EMPLOYMENT
AGREEMENT
  
  EMPLOYMENT AGREEMENT (the
"Agreement") dated as of August 13, 2010 between POWER EFFICIENCY CORPORATION,
a Delaware corporation (the "Corporation"), with principal executive offices
located at 3960 Howard Hughes Parkway, Suite 460, Las Vegas, NV 89169; and John
(BJ) Lackland (the "Executive").
  W
I T N E SS E T H:
  WHEREAS, the Corporation
desires to employ Executive as the Corporation's Secretary and Chief Financial
Officer to engage in such activities and to render such services under the terms
and conditions hereof and has authorized and approved the execution of this
Agreement; and
  WHEREAS, Executive desires to
be employed by the Corporation under the terms and conditions hereinafter
provided;
  NOW, THEREFORE, in
consideration of the mutual covenants and undertakings herein contained, the
parties agree as follows:
  1.  Employment,
Duties and Acceptance.
  1.1  Services.  The
Corporation hereby employs the Executive for the Term (as defined in Section 2
hereof), to render services with respect to the business and affairs of the
Corporation in the office referenced in the recitals hereof and, in connection
therewith, to perform such duties as directed by the Chief Executive Officer of
the Corporation (the "CEO") from time to time, in his reasonable discretion, and
to perform such other duties as shall be consistent with the responsibilities of
such office (collectively the "Services").  Executive shall use his
best efforts, skills and abilities to promote the interests of the Corporation
and its subsidiaries.
  1.2  Acceptance.  Executive
hereby accepts such employment and agrees to render the Services.
  1.3  Representations of the
Executive.  The Executive represents and warrants to the
Corporation that his execution and delivery of this Agreement, his performance
of the Services hereunder and the observance of his other obligations
contemplated hereby will not (i) violate any provisions of or require the
consent or approval of any party to any agreement, letter of intent or other
document to which he is a party or (ii) violate or conflict with any arbitration
award, judgment or decree or other restriction of any kind to or by which he is
subject or bound.
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  2.  Term of
Employment.
  The term
of Executive's employment under this Agreement (the "Term") shall commence on
June 1, 2010 (the "Commencement Date") and shall terminate on June 1, 2015,
unless sooner terminated pursuant to Section 9 of this Agreement.
  3.  Base
Salary and Expense Reimbursement.
  3.1  Base Salary.  During
the Term, as full compensation for the Services, the Corporation agrees to pay
Executive a minimum base salary ("Base Salary") at the annual rate of $200,000
for each year from the Commencement Date to June 1, 2015. The Base Salary is
subject to withholding and other applicable taxes, and is payable during the
term of this Agreement in accordance with the Corporation's customary payment
practices, but not less frequently than monthly.
  3.2  Stock Options.  The
parties hereby agree that the Corporation shall on the date hereof grant the
Executive stock options (the "Options") to purchase up to two million
(2,000,000) shares of Common Stock, at a per share exercise price of
$0.18.  The Options shall be exercisable for a period of ten (10)
years commencing on the date hereof, and shall be allocated between incentive
stock options and non-qualified stock options as provided in the option
agreements executed pursuant to this Section 3.2 and shall vest in substantially
equal quarterly installments, beginning September 1, 2010.  To
evidence the grant of options under this Section 3.2, the Corporation and the
Executive will execute and deliver option agreements in the form currently
approved by the Board for use under the Corporation’s 2000 Stock Option and
Restricted Stock Plan.
  3.3  Business Expense
Reimbursement.  Upon submission to, and approval by, an officer
of the Corporation designated by the Board of Directors of the Corporation of a
statement of expenses, reports, vouchers or other supporting information, which
approval shall be granted or withheld based on the Corporation's policies in
effect at such time, the Corporation shall promptly reimburse the Executive for
all reasonable business expenses actually incurred or paid by him during the
Term thereof in the performance of the Services, including, but not limited to,
expenses for entertainment, travel and similar items.
  4.  Bonuses;
Change in Control.
  4.1  Bonus.  The
Executive shall be eligible to receive bonuses in such amount(s) as the
Corporation's Compensation Committee shall determine in its absolute discretion.
If there is no Compensation Committee, such determinations shall be made by the
entire Board of Directors.
