Clean Energy Fuels Corp (CLNE)

(13) Related Party Transactions

        In 2006, 2007 and 2008, under an advisory agreement, the Company paid $10,000 a month for energy market advice to BP Capital L.P. (BP Capital), which is owned by Boone Pickens, the majority stockholder and a director of the Company. During 2006, under the agreement, the Company also paid BP Capital approximately $2,253,000 in commissions related to gains on its hedging activities.

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Clean Energy Fuels Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(13) Related Party Transactions (Continued)

        On August 2, 2006, the Company entered into certain futures contracts related to January 2008 through December 2011 (Positions). During the period August 3, 2006 through December 28, 2006, the Positions decreased in value by $78.7 million. On December 28, 2006, the Company entered into a transaction with Boone Pickens, its majority stockholder, whereby Mr. Pickens assumed the obligations related to the Positions in exchange for a five-year warrant to purchase 15 million shares of the Company's common stock at $10 per share. The derivative obligation of $78.7 million was removed from the Company's balance sheet, and the warrant (valued at $80.9 million) was recorded as an increase of stockholders' equity. The difference between the value of the warrant and the value of the derivative obligation ($2.2 million) was recorded in the Company's consolidated statement of operations for the year ended December 31, 2006 as a loss on extinguishment of derivative liability.

        As the Positions decreased in value, the Company was required to make certain additional margin deposits to cover the losses. Mr. Pickens agreed to loan the Company up to $100 million to make such deposits under a revolving line of credit (the Revolver). At December 28, 2006, Mr. Pickens had advanced the Company $69.7 million under the Revolver to make additional margin deposits which he remitted directly to the broker. As part of the transaction, Mr. Pickens received back the deposits he had funded with advances under the Revolver as payment of the outstanding Revolver balance. The Company paid Mr. Pickens $1.2 million of interest expense on advances made under the Revolver during the period. The Revolver was cancelled on December 28, 2006 after the transaction was completed.

        In July 2006, the Company entered into an agreement with Inland Kenworth, Inc. (Inland) and Westport Innovations pursuant to which the Company agreed to deposit certain amounts with Inland, as security for a guaranty, to help fund Inland's acquisition from Kenworth Truck Company (Kenworth) of up to 125 diesel tractors, which tractors Westport Innovations will convert to run on LNG. Westport Innovations is a stockholder of the Company and Westport Innovation's chief executive officer was a member of the Company's Board of Directors in 2006 and 2007. In addition, the president and chief executive officer of the Company is also a director of Westport Innovations, and Boone Pickens, a director and the largest stockholder of the Company, is a stockholder of Westport Innovations. At December 31, 2008, approximately $3.2 million of deposits to Inland under this agreement had not been repaid. If any tractor purchased by Inland remains unsold after a period of 365 days, the Company must either purchase the tractor or instruct Inland to sell the tractor. In 2007, the Company also entered into two separate deposit agreements with Westport Innovations to facilitate the production of LNG fuel systems for installation in the diesel tractors referenced above. At December 31, 2008, approximately $3.0 million to Westport Innovations under these agreements has not been repaid. Repayment of these deposits will occur incrementally upon the sale of the converted tractors to third parties, however, to the extent an LNG fuel system incorporated into a tractor is not sold within 24 months of the effective date of the applicable deposit agreement (or such other time period as is agreed by both the Company and Westport Innovations), Westport Innovations is not obligated to repay any of the deposit with respect to such LNG fuel system.

97

Clean Energy Fuels Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(10) Related Party Transactions

        In 2005, 2006 and 2007, under an advisory agreement, the Company paid $10,000 a month for energy market advice to BP Capital L.P. (BP Capital), which is owned by Boone Pickens, the majority stockholder and a director of the Company. During 2005, 2006 and 2007, under the agreement, the Company also paid BP Capital approximately $11,622,000, $2,253,000, and $0, respectively, in commissions related to gains on its hedging activities. In addition, the Company reimbursed Terasen, a former stockholder, approximately $39,000 in 2005 for certain operational, financial, and executive services. At December 31, 2006 and 2007, BP Capital owed the Company $86,780 and $0, respectively.

        On August 2, 2006, the Company entered into certain futures contracts related to January 2008 through December 2011 (Positions). During the period August 3, 2006 through December 28, 2006, the

82

Clean Energy Fuels Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(10) Related Party Transactions (Continued)

Positions decreased in value by $78.7 million. On December 28, 2006, the Company entered into a transaction with Boone Pickens, its majority stockholder, whereby Mr. Pickens assumed the obligations related to the Positions in exchange for a five-year warrant to purchase 15 million shares of the Company's common stock at $10 per share. The derivative obligation of $78.7 million was removed from the Company's balance sheet, and the warrant (valued at $80.9 million) was recorded as an increase of stockholders' equity. The difference between the value of the warrant and the value of the derivative obligation ($2.2 million) was recorded in the Company's consolidated statement of operations for the year ended December 31, 2006 as a loss on extinguishment of derivative liability.

        As the Positions decreased in value, the Company was required to make certain additional margin deposits to cover the losses. Mr. Pickens agreed to loan the Company up to $100 million to make such deposits under a revolving line of credit (the Revolver). At December 28, 2006, Mr. Pickens had advanced the Company $69.7 million under the Revolver to make additional margin deposits which he remitted directly to the broker. As part of the transaction, Mr. Pickens received back the deposits he had funded with advances under the Revolver as payment of the outstanding Revolver balance. The Company paid Mr. Pickens $1.2 million of interest expense on advances made under the Revolver during the period. The Revolver was cancelled on December 28, 2006 after the transaction was completed.

        In July 2006, the Company entered into an agreement with Inland Kenworth, Inc. (Inland) and Westport Innovations pursuant to which the Company agreed to deposit certain amounts with Inland, as security for a guaranty, to help fund Inland's acquisition from Kenworth Truck Company (Kenworth) of up to 125 diesel tractors, which tractors Westport Innovations will convert to run on LNG. Westport Innovations is a stockholder of the Company and Westport Innovation's chief executive officer is a member of the Company's Board of Directors. In addition, the president and chief executive officer of the Company is also a director of Westport Innovations, and Boone Pickens, a director and the largest stockholder of the Company, is a stockholder of Westport Innovations. At December 31, 2007, the Company had made approximately $9.5 million of deposits to Inland under this agreement. If any tractor purchased by Inland remains unsold after a period of 365 days, the Company must either purchase the tractor or instruct Inland to sell the tractor. In 2007, the Company also entered into two separate deposit agreements with Westport Innovations to facilitate the production of LNG fuel systems for installation in the diesel tractors referenced above. At December 31, 2007, the Company had advanced a total of $5.9 million to Westport Innovations under these agreements. Repayment of these deposits will occur incrementally upon the sale of the converted tractors to third parties, however, to the extent an LNG fuel system incorporated into a tractor is not sold within 24 months of the effective date of the applicable deposit agreement (or such other time period as is agreed by both the Company and Westport Innovations), Westport Innovations is not obligated to repay any of the deposit with respect to such LNG fuel system.