Document:

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                                                                   EXHIBIT 10.35

                              CONSULTING AGREEMENT

This Agreement is effective as of September 22, 2003 by and between Power
Efficiency Corporation (the "Company") and Raymond J. Skiptunis (the
"Consultant").

The Company and the Consultant agree as follows:

1.       SERVICES

         The Consultant shall provide consulting services to the Company as may
         be requested by the Company's Chief Executive Officer. The Consultant
         shall be engaged by the Company as a consultant only and shall not have
         the authority to bind the Company.

2.       COMPENSATION

         As full consideration for the consulting services provided by the
         Consultant, the Company shall pay to the Consultant: (i) the amount of
         $4,000 per month, half payable on the 15th day and half payable on the
         last day of each month, and (ii) $7,000 per month accrued and payable
         at the rate of 5% of all cash raised through the issuance of debt or
         equity. No money received by the Company (i) from Summit Energy
         Ventures, LLC, a Delaware limited liability company, or (ii) pursuant
         to the Regulation S Stock Purchase Agreement dated April 23, 2003
         between the Company and Starz Investments Limited, shall cause any of
         the accrued amounts to become payable. In addition to the foregoing
         amount, the Company shall promptly reimburse the Consultant for all
         reasonable and necessary expenses (pre-approved and in writing)
         incurred by the Consultant in providing consulting services under this
         Agreement. Reimbursement for such expenses shall be made to Consultant
         within 45 days of receipt by Company of invoices and receipts
         substantiating such expenditures and detailing the services provided.

3.       COMPETITION

         The Consultant represents to the Company that the Consultant does not
         have any agreement to provide consulting services to any other party,
         firm, or company on matters relating to the business of the Company,
         and will not enter into any such agreement during the term of this
         Agreement.

4.       TERM AND TERMINATION

         Without limiting any rights which either party to this Agreement may
         have by reason of any default by the other party, each party reserves
         the right to terminate this Agreement at its convenience by written
         notice given to the other party. Such termination shall be effective
         upon the date not earlier than 30 days following the date of such
         notice as shall be specified in said notice.
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5.       MISCELLANEOUS

a.       This Agreement shall inure to the benefit of and be binding upon the
         respective heirs, executors, successors, representatives, and assigns
         of the parties, as the case may be; provided, however, the obligations
         hereunder of each party to the other are personal and may not be
         assigned without the express written consent of such other party.
b.       The relationship created by this Agreement shall be that of independent
         contractor, and the Consultant shall have no authority to bind or act
         as agent for the Company or its employees for any purpose.
c.       Except for agreement relating to confidentiality, this Agreement
         replaces all previous agreements and the discussions relating to the
         subject matters hereof and constitutes the entire agreement between the
         Company and the Consultant with respect to the subject matters of this
         Agreement. This Agreement may not be modified in any respect by any
         verbal statement, representation, or agreement made by any employee,
         officer, or representative of the Company, or by any written documents
         unless it is signed by an officer of the Company and by the Consultant.

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                  IN WITNESS WHEREOF, the parties have executed this Consulting
         Agreement effective the date first stated above.

<TABLE>
<CAPTION>
<S>                                                                    <C>
   ---------------------------------------------------------------     -------------------------------------------------------
   POWER EFFICIENCY CORPORATION, a Delaware Corporation                Raymond J. Skiptunis, individually

   By: _______________________________                                 ___________________________________
   Name:  Richard Koch
   Title:  Chief Executive Officer

   ---------------------------------------------------------------     -------------------------------------------------------
</TABLE>

Signature page to the Consulting Agreement dated September 22, 2003.<PAGE>

                                                                   EXHIBIT 10.36

                             BUSINESS PROPERTY LEASE
                                     BETWEEN
                     ARENS INVESTMENT COMPANY AS A LANDLORD
                                       AND
                        POWER EFFICIENCY CO. AS A TENANT

     THIS LEASE (this "Lease") dated this 1st day of November 2003, by and
between ARENS INVESTMENT Company, 2110 Crescent Beach, Manistee, MI 49660, the
Lessor, a Michigan Limited Partnership (hereinafter designated as the
"Landlord"), and Power Efficiency Co., a Delaware corporation, 4420 Varsity
Drive Suite E, Ann Arbor, MI 48108, the Lessee (hereinafter designated as the
"Tenant").

