean Energy shall be entitled to obtain from a
          court of competent equitable relief including, without limitation,
          enforcement of all of the provisions of this Agreement by specific
          performance and/or temporary, preliminary and/or permanent injunctions
          enforcing any of the rights of Clean Energy, requiring performance by
          McSheahan, or enjoining any breach by McSheahan, all without proof of
          any actual damages that have been or may be caused Clean Energy by
          such breach or threatened breach and without the posting of bond or
          other security in connection therewith. McSheahan waives the claim or
          defense therein that the party bringing the action or proceeding has
          an adequate remedy at law and such party shall not allege or otherwise
          assert the legal position that any such remedy at law exists.
          McSheahan acknowledges that: (1) the terms of this subsection (iii)are fair, reasonable and necessary to protect the legitimate
          interests of Clean Energy; (2) this waiver is a material inducement to
          Clean Energy to enter into the transaction contemplated hereby; (3)
          Clean Energy has already relied upon this waiver in entering into this
          Agreement; and (4) Clean Energy will continue to rely on this waiver
          in their future dealings with McSheahan. McSheahan warrants and
          represents that it has reviewed this provision with its legal counsel,
          and that it has knowingly and voluntarily waived its rights following
          consultation with legal counsel.Recovery of Fees and Costs. If any
          party institutes or should the parties otherwise become a party to any
          action or proceeding based upon or arising out of this Agreement
          including, without limitation, to enforce or interpret this Agreement
          or any provision hereof, or for damages by reason of any alleged
          breach of this Agreement or any provision hereof, or for a declaration
          of rights in connection herewith, or for any other relief, including
          equitable relief, in connection herewith, the "prevailing
          party" (as such term is defined below) in any such action or
          proceeding, whether or not such action or proceeding proceeds to final
          judgment or determination, shall be entitled to receive from the
          non-prevailing party as a cost of suit, and not as damages, all fees,
          costs and expenses of enforcing any right of the prevailing party
          (collectively, "fees and costs"), including without
          limitation, (1) reasonable attorneys' fees and costs and expenses, (2)
          witness fees (including experts engaged by the parties, but excluding
          shareholders, officers, employees or partners of the parties), (3)
          accountants' fees, (4) fees of other professionals, and (5) any and
          all other similar fees incurred in the prosecution or defense of the
          action or proceeding; including, without limitation, fees incurred in
          the following: (A) postjudgment motions; (B) contempt proceedings; (C)
          garnishment, levy, and debtor and third party examinations; (D)
          discovery; and (E) bankruptcy litigation. All of the aforesaid fees
          and costs shall be deemed to have accrued upon the commencement of
          such action and shall be paid whether or not such action is prosecuted
          to judgment.Any judgment or order entered in such action shall
          contain a specific provision providing for the recovery of the
          aforesaid fees, costs and expenses incurred in enforcing such judgment
          and an award of prejudgment interest from the date of the breach at
          the maximum rate of interest allowed by law.The term "prevailing
          party" is defined as the party who is determined to prevail
          by the court after its consideration of all damages and equities in
          the action or proceeding, whether or not the action or proceeding
          proceeds to final judgment (the court shall retain the discretion to
          determine that no party is the prevailing party in which case no party
          shall be entitled to recover its costs and expenses under this subsection
          (iv).
4. 

Successors and Assigns

Counterparts;
      Electronically Transmitted Documents. This Agreement may be
      executed in counterparts, each of which shall be deemed an original, and
      all of which together shall constitute one and the same instrument,
      binding on all parties hereto. Any signature page of this Agreement may be
      detached from any counterpart of this Agreement and reattached to any
      other counterpart of this Agreement identical in form hereto by having
      attached to it one or more additional signature pages. If a copy or
      counterpart of this Agreement is originally executed and such copy or
      counterpart is thereafter transmitted electronically by facsimile or
      similar device, such facsimile document shall for all purposes be treated
      as if manually signed by the party whose facsimile signature appears.

Notices.
      Unless otherwise specifically provided in this Agreement, all notices,
      demands, requests, consents, approvals or other communications
      (collectively and severally called "notices")
      required or permitted to be given hereunder, or which are given with
      respect to this Agreement, shall be in writing, and shall be given by: (1)
      personal delivery (which form of notice shall be deemed to have been given
      upon delivery), (2) by telegraph or by private airborne/overnight delivery
      service (which forms of notice shall be deemed to have been given upon
      confirmed delivery by the delivery agency), (3) by electronic or facsimile
      or telephonic transmission, provided the receiving party has a compatible
      device or confirms receipt thereof (which forms of notice shall be deemed
      delivered upon confirmed transmission or confirmation of receipt), or (4)
      by mailing in the official government mails of their applicable local
      jurisdiction by registered or certified mail or the equivalent, return
      receipt requested and postage prepaid (which forms of notice shall be
      deemed to have been given upon the of receipt). Notices shall be addressed
      at the addresses first set forth above, or to such other address as the
      party shall have specified in a writing delivered to the other parties in
      accordance with this paragraph. Any notice given to the estate of a party
      shall be sufficient if addressed to the party as provided in this subsection
      (g).

WHEREFORE, the parties hereto have for purposes
of this Agreement executed this Agreement in the City Burnaby, Province of
British Columbia, Canada, effective as of the date first set forth above.

CLEAN ENERGY:

Clean Energy USA, Inc.

By: /s/ R. Dirk Stinson

McSHEAHAN:

McSheahan Enterprises Ltd..

By:  /s/ Barry A. Sheahan

Barry A. Sheahan, President