SERVICE AGREEMENT

THIS AGREEMENT

(the "Agreement") is made and entered into this 16th day of July, 2007 by and
between ELITE FINANCIAL COMMUNICATIONS GROUP, LLC, located at 605 Crescent
Executive Court, Suite 124, Lake Mary, Florida 32746, (hereinafter referred to
as "ELITE") and POWER AIR CORPORATION, located at 4777 Bennett Drive, Suite E,
Livermore, California 94551, (hereinafter referred to as the "Company").

WITNESSETH:

For and consideration of the mutual promises and covenants contained herein, the
parties hereto agree as follows:

1)   EMPLOYMENT

Company hereby hires and employs ELITE as an independent contractor, and ELITE
does hereby accept its position as an independent contractor to the Company upon
the terms and conditions hereinafter set forth.

2)   TERM

The term of this Agreement shall be for twelve (12) months. However the Company
shall retain the right to terminate this Agreement following the first 90
consecutive days of representation by ELITE. Said desire to terminate must be
submitted in writing to ELITE by the Company no less than 30 days prior to the
desired termination date.

3)   DUTIES AND OBLIGATIONS OF ELITE

a)   ELITE will review and analyze various aspects of the Company

's goals and make recommendations on feasibility and achievement of desired
goals.

b)   Through its Market Relations Group, ELITE will provide exposure to its
network of firms and brokers that may be interested in participating with the
Company, schedule and conduct the necessary due diligence, and obtain the
required approvals necessary for those firms to participate. ELITE will also
interview and make determinations on any brokerage or institutional firms
referred by the Company with regard to their participation.

c)   At the Company

's request, ELITE will be available to field any calls from firms, individual
investors/shareholders and brokers inquiring about the Company. In addition,
ELITE will assist the Company in preparing its quarterly communications relative
to its financial results and coordinate corresponding news announcements,
conference calls and simulcasts on the Internet in accordance with Regulation
FD.

d)   ELITE will feature the Company on the Internet via ELITE

's home web site (www.efcg.net) within the Elite Financial Forum which will
feature comprehensive information relative to the Company's fundamental and
technical strengths, as well as industry and corporate overviews; management
biographies; stock trading history; market making activity; conference
call/webcast archives; and other information meaningful to the investment
community. The Forum will be updated routinely and provide for site visitors to
request ongoing information about the Company as it is released.

e)   ELITE shall write, produce and/or assist the Company in preparing and
releasing all news announcements. The Company shall be solely responsible for
paying all fees associated with the actual release(s) through BusinessWire, PR
Newswire, or any other comparable news dissemination source. ELITE will create,
build and continually enhance a database of all brokers, investors, analysts and
media contacts who have expressed an interest in receiving ongoing information
on the Company and manage the ongoing distribution of news announcements and/or
other Company approved communications.

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f)   ELITE shall serve as the Company

's publicist and will strive to obtain coverage in both national and industry
publications, in financial newsletters, on financial radio and television
programming and via traditional press mediums. Specifically, ELITE will
facilitate an ongoing outreach program to an intelligently targeted universe of
media professionals. Further, ELITE will track published articles and provide
monthly clippings of those articles/mentions featuring the Company.

g)   At the Company

's request, strive to obtain the Company analyst coverage and/or investment
banking sponsorship.

h)   ELITE shall arrange for a series of due diligence meetings with select
broker/dealers, institutional investors and analysts at predetermined dates
throughout the campaign term, while remaining compliant with the rules and
regulations associated with Regulation FD.

i)   ELITE shall develop customized, high-quality, high-impact and fully
integrated financial communications programs and platforms, and leverage our
strategic resources to enhance general product/service marketing programs
initiated by the Company.

j)   ALL OF THE FOREGOING ELITE-PREPARED DOCUMENTATION CONCERNING THE COMPANY,
INCLUDING, BUT NOT LIMITED TO, INFORMATIONAL WRITE-UPS, NEWS ANNOUNCEMENTS,
SHAREHOLDER LETTERS, ET AL, SHALL BE PREPARED BY ELITE USING MATERIALS SUPPLIED
TO IT BY THE COMPANY AND SHALL BE APPROVED BY THE COMPANY PRIOR TO DISSEMINATION
BY ELITE.

