Document:

Security Agreement with EMTUCK, LLC

 EXHIBIT 10.3 
 SECURITY AGREEMENT 
 This SECURITY AGREEMENT, dated as of April 19, 2006 (as amended or
supplemented from time to time, this “Agreement”), is made by Power Efficiency Corporation, a Delaware corporation (the “Borrower”), for the benefit of EMTUCK, LLC, a Nevada limited liability company (the
“Lender”). 
 W I T N E S S E T H 
 WHEREAS, pursuant to that certain Agreement dated April 19, 2006, between the Borrower and the Lender (the “Base Agreement”), the Lender has agreed to extend to the Borrower loans in a
maximum aggregate principal amount not to exceed [$1,500,000] subject, in the case of [$500,000] of such amount, to availability from the Lender (the “Loans”), evidenced by Notes dated as provided in the Base Agreement, issued by
the Borrower payable to the Lender (the “Notes”) and subject to the terms and conditions specified in the Notes; and 
 WHEREAS, the Lender is willing to make the Loan, but only upon the condition, inter alia, that the Borrower shall have executed and delivered to the Lender this Agreement; 
 NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower hereby agrees with the Lender as follows: 
 1. Defined
Terms; Interpretation. 
 (a) Defined Terms. Capitalized terms not otherwise defined in this Agreement shall have the meanings set
forth in the Note. All terms used in this Security Agreement and defined in Article 9 of the Code (as defined below) shall have the respective meanings assigned to those terms in Article 9 of the Code. In addition, the following terms
shall have the following respective meanings: 
 “Code” shall mean the Uniform Commercial Code as the same
may from time to time be in effect in the State of Nevada or, by reason of mandatory application, any other applicable jurisdiction. 
 “Collateral” shall have the meaning assigned to it in Section 2 of this Agreement. 
 “Event of Default” and “Default” shall mean any default or Event of Default (as defined under the Note) under the Note, this Agreement or any other instruments securing the Note. 
 “Obligations” shall mean all the unpaid principal amount of, and accrued interest on, the Notes, and all other
obligations and liabilities of the Borrower to the Lender, now existing or hereafter incurred, under, arising out of or in connection with, the Notes, the Base Agreement, or this Agreement. 
 (b) Interpretation. In this Agreement, unless otherwise indicated, the singular includes the plural and plural the singular; words importing any
gender include the other gender; references to statutes or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending or replacing the statute or regulation referred to; references to
“writing” include printing, typing, lithography and other means of reproducing words in a tangible visible form; the words “including,” “includes” and “include” are to be deemed to be followed by the words
“without limitation”; references to articles, sections (or subdivisions of sections), exhibits, annexes or schedules are to this Agreement; references to agreements and other contractual instruments include all subsequent amendments,
extensions and other modifications to those instruments; and references to persons include their respective successors and permitted assigns and, in the case of governmental authorities, persons succeeding to their respective functions and
capacities. 