  4.2  Change in
Control.  For purposes of this Agreement, a "Change in Control"
with respect to the Corporation shall be deemed to have taken place on the
occurrence  of one or more of the following events:
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  (i)  Any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") acquires or becomes a
"beneficial owner" (as defined in Rule 13d-3 or any successor rule under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing 50% or more of the combined voting power of the Corporation's then
outstanding securities entitled to vote generally in the election of directors
("Voting Securities"), provided, however, that the following shall not
constitute a Change in Control pursuant to this Section 4.2:
  (A)  any
acquisition or beneficial ownership by the Corporation or a
subsidiary;
  (B)  any
acquisition or beneficial ownership by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or one or more of its
subsidiaries;
  (C)  any
acquisition or beneficial ownership by any corporation  with respect
to which, immediately following such acquisition, more than 50% of both the
combined voting power of the Corporation's then outstanding Voting Securities
and shares of the Corporation's Common Stock (the "Shares) is then beneficially
owned, directly or indirectly, by all or substantially all of the persons who
beneficially owned Voting Securities and Shares of the Corporation immediately
prior to such acquisitions in substantially the same proportions as their
ownership of such Voting Securities and Shares, as the case may be, immediately
prior to such acquisitions; or
  (D)  any
acquisition or beneficial ownership by Summit Energy Ventures, LLC, or any
person who is an affiliate thereof on the date of this Agreement.
  (ii)  A
majority of the members of the Board shall not be Continuing
Directors.  "Continuing Directors" shall mean: (A) individuals who, on
the date hereof, are directors of the Corporation, (B) individuals elected as
directors of the Corporation subsequent to the date hereof for whose election
proxies shall have been solicited by the Board or (C) any individual elected or
appointed by the Board to fill vacancies on the Board caused by death or
resignation (but not by removal) or to fill newly-created
directorships;
  (iii)  Approval
by the stockholders of the Corporation of a reorganization, merger or
consolidation of the Corporation or a statutory exchange of outstanding Voting
Securities of the Corporation, unless, immediately following such
reorganization, merger, consolidation or exchange, all or substantially all of
the persons who were the beneficial owners, respectively, of Voting Securities
and Shares of the Corporation immediately prior to such reorganization, merger,
consolidation or exchange beneficially own, directly or indirectly, more than
50% of, respectively, the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors and the then
outstanding shares of common stock, as the case may be, of the corporation
resulting from such reorganization, merger, consolidation or exchange in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger, consolidation or exchange, of the Voting Securities and
Shares of the Corporation, as the case may be; or
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  (iv)  Approval
by the stockholders of the Corporation of (A) a complete liquidation or
dissolution of the Corporation or (B) the sale or other disposition of all or
substantially all of the assets of the Corporation (in one or a series of
transactions), other than to a corporation with respect to which, immediately
following such sale or other disposition, more than 50% of, respectively, the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and the then
outstanding shares of common stock of such corporation is then beneficially
owned, directly or indirectly, by all or substantially all of the persons who
were the beneficial owners, respectively, of the Voting Securities and Shares of
the Corporation immediately prior to such sale or other disposition in
substantially the same proportions as their ownership, immediately prior to such
sale or other disposition, of the Voting Securities and Shares of the
Corporation, as the case may be.
  Upon the
occurrence of a Change in Control, the Executive shall then be entitled to
receive a bonus, payable immediately, equal to 2.99 times the sum of (x) the
Executive's then current Base Salary and (y) the most recent annual bonus paid
to the Executive in accordance with Section 4.1 above, and all of the
Executive's granted but unexercised stock options shall immediately vest in full
and be exercisable.
  5.  Severance.
  5.1  Termination for Good
Reason.  In the event that Executive's employment hereunder
shall be terminated by the Executive for Good Reason (as defined in Section 9.5
hereof) at any time prior to the end of the Term, the Executive shall be
entitled to receive from the Corporation, in addition to any Base Salary earned
to the date of termination, a severance payment in an amount equal to 2.99 times
the sum of (x) Executive's current Base Salary and (y) the most recent annual
bonus paid to the Executive in accordance with Section 4.1
above.  Furthermore, all of the Executive's granted but unexercised
stock options shall immediately vest in full. In the event of such termination,
the amounts due hereunder shall be payable without offset or defense or any
obligation of the Executive to mitigate damages.
  6.  Additional
Benefits.