4)   ELITE

'S COMPENSATION

a)   Upon execution of this Agreement, the Company will pay ELITE $21,000.00 in
cash in consideration of services provided pursuant to this Agreement for July
16, 2007

- September 15, 2007.

b)   On October 16, 2007, November 16, 2007 and December 16, 2007, the Company
will pay ELITE 8,500.00 in monthly cash consideration.

c)   Every month thereafter, beginning on January 16, 2008, the Company will pay
ELITE $10,000.00 in monthly cash consideration.

d)   ELITE will also be entitled to receive an option or warrant to purchase up
to 300,000 common shares of the Company

's common stock, exercisable as follows:

i)   150,000 shares exercisable at $0.45 per share, which shall vest
immediately; and
ii)   150,000 shares exercisable at $0.60 per share, which shall vest on the
181st day following execution of this Agreement.

e)   The Company shall agree to issue ELITE piggyback registration rights for
the common shares underlying the option/warrant listed above, whereby these
shares will be registered for resale by ELITE on the first applicable
Registration Statement filed by the Company with the U.S. Securities & Exchange
Commission; said underlying shares common shares shall be held by the Company
until such time as ELITE elects to exercise its option or warrant to purchase
the common shares. The term of the option/warrant shall expire 24 months from
the date the Registration Statement registering the shares underlying the
option/warrant is deemed effective.

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5)   ELITE

'S EXPENSES AND COSTS

Company shall pay all reasonable costs and expenses incurred by ELITE, its
directors, officers, employees and agents, in carrying out its duties and
obligations pursuant to the provisions of this Agreement, excluding ELITE

's general and administrative expenses and costs, but including and not limited
to the following costs and expenses; provided all costs and expense items in
excess of $1.00 (One Dollar) must be approved by the Company in writing prior to
ELITE's incurrence of the same:

a)   Seminars, expositions, money and investment conferences.

b)   Radio and television time and print media advertising costs, when/if
applicable.

c)   Subcontract fees and costs incurred in preparation of independent third
party research reports, when/if applicable.

d)   Cost of on-site due diligence meetings, if applicable.

e)   Printing and publication costs of brochures and marketing materials, which
are not supplied by the Company.

f)   Corporate web site development costs.

g)   Printing and publication costs of Company annual reports, quarterly
reports, and/or other shareholder communication collateral material, which is
not supplied by the Company.

6)   COMPANY

'S DUTIES AND OBLIGATIONS

Company shall have the following duties and obligations under this Agreement:

a)   Cooperate fully and timely with ELITE so as to enable ELITE to perform its
obligations under this Agreement.

b)   Within ten (10) days of the date of execution of this Agreement to deliver
to ELITE a complete due diligence package on the Company, including all the
Company

's filings with the U.S. Securities and Exchange Commission within the last
twelve months; the last six (6) months of press announcements on the Company;
and all other relevant materials with respect to such filings, including but not
limited to, corporate reports, brochures, and the like, and a list of analysts
and or fund managers, who have been following the Company.

c)   The Company will act diligently and promptly in reviewing materials
submitted to it from time to time by ELITE and inform ELITE of any inaccuracies
contained therein prior to the dissemination of such materials.

d)   Promptly give written notice to ELITE of any change in the Company

's financial condition or in the nature of its business or operations which had
or might have an adverse material effect on its operations, assets, properties
or prospects of its business.

e)   Promptly pay all Company pre-approved costs and expenses incurred by ELITE
under the provisions of this Agreement when presented with invoices for the same
by ELITE.

f)   Give full disclosure of all material facts concerning the Company to ELITE
and update such information on a timely basis.

g)   Promptly pay the compensation due ELITE under the provisions of this
Agreement, and as defined in Section 4 and Sections 5 and 6 (if and when
applicable) herein.