 2. Grant of Security Interest; Perfection. 
 (a) Grant of Security Interest. As collateral security for the prompt and complete payment and performance when due of all the Obligations and in
order to induce the Lender to make the Loans in accordance with the terms of the Base Agreement and the Notes, the Borrower hereby pledges and grants to the Lender a security interest in all the Borrower’s right, title and interest in, to and
under the following properties and assets, wherever located, and whether now held or in the future acquired by the Borrower and whether now existing or in the future coming into existence (all of which being hereinafter collectively called the
“Collateral”): 
 (i) a first lien and security interest in all accounts receivable and inventory now or
hereafter acquired; and 
 (ii) a second lien and security interest in all other collateral, subordinate to the existing lien
and security interest in favor of Pali Capital Corporation as representative of the holders of promissory notes of the Company in the aggregate principal amount of $[1,464,806] due October 26, [2006], and $125,000 due February 24, 2007
(the “Pali Notes”); and 
 (iii) to the extent not otherwise included, all proceeds and products in whatever
form of all or any part of the other Collateral, including all rents, profits, income and benefits and all condemnation awards and all other compensation for any casualty event with respect to all or any part of the other Collateral (together with
all rights to recover and proceed with respect to the same), and all accessions to, substitutions for and replacements of all or any part of the other Collateral. 
 (b) Perfection. The Borrower authorizes the Lender to file such financing statements and continuation statements in such offices from time to time before, on or after the date of this Agreement, as are
necessary or as the Lender may determine to be appropriate to create, perfect and establish the priority of the liens granted by this Agreement in any and all of the Collateral, to preserve the validity, perfection or priority of the liens granted
by this Agreement in any and all of the Collateral or to enable the Lender to exercise its remedies, rights, powers and privileges under this Agreement, and consents that any such financing statements may be filed describing the Collateral as
“all assets” or “all personal property” of the Borrower (without, however, modifying the description of the Collateral as set forth in Section 2(a)), including, without limitation, the execution and delivery customary
subordination and intercreditor agreements with respect to the Pali Notes. Concurrently with the execution and delivery of this Agreement, the Borrower shall take all such other actions, and authenticate or sign and file or record such other records
or instruments, as are necessary or as the Lender may request to perfect and establish the priority of the liens granted by this Agreement in any and all of the Collateral or to enable the Lender to exercise its remedies, rights, powers and
privileges under this Agreement, including cooperating with the Lender in obtaining, and taking such other actions as are necessary or that the Lender may request in order for it to obtain, control with respect to any of the Collateral the
perfection of which requires control under the Code. 
 3. Rights of the Lender; Limitations on the Lender’s Obligations. It is
expressly agreed by the Borrower that, anything herein to the contrary notwithstanding, the Borrower shall remain liable under the contracts and agreements included in the Collateral, to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant to the terms and provisions of each such contracts and agreements, to the same extent as if this Agreement had not been executed and delivered. The exercise by the Lender
of any right, remedy, power or privilege in respect of this Agreement shall not release the Borrower from any of its duties and obligations under those contracts and agreements. The Lender shall have no obligation or liability under those contracts
or agreements or in respect of any governmental approval included in the Collateral by reason of this Agreement or the assignment to the Lender of any payment relating to those contracts or agreements pursuant to this Agreement, nor shall the Lender
be required or obligated in any manner to perform or fulfill any of the obligations of the Borrower under or pursuant to those contracts or agreements or any such governmental approval, or to make any payment, or to make any inquiry as to the nature
or the sufficiency of any payment received by it or the sufficiency of any performance by any party under those contracts or agreements, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of
any amounts which may have been assigned to it or to which it may be entitled at any time or times. 

 4. Representations and Warranties. The Borrower hereby represents and warrants that the Borrower
is the sole beneficial owner of the Collateral or otherwise has the power to grant the security interests in the Collateral pursuant to this Agreement, and, except for the prior lien and security interest in favor of the holders of the Pali Notes
referred to above, the Collateral is free and clear of all liens, and no security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the Collateral is on file or of record in
any public office, except such as may have been filed by the Borrower in favor of the Lender pursuant to this Agreement and as set forth in the Notes. 
 5. Covenants. The Borrower covenants and agrees with the Lender that from and after the date of this Agreement and until the Obligations are fully satisfied: 
 (a) Further Documentation. At any time and from time to time, upon the written request of the Lender, and at the sole expense of the Borrower, the
Borrower promptly and duly shall execute and deliver any and all such further instruments and documents and take such further action as the Lender reasonably may deem desirable to create, perfect and establish the priority of the liens granted by
this Agreement in any and all of the Collateral, to preserve the validity, perfection or priority of the liens granted by this Agreement in any and all of the Collateral, and otherwise to enable the Lender to obtain the full benefits of this
Agreement and of the rights and powers herein granted, including the filing of any financing or continuation statements under the Code in effect in any jurisdiction with respect to the liens and security interests granted hereby. The Borrower also
hereby authorizes the Lender to file any such financing or continuation statement without the signature of the Borrower to the extent permitted by applicable law. If any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note or other instrument, such note or instrument shall immediately become a part of the Collateral and shall be pledged to the Lender, duly endorsed by the Borrower in a manner satisfactory to the Lender.

