THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO POWERCOLD CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED.

Right to Purchase up to 615,000 Shares of Common Stock of
PowerCold Corporation
(subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT

No. LMF-0001

Issue Date:  July  29, 2004

POWERCOLD CORPORATION, a corporation organized under the laws of the State of
Nevada PowerCold Corporation (“PowerCold Corporation”), hereby certifies that,
for value received, LAURUS MASTER FUND, LTD., or assigns (the "Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company (as
defined herein) from and after the Issue Date of this Warrant and at any time or
from time to time before 5:00 p.m., New York time, through the close of business
July 29, 2007 (the "Expiration Date"), up to 615,000 fully paid and
nonassessable shares of Common Stock (as hereinafter defined), $0.001 par value
per share, at the applicable Exercise Price per share (as defined below).  The
number and character of such shares of Common Stock and the applicable Exercise
Price per share are subject to adjustment as provided herein.

As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

(a)

The term "Company" shall include PowerCold Corporation and any corporation which
shall succeed, or assume the obligations of, PowerCold Corporation  hereunder.

(b)

The term "Common Stock" includes (i) the Company's Common Stock, par value
$0.001per share; and (ii) any other securities into which or for which any of
the securities described in (a) may be converted or exchanged pursuant to a plan
of recapitalization, reorganization, merger, sale of assets or otherwise.

(c)

The term "Other Securities" refers to any stock (other than Common Stock) and
other securities of the Company or any other person (corporate or otherwise)
which the holder of the Warrant at any time shall be entitled to receive, or
shall have received, on the exercise of the Warrant, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 4 or otherwise.

(d)

The "Exercise Price" applicable under this Warrant shall be as follows:

(i)

a price of $2.63,150% of the average closing price of  Common Stock for the
twenty two (22)  trading days immediately prior to the date hereof for the
 first 300,000 shares acquired hereunder; and

(ii)

a price of $3.07, 175% of the average closing price of  Common Stock for the
twenty two (22)  trading days immediately prior to the date hereoffor any
additional shares acquired hereunder.

1.

Exercise of Warrant.

1.1

Number of Shares Issuable upon Exercise.  From and after the date hereof through
and including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, by delivery of an original or fax
copy of an exercise notice in the form attached hereto as Exhibit A (the
"Exercise Notice"), shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4.

1.2

Fair Market Value.  For purposes hereof, the "Fair Market Value" of a share of
Common Stock as of a particular date (the "Determination Date") shall mean:

(a)

If the Company's Common Stock is traded on the American Stock Exchange or
 another national exchange or is quoted on the National or SmallCap Market of
The Nasdaq Stock Market, Inc.("Nasdaq"), NASDAQ Over The Counter Bulletin Board
(NASD OTC:BB) then the mean of the average of the closing bid and asked   sale
price, respectively, reported for the last business day immediately preceding
the Determination Date.

(b)

Except as provided in clause (c) below, if the Company's Common Stock is not
publicly traded, then as the Holder and the Company agree or in the absence of
agreement by arbitration in accordance with the rules then in effect of the
American Arbitration Association, before a single arbitrator to be chosen from a
panel of persons qualified by education and training to pass on the matter to be
decided.

(c)

If the Determination Date is the date of a liquidation, dissolution or winding
up, or any event deemed to be a liquidation, dissolution or winding up pursuant
to the Company's charter, then Fair Market Value shall be all amounts to be
payable per share to holders of the Common Stock pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all other amounts to
be payable per share in respect of the Common Stock in liquidation under the
charter (assuming for the purposes of this clause (c) that all of the shares of
Common Stock then issuable upon exercise of the Warrant are outstanding at the
Determination Date).

1.3

Company Acknowledgment.  The Company will, at the time of the exercise of the
Warrant, upon the request of the holder hereof acknowledge in writing its
continuing obligation to afford to such holder any rights to which such holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such holder any such rights.

1.4

Trustee for Warrant Holders.  In the event that a bank or trust company shall
have been appointed as trustee for the holder of the Warrant pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and duties
of a warrant agent (as hereinafter described) and shall accept, in its own name
for the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Warrant pursuant to this Section 1.

2.

Procedure for Exercise.

2.1

Delivery of Stock Certificates, Etc., on Exercise.  The Company agrees that the
shares of Common Stock purchased upon exercise of this Warrant shall be deemed
to be issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares in accordance herewith.  As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
three (3) business days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of duly and
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one full
share, together with any other stock or other securities and property (including
cash, where applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or otherwise.

3.

Effect of Reorganization, Etc.; Adjustment of Exercise Price.

3.1

Reorganization, Consolidation, Merger, Etc.  In case at any time or from time to
time, the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1 at any time after the consummation
of such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.

3.2

Dissolution.  In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company,
concurrently with any distributions made to holders of its Common Stock, shall
at its expense deliver or cause to be delivered to the Holder on the exercise
hereof as provided herein, the stock and other securities and property
(including cash, where applicable) receivable by the Holder of the Warrant
pursuant to Section 3.1 (assuming exercise), or, if the Holder shall so instruct
the Company, to a bank or trust company specified by the Holder and having its
principal office in New York, NY as trustee for the Holder of the Warrant (the
“Trustee”).