7)   NONDISCLOSURE

Except as may be required by law, the Company, its officers, directors,
employees, agents and affiliates shall not disclose the contents and provisions
of this Agreement to any individual or entity without ELITE

's expressed written consent subject to disclosing same further to Company
counsel, accountants and other persons performing investment banking, financial,
or related functions for the Company.

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8)   COMPANY

'S DEFAULT

In the event of any default in the payment of ELITE

's compensation to be paid to it pursuant to this Agreement, or any other
charges or expenses on the Company's part to be paid or met, or any part or
installment thereof, at the time and in the manner herein prescribed for the
payment thereof and as when the same becomes due and payable, and such default
shall continue for five (5) days after ELITE's written notice thereof is
received by Company; in the event of any default in the performance of any of
the other covenants, conditions, restrictions, agreements, or other provisions
herein contained on the part of the Company to be performed, kept, complied with
or abided by, and such default shall continue for five (5) days after ELITE has
given Company written notice thereof, or if a petition in bankruptcy is filed by
the Company, or if the Company is adjudicated bankrupt, or if the Company shall
compromise all its debts or assign over all its assets for the payment thereof,
of if a receiver shall be appointed for the Company's property, then upon the
happening of any of such events, ELITE shall have the right, at its option,
forthwith or thereafter to accelerate all compensation, costs and expenses due
or coming due hereunder and to recover the same from the Company by suit or
otherwise and further, to terminate this Agreement. The Company covenants and
agrees to pay all reasonable attorney fees, paralegal fees, costs and expenses
due of ELITE, including court costs, (including such attorney fees, paralegal
fees, costs and expenses incurred on appeal) if ELITE employs an attorney to
collect the aforesaid amounts or to enforce other rights of ELITE provided for
in this Agreement in the event of any default as set forth above and ELITE
prevails in such litigation.

9)   COMPANY

'S REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to ELITE for the purpose of inducing ELITE
to enter into and consummate this Agreement as follows:

a)   The Company has the power and authority to execute, deliver and perform
under this Agreement.

b)   The execution and delivery by the Company of this Agreement have been duly
and validly authorized by all requisite action by the Company. No license,
consent or approval of any form is required for the Company

's execution and delivery of this Agreement.

c)   No representation or warranty by the Company in this Agreement and no
information in any statement, certificate, exhibit, schedule or other document
furnished, or to be furnished by the Company to ELITE pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading. There is no fact which the Company has not disclosed to ELITE, in
writing, or in SEC filings or news announcements, which materially adversely
affects, nor, so far as the Company can now reasonably foresee, may adversely
affect the business, operations, prospects, properties, assets, profits or
condition (financial or otherwise) of the Company. IN NO EVENT WILL THE COMPANY
BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES NOR FOR ANY CLAIM
AGAINST ELITE BY ANY PERSON OR ENTITY ARISING FROM OR IN ANY WAY RELATED TO THIS
AGREEMENT.

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10)  ELITE

'S DEFAULT

In the event of any default in the performance by ELITE pursuant to this
Agreement, at the sole discreation of the company, and such default shall
continue for five (5) days after the company

's written notice thereof is received by ELITE; in the event of any default in
the performance of any of the other covenants, conditions, restrictions,
agreements, or other provisions herein contained on the part of ELITE to be
performed, kept, complied with or abided by, and such default shall continue for
five (5) days after Company has given ELITE written notice thereof, or if a
petition in bankruptcy is filed by the ELITE, or if ELITE is adjudicated
bankrupt, or if ELITE shall compromise all its debts or assign over all its
assets for the payment thereof, of if a receiver shall be appointed for ELITE's
property, then upon the happening of any of such events, the Company shall have
the right, at its option, forthwith or thereafter to get back all of its money
from ELITE by suit or otherwise and further, to terminate this Agreement. ELITE
covenants and agrees to pay all reasonable attorney fees, paralegal fees, costs
and expenses due of the Company, including court costs, (including such attorney
fees, paralegal fees, costs and expenses incurred on appeal) if the Company
employs an attorney to collect the aforesaid amounts or to enforce other rights
of the Company provided for in this Agreement in the event of any default as set
forth above and the Company prevails in such litigation.

