EXHIBIT 10.3 AGREEMENT

                                                                    EXHIBIT 10.3
                                   AGREEMENT

Dated:            Effective as of June 30, 2004

Between: Xxxxxx X. Xxxxx ("Xxxxx")

And:              California Clean Air, Inc. ("Company")

         This Agreement supercedes and replaces the Agreement effective as of
March 31, 2004, between Xxxxx and the Company in its entirety.

         WHEREAS, Xxxxx has advanced certain operating funds to the Company
which, as of June 30, 2004, total Two Hundred Eighty-Two Thousand and
Forty-Eight Dollars ($282,048) ("Sums Advanced");

         WHEREAS, Xxxxx and Company desire to set forth their agreement and
understanding with respect to the right of Xxxxx to demand repayment by the
Company of the Sums Advanced.

         NOW THEREFORE, IT IS AGREED AS FOLLOWS:

         1. The Sums Advanced shall be considered a non-interest bearing loan by
Xxxxx to the Company which shall be repaid on demand.

         2. Xxxxx agrees not to demand repayment of the Sums Advanced until July
1, 2005, after which date Xxxxx shall be entitled to demand repayment, in whole
or in part, of the Sums Advanced, and only from revenues derived from
operations.

         3. The Company shall make payment to Xxxxx within five (5) business
days after receipt from Xxxxx of written demand for repayment, which demand
shall set forth the amount to be repaid.

         4. In the event that Xxxxx shall be required to undertake any
collection action against the Company to recover any amounts owing hereunder,
Xxxxx shall be entitled to the recovery of his collection costs, including
reasonable attorney fees.

         5. This Agreement shall be governed by the laws of the State of Oregon.
This Agreement represents the entire agreement and understanding of the parties
with respect to its subject matter and supercedes any and all prior agreements
and understandings, written or oral with respect to the subject matter of this
Agreement. This Agreement shall be binding on the respective heirs, legatees,
executors, administrators, successors and assigns of the parties.

         WHEREAS, this Agreement is deemed effective as of the date first
written above.


CALIFORNIA CLEAN AIR, INC.

By: /s/XXXXXXX X. XXXXXX                                 /s/XXXXXX X. XXXXX
    Xxxxxxx X. Xxxxxx, President                         Xxxxxx X. Xxxxx