 (b) Maintenance of Records. The Borrower will keep and maintain at its own cost and expense satisfactory and complete records of
the Collateral including a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral. The Borrower will mark, to the extent feasible, its books and records pertaining to the
Collateral to evidence this Agreement and the security interests granted hereby. For the Lender’s further security, the Borrower agrees that the Lender shall have a special property interest in all of the Borrower’s books and records
pertaining to the Collateral and the Borrower shall deliver and turn over copies of any such books and records to the Lender or to its representatives at any time on reasonable demand of the Lender. 
 (c) Indemnification. In any suit, proceeding or action brought by the Lender under any contract or agreement that is a part of the Collateral for
any sum owing thereunder, or to enforce any provisions of such contract or agreement, the Borrower will save, indemnify and keep the Lender harmless from and against all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the person or entity against whom such suit, proceedings or action is brought, arising out of a breach by the Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such obligee or its successors from the Borrower, and all such obligations of the Borrower shall be and remain enforceable against and only against the Borrower and shall not
be enforceable against the Lender. 
 (d) Compliance with Laws, etc. The Borrower will comply, in all material respects, with all
acts, rules, regulations, orders, decrees and directions of any governmental authority, applicable to the Collateral or any part thereof; provided, however, that the Borrower may contest any act, regulation, order, decree or direction in any
reasonable manner. 
 (e) Payment of Obligations. The Borrower will pay promptly when due, all taxes, assessments and governmental
charges or levies imposed upon the Collateral or in respect of its income or profits therefrom, as well as all claims of any kind (including claims for labor, materials and supplies), except that no such charge need be paid if (i) the validity
thereof is being contested in good faith by appropriate proceedings, (ii) such proceedings do not involve any danger of the sale, forfeiture or loss of any of the Collateral or any interest therein and (iii) such charge is adequately
reserved against in accordance with generally accepted accounting principles. 

 (f) Limitation on Sale and Liens. Other than as set forth in the Notes and with respect to the
first security interest in respect of the Pali Notes referred to above, the Borrower will not (i) dispose of the Collateral, (ii) permit any person other than the Lender to have control of any deposit account, electronic chattel paper,
investment property or letter-of-credit right included in the Collateral and (iii) create, permit or suffer to exist, and will defend the Collateral against and take such other action as is necessary to remove, any lien, security interest,
encumbrance, claim or right, in or to the Collateral, and will defend the right, title and interest of the Lender in and to any of the Borrower’s rights under and in the Collateral against the claims and demands of all persons whomsoever.

 (g) Notices. The Borrower will advise the Lender promptly, in reasonable detail, (i) of any lien, security interest,
encumbrance or claim made or asserted against any of the Collateral, (ii) of any material change in the composition of the Collateral not in the ordinary course of business, and (iii) of the occurrence of any other event which would have a
material adverse effect on the aggregate value of the Collateral or on the security interests created hereunder not in the ordinary course of business. 
 (h) Right of Inspection. The Lender shall at all times have full and free access during normal business hours to all the books, correspondence and records of the Borrower, and the Lender or its representatives
may examine the same, take extracts therefrom and make photocopies thereof, and the Borrower agrees to render to the Lender, at the Borrower’s cost and expense, such clerical and other assistance as may be reasonably requested with regard
thereto. The Lender and its representatives shall at all times also have the right to enter into and upon any premises where any of the Collateral is located for the purpose of inspecting the same, observing its use or otherwise protecting the
interests of the Lender therein. 
 6. The Lender’s Appointment as Attorney-in-Fact. 
 (a) Subject to the rights of the holders of the Pali Notes in respect of the prior lien and security interest in their favor referred to above, the
Borrower hereby irrevocably constitutes and appoints the Lender and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the
Borrower and in the name of the Borrower or in its own name, from time to time in the Lender’s discretion, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives the Lender the power and right, on behalf of the Borrower, without notice to or
assent by the Borrower, to do the following: 
 (i) to create, perfect and establish the priority of the liens granted by this
Agreement in any and all the Collateral, to preserve the validity, perfection or priority of the liens granted by this Agreement in any and all of the Collateral or to enable the Lender to exercise its remedies, rights, powers and privileges under
this Agreement; 
 (ii) upon the occurrence and continuance of any Default or Event of Default, to ask, demand, collect,
receive and give acquittances and receipts for any and all moneys due and to become due under any contract or account that is a part of the Collateral and, in the name of the Borrower or its own name or otherwise, to take possession of and endorse
and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any contract or account that is a part of the Collateral and to file any claim or to take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by the Lender for the purpose of collecting any and all such moneys due under any such contract or account whenever payable; 
 (iii) to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;
and 
 (iv) upon the occurrence and continuance of any Default or Event of Default, (A) to direct any party liable for
any payment under any of the contracts or accounts that are a part of the Collateral to make payment of any and all moneys due and to become due thereunder directly to the Lender or as the Lender shall direct; (B) to receive payment of and
receipt for any and all moneys, claims and other amounts due and to become due at any time in respect of or arising out of any Collateral; (C) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and 

