POWER EFFICIENCY CORPORATION

                            ANNUAL PURCHASE AGREEMENT
                               FOR THE PURCHASE OF
                             PERFORMANCE CONTROLLERS
                             ("Purchase Agreement")

                                        PREPARED FOR:
                                 MILLAR ELEVATOR
                                 SERVICE COMPANY
                                    (REVISED)


                                 AUGUST 17,2000



              4220 VARSITY DRIVE, SUITE 3 ANN ARBOR, MICHIGAN 48108
                      TEL (734) 975-9111 FAX (734) 975-9115
                           www.performancecontrol.com



<PAGE>


                            ANNUAL PURCHASE AGREEMENT
                               FOR THE PURCHASE OF
                             PERFORMANCE CONTROLLERS
                             ("Purchase Agreement")

1.      DATE AND TERM
This Purchase Agreement is made September 1 2000, and shall apply to orders made
according to this Purchase Agreement, from September 1, 2000 and shall continue
valid until September l, 2001.

2.      PARTIES
        (a) Millar Elevator Service Company    (the Purchaser)
            1530 Timberwolf Drive
            Holland, Ohio 43528      (the Purchaser's primary place of business)

        (b) Power Efficiency Corporation       (the Supplier)
            4220 Varsity Drive, Suite E
            Ann Arbor, Michigan 48108 (the Supplier's primary place of business)

        Orders applicable to this Purchase Agreement may be made directly by the
        Purchaser of any of the products listed in Appendix 7 ("Participating
        Units"), or subsequently added the list by the Parties. The Purchaser
        shall establish its own ordering procedures with the Supplier.

        The Purchaser and the Supplier shall always communicate directly
        regarding any specific Order.

3.      APPLICABLE TERMS

        The General Terms and Conditions of Purchase, attache Appendix 2
        ("GTC"), shall as apply and the application of any other general terms
        and conditions is specifically excluded.

4.      SCOPE OF THE PURCHASE AGREEMENT

        The Purchaser shall purchase, via separate Purchase Orders ("Order"),
        the following Equipment from the Supplier: Performance Controller

        Subject to the quality of the Equipment meeting the requirements of the
        Purchaser and the availability of the Equipment by the Supplier, the
        Purchaser shall prefer the purchases of the Equipment from the Supplier.


<PAGE>


        Appendix 1 (Specification) is the detailed description of the Equipment.

        Appendix 3 (Technical Documentation) is the list of drawings and other
        technical documents to be delivered with the Equipment, including the
        delivery times thereof.

5.      DELIVERY

        The Supplier shall deliver the Equipment to the Purchaser FOB Ann Arbor
        (INCOTERMS 1990) .

        Supplier shall only be obligated to deliver the Equipment to location
        designated by Purchaser in Appendix 1, located in the United States.
        Supplier shall have no obligation to deliver the Equipment to multiple
        locations or locations outside the United States.

        The Delivery Time (GTC 4) shall be stated on the order transmittal, and
        calculated from the date of each Purchase Order.

6.      PURCHASE PRICE

        The Purchase Prices for the Equipment shall be as set out in the Price
        List attached hereto as Appendix 4. The Supplier will incorporate last
        column pricing throughout each twelve-month period.

        The Purchase Prices shall fully cover the costs for all the obligations
        of the Supplier and the Supplier shall not be entitled to mark any
        additional charges, such as packing, cartage, drayage or handling
        charges or charges for small deliveries.

7.      TIME OF PAYMENT

        Payments shall be made within thirty (30) days calculated from the
        Delivery of each ordered Equipment subject to the receipt of the
        Supplier's respective invoice.

8.      VOLUME INDICATIONS

        Any indications as to the volumes of Equipment to be purchased by the
        Purchaser during the validity of this Purchase Agreement are given as
        the best estimate only and shall not be construed as legally binding.

9.      DAMAGES (GTC 4.3)

        If the Supplier fails to deliver the equipment at the times specified in
        Article 5 of this Purchase Agreement and on the individual Purchase
        Orders, and the Purchaser pays or incurs any damages, penalty or other
        charges for a late delivery or performance under the terms of the
        Purchase Agreement on account of Supplier's late delivery, Supplier
        shall immediately indemnify and hold harmless the Purchaser therefore
        from all such damages and costs.


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10.     GUARANTEE PERIOD (GTC 5.4)

        The Guarantee Period for the Equipment shall be 18 months from Delivery
        of the equipment, or twelve (12) months after installation, whichever is
        first. Appendix 6

11.     CONTRACT DOCUMENTS

        In the event of any conflict between the provisions of this document and
        any Appendix to this Purchase Agreement listed below, or between any two
        Appendixes, this document shall govern and Appendices shall be
        interpreted in their numbered order.

        Appendix 1    Specification
        Appendix 2 General Terms and Conditions of the Purchase Appendix 3
        Technical Specification Appendix 4 Price List Appendix 5 Example of
        Purchase Order Form Appendix 6 Warranty Appendix 7 Participating Units

12.     PARTIES REPRESENTATIVES (GTC 8)

        For the Purchaser:   /s/ Rod Hoyving
                             ---------------------------------------------------
                             Rod Hoyving, Vice President

        For the Supplier:    /s/ Stephen L. Shulman, President
                             ---------------------------------------------------
                             Stephen L. Shulman, President


13.     OTHER PROVISIONS

        This Agreement contains all the terms agreed upon between the parties
        with respect to the subject matter hereof and supersedes all agreements,
        and communications, whether oral or written, pertaining to the subject
        of this Agreement. Any modifications to this Agreement may be
        accomplished only by amendment as accepted by both parties in writing,
        to be effective from the agreed date.


<PAGE>

The parties have executed this Purchase Agreement in two identical copies, one
for each party.