  6.1  In General.  In
addition to the compensation, bonuses, expenses and other benefits to be paid
under Sections 3, 4 and 5 hereof, Executive will be entitled to all rights and
benefits for which he shall be eligible under any insurance, health and medical,
incentive, bonus, profit-sharing,pension or other extra
compensation or "fringe" benefit plan of the Corporation or any of its
subsidiaries now existing or hereafter adopted for the benefit of the executives
or employees generally of the Corporation.  The provisions of this
Agreement which incorporate employee benefit packages shall change as and when
such employee benefit packages change.
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  7.  Vacation.
  The
Executive shall be entitled each year during the Term of this Agreement to a
vacation period of four (4) weeks, during which all salary, compensation,
benefits and other rights to which the Executive is entitled to hereunder shall
be provided in full.  Such vacation may be taken in the Executive's
discretion, at such time or times as are not inconsistent with the reasonable
business needs of the Corporation. Unused vacation days may be accured up to a
maximum of eight (8) weeks. Unused days in excess of eight (8) weeks shall be
forfeited.
  8.  Insurability; Right to
Insure.
  Executive
agrees that the Corporation shall have the right during the Term to insure the
life of Executive by a policy or policies of insurance in such amount or amounts
as it may deem necessary or desirable, and the Corporation shall be the
beneficiary of any such policy or policies and shall pay the premiums or other
costs thereof.  The Corporation shall have the right, from time to
time, to modify any such policy or policies of insurance or to take out new
insurance on the life of Executive.  Executive agrees, upon request,
at any time or times prior to the commencement of or during the Term to sign and
deliver any and all documents and to submit to any physical or other reasonable
examinations which may be required in connection with any such policy or
policies of insurance or modifications thereof.
  9.  Termination.
  9.1  Death.  If Executive
dies during the Term of this Agreement, Executive's employment hereunder shall
terminate upon his death and all obligations of the Corporation hereunder shall
terminate on such date, except that Executive's estate or his designated
beneficiary shall be entitled to payment of any unpaid accrued Base Salary
through the date of his death.  In addition, any accrued and unpaid
Bonus shall be paid in accordance with Section 4 hereof.
  9.2  Disability.  Subject
to the provisions of Section 6.1, if Executive shall be unable to perform a
significant part of his duties and responsibilities in connection with the
conduct of the business and affairs of the Corporation and such inability lasts
for (i) a period of at least one hundred eighty (180) consecutive days, or (ii)
periods aggregating at least two hundred seventy (270) days during any three
hundred sixty-five (365) consecutive days, by reason of Executive's physical or
mental disability, whether by reason of injury, illness or similar cause,
Executive shall be deemed disabled, and the Corporation any time thereafter may
terminate Executive's employment hereunder by reason of the
disability.  Upon delivery to Executive of such notice, all
obligations of the Corporation hereunder shall terminate, except that Executive
shall be entitled to (i) payment of any unpaid accrued Base Salary through the
date of termination and (ii) health insurance paid for by the Corporation as
though the Executive's employment continued through June 1, 2015.  In
addition, any accrued and unpaid Bonus shall be paid in accordance with Section
4 hereof.  The obligations of Executive under Section 10 hereof shall
continue notwithstanding termination of Executive's employment pursuant to this
Section 9.2.
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  9.3  Termination For
Cause.  The Corporation may at any time during the Term,
without any prior notice, terminate this Agreement and discharge Executive for
Cause, whereupon the Corporation's obligation to pay compensation or other
amounts payable hereunder to or for the benefit of Executive shall terminate on
the date of such discharge. Furthermore, the Executive shall be entitled to all
options which have vested as of the termination date and all options which have
not vested shall be cancelled. As used herein the term "Cause" shall
mean:  (i) a willful and material breach by Executive of the terms of
this Agreement; (ii) willful violation of specific and lawful written direction
from the CEO of the Corporation; provided such direction is not inconsistent
with the Executive's duties and responsibilities under the office the Executive
is holding at the time of the directive; (iii) conviction of the Executive of a
felony by a federal or state court of competent jurisdiction.  In the
case of (i) or (ii) above, the Corporation's CEO must deliver to the Executive a
notice of Executive's breach of the Agreement, and Executive shall have thirty
(30) days to cure such breach ("Cure Period"). If the Executive fails to take
corrective action during this Cure Period, then the CEO may terminate the
Executive for cause. The obligations of the Executive under Section 10 shall
continue notwithstanding termination of the Executive's employment pursuant to
this Section 9.3.