1. DESCRIPTION: Landlord, in consideration of the rents to be paid and the
covenants and agreements to be performed by the Tenant, leases to Tenant the
following premises situated in the City of Livonia, Michigan to wit: 35432
Industrial Road, Livonia, MI 48150 (the "Premises" or "Property").

2. TERM: For the term of (5) five years, and (2) two months from and after the
1st day of November 2003, to be completed and ended upon expiration of such
Lease term.

3. RENT: Tenant shall pay to Landlord monthly installments of:

Months 01 through 02- No Charge;
Months 03 through 62- $6,073.33 per month totaling $364,399.80 for sixty (60)
months. All Lease payments are due on the first day of the month. Lease payments
shall be made to the Landlord at 2110 Crescent Beach, Manistee, MI 49660, which
address may be changed from time to time upon written notice from the Landlord.

4. SECURITY PROVISION: The Landlord acknowledges the receipt of Twelve Thousand
One Hundred Forty Six and 66/100 Dollars ($12,146.66) (the "Security Deposit),
which the Landlord is to retain as security for the faithful performance of all
of the covenants, conditions and agreements of this Lease, but in no event shall
the Landlord be obliged to apply the same upon rents or other charges in arrears
or upon damages for the Tenant's failure to perform the said covenants,
conditions, and agreements for non-payment of rent or for any other default.
Tenant's obligation to pay rent shall not in any event be affected by reason of
the fact that the Landlord holds the Security Deposit. The Security Deposit, if
not applied toward the payment of damages of rent in arrears or toward the
payment of damages suffered by the Landlord by reason of the Tenant's breach of
the covenants, conditions, and agreements of this Lease, is to be returned to
the Tenant within thirty (30) days after this Lease is terminated, according to
these terms, and in no event is the Security Deposit to be returned until the
tenant has vacated the Premises and delivered possession to the Landlord.

In the event that the Landlord repossesses itself of the Premises because of the
Tenant's default or because of the Tenant's failure to carry out the covenants,
conditions and agreements of this Lease, the Landlord may apply said Security
Deposit upon all damages suffered to the date of said repossession and may
retain the Security Deposit to apply upon such damages as may be suffered or
shall accrue thereafter by reason of the Tenant's default or breach.
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                                                                    Page 2 of 13

The Landlord shall not be obliged to keep the Security Deposit as a separate
fund, but may mix the Security Deposit with Landlord's funds.

5. ADDITIONAL RENT: Tenant agrees to pay as additional rental all of the
following:

     (a) One hundred (100%) percent of:

                  (i) the total gas, water and electric bills relating to the
  Premises during the term of the Lease when due; and

                  (ii) Reasonable costs and expenses of every kind and nature
  paid or incurred by Landlord in operating, repairing, replacing and
  maintaining the Premises and facilities excepting the roof, foundation, and
  outer walls; and

     (b) One hundred (100%) percent of each of the following expenses relating
to the entire land and building of which the Premises are a part:

                   (i) Taxes: Tenant shall pay, as rent, Tenant's proportionate
share (100%) of the real estate taxes assessed against the Premises during the
term of the Lease. For taxes assessed against the Premises for any period where
part of such period is not during the term of the Lease, the Tenant shall only
be responsible for the portion of the taxes attributable to the term of the
Lease. Payment of said taxes shall be made 1/12th with each monthly payment
required hereunder. Any increase or decrease in the amount required to be paid
as taxes, shall be adjusted within thirty (30) days after written notice to
Tenant from Landlord showing the amount of such increase or decrease and
necessary data showing the computation of such. Landlord agrees to provide
Tenant copies of said data, including a copy of the tax bill, annually upon
Tenant's request. Tenant shall have the right to contest the validity of any tax
payable by him which it deems to have been wrongfully or illegally levied or
assessed against the Premises, and for that purpose shall have the right to
institute such proceeding or proceedings in the name of the Landlord as Tenant
may deem necessary, provided that the expenses incurred by reason thereof shall
be paid by Tenant and Tenant receives Landlord's prior consent. The Landlord
agrees to cooperate with Tenant in any such contest or proceedings initiated by
Tenant. The Landlord covenants that all amounts levied or assessed by the
appropriate governmental agency are paid to date. If an assessment is payable in
installments, Tenant shall only be responsible to pay it's pro rata share of the
installments as said installments become due during the term of Tenant's
occupancy. Tenant shall not be responsible for any installments, which are due
after the termination of the Lease;

