Unassociated Document


     

    NEITHER
THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY OTHER
APPLICABLE STATE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES
LAWS.  NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE
HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF
THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS.  THIS WARRANT MAY NOT
BE EXERCISED BY OR ON BEHALF OF A UNITED STATES PERSON UNLESS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.

     

    STOCK
PURCHASE WARRANT

     

    Warrant #
___

     

    To
Purchase [_____] Shares
of Common Stock of

     

    POWER
EFFICIENCY CORPORATION

     

    THIS
CERTIFIES that, for value received, [________________] (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
“Initial Exercise Date”) and on or prior to the close of business on [          ], 2013 (the “Termination
Date”) but not thereafter, to subscribe for and purchase from POWER EFFICIENCY
CORPORATION, a corporation incorporated in the State of Delaware (the
“Company”), up to [_________] shares (the
“Warrant Shares”) of common stock, $0.001 par value, of the Company (the “Common
Stock”).  The purchase price of one share of Common Stock (the
“Exercise Price”) under this Warrant shall be $0.40.  The Exercise
Price and the number of shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein.  In the event of any
conflict between the terms of this Warrant and the Securities Purchase Agreement
dated as of [month, date], 2009 pursuant to which this Warrant has been issued
(the “Purchase Agreement”), the Purchase Agreement shall
control.  Capitalized terms used and not otherwise defined herein
shall have the meanings set forth for such terms in the Purchase
Agreement.

     

    1. Title to
Warrant.  Prior to the Termination Date and subject to
compliance with applicable laws and the terms hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, at the office or agency
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.

     

    2. Authorization of
Shares.  The Company covenants that all shares of Common Stock
which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant
in accordance with the other terms and conditions hereof, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3. Exercise of
Warrant.

     

    (a) Except as provided in Section
4 herein, exercise of the purchase rights represented by this Warrant may be
made at any time or times on or after the Initial Exercise Date, and before the
close of business on the Termination Date by the surrender of this Warrant and
the Notice of Exercise Form annexed hereto duly executed, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered holder hereof at the address of such holder
appearing on the books of the Company) and upon payment of the Exercise Price of
the shares thereby purchased by wire transfer or cashier’s check drawn on a
United States bank, the holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so
purchased.  Certificates for shares purchased hereunder shall be
delivered to the holder hereof within five
(5)
Trading Days after the date on which this Warrant shall have been exercised as
aforesaid.  This Warrant shall be deemed to have been exercised and
such certificate or certificates shall be deemed to have been issued, and Holder
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by Holder, if any, pursuant to Section 5 prior to
the issuance of such shares, have been paid.

     

    (b) If this Warrant shall have
been exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased shares of
Common Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.

     

    (c) Cashless
Exercise.  This Warrant may also be exercised, in whole or in
part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a certificate for the number of Warrant Shares equal to
the quotient obtained by dividing [(A-B) (X)] by (A), where:

     

    
      	
            	
              (A)  =

            	
              the
      closing price on the Trading Day immediately preceding the date on which
      Holder elects to exercise this Warrant by means of a “cashless exercise,”
      as set forth in the applicable Notice of
  Exercise;

            


    

     

    
      	
            	
              (B)  
      =

            	
              the
      Exercise Price of this Warrant, as adjusted hereunder;
  and

            


    

     

    
      	
            	
              (X)  
      =

            	
              the
      number of Warrant Shares that would be issuable upon exercise of this
      Warrant in accordance with the terms of this Warrant if such exercise were
      by means of a cash exercise rather than a cashless
    exercise.

            


    

     

    (d) Mechanics of
Exercise.

     

    (i) Delivery of Certificates
Upon Exercise.  This Warrant shall be deemed to have been
exercised on the first date on which both the Notice of Exercise and payment of
the Exercise Price shall have been delivered to the Company.  The
Warrant Shares shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been
exercised, with payment to the Company of the Exercise Price (or by cashless
exercise) and all taxes required to be paid by the Holder, if any, prior to the
issuance of such shares, having been paid.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (ii)
Delivery of New
Warrants Upon Exercise.  If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased Warrant
Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.

    


    (e) Definitions.

    


    (i)
“Trading Day” means a day on which the principal Trading Market is open for
trading.

     

    (ii)
“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
Alternext, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or
any successors to any of the foregoing).

     

    4. No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  In lieu
thereof, any fractional shares to which Holder is entitled shall be rounded up
or down to the nearest whole share.