3.3

Continuation of Terms.  Upon any reorganization, consolidation, merger or
transfer or dissolution following any transfer referred to in this Section 3,
this Warrant shall continue in full force and effect and the terms hereof shall
be applicable to the shares of stock and other securities and property
receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any such stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the properties or
assets of the Company, whether or not such person shall have expressly assumed
the terms of this Warrant as provided in Section 4.  In the event this Warrant
does not continue in full force and effect after the consummation of the
transactions described in this Section 3, then the Company's securities and
property (including cash, where applicable) receivable by the Holders of the
Warrant will be delivered to Holder or the Trustee as contemplated by Section
3.2.

4.

Extraordinary Events Regarding Common Stock.  In the event that the Company
shall (a) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide into a greater or
consolidated into a lesser number of its outstanding shares of Common Stock, or
(c) combine its outstanding shares of the Common Stock into a smaller number of
shares of the Common Stock, then, in each such event, the Exercise Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then Exercise Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall thereafter be
the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4.  The number of shares of Common Stock
that the holder of this Warrant shall thereafter, on the exercise hereof as
provided in Section 1, be entitled to receive shall be increased or decreased to
a number determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (a) the numerator is the Exercise Price that
would otherwise (but for the provisions of this Section 4) be in effect, and (b)
the denominator is the Exercise Price in effect on the date of such exercise.

5.

Certificate as to Adjustments.  In each case of any adjustment or readjustment
in the shares of Common Stock (or Other Securities) issuable on the exercise of
the Warrant, the Company at its expense will promptly cause its Chief Financial
Officer, the Company’s certified public accountants,  or other appropriate
designee to compute such adjustment or readjustment in accordance with the terms
of the Warrant and prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration received
or receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number
of shares of Common Stock (or Other Securities) outstanding or deemed to be
outstanding, and (c) the Exercise Price and the number of shares of Common Stock
to be received upon exercise of this Warrant, in effect immediately prior to
such adjustment or readjustment and as adjusted or readjusted as provided in
this Warrant.  The Company will forthwith mail a copy of each such certificate
to the holder of the Warrant and any Warrant agent of the Company (appointed
pursuant to Section 11 hereof).

6.

Reservation of Stock, Etc., Issuable on Exercise of Warrant.  The Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of the Warrant, shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of the Warrant.

7.

Assignment; Exchange of Warrant.  This Warrant, and the rights evidenced hereby,
may not be transferred by any registered holder hereof (a "Transferor") in whole
or in part unless an exemption from the registration requirements of the United
States Securities Act of 1933, as amended (the “1933 Act”), is available and the
Holder has complied with the requirements set forth in the form annexed hereto..
 On the surrender for exchange of this Warrant, with the Transferor's
endorsement in the form of Exhibit B attached hereto (the "Transferor
Endorsement Form"), compliance with the requirements set forth in the Transferor
Endorsement Form, and such evidence reasonably satisfactory to the Company
demonstrating compliance with applicable securities laws, which shall include,
without limitation, the provision of a legal opinion from the Transferor's
counsel that such transfer is exempt from the registration requirements of
applicable securities laws, and with payment by the Transferor of any applicable
transfer taxes, the Company will issue and deliver to or on the order of the
Transferor thereof a new Warrant of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor.

8.

Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

9.

Registration Rights.  The Holder of this Warrant has been granted certain
registration rights by the Company.  These registration rights are set forth in
a Registration Rights Agreement entered into by the Company and Purchaser dated
as of even date of this Warrant.

10.

Maximum Exercise.  The Holder shall not be entitled to exercise this Warrant on
an exercise date, in connection with that number of shares of Common Stock which
would be in excess of the sum of (i) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates on an exercise date, and
(ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this proviso is being made on
an exercise date, which would result in beneficial ownership by the Holder and
its affiliates of more than 4.99% of the outstanding shares of Common Stock of
the Company on such date.  For the purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder.  Notwithstanding the foregoing, the restriction described in
this paragraph may be revoked upon 75 days prior notice from the Holder to the
Company and is automatically null and void upon an Event of Default under the
Note which has a Material Adverse Effect.  

11.

Warrant Agent.  The Company may, by written notice to the each Holder of the
Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.

12.

Transfer on the Company's Books.  Until this Warrant is transferred on the books
of the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

13.

Notices, Etc.  All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or, until any such Holder furnishes to the Company an
address, then to, and at the address of, the last Holder of this Warrant who has
so furnished an address to the Company.

14.

Miscellaneous.  This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be governed by and construed in accordance with the
laws of State of New York without regard to principles of conflicts of laws..
 In the event that any provision of this Warrant is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law.  Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant.  The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof.  The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision hereof.  The Company acknowledges that legal counsel
participated in the preparation of this Warrant and, therefore, stipulates that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Warrant to
favor any party against the other party.