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                                                                    Page 3 of 13

                   (ii) Insurance: During the term of this Lease or any
extensions thereof, the Tenant shall pay as additional rent, Tenant's
proportionate share of the cost of a fire and extended coverage insurance policy
insuring the buildings, improvements and building equipment on the Premises
against loss or damage by fire, vandalism, malicious mischief, and against other
such risks, of a similar or dissimilar nature, as shall be insurable against
under present or future forms and fire and extended coverage policies which are
standard for use in the State of Michigan in amounts not less than 100% of the
actual replacement value of said buildings, improvements and building equipment
on Premises. Said insurance shall be in an amount not less than One Million, two
hundred thousand and 00/100 Dollars ($1,200,000.00). Tenant shall pay to
Landlord Tenant's proportionate share of the cost of said insurance premium
within thirty (30) days of receipt of a copy of insurance bill from Landlord.
Landlord shall provide Tenant with copies of all statements for insurance
premiums within thirty (30) days after Landlord receives them and shall make
available to Tenant copies of the insurance policy together with any
endorsements during regular business hours and shall make copies of same if so
requested by Tenant. Landlord shall be entitled to determine which A-rated
insurance company shall issue the policy. All such policies shall provide that
any loss shall be payable notwithstanding any act of negligence of Tenant or
Landlord which might otherwise result in forfeiture of said Insurance. Every
fire and extended coverage insurance policy shall include a mortgage endorsement
in favor of any mortgagee designated by Landlord. Insurance to include glass
plate insurance.

Tenant will procure and keep in effect during the term hereof, general liability
insurance in the sum of Two Million Dollars ($2,000,000.00) each occurrence and
general aggregate combined for bodily injury and property damage. Landlord shall
be named as an additional insured and the policy shall provide that Landlord
shall receive written notice of cancellation not less than ten (10) days prior
to cancellation. Tenant shall provide landlord with a certificate of insurance
as evidence of such insurance. Tenant shall deliver copies of policy to Landlord
upon request.

Upon Tenant's failure to provide required insurance , the Landlord may, at its
option, obtain such insurance, and the cost thereof shall be paid as additional
rent due and payable upon the next ensuing rent day. The policies for such
insurance and the insurance companies issuing those policies shall be subject to
the reasonable approval of Landlord

                   (iii) Building Operating Costs: Building operating costs
shall include Landlord's reasonable, actual costs incurred and paid (without
mark-up) for the operations, repair and maintenance of the of the Premises (to
the extent not done or paid for by Tenant), the Building common areas (including
the parking areas, loading and unloading areas, roadways, walking areas and
lighting facilities), landscaping, signs, fencing, fire detection systems,
security systems, security services, safety inspections, water backflow
inspections, elevator inspections, crane inspections, sprinkling systems,
sprinkling winterization, heating & cooling systems, association dues, and any
other expenses designated as a depreciable item or a "not current expense" under
generally accepted accounting principles.

Notwithstanding anything herein to the contrary, if Tenant is responsible for an
expense or cost which would be deemed a capital improvement or capital
expenditure under generally accepted accounting principles, Tenant shall only be
responsible for a portion of said cost or expenditure which shall be determined
by the following formula:

         Amount of capital cost or expenditure X remainder of Lease term
         ---------------------------------------------------------------
                           useful life of improvement
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                                                                    Page 4 of 13

Tenant agrees to pay its prorated share of such expenses within fifteen (15)
days after receipt of billings from the Landlord, which shall include a copy of
the actual bill or invoice for said expense. With respect to bills for real
estate taxes and assessments, in the first and last years during the Lease
terms, Tenant's obligation shall be prorated on a due date basis, in advance.
With respect to bills for fire and hazard insurance premiums in the first and
last years during the Lease term, Tenant's obligation shall be prorated on a
calendar year basis, in advance.

If Tenant exercises an option to renew, the numerator shall be adjusted
accordingly to take into account the renewal term. Each party shall pay its
prorated share of the expense of the capital improvement or expenditure at the
time the work is undertaken.

6. LANDLORD'S REPRESENTATIONS AND WARRANTIES: To the best of the Landlord's
knowledge, the Landlord hereby represents to Tenant, that as of the date of this
Lease:

                  (i) Landlord is a limited Partnership validly existing and in
good standing under the laws of Michigan.