  9.4  Termination by
Executive.  The Executive shall have the right to terminate
this Agreement for Good Reason, as hereinafter defined.  Good Reason
shall mean any of the following:  (i) the assignment to the
Executive of duties inconsistent with the Executive's position, duties,
responsibilities, titles or offices as described herein; (ii) any material
reduction by the Corporation of the Executive's duties and responsibilities as
Chief Financial Officer and Chief Operating Officer; or (iii) any material
breach by the Corporation of this Agreement, including a lack of complete
payment of Executive's compensation and benefits as stated throughout this
Agreement.  In the event the Executive terminates this Agreement for
Good Reason as defined above, the Corporation shall pay the Executive upon
termination, the amount required pursuant to Section 5.1.  In
addition, all options granted to the Executive shall immediately vest and be
exercisable by the Executive. The obligations of the Executive under Section 10
hereof shall continue notwithstanding termination of the Executive's employment
pursuant to this Section 9.4.
  In the
event the Executive terminates this Agreement without Good Reason the Executive
shall be entitled to accrued base salary through the date of termination but
shall otherwise be treated as if this Agreement had been terminated pursuant to
Section 9.3.
  10.  Protection
of Confidential Information.
  In view
of the fact that Executive's work for the Corporation will bring him into close
contact with confidential information and plans for future developments,
Executive agrees to the following:
  10.1  Secrecy.  To keep
secret and retain in the strictest confidence all confidential matters of the
Corporation, including, without limitation, trade "know how" and trade secrets,
customer lists, pricing policies, marketing plans, technical processes,
formulae, inventions and research projects, and other business affairs of the
Corporation, learned by him heretofore or hereafter, and not to disclose them to
anyone inside or outside of the Corporation, except in the course of performing
the Services hereunder or with the express written consent of the Chief
Executive Officer or Board of Directors of the Corporation and except to the
extent such information is already known to the general public.
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  10.2  Return Memoranda,
etc.  To deliver promptly to the Corporation on termination of
his employment, or at any other time as the Chief Executive Officer or the Board
of Directors of the Corporation may so request, all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the Corporation's business and all property associated
therewith, which he may then possess or have under his control.
  10.3  Covenants.
  10.3.1                      Non-competition.  Executive
agrees that during the Term, regardless of the reason for termination of his
employment or this Agreement, for a period of one (1) year thereafter, he will
not, as a principal, agent, employee, employer, consultant, stockholder,
investor, director or co-partner of any person, firm, corporation or business
entity other than the Corporation, or in any individual or representative
capacity whatsoever, directly or indirectly, without the express prior written
consent of the Corporation:
  (i)           engage
or participate in any business whose products or services are directly
competitive with that of the Corporation, which business is the manufacture and
sale of motor-related energy saving equipment, and which conducts or solicits
business, or transacts with supplier or customers located within the United
States;
  (ii)           aid
or counsel any other person, firm, corporation or business entity to do any of
the above;
  (iii)           become
employed by a firm, corporation, partnership or joint venture which competes
with the business of the Corporation within the United States; or
  (iv)           approach,
solicit business from, or otherwise do business or deal with any customer of the
Corporation in connection with any product or service competitive to any
provided by the Corporation.
  10.3.2                      Anti-Raiding.  Executive
agrees that during the Term, regardless of the reason for termination of his
employment or this Agreement, for a period of one (1) year thereafter, he will
not, as a principal, agent, employee, employer, consultant, director or partner
of any person, firm, corporation or business entity other than the Corporation,
or in any individual or representative capacity whatsoever, directly or
indirectly, without the prior express written consent of the Corporation
approach, counsel or attempt to induce any person who is then in the employ of
the Corporation to leave the employ of the Corporation or employ or attempt to
employ any such person or persons who at any time during the preceding six
months was in the employ of the Corporation.
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  10.3.3                      Executive's
Acknowledgements.  Executive acknowledges (i) that his position
with the Corporation requires the performance of services which are special,
unique, and extraordinary in character and places him in a position of
confidence and trust with the customers and employees of the Corporation,
through which, among other things, he shall obtain knowledge of the
Corporation's "technical information" and "know-how" and become acquainted with
its customers, in which matters the Corporation has substantial proprietary
interests; (ii) that the restrictive covenants set forth above are necessary in
order to protect and maintain such proprietary interests and the other
legitimate business interests of the Corporation; and (iii) that the Corporation
would not have entered into this Agreement unless such covenants were included
herein.