WITNESSES:                                  "SUPPLIER"
                                            Power Efficiency Corporation,
                                            a Delaware Corporation

                                       By: /s/ Stephen L. Shulman
--------------------------                 ----------------------
                                           Stephen L. Shulman
--------------------------                  Managing Member


                                            Date: 9/20/00


                                            "PURCHASER"
                                            Millar Elevator Service Company, a
                                            Division of the Schindler Group

                                          By: /s/ Rod Hoyving
--------------------------                    --------------------

--------------------------
                                            Date: 9/1/2000



<PAGE>

Appendix 2 - General Terms and Conditions of Purchase ("GTC")

                GENERAL TERMS AND CONDITIONS OF PURCHASE ("GTC")

1. DEFINITIONS

         The  following  capitalized  terms shall have the meanings  assigned to
         them, unless a different definition is assigned to them in the Purchase
         Agreement:

         "Delivery"

                    Completion  of  the  delivery  of the  Equipment,  including
                    successful completion of the specified inspections and tests
                    to insure the equipment meets the  requirements set forth in
                    the Purchase  Agreement for the quality and  workmanship  of
                    the equipment.

         "Equipment"

                    The materials,  equipment and all necessary documentation to
                    be delivered to the Purchaser by the Supplier, including any
                    specified  services to be performed in  connection  with the
                    Delivery, such as installation and testing of the Equipment.
                    (GTC 3.1).

         "Supplier"

                    "Seller"  as  referenced  on  the  individual  Millar,  Inc.
                    Purchase Orders is same as "Supplier".

         "Purchaser"

                    "Buyer"  as  referenced  on  the  individual  Millar,  Inc.,
                    Purchase Orders is same as "Purchaser".

         "End User"

                    Legal  entity  responsible  for  the  use of  the  installed
                    product furnished by Millar, and its subsidiaries.

         "Project Destination"

                    Installed  location of the product furnished by Millar,  and
                    its subsidiaries.

         "Participating   Units"

                    Business unit within Millar  Corporation which  participates
                    in the purchase of goods or services covered by the Purchase
                    Agreement.

          "Purchase Agreement"

                    Contract  for the  purchase of (goods or services) by Millar
                    Corporation, including its subsidiaries.

2. PAYMENT

         2.1      Payment Terms
         Unless  otherwise  agreed  to  in  Article  7 of  the  Annual  Purchase
         Agreement,  payment  shall be made  within 30 days  after  delivery  of
         material and receipt of invoice,  (original and one copy),  with prices
         and  extended.  Supplier  shall render  separate  invoices for each and
         every  shipment.  Supplier   shall  render  a  monthly  statement  on a
         mutually  agreeable day of the month following shipment of goods. Under
         no circumstances  shall Purchaser pay any late,  interest,  carrying or
         other  charges  with respect to any amounts  invoiced to Purchaser  for
         goods ordered under the Purchase Agreement.


<PAGE>

Appendix 3 - Technical Documentation (Shipping Manual)

3. EQUIPMENT

         3.1      Scope of Delivery
         The Equipment shall be completed to meet the Specification  attached to
         the Purchase Agreement  ("Specification") and shall be delivered to the
         Purchaser  within the period  allowed for the  Delivery.  The Equipment
         shall be  deemed to  include  any  equipment  and  services,  which are
         necessary  for the  Delivery  and the  intended  use of the  Equipment,
         regardless  of  whether  or not it is  specifically  identified  in the
         specification.

         Individual  deliveries may be changed by Purchaser from time to time to
         correspond  with the  progress  of the  projects  for  which  goods are
         ordered  hereunder.  Purchaser may change the Delivery date to any date
         upon (1) thirty  days  notice for those  portions  of this order with a
         Delivery  date of six  months  or less from  date of the  order.  If no
         Delivery date is shown,  Purchaser  shall fix a Delivery date by giving
         Supplier  (i) thirty days' notice for  deliveries  required  within the
         six-month period following said notice, and (ii) sixty days' notice for
         deliveries required beyond the six-month period following such notice.

         In accordance  with Purchase  Order,  Supplier  shall give Purchaser 24
         hours notice of all shipments.

         3.2      Modifications
         No change or  modification  of the Purchase  Agreement or General Terms
         and Conditions shall be made without Purchaser and Supplier's  specific
         written consent.

         The  Purchaser  shall have the right to request the  Supplier to modify
         the Specification at any time. Any adjustment to the Purchase Price and
         to the Delivery Time caused by the modification  shall be agreed to via
         a written change order. The rights and obligations of the parties under
         the Purchase Agreement shall extend to all modifications.

         3.3      Documentation
         The Supplier shall provide the Purchaser with documentation  concerning
         Equipment in accordance with the Purchase Agreement.  Upon a reasonable
         request  by  the  Purchaser,  the  Supplier  shall  deliver  additional
         instructions and documentation to enable the orderly use,  installation
         and servicing of the Equipment.

         The Purchaser  shall have the right to use all  documentation  that has
         been placed at his disposal,  for any  authorized  purpose and to place
         such  documents at the disposal of  authorities,  the End User,  or any
         other third party, as necessary in such connection.

         Supplier shall accept individual Purchase Orders and agree to the terms
         hereof.  (i)  Signing  and  returning  the  Acknowledgment  Copy of the
         Purchase  Order hereof,  or (ii)  furnishing  Purchaser  with any other
         writing indicating its acceptance,  or (iii) performance by Supplier in
         accordance with the Purchase Order.  However, the receipt from Supplier
         of any acceptance or any document purporting to be an acceptance of the
         Purchase Order, or receipt of goods shipped or work performed under the
         Purchase Order or payment  therefore,  does not constitute an assent by
         Purchaser to any terms which are  different  from or  additional to the
         instructions,  Terms and Conditions on the Face and Reverse Side of the
         Purchase Order,  unless expressly  assented to in writing by Purchaser.
         The  Purchase  Order  is  revocable  at any time  prior to  acceptance.
         Without limiting the foregoing, Purchaser's receipt of any invoice from
         Supplier,  before  or after  Supplier's  delivery  of  goods  described
         herein,  shall not obligate  Buyer to any terms in such  invoice  which
         differ from or are in addition to the terms contained herein.