     

    5. Charges, Taxes and
Expenses.  Issuance of certificates for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificate, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant; provided, however, in the event certificates for shares of Common
Stock are to be issued in a name other than the name of the holder of this
Warrant, this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof; and the
Company may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

     

    6. Closing of
Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this
Warrant.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    7. Transfer, Division and
Combination.

     

    (a) Subject to compliance with
any applicable securities laws, transfer of this Warrant and all rights
hereunder, in whole or in part, shall be registered on the books of the Company
to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer.  Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  A Warrant, if properly assigned,
may be exercised by a new holder for the purchase of shares of Common Stock
without having a new Warrant issued.

     

    (b) This Warrant may be divided
or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by Holder or its
agent or attorney.  Subject to compliance with Section 7(a), as to any
transfer which may be involved in such division or combination, the Company
shall execute and deliver a new Warrant or Warrants in exchange for the Warrant
or Warrants to be divided or combined in accordance with such
notice.

     

    (c) The Company shall prepare,
issue and deliver at its own expense (other than transfer taxes) the new Warrant
or Warrants under this Section 7.

     

    (d) The Company agrees to
maintain, at its aforesaid office, books for the registration and the
registration of transfer of the Warrants.

     

    8. No Rights as Shareholder
until Exercise.  This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.  Upon the surrender of this Warrant and
the payment of the aggregate Exercise Price, the Warrant Shares so purchased
shall be and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the later of the date of such surrender or
payment.

     

    9. Loss, Theft, Destruction or
Mutilation of Warrant.  The Company covenants that upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant certificate or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Company will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
such Warrant or stock certificate.

     

    10. Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday, Sunday or a legal holiday, then such action may be taken or such right
may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    11. Adjustments of Exercise
Price and Number of Warrant Shares; Stock Splits, etc.

     

    The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.  In case the Company shall (i) pay
a dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the holder of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof.  Upon each such adjustment of the kind
and number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the holder of this Warrant shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment.  An adjustment made
pursuant to this paragraph shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.

    


    (b) If the Company, at any time prior
to the date this Warrant has been exercised in full, shall issue warrants to any
person entitling him to subscribe for or purchase shares of Common Stock at a
price per share (the “Offering Price”) lower than the Exercise Price, then the
Exercise Price then in effect shall be reduced (but not increased) to the
Offering Price (the “Offering Price Adjustment”).  Such adjustment
shall be made whenever such warrants are issued, and shall become effective
immediately.

    


    12. Reorganization
Reclassification Merger Consolidation or Disposition of
Assets.   In case the Company shall reorganize its
capital, reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation (“Other
Property”), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event.  In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section
12.  For purposes of this Section 12, “common stock of the successor
or acquiring corporation” shall include stock of such corporation of any class
which is not preferred as to dividends or assets over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such
stock.  The foregoing provisions of this Section 12 shall similarly
apply to successive reorganizations, reclassifications, mergers, consolidations
or disposition of assets.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    13. Voluntary Adjustment by the
Company.  The Company may at any time during the term of this
Warrant reduce the then current Exercise Price to any amount and for any period
of time deemed appropriate by the Board of Directors of the
Company.

     

    14. Notice of
Adjustment.  Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
holder of this Warrant notice of such adjustment or adjustments setting forth
the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.  Such notice, in the
absence of manifest error, shall be conclusive evidence of the correctness of
such adjustment.  Notwithstanding the foregoing, if the Company fails
to give notice to the Holder of any required adjustment set forth in this
Warrant, then so long as the Company has made the adjustment(s) required by this
Warrant, the failure of the Company to give notice of such adjustment to the
Holder will not cause the Company to incur any liability.

     

    15. Notice of Corporate
Action.  If at any time:

     

    (a) the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or
any other securities or property, or to receive any other right, or

     

    (b) there shall be any capital
reorganization of the Company, any reclassification or recapitalization of the
capital stock of the Company or any consolidation or merger of the Company with,
or any sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation
or,

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (c) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company;

     

    then, in
any one or more of such cases, the Company shall give to Holder (i) at least 20
days’ (or as many days as is reasonably practicable) prior written notice of the
date on which a record date shall be selected for such dividend, distribution or
right or for determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 20 days’ prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause also shall specify (i) the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, the date on
which the holders of Common Stock shall be entitled to any such dividend,
distribution or right, and the amount and character thereof, and (ii) the date
on which any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is to take place
and the time, if any such time is to be fixed, as of which the holders of Common
Stock shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such disposition, dissolution, liquidation or
winding up.  Each such written notice shall be sufficiently given if
addressed to Holder at the last address of Holder appearing on the books of the
Company and delivered in accordance with Section 18(c).