                  (ii) Landlord now holds and will continue to hold good
indefeasible, fee simple, and marketable title to the Property.

                  (iii) Landlord has complete and unrestricted power to enter
into this Lease and to sell, transfer, assign and deliver to Tenant all of the
Property.

                  (iv) There is no litigation or proceeding of any type pending
or threatened, and Landlord has not received notice of any investigation pending
or threatened against Landlord or the Property, which might result in any lien
upon the Property or in any material, adverse change pertaining to the Property
or the operations thereof, or which questions the validity of any action taken
in connection with any of the provisions of this Lease. The Landlord knows of no
reasonable grounds or any basis for any such action relative to the Landlord or
the Property.

                  (v) Landlord has not, and to its knowledge its predecessor
owners have not, generated, disposed of, transported or otherwise permitted to
be stored on the Property hazardous or toxic wastes within the meaning of or
subject to regulation under any applicable federal, state or local law. Landlord
agrees to defend and hold harmless the Tenant from any claims alleging liability
for such generation, disposition, transportation or storage for periods prior to
the commencement of the term of this Lease.

                  (vi) This Lease is legal, valid, and a binding obligation of
Landlord.

                  (vii) The Property is zoned such that it will accommodate
Tenant's use as described in the "USE" clause.

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                                                                    Page 5 of 13

                  (viii) The Premises is in compliance with all Legal
Requirements. As used herein, "Legal Requirements" mean all laws, statutes,
ordinances, orders, rules, regulations and requirements, including all mandatory
energy conservation requirements applicable to the Property, of all federal,
state and municipal governments, and the appropriate agencies, officers,
departments, boards and commissions thereof, whether now or hereafter in force
applicable to the Property, or any part thereof (including, without limitation,
the Americans With Disabilities Act); all applicable local, state and federal
laws and regulations relating to the use on, storage in, and the removal from
the Land and/or the Building of hazardous or toxic material, petro-chemical
products, or asbestos or products containing asbestos; and all covenants,
conditions and restrictions of record affecting the use or occupancy of the
Property.

                  (ix) The Landlord currently has an insurance policy in effect
that meets the requirements described in section 5(b)(ii), the premium of such
policy is less than $3,200 per year and the Landlord has no knowledge of any
fact that would cause the policy's renewal premium to be higher than the current
premium except for normal increases due to general market conditions and typical
annual increases.

7. ESTOPPEL CERTIFICATES: Tenant agrees that at any time and from time to time
at reasonable intervals, within fifteen (15) days after written request by
Landlord, Tenant will execute, acknowledge and deliver to Landlord, Landlord's
mortgagee, or others designated by Landlord, a certificate in a form as may from
time to time be provided, ratifying this Lease and certifying: (a) that Tenant
has entered into occupancy of its Premises and the date of such entry if such is
the case; (b) that this Lease is in full force and effect, and has not been
assigned, modified, supplemented or amended in any way (or if there has been any
assignment, modification, supplement or amendment, identifying same); (c) that
this Lease represents the entire agreement between Landlord and Tenant as to the
subject matter hereof (or if there has been any assignment, modification,
supplement or amendment, identifying same); (d) the date of commencement and
expiration of the Term; (e) that all conditions under this Lease to be performed
by Landlord have been satisfied and all required contributions by Landlord to
Tenant on account of Tenant's improvements have been received (and if not, what
conditions remain unperformed); (f) that to the knowledge of the signer of such
writing no default exists in the performance or observance of any covenant or
condition in this Lease and there are no defenses or offsets against the
enforcement of this Lease by Landlord or specifying each default, defense or
offset which the signer may have knowledge; (g) with the exception of the
regular monthly payment, that no rent has been paid in advance; and (h) the date
to which all rentals have been paid under this Lease.