<PAGE>

         Notwithstanding  anything to the contrary contained herein, no term and
         condition of any individual Purchase Order shall modify any term and/or
         condition   applicable  to  Supplier  under  the  Purchase   Agreement,
         including  by way of  illustration  and not  limitation  the  scope  of
         Supplier's  obligations  for  delivery or the  Purchase  Prices for the
         Equipment.  In the event of any conflict between an individual Purchase
         Order and the  Purchase  Agreement,  as  amended  herein,  the  amended
         Purchase Agreement shall control.

         3.4      Inspections and quality control
         Both the Purchaser and the End User shall be allowed free access to the
         facilities of the Supplier at all  reasonable  times for the purpose of
         inspecting,  expediting,  or  testing  the  Equipment  and the  quality
         thereof and witnessing tests which may have been agreed upon. The costs
         of  carrying  out of any  tests and  inspections  shall be borne by the
         Supplier. The cost of attending shall be borne by the attending party.

         In addition,  if any goods  furnished by Supplier shall fail to satisfy
         the requirements of the specifications,  or shall prove to be defective
         in any respect,  Purchaser may, at its option, upon notice to Supplier,
         (i)  require  Supplier  to  promptly  correct  or  replace  the same at
         Supplier's  expense;  (ii)  correct or replace or arrange to correct or
         replace  the  same,  for  which  Supplier  shall  reimburse   Purchaser
         immediately upon demand. If Purchaser elects to cancel, Purchaser shall
         hold any  goods  in its  possession  affected  by the  cancellation  at
         Supplier's  risk, to be disposed of in accordance  with applicable law,
         and Supplier  shall refund any payments made on account of the canceled
         goods. Furthermore, in the event any goods furnished by Supplier are or
         become defective in any respect  whatsoever or if Supplier breaches any
         of  its  warranties  or  obligations  hereunder,   Supplier  agrees  to
         indemnify and hold harmless Purchaser from any or all loss,  liability,
         cost or expense  (including court costs and reasonable  attorney's fees
         and  expense)  by reason of any  injury or  damage,  whether  direct or
         indirect, consequential,  incidental or otherwise, including all claims
         of such injury or damage to persons or property, caused by, relating to
         or arising from such defect or breach.

         No  approval  of  the  Supplier's   technical  documents  or  drawings,
         inspection,  testing of the Equipment, or supervision of design work or
         manufacturing,  whether  by the  Purchaser  or the End  User,  shall be
         construed   as   implying   any   limitation   on   the    obligations,
         representations, warranties and liabilities of the Supplier.

3.5      Safety
         The  Equipment  shall  include  all  specified  safety  devices and the
         Supplier shall ensure that they fully satisfy the  requirements  of any
         applicable safety  regulations and standards.  If any additional safety
         devices are required,  due to a non-compliance with any regulations and
         standards, they shall be installed at the cost of the Supplier.
<PAGE>

         Whenever any work is performed at any facility of the  Purchaser or end
         user, the Supplier shall comply with all applicable safety  regulations
         of the  Purchaser or end user and shall  follow any other  instructions
         given by the Purchaser concerning safety.

         3.6      Compliance with other laws and regulations
         The Supplier  shall also ensure that the Equipment  fully complies with
         any other applicable laws and regulations of an end use location in the
         United States of America for the installed equipment.

         3.7      Change in Laws
         If  any  modification  of  the  Specification  is  necessary  due to an
         unanticipated  change  in  laws  after  the  signing  of  the  Purchase
         Agreement,  the Supplier  shall  request a  modification  to be made in
         accordance with Article 3.2.

4. DELIVERY

         4.1      Shipping, Packing, Marking, & Storage
         All  shipments  are to be made as  directed  on the  front  page of the
         individual Purchase Order. Notices must be sent to consignee.  A NOTICE
         must be sent to  Consignee  covering  carload and  truckload  shipments
         within  24 hours of the  material  being  forwarded,  giving  number of
         order,  kind of material,  shipper's  name, car number and initials and
         routing.  Enclose  shipping  memorandum  in each  package  or tack same
         inside each car door.  For less than carload and  truckload  shipments,
         indicate  order  numbers on all material or packages and packing  slips
         and Bins of Lading,  in space  provided  on the  blanks of the  various
         railroad, truck and express companies.  IMMEDIATELY upon shipping, mail
         the Purchaser two (2) copies of tally and shipping memorandum.

         The  Equipment  shall be packed in a manner which is  appropriate  with
         regard  to the  means of  transport  to be used and the  nature  of the
         Equipment  and  in  accordance  with  any  instructions  given  in  the
         Specification as to the manner, size, weight, etc. of the packing.

         The  Equipment  shall be  clearly  marked  by the  Supplier  and  carry
         information  concerning  the identity of the  recipient and the name of
         the  place  of  destination  together  with any  specific  instructions
         necessary for handling and storage.

         4.2      Early Delivery
         No Equipment  should be delivered or performed prior to the time agreed
         in the Purchase Agreement as the earliest time for delivery without the
         prior written consent of the Purchaser.