     

    16. Authorized
Shares.  The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this
Warrant.  The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant.  The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the principal market upon which the Common Stock may be
listed.

     

    The
Company shall not by any action, including, without limitation, amending its
articles of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder against
impairment.  Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (c) use commercially reasonable efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    Before
taking any action which would result in an adjustment in the number of shares of
Common Stock for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     

    17. No Net-Cash
Settlement.  In no event will any holder of this Warrant be
entitled to receive a net-cash settlement in lieu of physical settlement in
shares of Common Stock, regardless of whether any of such holder’s Warrant
Shares are registered pursuant to an effective registration
statement.

     

    18. Miscellaneous.

     

    (a) Jurisdiction.  This
Warrant shall constitute a contract under the laws of Delaware, without regard
to its conflict of law, principles or rules, and be subject to arbitration
pursuant to the terms set forth in this Warrant.

     

    (b) Restrictions.  The
holder hereof acknowledges that the Warrant Shares acquired upon the exercise of
this Warrant, if not registered, will have restrictions upon resale imposed by
state and federal securities laws.

     

    (c) Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the holder hereof by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.

     

    (d) Remedies.  Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant.  The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be
adequate.

     

    (e) Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are intended to be
for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.

     

    (f) Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.

     

    (g) Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant 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 provisions or the remaining provisions of
this Warrant.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (h) Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

    (i) Arbitration.  In
the event any controversy or dispute shall arise between the parties under, out
of, in connection with, or relating to this Warrant or the breach thereof, the
party initiating such controversy or making such claim shall provide to the
other party notice containing a brief and concise statement of the initiating
party’s claims, together with relevant facts supporting
them.  Following the date of said notice, the parties shall make good
faith efforts to settle the dispute.  In the event the parties have
been unable to reach accord using the procedures set forth in this Section 13,
either party may seek binding arbitration before three (3) arbitrators in
accordance with the rules of the American Arbitration Association
(“AAA”).  Each party shall appoint one arbitrator and the appointed
arbitrators shall in turn appoint the third arbitrator.  In the event
the two appointed arbitrators are unable to agree upon the third arbitrator, the
AAA shall designate the third arbitrator to arbitrate the controversy or
dispute.  The arbitration shall be held in Las Vegas,
Nevada.  Within thirty (30) days after initiation of arbitration, the
parties shall reach agreement upon and thereafter follow procedures assuring
that the arbitration will be concluded and the award rendered within no more
than six (6) months from selection of the three arbitrators.  Failing
such agreement, AAA will design, and the parties will follow, such
procedures.  THE ARBITRATORS SHALL NOT AWARD ANY PARTY PUNITIVE OR
EXEMPLARY DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK
SUCH DAMAGES.  Each party has the right before or during the
arbitration to seek and obtain from the appropriate court provisional remedies
such as attachment, preliminary injunction, replevin, etc., to avoid irreparable
harm, maintain the status quo or preserve the subject matter of the
arbitration.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.

     

    Dated:
[__], 2009

     

    
      	 
      	
              POWER
      EFFICIENCY CORPORATION

            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
              By:

            	                 
          	 
	 
      	
              Name:

            	 
      	 
	 
      	
              Title:

            	 
      	 


    

    


    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    


    NOTICE OF
EXERCISE

     

    To:  Power
Efficiency Corporation.

     

    (1) The
undersigned hereby elects to purchase shares of Common Stock (the “Common
Stock”), of Power Efficiency Corporation, a Delaware corporation pursuant to the
terms of the attached Warrant, and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if any.

     

    (2)
Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned or in such other name as is specified
below:

     

    
      	 	            
      	 
      
	 	
              (Name)

            	 
      
	 	 	 
	 	   
      	 
      
	 	
              (Address)

            	 
      


    

     

    Dated:

     

    
      	 
      	              
        	 
      
	 
      	
              Signature

            	 
      


    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
FORM

     

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

     

    FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

     

    _____________________________________________________whose
address is
_____________________________________________________________________________.

     

    
      	 
      	
              Dated:

            	
               
       

            	,	         
        	 


    

    


    
      	 
      	
              Holder’s
      Signature:

            	            
      	 


    

     

    
      	 
      	
              Holder’s
      Address:

            	        
      	 


    

     

    
      	
              Signature
      Guaranteed:

            	                
      	 
      


    

    


     

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in an fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

     

    
      
         

      

      
        12