 
to enforce any other right in respect of any Collateral; (D) to defend any suit, action or proceeding brought against the Borrower with respect to any
Collateral; (E) to settle, compromise or adjust any suit, action or proceeding described above and, in connection therewith, to give such discharges or releases as the Lender may deem appropriate; and (F) generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Lender were the absolute owner thereof for all purposes, and to do, at the Lender’s option and the Borrower’s
expense, at any time, or from time to time, all acts and things which the Lender deems necessary to protect, preserve or realize upon the Collateral and the Lender’s security interest therein, in order to effect the intent of this Agreement,
including the preparation, execution and recordation of patent, trademark or other forms of assignment, all as fully and effectively as the Borrower might do. 
 The Borrower hereby ratifies all that said attorneys-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable. 
 (b) The powers conferred on the Lender hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise
any such powers. The Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and neither it nor any of its officers, directors, employees or agents shall be responsible to the Borrower for
any act or failure to act, except for its own gross negligence or willful misconduct. 
 (c) The Borrower also authorizes the Lender, at any
time and from time to time (i) to communicate in its own name with any party to any contract or agreement that is a part of the Collateral with regard to the assignment of those contracts or agreements hereunder and other matters relating
thereto and (ii) to execute, in connection with the sale provided for in paragraph (b) of Section 8 of this Agreement, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.

 7. Performance by the Lender of the Borrower’s Obligations. If the Borrower fails to perform or comply with any of its
agreements contained in this Agreement, and the Lender, as provided for by the terms of this Agreement, itself performs or complies, or otherwise causes performance or compliance, with such agreement, the expenses of the Lender incurred in
connection with such performance or compliance, together with interest thereon, shall be payable by the Borrower to the Lender on demand and shall constitute an Obligation secured by this Agreement. 
 8. Remedies, Rights Upon An Event of Default. 
 (a) If an Event of Default shall occur and be continuing: 
 (i) The Borrower shall, upon
written request by the Lender, notify (and the Borrower hereby authorizes the Lender so to notify) each account debtor in respect of any accounts receivable that such Collateral has been assigned to the Lender under this Agreement and that any
payments due or to become due in respect of that Collateral shall be made directly to the Lender; 
 (ii) All payments
received by the Borrower under or in connection with any of the Collateral shall be held by the Borrower in trust for the Lender, shall be segregated from other funds of the Borrower and shall forthwith upon receipt by the Borrower, be turned over
to the Lender, subject to the rights of the holders of the Pali Notes in respect of the prior lien and security interest referred to above, in the same form as received by the Borrower (duly indorsed by the Borrower to the Lender, if required); and

 (iii) Any and all such payments so received by the Lender (whether from the Borrower or otherwise) may, in the sole
discretion of the Lender, be held by the Lender as collateral security for, and then or at any time thereafter applied in whole or in part by the Lender, against all or any part of the Obligations. 
 Any balance of such payments so paid to or held by the Lender and remaining after payment in full of all the Obligations shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same. 

 (b) If any Event of Default shall occur and be continuing, the Lender may exercise in addition to all
other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the
foregoing, the Borrower expressly agrees that in any such event the Lender, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon
the Borrower or any other person (all and each of which demands, advertisements and/or notices are hereby expressly waived), may forthwith collect, receive appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales, at any exchange broker’s
board or at any of the Lender’s offices or elsewhere at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of said Collateral so sold, free of any right or equity of redemption in the Borrower, which right or equity is hereby expressly released.
The Borrower further agrees, at the Lender’s request, to assemble the Collateral, make it available to the Lender at places which the Lender reasonably shall select, whether at the Borrower’s premises or elsewhere. The Lender shall apply
the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care, safe keeping or otherwise of any or all of
the Collateral or in any way relating to the rights of the Lender hereunder, including reasonable attorneys’ fees and legal expenses, to the payment in whole or in part of the Obligations, in such order as the Lender may elect, the Borrower
remaining liable for any deficiency remaining unpaid after such application, and only after so paying over such net proceeds and after the payment by the Lender of any other amount required by any provision of law, need the Lender account for the
surplus, if any, to the Borrower. To the extent permitted by applicable law, the Borrower waives all claims, damages, and demands against the Lender arising out of the repossession, retention or sale of the Collateral. The Borrower agrees that the
Lender need not give more than ten (10) days’ notice (which notification shall be deemed given when mailed, postage prepaid, addressed to the Borrower at its address set forth in Section 10 hereof) of the time and place of any public
sale or of the time after which a private sale may take place and that such notice is reasonable notification of such matters. The Borrower shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which the Lender is entitled, the Borrower also being liable for the fees of any attorneys employed by the Lender to collect such deficiency. 
 (c) The Borrower also agrees to pay all costs of the Lender, including attorneys’ fees, incurred with respect to the collection of any of the
Obligations and the enforcement of any of their respective rights hereunder. 
 9. Limitation on the Lender’s Duty in Respect of
Collateral. Beyond the safe custody thereof, the Lender shall not have any duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of it or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto. 
 10. Notices. All notices, demands and approvals hereunder
shall be in writing and shall be deemed to have been sufficiently given or served when presented personally, telecopied or when deposited in the mail with first class postage prepaid: 
  