8. EVENT OF DEFAULT BY TENANT:

         (a) Events of Default. Each of the following events shall be deemed to
be, and is referred to in this Lease as, an "Event of Default:"

                  (1) A default by Tenant in making any payment of rent or
additional rent due hereunder on the day such payment is due and payable which
continues for more than fifteen (15) days after Landlord shall have given Tenant
a written notice specifying such default;
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                                                                    Page 6 of 13

                  (2) The neglect or failure of Tenant to perform or observe any
of the terms, covenants or conditions contained in this Lease other than the
payment of rent or additional rent on Tenant's part to be performed or observed
(i) within thirty (30) days after Landlord shall have given to Tenant notice
specifying such neglect or failure, or (ii) in the case of any such neglect or
failure which cannot with due diligence and in good faith be cured within thirty
(30) days, within such additional period, if any, as may be reasonably required
to cure such default with due diligence and in good faith provided that Tenant
commences the curing of the same within the 30-day period and completes the cure
within ninety (90) days after Landlord's notice to Tenant (it being intended
that, in connection with any such default which is not susceptible of being
cured with due diligence and in good faith within thirty (30) days, the time
within which the Tenant is required to cure such default shall be extended for
such additional period as may be necessary for the curing thereof with due
diligence and in good faith but in no event longer than ninety (90) days from
the date of Landlord's notice), it being agreed that any default which is not
cured within ninety (90) days shall become an Event of Default;

                  (3) The assignment, transfer, mortgaging or encumbering of
this Lease or the subletting of the Premises in a manner not permitted by this
Lease;

                  (4) The taking of this Lease or the Premises, or any part
thereof, upon execution or by other process of law directed against Tenant, or
upon or subject to any attachment at the instance of any creditor of or claimant
against Tenant, which execution or attachment shall not be discharged or
disposed of within sixty (60) days after the levy thereof; or

         (b) Landlord's Rights upon Event of Default. Upon the occurrence of an
Event of Default, Tenant shall in all events remain liable for the rent and
additional rent (except as otherwise provided in Section 8(b)(1) below) provided
herein for the balance of the term of this Lease and Landlord shall also have
the right, at its sole election, then or at any time thereafter, either:

                  (1) To give notice to Tenant that this Lease will terminate
(thereby ending the term of the Lease) on a date to be specified in such notice,
which date may be fifteen (15) days from the date of such notice or any day
thereafter, and on the date specified in such notice Tenant's right to
possession of the Premises and obligation to pay rent shall cease and this Lease
shall thereupon be terminated; or

                  (2) After obtaining a valid court order, or if said Premises
shall be deserted or vacated, then it shall be lawful for the Landlord, its
certain attorney, heirs, representatives and assigns, to re-enter into,
repossess the Premises and the Tenant and each and every occupant to remove and
put out. In the event that the Landlord shall, during the period covered by this
Lease, obtain possession of the Premises by re-entry, summary proceedings, or
otherwise, the Tenant hereby agrees to pay the Landlord the expenses incurred in
obtaining repossession of the Premises (including reasonable attorney fees), and
also all expenses and commissions which may be paid in and about the letting of
the same, and all other damages. Landlord agrees to use its best efforts to
mitigate its damages. Landlord may, in its sole discretion, elect to submit all
or any part of any controversy or claim arising out of or related to this Lease
to judicial proceedings or to arbitration. With respect to any matter(s) which
Landlord elects to submit to arbitration, the parties hereby agree that such
matter(s) shall be determined by binding arbitration under the commercial
arbitration rules of the American Arbitration Association. The parties further
agree that any such controversy or claim submitted to arbitration shall be
determined by one (1) arbitrator selected from the panels of arbitrators of the
American Arbitration Assocation. The parties further agree that, with respect to
each matter submitted to arbitration: they will faithfully observe this
agreement and the rules; they will abide by and perform any award rendered by
the arbitrator; and a judgment of the court having jurisdiction may be entered
on the award. Landlord's election to arbitrate any matter shall be made by
filing a claim for arbitration pursuant to the rules of the American Arbitration
Association. The parties agree that all arbitration hearings, and all judicial
proceedings to enforce any of the provisions of this Lease, shall take place in
Oakland County, Michigan and that the costs and expenses of arbitration,
including the fees of the arbitrator, shall be borne by the losing party, or in
such proportions as the arbitrator shall determine.
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                                                                    Page 7 of 13

9.       EVENT OF DEFAULT BY LANDLORD:

         (a)      Landlord Default Provisions

                  (1) Landlord Default. Each of the following events shall be
deemed to be, and is referred to in this Lease as, a "Landlord Default:"