  Executive
also acknowledges that the business of the Corporation presently will extend
throughout the United States and overseas, and that he will personally supervise
and engage in such business on behalf of Corporation and, accordingly, it is
reasonable that the restrictive covenants set forth above are not more limited
as to geographic area then is set forth therein.  Executive also
represents to the Corporation that the enforcement of such covenants will not
prevent Executive from earning a livelihood or impose an undue hardship on the
Executive.
  10.4  Severability.  If
any of the provisions of this Section 10, or any part thereof, is hereinafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of such provision or provisions, which shall be given full effect,
without regard to the invalid portions.  If any of the provisions of
this Section 10, or any part thereof, is held to be unenforceable because of the
duration of such provision, the area covered thereby or the type of conduct
restricted therein, the parties agree that the court making such determination
shall have the power to modify the duration, geographic area and/or other terms
of such provision and, as so modified, said provision(s) shall then be
enforceable.  In the event that the courts of any one or more
jurisdictions shall hold such provisions wholly or partially unenforceable by
reason of the scope thereof or otherwise, it is the intention of the parties
hereto that such determination not bar or in any way affect the Corporation's
right to the relief provided for herein in the courts of any other jurisdictions
as to breaches or threatened breaches of such provisions in such other
jurisdictions, the above provisions as they relate to each jurisdiction being,
for this purpose, severable into diverse and independent covenants.
  10.5  Injunctive
Relief.  Executive acknowledges and agrees that, because of the
unique and extraordinary nature of his services, any breach or threatened breach
of the provisions of Sections 10.1, 10.2, or 10.3 hereof will cause irreparable
injury and incalculable harm to the Corporation, and the Corporation shall,
accordingly, be entitled to injunctive and other equitable relief for such
breach or threatened breach and that resort by the Corporation to such
injunctive or other equitable relief shall not be deemed to waive or to limit in
any respect any right or remedy which the Corporation may have with respect to
such breach or threatened breach.  The Corporation and Executive agree
that any such action for injunctive or equitable relief shall be heard in a
state or federal court situate in Nevada and each of the parties hereto, hereby
agrees to accept service of process by registered mail and to otherwise consent
to the jurisdiction of such courts.
  10.6  Expenses of Enforcement of
Covenants.  In the event that any action, suit or proceeding at
law or in equity is brought to enforce the covenants contained in
Sections 10.1, 10.2, or 10.3 hereof or to obtain money damages for the
breach thereof, the party prevailing in any such action, suit or other
proceeding shall be entitled upon demand, to reimbursement from the other party
for all expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred in connection therewith.
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  10.7  Separate
Agreement.  The provisions of this Section 10 shall be
construed as an agreement on the part of the Executive independent of any other
part of this Agreement or any other agreement, and the existence of any claim or
cause of action of the Executive against the Corporation, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Corporation of the provisions of this Section 10.
  11.  Indemnification.
  The
Corporation shall provide the Executive (including his heirs, executors and
administrators) with coverage under a standard directors and officers liability
insurance policy at the Corporation's expense to the same extent as provided for
any other director, officer or trustee of the Corporation.  In
addition, the Corporation shall indemnify the Executive (and his heirs,
executors and administrators) to the fullest extent permitted under the law of
its state of incorporation against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which the Executive may be involved by reason of his having been a
director or officer of the Corporation or any subsidiary
thereof.  Such expenses and liabilities shall include, but not be
limited to, judgments, court costs and attorneys' fees and the cost of
reasonable settlements, such settlements to be approved by the Board if such
action is brought against the Executive in his capacity as a director or officer
of the Corporation or any subsidiary thereof.  The Corporation shall,
upon the request of the Executive, advance to the Executive such amounts as
necessary to cover expenses, including without limitation legal fees and
expenses, incurred by the Executive in connection with any suit or proceeding in
which the Executive may be involved by reason of his being or having been a
director or officer of the Corporation or of any subsidiary
thereof.  Such indemnity and advance of expenses, however, shall not
extend to matters as to which the Executive is finally adjudged to be liable for
willful misconduct in the performance of his duties.