	 	If to the Borrower:	John (BJ) Lackland 

 Power Efficiency
Corporation 
 3960 Howard Hughes Parkway 
 Suite 460 
 Las Vegas, NV 89109 
  

	 	If to the Lender:	EMTUCK, LLC 

 c/o Northwest Power
Management, Inc. 
 Suite 1004 
 One Hughes Center Drive 
 Las Vegas, NV 89109 

 and shall be deemed to have been received upon the earlier of actual receipt thereof or the fourth calendar day after
such mailing. Either party may change its address by notice to the other. 
 11. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 
 12. No
Waiver; Cumulative Remedies. The Lender shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder and no waiver shall be valid unless in writing, signed by the Lender, and then only to
the extent therein set forth. A waiver by the Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Lender would otherwise have had on any future occasion. No failure to exercise
nor any delay in exercising on the part of the Lender, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law. None of
the terms or provisions of this Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by the Lender. 
 13. Successors and Assigns; Governing Law. This Agreement and all obligations of the Borrower hereunder shall be binding upon the successors and assigns of the Borrower, and shall, together with the rights and
remedies of the Lender hereunder, inure to the benefit of the Lender and its successors and assigns. This Agreement shall be governed by, and be construed and interpreted in accordance with, the laws of the State of Nevada, without regard to
conflict of laws principles. 
 14. Further Indemnification. The Borrower agrees to pay, and to save the Lender harmless from, any and
all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement. 
 15. Termination. When all Obligations have been paid in full and the Total Commitments have expired
or been terminated, this Agreement shall terminate, and the Lender shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever, any remaining Collateral and money
received in respect of the Collateral, to or on the order of the Borrower. The Lender shall also execute and deliver to the Borrower upon that termination such Code termination statements and such other documentation as is reasonably requested by
the Borrower to effect the termination and release of the liens granted by this Agreement on the Collateral. 
 16. Amendments, Etc.
No provision of this Agreement may be waived, modified or supplemented except by an instrument in writing signed by the Borrower and the Lender. Any modification, supplement or waiver shall be for such period and subject to such conditions as shall
be specified in the written instrument effecting the same and shall be binding upon the Lender and the Borrower, and any such waiver shall be effective only in the specific instance and for the purpose for which given. 
 17. Agreements Superseded. This Agreement supersedes all prior agreements and understandings, written or oral, among the parties with respect to
the subject matter of this Agreement. 

 IN WITNESS WHEREOF, the Borrower has caused this Agreement to be executed by its duly authorized
officer on the date first set forth above. 
  

			
	POWER EFFICIENCY CORPORATION
  (a Delaware corporation)
		
	By:	 	  

			
	 Name:
	 	  
	 Title:
	 	  

  

			
	EMTUCK, LLC
  (a Nevada limited liability company)
		
	 By:
	 	[                                      
  ],
		 	  its manager

					
			
		 	By:	 	  
		 	 Name:
	 	  