11)  LIMITATION OF ELITE LIABILITY

If ELITE fails to perform its services hereunder, its entire liability to the
Company shall not exceed the lessor of (a) the amount of cash compensation ELITE
has received from the Company under Section 4 of this Agreement or (b) the
actual damage to the Company as a result of such non-performance. IN NO EVENT
WILL ELITE BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES NOR FOR
ANY CLAIM AGAINST THE COMPANY BY ANY PERSON OR ENTITY ARISING FROM OR IN ANY WAY
RELATED TO THIS AGREEMENT, UNLESS SUCH DAMAGES RESULT FROM THE USE, BY ELITE, OF
INFORMATION NOT AUTHORIZED BY THE COMPANY.

12)  MISCELLANEOUS

a)    Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
when delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid to the parties hereto at their addresses
first above written. Either party may change his or its address for the purpose
of this paragraph by written notice similarly given.

b)    Entire Agreement. This Agreement represents the entire agreement between
the Parties in relation to its subject matter and supercedes and voids all prior
agreements between such Parties relating to such subject matter.

c)    Amendment of Agreement. This Agreement may be altered or amended, in whole
or in part, only in writing signed by both Parties.

d)    Waiver. No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any other subsequent breach or condition, whether of a
like or different nature, unless such shall be signed by the person making such
waiver and/or which so provides by its terms.

e)   Captions. The captions appearing in this Agreement are inserted as a matter
of convenience and for reference and in no way affect this Agreement, define,
limit or describe its scope or any of its provisions.

f)   Situs. This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida. Venue shall be located in Livermore,
California.

g)   Benefits. This Agreement shall inure to the benefit of and be binding upon
the Parties hereto, their heirs, personal representatives, successors and
assigns.

h)    Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision and shall not in any way render invalid or unenforceable any
other provisions of this Agreement, and this Agreement shall be carried out as
if such invalid or unenforceable provision were not contained herein.

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i)   Arbitration. Any controversy, dispute or claim arising out of or relating
to this Agreement or the breach thereof shall be settled by arbitration.
Arbitration proceedings shall be conducted in accordance with the rules then
prevailing of the American Arbitration Association or any successor. The award
of the Arbitration shall be binding on the Parties. Judgment may be entered upon
an arbitration award or in a court of competent jurisdiction and confirmed by
such court. Venue for arbitration proceedings shall be located in Livermore,
California. The costs of arbitration, reasonable attorney

's fees of the Parties, together with all other expenses, shall be paid as
provided in the Arbitration award.

j)   Currency. In all instances, references to monies used in this Agreement
shall be deemed to be United States dollars.

k)   Multiple Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of such
counterparts shall constitute one (1) instrument.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
as follows:

CONFIRMED AND AGREED ON THIS 16th DAY OF JULY 2007.

ELITE FINANCIAL COMMUNICATIONS GROUP, LLC

 

By: /s/

Dodi B. Handy                 
             ELITE Officer

             /s/ Steve Handy                        

                        Witness

              

DODI B. HANDY         
             Print Name

                   STEVE HANDY                 

                        Print Name

 

CONFIRMED AND AGREED ON THIS 16th DAY OF JULY 2007.

POWER AIR CORPORATION

By: /s/ Remy Kozak                 
             Duly Authorized

             /s/ Don Ceci                           

                        Witness

              REMY KOZAK           
             Print Name

                   DON CECI                       

                        Print Name

 

 

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