                  The neglect or failure of Landlord to perform or observe any
of the terms, covenants or conditions contained in this Lease on Landlord's part
to be performed or observed which is not remedied by Landlord (i) within thirty
(30) days after Tenant shall have given to Landlord notice specifying such
neglect or failure, or (ii) in the case of any such neglect or failure which
cannot with due diligence and in good faith be cured within thirty (30) days,
within such additional period, if any, as may be reasonably required to cure
such default with due diligence and in good faith provided that Landlord
commences the curing of the same within the 30-day period and completes the cure
within one hundred twenty (120) days after Tenant's notice to Landlord (it being
intended that, in connection with any such default which is not susceptible of
being cured with due diligence and in good faith within thirty (30) days, the
time within which the Landlord is required to cure such default shall be
extended for such additional period as may be necessary for the curing thereof
with due diligence and in good faith but in no event longer than one hundred
twenty (120) days from the date of Tenant's notice), it being agreed that any
default which is not cured within one hundred twenty (120) days shall become a
Landlord Default.

                  (2) Tenant's Rights upon Landlord Default. If Landlord commits
a Landlord Default, Tenant may (i) recover from Landlord all damages suffered by
Tenant as a result of a Landlord Default (subject to any limitations on
Landlord's liability otherwise provided in this Lease), (ii) obtain injunctive
or other equitable relief against Landlord (but only to the extent such relief
is otherwise available under applicable law), (iii) without waiving any claim
for damages, cure such Landlord Default, and any amount paid or any contractual
liability incurred by Tenant in so doing shall be deemed paid or incurred for
the account of Landlord, which amount shall be paid by Landlord to Tenant upon
written demand to Landlord, or (iv) terminate this Lease by written notice to
Landlord, in which case this Lease shall terminate fifteen (15) days after the
date of such notice. Landlord shall be liable to Tenant for all reasonable
attorneys' fees and costs incurred by Tenant as a result of a Landlord Default.

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                                                                    Page 8 of 13

10. ASSIGNMENT: Tenant may not assign or sublease any interest in the Premises,
nor assign, mortgage, nor pledge this Lease, without the prior written consent
of Landlord, which shall not be unreasonably withheld or delayed.

11. BANKRUPTCY AND INSOLVENCY: The Tenant agrees that if the estate created
hereby shall be taken in execution, or by other process of law, or if the Tenant
shall be declared bankrupt or insolvent, according to law, or any receiver be
appointed for the business and property of the Tenant, or if any assignment
shall be made of the Tenant's property for the benefit of creditors, then and in
such event this Lease may be cancelled at the option of the Landlord.

12. RIGHT TO MORTGAGE: The Landlord reserves the right to subject and
subordinate this Lease at all times to the lien of any mortgage or mortgages now
or hereafter placed upon the Landlord's interest in the Premises and on the land
and buildings of which the Premises are a part or upon any buildings hereafter
placed upon the land of which the Premises form a part. And the Tenant covenants
and agrees to execute and deliver upon demand such further instrument or
instruments subordinating this Lease to the lien of any such mortgage or
mortgages as shall be desired by the Landlord provided, however, that such
mortgagee recognizes the rights of the Tenant under this Lease so long as the
Tenant is not in default of its obligations hereunder.

13. USE AND OCCUPANCY: It is understood and agreed between the parties hereto
that the Premises during the continuance of this Lease shall be used and
occupied for light industrial, assembly, storage, and related office use, and
for no other purpose or purposes without the written consent of the Landlord,
which consent shall not be unreasonably withheld or delayed, and that the Tenant
will not use the Premises for any purpose in violation of any law, municipal
ordinance or regulation. Upon any breach of this paragraph that remains uncured
after thirty (30) days written notice, the Landlord may, at its option,
terminate this Lease forthwith and re-enter and repossess the Premises.

14. DAMAGE TO THE PREMISES: It is understood and agreed that if the Premises
hereby leased shall be damaged or destroyed in whole or in part by fire or other
casualty or deterioration during the term hereof, the Landlord will repair and
restore the same to good tenantable condition with reasonable dispatch, and that
the rent and all other charges including taxes, maintenance and insurance herein
provided for shall abate entirely in case the entire Premises are untenantable
and pro rata for the portion rendered untenantable, in case a part only is
untenantable, until the same shall be restored to a tenantable condition;
provided, however, that if the Tenant shall fail to adjust its own insurance or
to remove its damaged goods, wares, equipment or property within a reasonable
time, and as a result thereof the repairing and restoration is delayed there
shall be no abatement of rental during the period of such resulting delay, and
provided further that if the Tenant shall use any part of the Premises for
storage during the period of repair a reasonable charge shall be made therefor
against the Tenant, and provided further that in case the Premises shall be
destroyed to the extent of more than one-half of the value or leasable space
thereof, the Landlord or the Tenant may, at their option, terminate this Lease
forthwith by thirty (30) days' written notice to the other. Notwithstanding
anything herein to the contrary, if the work of repairing or restoring the
Premises to pre-casualty condition is not completed within one hundred twenty
(120) days after the date of said casualty, Tenant shall have the right to
terminate this Lease by providing written notice to Landlord.