		 	 Title:Form of warrant

 EXHIBIT 10.4 
 NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF
COUNSEL FOR THE COMPANY, IS AVAILABLE. 
 Warrant Number WCE xx 
 Void after 5:00 P.M. Las Vegas, Nevada time on the last day of the Exercise Period, 
 as defined in the Warrant 
 COMMON STOCK PURCHASE WARRANT 
 OF 
 POWER EFFICIENCY CORPORATION 
 This is to certify that, FOR VALUE RECEIVED,
                     (the “Holder”), is entitled to purchase, subject to the provisions of this Warrant, from Power
Efficiency Corporation, a Delaware corporation (the “Company”), at twenty-four cents ($0.24) per share (the “Warrant Exercise Price”), calculated as provided below, One Million Forty-One Thousand Six Hundred
Sixty-Seven (1,041,667) shares of common stock, par value $0.01 per share (the “Common Stock”). The Warrant Exercise Price is a price equal to the five-day average of the Closing Price of the shares of Common Stock on the OTC
Bulletin Board on the last trading day immediately prior to the making of the initial Base Loan pursuant to the Loan Agreement, with a floor on the Warrant Exercise Price of Twenty Cents ($0.20). The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, have been calculated pursuant to paragraph 3 of the Loan Agreement and are hereinafter sometimes referred to as the “Warrant Shares.” 
 1. ISSUANCE OF WARRANT. This Warrant is being issued as part of the consideration paid for services provided in connection with the
Base Loans made pursuant to the Loan Agreement (hereinafter defined). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement. In addition, the following terms shall have the meanings
set forth below: 
 “Closing Price” means, as of any date, the last bid price for the Common Stock as
reported by the NASDAQ OTC Bulletin Board, or other principal exchange or electronic trading system on which the shares of Common Stock are quoted or traded. 
 “Exercise Period” shall mean the period commencing on the date hereof and ending at 5:00 p.m., Pacific Time on
April 19, 2011. 
 “Loan Agreement” shall mean the Agreement between EMTUCK, LLC, as Lender, and the
Company, as Borrower, providing for the making of the Base Loans and Additional Loans (as defined in the Loan Agreement). 
 “Securities Act” means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder. 
 2. EXERCISE OF WARRANT. A. Subject to the vesting of the exercisability of applicable Warrants in accordance with the terms of paragraph 3 of the Loan Agreement, this Warrant may be exercised in whole or in
part at any time or from time to time from the date hereof until the end of the Exercise Period by presentation and surrender of this Warrant to the Company at its principal office, or at the office of its stock transfer 

 
agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Warrant Exercise Price for the number of shares of
Common Stock specified in such form. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the balance
of the shares of Common Stock purchasable hereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then actually be delivered to
the Holder. As soon as practicable after each exercise of this Warrant, in whole or in part, and in any event within seven (7) days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to
be issued in the name of and delivered to the Holder hereof or, subject to Section 8 hereof, as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct, a certificate or certificates (with appropriate restrictive
legends, as applicable) for the number of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock to which the Holder shall be entitled upon exercise. All issuances of Common Stock pursuant to the exercise of this
Warrant shall be rounded (up or down as the case may be) to the nearest whole share. 
 B. Cashless Exercise. Notwithstanding
any provisions herein to the contrary, in lieu of exercising this Warrant in the manner set forth in this Section 2, the Holder may elect to exercise this Warrant or a portion hereof and to pay for the shares of Common Stock issuable upon such
exercise by way of cashless exercise by surrendering this Warrant at the principal executive office of the Company, together with the Notice of Exercise attached hereto duly executed, in which event the Company shall issue to the Holder that number
of shares of Common Stock of the Company computed using the following formula: 
  

			
	X = 	 	Y (A - B)
		
		 	A

  

							
				
	Where	    	X	    	=	  	the number of shares of Common Stock to be issued to the Holder.
				
		    	Y	    	=	  	the number of shares of Common Stock purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being cancelled (at the date of such
calculation).
				
		    	A	    	=	  	the greater of: (i) the Closing Price of one share of Common Stock (on the date prior to such exercise) or (ii) the 10-day average of the closing bid price of the shares of Common Stock on the
OTC Bulletin Board prior to such surrender.
				
		    	B	    	=	  	the Exercise Price (as adjusted to the date of such calculation).

 If the above calculation results in a negative number, then no shares of Common Stock of the
Company shall be issued or issuable upon conversion of this Warrant. 
 3. RESERVATION OF SHARES/FRACTIONAL SHARES. The Company
hereby agrees that at all times there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of Common Stock as shall be required for issuance and delivery upon exercise of this Warrant. No fractional
shares or script representing fractional shares shall be issued upon the exercise of this Warrant. Instead, the Company will round up to the nearest whole share. 
 4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender of this Warrant to the Company for
other Warrants of different denominations entitling the Holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company or at the office of its stock transfer
agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any applicable transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer
agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term “Warrant” as used herein includes any Warrants into which this Warrant
may be divided or for which it 