         4.3      Delay by the Supplier
         If Supplier shall fail or refuse to proceed with this order,  Purchaser
         shall  have the  right to  cancel  all of any  part of this  order.  If
         Supplier  shall fail to make delivery of all items within the specified
         times agreed upon in a Purchase  Order,  Purchaser shall have the right
         to cancel all or any part of the Purchase Order. Time is of the essence
         to this  contract.  If  Purchaser  instructs  Supplier  that damages or
         penalties  could be incurred if the goods  ordered are not delivered in
         accordance with Purchaser's  instructions at the time of the order, and
         subsequently  Purchaser  pays or incurs any  damages,  penalty or other
         charge for a late delivery or performance on account of Supplier's late
         delivery,  Supplier  shall  immediately  indemnify  and  hold  harmless
         Purchaser therefor.
<PAGE>

         4.4      Quantity
         The specific quantity ordered on each individual Purchase Order must be
         delivered in full. Delivery of any unauthorized  quantity is subject to
         Purchaser's rejection, and such goods shall be held at Supplier's risk.
         Purchaser may return such goods at Supplier's  risk, and Supplier shall
         pay all transportation charges to and from the original destination.

         4.5      Transfer of Title
         The title to all Equipment or parts thereof shall be transferred to the
         Purchaser  when the  relevant  parts have been  obtained,  or otherwise
         identified and separated,  by the Supplier, as parts to be used for the
         purposes of the Purchase Agreement.

         4.7      Transfer of Risk
         The  Supplier  shall bear the risk of loss of the  Equipment  until the
         Delivery of equipment is complete and written  acceptance by Purchaser,
         upon which the risk of loss shall be  transferred  from the Supplier to
         the Purchaser.

         4.8      Waiver
         No waiver by  Purchaser  of any  breach of any  provision  of the order
         shall  constitute  a waiver of any other breach or  provision.  No act,
         conduct or failure to act of Purchaser shall constitute a waiver of any
         provision  contained herein unless such waiver is in writing,  executed
         by Purchaser and delivered to Supplier.

5. OTHER RESPONSIBILITIES OF THE SUPPLIER

         5.1      Insurance
         Supplier  shall  at  all  times  and at  Supplier's  cost,  maintain  a
         Comprehensive  General  Liability  Policy  including  bodily injury and
         property  damage  coverage  and  containing  a Broad  Form  Contractual
         Liability  Endorsement  which  specifically  covers the indemnity under
         paragraph 7.2 and the obligation Supplier has accepted hereunder.  This
         Comprehensive  General Liability Policy shall be specifically  endorsed
         to name Purchaser as an additional insured.

         5.2      Supply of Spare Parts
         The  Supplier  guarantees  the  availability  of  spare  parts  for the
         Equipment for at least ten (10) years after Delivery of the Equipment.

         5.3      Special Tools
         No charge shall be made for patterns, pattern equipment, jigs, dies and
         fixtures or special  apparatus used in the manufacture of the Equipment
         provided by the Supplier.

         5.4      Liability for Defects
         The Supplier  guarantees  that the Equipment  complies in every respect
         with the requirements of the Purchase  Agreement and that they are free
         from  any   defect  in   design,   materials,   or   workmanship.   Any
         non-compliance  appearing  during the period of time  specified  in the
         Purchase  Agreement  as  the  period  starting  from  the  Delivery  of
         Equipment  during which the Supplier shall be liable for any defects in
         the Equipment ("Guarantee Period"),  shall be corrected by the Supplier
         without delay and without any  additional  cost to the Purchaser or the
         End User.
<PAGE>

         If any repair under the guarantee  obligation is made subsequent to the
         End User having put the Equipment in service,  the guarantee  period in
         respect of the affected  Equipment  shall be renewed  starting from the
         date when the repair work was approved by the End User.

         Should  the  Supplier  refuse,   or  fail,  to  fulfill  his  guarantee
         obligation to the Purchaser's,  or End User's,  satisfaction,  within a
         reasonable  period of time,  the  Purchaser  shall be  entitled to have
         repair or replacement carried out at the Supplier's  expense.  The same
         right  shall  accrue  to the  Purchaser,  if in  case  of  urgency  the
         Purchaser finds it  inappropriate to wait for the Supplier to carry out
         the work.

         The Purchaser shall request the consent of the Supplier before carrying
         out the repair or replacement  work, if time permits.  If such work has
         been carried out without the consent of the Supplier, the Supplier will
         be given  opportunity  to inspect the repaired or replaced  products to
         evidence the  applicability  of the Supplier's  guarantee  liability to
         such work.

         The guarantee  obligation  for the Supplier shall not extend to defects
         proved to have been  directly  caused by wrong or negligent  operation,
         installation, overloading or inadequate maintenance.

6. BONDS

         The performance bond, if required from the Supplier, shall be issued by
         any  acceptable  surety in any  agreed  form,  for the value set in the
         Purchase  Agreement or Purchase Order to secure the  performance of the
         obligations of the Supplier . The Performance Bond shall be valid until
         the end of the Guarantee Period.

7. LIABILITIES OF THE SUPPLIER

         7.1      Indemnification and Hold Harmless
         The Supplier  shall  defend,  indemnify and hold harmless the Purchaser
         against  losses  and  claims  for  injuries  or damage to any person or
         property which may arise out of or in consequence of the performance of
         any Purchase  Agreement  or Purchase  Order by the Supplier and against
         all claims, demands, proceedings, damages, costs, charges, and expenses
         in respect thereof or in relation thereto. Provided that the Supplier's
         liability to  indemnify  and hold  harmless the  Purchaser as aforesaid
         shall be reduced  proportionately to the extent that the act or neglect
         of the Purchaser, his servants, or agents is proven to have contributed
         to the said loss, injury, or damage.