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                                                                    Page 9 of 13

15. TENANT TO INDEMNIFY: The Tenant agrees to indemnify and hold harmless the
Landlord from any liability for damages to any person or property in, on or
about said Premises in connection with (i) Tenant's, its employees or invitee's
use or occupancy of the Premises and (ii) breach of Tenant's covenant's
contained herein. Notwithstanding anything herein to the contrary, Landlord
shall still remain liable to the Tenant for its negligence or breach of this
Lease as well as the negligence of its agents, employees, and or
representatives.

16. LANDLORD TO INDEMNIFY: The Landlord hereby agrees to indemnify and hold
harmless Tenant, the officers, directors, agents and employees of, and the
partners in, Tenant, from and against any and all claims, losses, actions,
damages, liabilities and expenses (including reasonable attorneys' fees and
disbursements) that arise from or are in connection with (i) Landlord's, its
employees' or invitees' use or occupancy of all or any part of the Premises, and
(ii) breach of any of Landlord's representations and warranties contained
therein. Notwithstanding the foregoing, Tenant shall remain liable to Landlord
for its negligence or breach of the Lease, as well as the negligence of its
agents, employees and/or representatives.

17. WAIVER OF SUBROGATION: Each party hereto does hereby remise, release and
discharge the other party hereto and any officer, agent, employee or
representative of such party, of and from any liability whatsoever hereafter
arising from loss, damage or injury caused by fire or other casualty for which
insurance (permitting waiver of liability and containing a waiver of
subrogation) is carried by the insured party at the time of such loss, damage or
injury, to the extent of any recovery by the injured party under such insurance.

18. REPAIRS AND ALTERATIONS: The Tenant further covenants and agrees that it
will, at its own expense (subject to the capital improvement calculation in
section 5(b)(iii)), during the term of this Lease, keep the Premises and every
part thereof in as good repair (except for the roof, outer walls, and
foundation) and at the expiration of the term yield and deliver up the same in
like condition as when taken, reasonable use and wear thereof and damage by the
elements or damage by casualty loss excepted. The Landlord covenants and agrees
that it will, at its own expense during the term of this Lease, keep the roof,
foundation and outer walls in good repair. The Tenant shall not make any
structural alterations, additions or improvements to the Premises without the
Landlord's written consent, and all alterations, additions or improvements made
by either of the parties to the Premises, except movable office furniture,
Tenant's equipment and trade fixtures put in at the expense of the Tenant, shall
be the property of the Landlord, and shall remain upon and be surrendered with
the Premises at the termination of this Lease, without molestation or damage:

19. EMINENT DOMAIN: If the whole or any substantial part of the Premises hereby
Leased shall be taken by any public authority under the power of eminent domain,
then the term of this Lease shall cease on the part so taken from the day the
possession of that part shall be required for any public purpose, and the rent
shall be paid up to that day, and from that day the Tenant shall have the right
either to cancel this Lease and declare the same null and void or to continue in
possession of the remainder of the same under the terms herein provided, except
that the rent shall be reduced in proportion to the amount of the Premises
taken. All damages awarded for such taking shall belong to and be the property
of Landlord whether such damages shall be awarded as compensation for diminution
in value to the Leasehold or to the fee of the Premises herein Leased; provided
however, that the Landlord shall not be entitled to any portion of the award
made to the Tenant for loss of business or for Tenant's moving expenses.

<PAGE>
                                                                   Page 10 of 13

20. RESERVATION: The Landlord reserves the right of free access at all times to
the roof of said Premises. The Tenant shall not erect any structures for storage
or any aerial, or use the roof for any purpose without the consent in writing of
the Landlord.