 
may be exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, (and, in the case
of loss, theft or destruction, of reasonably satisfactory indemnification), and upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. 
 5. RIGHTS AND OBLIGATIONS OF THE HOLDER. The Holder shall not, by virtue of this Warrant, be entitled to any rights of a stockholder
of the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. In addition, no provision hereof, in the absence
of affirmative action by the Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof shall give rise to any liability of such Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 
 6. NOTICES TO WARRANT
HOLDERS. So long as this Warrant shall be outstanding, (a) if the Company shall pay any dividend or make any distribution upon Common Stock, or (b) if the Company shall offer to the holders of Common Stock for subscription
or purchase by them any share of any class or any other rights, or (c) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another entity,
tender offer transaction for the Company’s Common Stock, sale, lease or transfer of all or substantially all of the property and assets of the Company, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be
effected, or (d) if the Company shall file a registration statement under the Securities Act, or amend an existing Registration Statement, on any form other than on Form S-4 or S-8 or any successor form, then in any such case, the Company shall
cause to be mailed by certified mail to the Holder, at least ten (10) days prior to the date specified in clauses (a), (b), (c) or (d), as the case may be, of this Section 6 a notice containing a brief description of the proposed
action and stating the date on which (i) a record is to be taken for the purpose of such dividend, distribution or rights, or (ii) such reclassification, reorganization, consolidation, merger, tender offer transaction, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up, or (iii) such registration statement or amendment is to be filed with the SEC. 
 7. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of
any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary in which merger the Company is the continuing or surviving corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance of all or substantially all of the assets of the Company, the Company shall, as a
condition precedent to such transaction, cause effective provisions to be made so that (i) the Holder shall have the right thereafter by exercising this Warrant, to purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which could have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale or conveyance, and (ii) the successor or acquiring entity shall expressly assume the due and punctual observance and performance of each covenant and condition of
this Warrant to be performed and observed by the Company and all obligations and liabilities hereunder. The foregoing provisions of this Section 7 shall similarly apply to successive reclassifications, capital reorganizations and changes of
shares of Common Stock and to successive consolidations, mergers, sales or conveyances. 
 8. TRANSFER TO COMPLY WITH THE SECURITIES
ACT. This Warrant, the Warrant Shares or any other security issued or issuable upon the exercise of this Warrant may not be sold or otherwise disposed of except as follows: 
 (a) to a person who, in the opinion of counsel for the Company, is a person to whom this Warrant or Warrant Shares may legally be
transferred without registration and without the delivery of a current 

 
prospectus under the Securities Act with respect thereto and then only against receipt by the Company of an agreement of such person to comply with the
provisions of this Section 8 with respect to any resale or other disposition of such securities, which agreement shall be satisfactory in form and substance to the Company and its counsel; or 
 (b) to any person upon delivery of a prospectus then meeting the requirements of the Securities Act relating to such securities and the
offering thereof for such sale or disposition. 
 9. REGISTRATION. If the Company shall, after the date of the
issuance of this Warrant, file a registration statement or amendment to an existing registration statement under the Securities Act as provided in Section 6(d) hereof, the Company shall use its best efforts to include the shares of Common Stock
issuable on exercise of this Warrant in such registration statement or amended registration statement. 
 10. GOVERNING LAW;
JURISDICTION. The corporate laws of the State of [Delaware] shall govern all issues concerning the relative rights of the Company and its stockholders. All issues concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed in accordance with the internal laws of the State of [Delaware] without giving effect to the principles of conflicts of law thereof. The parties hereto agree that venue in any and all actions and
proceedings related to the subject matter of this Warrant shall be in the state and federal courts in and for Kent County, Delaware, which courts shall have exclusive jurisdiction for such purpose, and the parties hereto irrevocably submit to the
exclusive jurisdiction of such courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding. Service of process may be made in any manner recognized by such courts. This Warrant and any term
hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. 
 11. NOTICES. Except as provided in Section 6 hereof, any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 6:30 p.m. (Pacific time) on a Business Day, (b) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in
this Agreement later than 6:30 p.m. (Pacific time) on any date and earlier than 11:59 p.m. (Pacific time) on such date, (c) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or
(d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: 
  

	 	If to the Company:	Power Efficiency Corporation 

 3960 Howard
Hughes Parkway, Suite 460 
 Las Vegas, Nevada 89109 
 Attn: John (BJ) Lackland 
 Facsimile No.: (702) 697-0379 
  

	 	With a copy to:	Craig H. Norville, Esq. 