         7.2      Patents
         Supplier  warrants  that the goods  furnished  under  this order do not
         infringe any patent rights.  Supplier shall indemnify and hold harmless
         Purchaser,  its  affiliates and their  customers from losses,  expenses
         (including  attorneys' fees), claims or liability of any nature arising
         out of the  infringement  or  alleged  infringement  of any  patent  on
         account  of  the  manufacture,  sale  or use  of  any  goods  furnished
         hereunder  except  where  compliance  by Supplier  with  specifications
         prescribed by and originating with Purchaser constitutes the sole basis
         of  infringement  or alleged  infringement.  Supplier,  at its expense,
         agrees to defend any suit brought or claim asserted against  Purchaser,
         its affiliates and their customers on account of any such  infringement
         or alleged  infringement  upon  being  notified  in writing  thereof by
         Purchaser. If the use of such goods is enjoined,  Supplier shall at its
         expense  make  every  reasonable  effort to obtain for  Purchaser,  its
         affiliates  and their  customers,  a license  to  continue  to use such
         goods. If after a reasonable time Supplier is unable or fails to obtain
         such license, Supplier shall, at its expense, either replace such goods
         with equivalent non-infringing  goods or modify such  goods in a manner
         acceptable to Purchaser so that they become equivalent,  non-infringing
         goods. If Supplier fails or is unable to do any of the above,  Supplier
         shall  refund  to  Purchaser  the  money  or other  consideration  paid
         therefor.

<PAGE>

         7.3      Confidentiality
         All drawings and technical  documents submitted by either the Purchaser
         to  the  Supplier  or  the  Supplier  to  the  Purchaser   (hereinafter
         "Submitting   Party")  shall  remain  the  exclusive  property  of  the
         Submitting Party. They may not, without the Submitting  Party's express
         written consent, be utilized by the other party, or copied, reproduced,
         transmitted  or  communicated  to a third party,  except as provided in
         Section 3.3 hereof.

         The other party shall, at the Submitting  Party's request,  immediately
         return any copies of the drawings or technical  documents held by it at
         the end of the Guarantee Period.

         Both parties  shall ensure that no  information  regarding the Purchase
         Agreement  is  brought  to the  knowledge  of any third  party  without
         obtaining prior consent thereto from the other party.

8. MISCELLANEOUS

         8.1      Notices
         Notices  shall be  deemed  to have  been  validly  given  if  delivered
         personally  in writing,  telexed,  sent by  registered  mail, or faxed,
         followed by a letter copy,  to the  addresses set forth in the Purchase
         Agreement or to any other address of which the Parties  hereto may have
         informed to the other Party.  A notice or document  sent by  registered
         mail  shall be  deemed  to have  been  received  on the 14th day  after
         mailing.

         8.2      The Representatives of the Parties
         All  communication  between the parties  shall be affected  through the
         representatives named in the Purchase Agreement or their substitutes as
         notified from time to time by either party to the other party. However,
         all communication  concerning any specific Order or Participating  Unit
         shall be  affected  directly  between  the  Participating  Unit and the
         authorized representative of the Supplier.

         8.3      Amendments
         Amendments to the Purchase Agreement shall only be made in writing with
         specific  reference to the Purchase  Agreement and therefore any waiver
         given by  either  party to the other in any one  instance  shall not be
         deemed an amendment of the Purchase Agreement.


<PAGE>

         8.4      Entire Agreement
         The  Purchase  Agreement  and  the  documents  listed  in the  Purchase
         Agreement shall constitute the entire agreement between the parties and
         it shall take precedence over any other document  exchanged between the
         parties before the date of the Purchase Agreement. No document shall be
         deemed to be  included  in the  Purchase  Agreement  without a specific
         reference.

         8.5      Termination
         In  addition  to any  other  rights  of  termination  specified  in the
         Purchase Agreement, the Purchaser has a right to terminate the Purchase
         Agreement in the event that the  Supplier is in material  breach of his
         obligations under the Purchase  Agreement and has failed to remedy such
         breach  within  thirty  (30) days of a written  demand  thereof  by the
         Purchaser. The Equipment failing to meet the specified time and quality
         requirements  shall  always  be  considered  a  material  breach of the
         obligations of the Supplier.

         Purchaser  may cancel  all or any part of an order at any time  without
         notice of any kind,  after  acceptance and before complete  delivery is
         made,  upon the  happening of any of the  following:  insolvency of the
         Supplier,   however  induced;  the  application  by  Supplier  for  the
         appointment of receiver,  trustee or custodian for Supplier or any part
         of its assets,  the  execution  by Supplier  of an  assignment  for the
         benefit of creditors;  Supplier becomes insolvent or fails generally to
         pay its debts as such debts become due.

         Supplier may cancel this Purchase  Agreement in the event Purchaser has
         not  paid,  within  one  hundred  twenty  (120)  days of due date of an
         invoice,  any of Supplier's invoices for Equipment previously delivered
         to Purchaser.

         8.7       Excuse of Performance: Cost of Performance
         The terms and  provisions  of Section  2-615 of the Uniform  Commercial
         Code  notwithstanding,  the  occurrence  or existence of the  following
         events and circumstances shall not excuse Supplier from the performance
         of any of its obligations hereunder: (i) any adverse change in the cost
         or availability of raw materials,  supplies or work in process from the
         date  of  this  order  to  the  Date  Required;   (ii)  fires,  floods,
         explosions, accidents or breakdowns; (iii) riots, strikes, slowdowns or
         other concerted acts of workmen,  whether direct or indirect;  and (iv)
         any other cause  similar to any of  foregoing.  Under no  circumstances
         shall  Purchaser  pay or be liable to Supplier for a price in excess of
         the price  determined in accordance with Appendix 6 (Price List) of the
         Purchase  Agreement  hereof due to an  increase in  Supplier's  cost of
         performance  between the date of this order and the time of  Supplier's
         performance  thereof unless the Project  Designation space on the front
         page of the Purchase  Order is completed and the general  contractor(s)
         or owner(s) of said Project(s) agree(s) to pay such increase.