(a)

Any controversy arising out of, connected to, or relating to any matters herein
of the transactions between Holder and Company (including for purposes of
arbitration, partners, officers, directors, employees, controlling persons,
affiliates, professional advisors, attorneys, agents), on behalf of the
undersigned, or this Agreement, or the breach thereof, including, but not
limited to any claims of violations of Federal and/or State Securities Acts,
Banking Statutes, Consumer Protection Statutes, Federal and/or State
anti-Racketeering (e.g. RICO) claims as well as any claims relating  or deriving
from the Warrants, or underlying securities law and any State Law claims of
fraud, negligence, negligent misrepresentations, and/or conversion or any
foreign laws, shall be settled by arbitration; and in accordance with this
paragraph and judgment on the arbitrator's award may be entered in any court
having jurisdiction thereof in accordance with the provisions of New York Law.
In the event of such a dispute, each party to the conflict shall select an
arbitrator, both of whom shall then select a third arbitrator, which shall
constitute the three person arbitration board.  The decision of a majority of
the board of arbitrators, who shall render their decision within thirty (30)
days of appointment of the final arbitrator, shall be binding upon the parties.
Tthe prevailing party on any action to enforce rights hereunder shall be
entitled, in addition to any court awarded damages, their costs and reasonable
attorney's fees, whether at arbitration, or on appeal.

.

15.

COMPLIANCE WITH THE 1933 ACT .  

(a)

Neither this Warrant nor the Common Stock issuable upon exercise thereof have
been registered under the 1933 Act or under the laws of any state of the United
States. This Warrant or the Common Stock or any other security issued or
issuable upon exercise of this Note, may not be sold, transferred or otherwise
disposed of unless registered under the 1933 or pursuant to an exemption from
the registration requirements of the 1933 Act and all applicable state
securities laws.  

(b)

By accepting this Warrant, the Holder hereby represents and warrants to the
Company: that this Warrant and the Common Stock to be issued herein, have not
been approved or disapproved by the United States Securities and Exchange
Commission, the State of Nevada, any other state securities agencies, or foreign
jurisdictions and that it’s representations and warranties to the Company as set
forth in the Securities Purchase Agreement are true and correct on the date
hereof.

(c)

The rights of this Warrant may only be exercised by or on behalf of a Holder
who, at the time of exercise, either:

(i)

Provides written confirmation that the undersigned was the original Purchaser
(the “Initial Purchaser”) under which the Warrant was issued and the
representations and warranties made to the Company in the Securities Purchase
Agreement executed and delivered in connection with the acquisition of the
Warrant remain true and correct on the Exercise Date; or

(ii)

Provides a written opinion of counsel, in a form and from counsel reasonably
acceptable to the Company, that the Common Stock to be delivered upon exercise
of the Warrant is exempt from such registration requirements, the 1933 Act, the
securities laws of all applicable states of the United States, and any relevant
foreign jurisdictions.

16.

Holder’s Status. The Holder shall not, by virtue hereof, be entitled to any
rights of a shareholder in the Company, either at law or equity, and the rights
of the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS.]

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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

  

PowerCold Corporation

   

WITNESS:

     

By:

    

Name:

Joseph C. Cahill

  

Title:

Secretary

--------------------------------------------------------------------------------

EXHIBIT A

FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)

TO:

PowerCold Corporation

Attention:

Chief Financial Officer

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):

  

________ shares of the Common Stock covered by such Warrant

In connection with the exercise of the warrant certificate, the undersigned
represents that (i) it was the original Purchaser in the Company’s placement in
which the Warrants were issued, (ii) it is an Accredited Investor and (iii) the
representations and warranties made to the Company in connection with the
acquisition of securities remain true and correct on the date of this
subscription form.

The undersigned herewith makes payment of the full Exercise Price for such
shares at the price per share provided for in such Warrant, which is
$___________.  Such payment takes the form of (check applicable box or boxes):

  

$__________ in lawful money of the United States; and/or

      

the cancellation of such portion of the attached Warrant as is exercisable for a
total of _______ shares of Common Stock (using a Fair Market Value of $_______
per share for purposes of this calculation); and/or

        

the cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth in Section 2.2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2.

   

The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to ______________________________________________ whose
address is
___________________________________________________________________________.

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the "Securities Act") or pursuant to an exemption from
registration under the Securities Act.

Dated:

      

(Signature must conform to name of holder as specified on the face of the
Warrant)

      

Address:

      

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto
the person(s) named below under the heading "Transferees" the right represented
by the within Warrant to purchase the percentage and number of shares of Common
Stock of PowerCold Corporation  into which the within Warrant relates specified
under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of PowerCold
Corporation  with full power of substitution in the premises.

Transferees

 

Address

 

Percentage

Transferred

 

Number Transferred

                                                               

The undersigned is delivering a written opinion of counsel to the effect that
the Warrants and the Common Stock to be delivered upon exercise hereof are
exempt from registration requirements of United States Securities Act of 1933 as
amended (the “US Securities Act”).

Dated:

      

(Signature must conform to name of holder as specified on the face of the
Warrant)

      

Address:

      

 

SIGNED IN THE PRESENCE OF:

       

(Name)

ACCEPTED AND AGREED:

 

[TRANSFEREE]

       

(Name)