 Jones Vargas

 3773 Howard Hughes Parkway, Third Floor South 
 Las Vegas, Nevada 89109 
 Facsimile No.: (702) 734-2722 
  

	 	If to the Holder	To the Address Set Forth In the Records of the Company 

  

	 	With copies to:	EMTUCK, LLC 

 One Hughes Center Drive

 Suite 1004 
 Las Vegas, NV 89109 
 Facsimile No.: (702) 792-5445 
 Attn: Steven Strasser 

 12. PAYMENT OF TAXES. The Company will pay the cost of all applicable documentary
stamp taxes, if any, attributable to the issuance of shares of Common Stock underlying this Warrant upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the registration of any certificate for shares of Common Stock underlying this Warrant in a name other that of the Holder. The Holder is responsible for all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving shares of Common Stock underlying this Warrant upon exercise hereof. 
 13.
INCONSISTENCIES. To the extent there are any inconsistencies between the terms and provisions of this Warrant and the terms and provisions of the Loan Agreement, the terms and provisions of this Warrant shall govern and be controlling.

 IN WITNESS WHEREOF, this Warrant has been duly executed as of April 19, 2006. 
  

			
	POWER EFFICIENCY CORPORATION
		
	By:	 	  
		 	 Name:

		 	 Address:

 EXHIBIT A 
 FORM OF EXERCISE NOTICE 
 [To be executed only upon exercise of Warrant] 
 To POWER EFFICIENCY CORPORATION: 
 (A) The
undersigned registered holder of the within Warrant hereby irrevocably exercises the Warrant pursuant to Section 2 of the Warrant with respect to
                    (1) shares of the Common Stock, at an exercise price per share of Common Stock of
$            , which the holder would be entitled to receive upon the cash exercise hereof, and requests that the certificates for the shares be issued in the name of, and delivered
to, whose address is: 
 OR 
 (B) The undersigned
registered holder of the within Warrant hereby irrevocably exercises the Warrant pursuant to Section 2(B) of the Warrant with respect to
                    (1) shares of the Common Stock, and hereby authorizes POWER EFFICIENCY CORPORATION to withhold
             shares of Common Stock having a total value of $            , such value being determined in accordance with
the terms of this Warrant, from the Shares otherwise to be received, and requests that the certificates for the shares be issued in the name of, and delivered to
                    , whose address is: 
 Dated:
                         
  

	
	
	   
	 Print or Type Name

	
	   
	(Signature must conform in all respects to name of holder as specified on the face of Warrant)
	
	   
	(Street Address)
	
	   
	(City)                                (State)     
        (Zip Code)

	(1)	Insert here the number of shares called for on the face of this Warrant (or, in the case of a partial exercise, the portion thereof as to which this Warrant is being exercised), in
either case without making any adjustment of shares of Common Stock or any other stock or other securities or property or cash which, pursuant to the adjustment provisions of this Warrant, may be delivered upon exercise. In the case of a partial
exercise, a new Warrant or Warrants will be issued and delivered, representing the unconverted portion of the Warrant, to the holder surrendering the Warrant. 

 PURCHASE FORM 
 Dated:                     , 20     
 The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing
             shares of Common Stock and hereby makes payment of $             in payment of the stated exercise
price thereof. Schedule 1 attached hereto specifies the Warrant Shares from which the shares of Common Stock are being purchased and the Warrant Exercise Price(s) for such shares. 
  

	
	
	   

 INSTRUCTIONS FOR REGISTRATION OF STOCK 
  

			
		
	Name:	 	  
		 	     (Please typewrite or print in block letters)

			
		
	Signature:	 	  

			
		
	Social Security or Employer Identification No.:	 	  

 ASSIGNMENT FORM 
 FOR VALUE RECEIVED,
                                        
                                        
             hereby sells, assigns and transfer unto: 
  

			
		
	Name:	 	  
		 	     (Please typewrite or print in block letters)

			
		
	Address:	 	  

			
		
	Social Security or Employer Identification No.:	 	  

 The right to purchase Common Stock represented by this Warrant to the extent of shares as to which such right is
exercisable and does hereby irrevocably constitute and appoint                      as attorney to transfer the same on the books of the
Company with full power of substitution. 
 Dated:
                        , 200_. 
  

			
		
	Signature:	 	  

  

	
	 Signature Guaranteed:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]