         8.8      Force Majeure
         The following circumstances shall constitute an event of Force Majeure,
         provided  they arise  subsequently  to the  entering  into the Purchase
         Agreement  and  could  not  reasonably  have  been  anticipated  by the
         Supplier at the time: war,  mobilization,  civil  commotion,  revolt or
         riot, government intervention, official strike, and acts of God.
<PAGE>

         The Supplier may not invoke any events of Force  Majeure  unless he can
         prove that

                  a.)      he has  taken  all  reasonable  steps  to  limit  the
                           effects  and to make good the time  lost,  during and
                           after the event of Force Majeure,

                  b.)      he has, when the circumstances he wishes to invoke as
                           events of Force  Majeure  have  become  known to him,
                           within  three (3) days  given  written  notice to the
                           Purchaser of the nature and anticipated  consequences
                           of the Force Majeure.

         Under no circumstances can a period longer than seven (7) days prior to
         the written  notice be taken into account as an event of Force Majeure,
         whether known to the Supplier or not.

         8.9      Applicable Law
         APPLICABLE   LAWS:   SEVERABILITY.   Supplier  shall  comply  with  the
         provisions of the Fair Labor  Standards  Act of 1938,  as amended,  the
         Occupational  Safety and Health Act of 1970,  and all other  applicable
         Federal, state and local laws, regulations,  rules and ordinances. This
         agreement shall be interpreted   under the parties' rights and remedies
         governed by the Uniform Commercial Code of Michigan. Wherever possible,
         each provision of this agreement shall be interpreted in such manner as
         to be effective and valid under applicable law, but if any provision of
         this agreement shall be prohibited by or invalid under  applicable law,
         such provision  shall be ineffective to the extent of such  prohibition
         or invalidity,  without invalidating the remainder of such provision or
         the remaining provisions of this agreement.

         8.10     Settlement of Disputes
         Solutions  to any  disputes  arising in  connection  with the  Purchase
         Agreement  shall be negotiated in good faith between the parties.  If a
         solution cannot be found in mutual negotiations,  the disputes shall be
         finally  settled under the rules of American  Arbitration  Association.
         The  arbitration  proceedings  shall be held in the City of Southfield,
         Michigan.

         In addition,  either  party has a right to submit any dispute,  or seek
         enforcement  of any  provision of the  Purchase  Agreement in the local
         court of the other party at his discretion,  shall take precedence over
         any  arbitration  proceedings  and decision of the court shall be final
         and binding to the parties.

         8.11     Buy American Act
         If  required  by  the  conditions  stated  in the  Purchase  Agreement,
         Supplier must comply with provisions of the Buy American Act (41 U.S.C.
         10)  including,  but not limited to,  Federal  Acquisition  Regulations
         52.225-1,  52.225-3,  52.225-5, as applicable per project specification
         requirements.


<PAGE>


Appendix 3 - Technical Documentation (Shipping Manual)
                                   Appendix 3

                             Technical Documentation


Below is a copy of the  abbreviated  manual that is shipped  enclosed with every
Performance  Controller.  When additional information is required (non Wye/Delta
Starter)  we direct the  installer/seller  to contact  Performance  Control  for
additional   information/wiring  diagrams  in  order  to  properly  install  the
controller.


<PAGE>


                           The Performance Controller
                                  USER'S GUIDE

                   Optimum Performance for AC Induction Motors


                                [GRAPHIC OMITTED]

                           4220 Varsity Drive, Suite E
                               Ann Arbor, MI 48108
                               734.975.9111 phone
                                734.975.9115 fax
                           www.performancecontrol.com


                      (C)2000 Power Efficiency Corporation



<PAGE>


                    How the Performance Controller Helps You

Performance Control  manufactures  high-quality  electric motor controllers that
manage  the  magnetic  field  of  AC  Induction  Motors.  The  controller  is  a
self-contained,  solid-state  device  that  mounts  between the AC motor and the
existing  motor starter.  It provides a true  ramp-type  soft-start and a unique
energy saving feature that  automatically  and continuously  updates the motor's
magnetic field to match the required load.

The Performance Controller has no effect on motor speed. Therefore, it cannot be
considered  a  variable-speed  drive  or  used  in  association  with  one.  The
controller is updating the energy to the motor only.

The Performance  Controller adjusts energy to the AC induction motor so that the
motor functions at its optimum efficiency. The controller monitors the phase lag
of current  and voltage to  precisely  what the motor  requires to maintain  the
rated  speed and torque  under the  present  load.  Volts,  amps,  and watts are
decreased thereby reducing your cost of operating the motor.

State-of-the-art electronic circuits constantly sense the workload of the motor.
When the actual  workload of the motor is lower than the rated load, the sensing
circuits  reduce the energy  (voltage and current) being fed to the motor to the
exact level that the motor needs.

The controller circuitry includes a solid-state soft-start that reduces starting
inrush  current by as much as 50%.  Soft starting is a proven method of reducing
contactor  wear and tear,  mechanical  starting  stress  upon  bearings  and the
associated  drive  train.  Additionally,  insulation  damage  and heat  buildup,
particularly  when the motor is  "duty-cycled"  by an Energy  Management  System
(EMS) or stopped and started frequently, are reduced as well.

The  energy-saving  feature  increases  motor  life by  lowering  the  operating
temperature of the motor 10(Degree) to 40(Degree)F.  The environmental  benefits
of the Performance Controller can be directly equated to lower carbon and sulfur
dioxide emissions, which benefits all of us.

                               System Requirements

o        The motor should be an AC Induction Motor.

o        The controller must be matched to the appropriate line voltage.  (i.e.:
         208, 480, 575 volts).

o        The load on the motor  should be cyclical  and exhibit low power factor
         for a portion of the cycle.

o        The controller  should be used in conjunction  with an  across-the-line
         starter  (please contact  Performance  Control if starter being used is
         other than across-the-line for additional information/wiring diagrams).

                              Product Capabilities
The controller will reduce:

o        Volts,  Amps, Watts, KVA, Heat,  Vibration and general wear and tear on
         motors that fit the  application  criteria  in the SYSTEM  REQUIREMENTS
         section above.