  12.  Arbitration.
  Except
with respect to any proceeding brought under Section 10 hereof, any controversy,
claim, or dispute between the parties, directly or indirectly, concerning this
Employment Agreement or the breach hereof, or the subject matter hereof,
including questions concerning the scope and applicability of this arbitration
clause, shall be finally settled by arbitration in Clark County, Nevada pursuant
to the rules then applying of the American Arbitration
Association.  The arbitrators shall consist of one representative
selected by the Corporation, one representative selected by the Executive and
one representative selected by the first two arbitrators.  The parties
agree to expedite the arbitration proceeding in every way, so that the
arbitration proceeding shall be commenced within thirty (30) days after request
therefore is made, and shall continue thereafter, without interruption, and that
the decision of the arbitrators shall be handed down within thirty (30) days
after the hearings in the arbitration proceedings are closed.  The
arbitrators shall have the right and authority to assess the cost of the
arbitration proceedings and to determine how their decision or determination as
to each issue or matter in dispute may be implemented or
enforced.  The decision in writing of any two of the arbitrators shall
be binding and conclusive on all of the parties to this
Agreement.  Should either the Corporation or the Executive fail to
appoint an arbitrator as required by this Section 12 within thirty (30) days
after receiving written notice from the other party to do so, the arbitrator
appointed by the other party shall act for all of the parties and his decision
in writing shall be binding and conclusive on all of the parties to this
Employment Agreement.  Any decision or award of the arbitrators shall
be final and conclusive on the parties to this Agreement; judgment upon such
decision or award may be entered in any competent Federal or state court located
in the United States of America; and the application may be made to such court
for confirmation of such decision or award for any order of enforcement and for
any other legal remedies that may be necessary to effectuate such decision or
award.
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  13.  Notices.
  All
notices, requests, consents and other communications required or permitted to be
given hereunder, shall be in writing and shall be deemed to have been duly given
if delivered personally or sent by prepaid telegram, telecopy or mailed
first-class, postage prepaid, by registered or certified mail (notices sent by
telegram or mailed shall be deemed to have been given on the date sent), to the
parties at their respective addresses hereinabove set forth or to such other
address as either party shall designate by notice in writing to the other in
accordance herewith.
  14.  General.
  14.1  Governing Law.  This
Agreement shall be governed by and construed and enforced in accordance with the
local laws of the State of Nevada, without regard to principles of conflict of
laws.
  14.2  Captions.  The
section headings contained herein are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement.
  14.3  Entire
Agreement.  This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes in their entirety all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter
hereof.  No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.
  14.4  Severability.  If
any of the provisions of this Agreement shall be unlawful, void, or for any
reason, unenforceable, such provision shall be deemed severable from, and shall
in no way affect the validity or enforceability of, the remaining portions of
this Agreement.
  14.5  Waiver.  The waiver
by any party hereto of a breach of any provision of this Agreement by any other
party shall not operate or be construed as a waiver of any subsequent breach of
the same provision or any other provision hereof.
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  14.6  Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same Agreement.
  14.7  Assignability.  This
Agreement, and Executive's rights and obligations hereunder, may not be assigned
by Executive.  The Corporation may assign its rights, together with
its obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets; in any event
the rights and obligations of the Corporation hereunder shall be binding on its
successors or assigns, whether by merger, consolidation or acquisition of all or
substantially all of its business or assets.  This Agreement shall
inure to the benefit of, and be binding upon, the Executive and his executors,
administrators, heirs and legal representatives.
  14.8  Amendment.  This
Agreement may be amended, modified, superseded, cancelled, renewed or extended
and the terms or covenants hereof may be waived, only by a written instrument
executed by both of the parties hereto, or in the case of a waiver, by the party
waiving compliance.  No superseding instrument, amendment,
modification, cancellation, renewal or extension hereof shall require the
consent or approval of any person other than the parties hereto.  The
failure of either party at any time or times to require performance of any
provision hereof shall in no matter affect the right at a later time to enforce
the same.  No waiver by either party of the breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
  [Signatures
On Following Page]
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  IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above
written.
   POWER
      EFFICIENCY CORPORATIONBy:Steven
      Strasser,
                Chairman
      & Chief Executive OfficerJohn
      (BJ) Lackland
 
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