The controller will not reduce or eliminate:

o        Single  phasing,  defective motor  insulation,  faulty  windings,  poor
         lubrication maintenance and problem motors in general.
<PAGE>

--------------------------------------------------------------------------------
                                     WARNING

      Equipment is at line voltage when AC power is connected. Pressing the
"Stop" push- button does not remove AC main's potential. De-energize and lockout
            circuit at the panel before installing control equipment.
--------------------------------------------------------------------------------

                                  Installation
The  installation  process is similar to any  ordinary  electrical  distribution
component. All NEC and local codes including licensing,  permits, and inspection
regulations apply. A few very important instructions are needed:

1.       Install the Performance Controller as the last apparatus in the circuit
         ahead of the motor  itself.  There should be nothing  between the motor
         and the Performance Controller.

2.       The Performance  Controller is a series device;  that is, wiring should
         consist  of  line  and  load  only.   Control  wiring  is  not  needed;
         communication takes place on the phase conductors.

3.       Mark the motor feeders,  cut and route to L1, L2, and L3. The remaining
         three  leads from the motor are  terminated  in T1, T2, and T3 as shown
         below.

4.       Check to ensure that  capacitors,  if  installed,  are connected on the
         line side of the controller

                               [GRAPHIC OMITTED]


   The above wiring diagram is for an across-the-line starter. If the starter
  being used on your application is other than across-the-line, please contact
         Performance Control for additional information/wiring diagrams.

                             Pre Start-Up Procedure


o        Clean out all metallic particles and foreign matter.

o        Check all connections for tightness.

o        Check to ensure  line  voltage is the same  voltage the  controller  is
         rated for.

                              Set-Up and Operation

Once the  Performance  Controller  has been properly  installed and has passed a
routine electrical inspection, we are ready to energize and make adjustments for
operation.  Set-up  of the  Performance  Controller  is  accomplished  with  two
adjustments outlined on these two pages:



1.       Soft-start  adjustment  determines  the amount of  soft-start  (time to
         voltage) applied to the voltage. Do not apply long duration soft-starts
         to loaded motors.

2.       "Energy"  (motor  matching) is the  adjustment  to each motor's  unique
         characteristics  and to the  application.  This is where energy savings
         are dialed in.

<PAGE>


                               [GRAPHIC OMITTED]

                   Starting the Controller for the First Time

1.       With the  Performance  Controller in "bypass" (on position),  start the
         motor and check for proper rotation.

2.       Continue to monitor for unusual events.  If motor start-up  confirms no
         problems, continue to step 3.

3.       Turn off power to the motor with the starter. (de-energize)

4.       Place the  Performance  Controller  in  "service" by turning the bypass
         switch to the "Normal"  (off).  (Never  SWITCH TO AND FROM BYPASS WHILE
         THE MOTOR IS RUNNING.)

5.       Adjust the "Soft-Start" to "25(Degree)" or lower if the motor labors to
         start. Do not apply long duration soft-starts to loaded motors.

6.       Adjust the "Energy" to "Min."

7.       Start the motor.

8.       While  monitoring  the  voltage  meter on the panel of the  Performance
         Controller, continue to monitor for unusual events.

9.       Once the motor has run without event for five to ten minutes, gradually
         increase  the  "Energy"   adjustment.   While  the  motor  is  running,
         increasing the "Energy" adjustment decreases the voltage and current to
         the motor. This is the reduction of motor losses (energy  savings).  If
         you reduce the "Energy" too much,  the motor will  "chatter" or "buck".
         Once the voltage needle starts to bounce (even  slightly) you have gone
         too  far.  Decrease  the  adjustment  knob  until  the  voltage  needle
         stabilizes.

         If you do not see a bounce in the voltage meter, use an ammeter clamped
         to the primary side of the Performance Controller. While increasing the
         "Energy"  adjustment,  amperage will go down. As amps continue to fall,
         you will come to a point where amps again start to rise,  decrease  the
         adjustment at this point  slightly and you have  properly  adjusted the
         Performance Controller.

10.      Close and secure the  cabinet,  making sure that the machine  operators
         and maintenance personnel have been notified of the installation of the
         Controller and its operation procedures.

                                  A. Operation

The  Performance  Controller  is fully  automatic and will provide many years of
service.  A monthly check of the voltage meter is all that is required to ensure
trouble-free operation.

While the  Performance  Controller  is  operating,  the  following  condition is
normal: The voltage meter is rising and falling as the motor loads and unloads.

<PAGE>



                                    Warranty

Seller warrants to Purchaser that any products  provided by Seller hereunder are
free from defects in material and/or  workmanship under normal use and operation
during the warranty  period stated herein.  If any products  provided  hereunder
prove to be defective in material and/or workmanship within eighteen months from
date of sale,  provided  conditions of operation  have been normal at all times,
and that the product has not been subjected to abnormal stresses,  including but
not limited  to,  such causes as  incorrect  primary  voltage and  frequency  or
improper  ventilation,  nor will this  Warranty be extended to any product which
has been  subject to misuse,  negligence,  accident,  improper  installation  or
operation,  not does it extend to any product which has been repaired or altered
by any party other than the Seller.  Seller,  if  promptly  notified  thereof in
writing,  will correct such defect at Seller's own expense,  at Seller's option,
repairing or replacing the defective products.

Claims for defective  products shall be subject to verification by an authorized
employee of the Seller.

No products shall be returned to Seller without prior written consent. Products,
which Seller consents to have returned, shall be shipped prepaid F.O.B. Seller's
factory,  or other  location  designated  by  Seller.  Seller  shall not  assume
responsibility or accept invoices for unauthorized repairs or alterations to its
products,  even though defective.  Any replacement or repaired product furnished
under this Warranty shall be warranted by Seller for the balance of the Warranty
period and under the same  Warranty  conditions  as  applicable  to the original
product.

The   foregoing   Warranty  does  not  apply  to   experimental,   prototype  or
developmental products.

Seller makes no warranty on products manufactured by others, which are resold by
Seller.  Seller  shall use its best  efforts  to obtain  from each such  product
manufacturer,  in  accordance  with the  manufacturer's  warranty  or  customary
practice,  the repair or  replacement  of  products,  which prove  defective  in
material and/or workmanship.

The foregoing  Warranties  shall apply to  controllers,  who are repaired by the
Seller,  except that the Warranty is limited to that portion of the product that
was  repaired  or  replaced.  This  Warranty  is in lieu of any  other  right or
remedies.  In no event  shall  the  Seller be liable  for any  special  indirect
consequential or incidental damages.

Seller shall pay transportation  charges for controllers  returned to Seller and
delivered  to Buyer  only if  Seller  is  responsible  under  the  terms of this
Warranty.  Buyer shall notify Seller, in writing,  of any intention to return an
allegedly defective product. Buyer shall give such advance notification to allow
Seller to arrange for shipment, should Seller so desire.

In no event shall seller or its  suppliers be liable for any special,  indirect,
incidental or consequential damages including, but not limited to loss of profit
or revenues,  loss of use of the products provided or any associated products or
equipment,   cost  of  capital,   cost  of  substitute  products  or  equipment,
facilities, downtime expenses, or claims of purchaser's customer for such costs.

WARNING:  Improperly  installing and/or maintaining these products can result in
death or serious personal injury. Before attempting installation or maintenance,
read and understand all  instructional  materials  related to the product.  This
Warranty  is  published  solely  for  information  purposes  and  should  not be
considered  all-inclusive.  If further  information  is required,  consult Power
Efficiency Corporation at (734) 975-9111.


<PAGE>


Appendix 6 - Warranty




                         PERFORMANCE CONTROLLER WARRANTY

Seller warrants to Purchaser that any products  provided by Seller hereunder are
free from defects in material and/or  workmanship under normal use and operation
during the warranty  period stated herein.  If any products  provided  hereunder
prove to be defective in material and/or workmanship within eighteen months from
date of sale,  provided  conditions of operation  have been normal at all times,
and that the product has not been subjected to abnormal stresses,  including but
not limited  to,  such causes as  incorrect  primary  voltage and  frequency  or
improper  ventilation,  nor will this  Warranty be extended to any product which
has been  subject to misuse,  negligence,  accident,  improper  installation  or
operation,  not does it extend to any product which has been repaired or altered
by any party other than the Seller.  Seller,  if  promptly  notified  thereof in
writing,  will correct such defect at Seller's own expense,  at Seller's option,
repairing or replacing the defective products.

Claims for defective  products shall be subject to verification by an authorized
employee of the Seller.

No products shall be returned to Seller without prior written consent. Products,
which Seller consents to have returned, shall be shipped prepaid F.O.B. Seller's
factory,  or other  location  designated  by  Seller.  Seller  shall not  assume
responsibility or accept invoices for unauthorized repairs or alterations to its
products,  even though defective.  Any replacement or repaired product furnished
under this Warranty shall be warranted by Seller for the balance of the Warranty
period and under the same  Warranty  conditions  as  applicable  to the original
product.

The   foregoing   Warranty  does  not  apply  to   experimental,   prototype  or
developmental products.

Seller makes no warranty on products manufactured by others, which are resold by
Seller.  Seller  shall use its best  efforts  to obtain  from each such  product
manufacturer,  in  accordance  with the  manufacturer's  warranty  or  customary
practice,  the repair or  replacement  of  products,  which prove  defective  in
material and/or workmanship.

The foregoing  Warranties  shall apply to  controllers,  who are repaired by the
Seller,  except that the Warranty is limited to that portion of the product that
was  repaired  or  replaced.  This  Warranty  is in lieu of any  other  right or
remedies.  In no event  shall  the  Seller be liable  for any  special  indirect
consequential or incidental damages.

Seller shall pay transportation  charges for controllers  returned to Seller and
delivered  to Buyer  only if  Seller  is  responsible  under  the  terms of this
Warranty.  Buyer shall notify Seller, in writing,  of any intention to return an
allegedly defective product. Buyer shall give such advance notification to allow
Seller to arrange for shipment, should Seller so desire.

In no event shall seller or its  suppliers be liable for any special,  indirect,
incidental or consequential damages including, but not limited to loss of profit
or revenues,  loss of use of the products provided or any associated products or
equipment,   cost  of  capital,   cost  of  substitute  products  or  equipment,
facilities, downtime expenses, or claims of purchaser's customer for such costs.

WARNING:  Improperly  installing and/or maintaining these products can result in
death or serious personal injury. Before attempting installation or maintenance,
read and understand all  instructional  materials  related to the product.  This
Warranty  is  published  solely  for  information  purposes  and  should  not be
considered  all-inclusive.  If further  information  is required,  consult Power
Efficiency Corporation at (734) 975-9111.



<PAGE>


Appendix 7 - Available Units

                Performance Controller Units Available for MILLAR


        PEC Model #               Voltage          Horsepower           F.L.A.
      PC3-20-10-11-28             208/230              10                 28
      PC3-20-15-11-42             208/230              15                 42
      PC3-20-20-11-54             208/230              20                 54
      PC3-20-25-11-68             208/230              25                 68
      PC3-20-30-11-80             208/230              30                 80
      PC3-20-40-11-104            208/230              40                104
      PC3-20-50-11-130            208/230              50                130
      PC3-46-10-11-14             460/480              10                 14
      PC3-46-15-11-21             460/480              15                 21
      PC3-46-20-11-27             460/480              20                 27
      PC3-46-30-11-40             460/480              30                 40
      PC3-46-40-11-52             460/480              40                 52
      PC3-46-50-11-65             460/480              50                 65
      PC3-46-60-11-77             460/480              60                 77

         *        All units come standard with internally mounted voltage meter.