21. CONDITION OF PREMISES: The Tenant further acknowledges that it has examined
the said Premises prior to the making of this Lease, and knows the condition
thereof, and that no representations as to the condition or state of repairs
thereof have been made by the Landlord, or its agent, which are not herein
expressed, and the Tenant hereby accepts the Premises in its present condition
at the date of the execution of this Lease.

22. CARE OF PREMISES: The Tenant shall not perform any acts or carry on any
practices which may seriously damage the Premises, and shall keep Premises under
its control (including adjoining drives, streets, alleys or yards) clean and
free from rubbish, dirt and ashes at all times, and it is further agreed that in
the event the Tenant shall not comply with these provisions, the Landlord may
enter upon the Premises and have rubbish, dirt and ashes removed and the side
walks cleaned, in which event the Tenant agrees to pay all charges that the
Landlord shall pay for hauling rubbish, ashes and dirt, or cleaning walks. Said
charges shall be paid to the Landlord by the Tenant as additional rent as soon
as bill is presented to him.

Subject to the rent calculation in section 5(b)(iii) for capital improvements,
Tenant shall reimburse Landlord for the reasonable costs and expenses of every
kind and nature paid or incurred by Landlord in operating, replacing and
maintaining the Premises in a proper manner with the exception of those expenses
relating to the roof, foundation, and outer walls,. The Landlord shall provide
copies of all such bills, and the Tenant will reimburse the Landlord within
thirty (30) days of receipt and all such amounts shall be considered additional
rent.

         (a) The Landlord has exclusive right to select the landscape contractor
at Tenant's expense. Landscaping will include 5 fertilizing treatments per year,
weeding, replacement of all trees and shrubs and mulch replacement. The Tenant
agrees to reimburse the Landlord at cost within thirty (30) days of receipt of
invoice (Copies of bills to be provided).

         (b) Tenant is solely responsible for snow and ice removal.

23. COMPLIANCE WITH LAWS: The Tenant shall at its own expense under penalty of
forfeiture and damages promptly comply with all Legal Requirements affecting the
Premises, unless failure of the Premises to so comply arises from events or
conditions occurring or present prior to the Lease term. Notwithstanding
anything herein to the contrary, Tenant shall not be required to undertake any
construction or capital improvements under this Section.

<PAGE>
                                                                   Page 11 of 13

24. RE-RENTING: The Tenant hereby agrees that for a period commencing one
hundred twenty (120) days prior to the termination of this Lease, the Landlord
may show the Premises to prospective Tenants, and ninety (90) days prior to the
termination of this Lease, may display in and about the Premises and in the
windows thereof, the usual and ordinarily "RE-RENT" signs. The Landlord is to
give three (3) business days' notice to the Tenant and must be accompanied by
Tenant's representative during "showing."

25. HOLDING OVER: It is hereby agreed that in the event of the Tenant herein
holding over after the termination of this Lease, thereafter the tenancy shall
be from month to month in the absence of a written agreement to the contrary.

26. GAS, WATER, HEAT, ELECTRICITY: Landlord shall arrange for and furnish all
electricity for lighting, ventilating, and heating and cooling the Premises, and
hot and cold running water. Tenant will pay all charges made against said
Premises for gas, water, heat, and electricity during the continuance of this
Lease, as the same shall become due. Landlord shall arrange for all utility
bills to be sent directly from each utility company to Tenant at the Premises.
Tenant shall be authorized by Landlord to handle all billing and other utility
matters with respect to the Premises, and Landlord agrees to cooperate with
Tenant in handling any such matters, as necessary.

27. ADVERTISING DISPLAY: It is further agreed that all signs and advertising
displayed in and about the Premises shall only advertise the business carried on
upon the Premises, and that the Landlord shall control the character and size
thereof, and that no sign shall be displayed excepting such as shall be approved
in writing by the Landlord, and that no awning shall be installed or used on the
exterior of said building unless approved in writing by the Landlord.

28. INSPECTION BY LANDLORD: At any time, except in the cases of emergency, the
Landlord shall have the right to enter upon the Premises at all reasonable hours
for the purpose of inspecting the same. Landlord must be accompanied by Tenant's
representative. If the Landlord deems any repairs necessary, it may demand that
the Tenant make the same; and if the Tenant refuses or neglects forthwith to
commence such repairs and complete the same within thirty (30) days after
notice, the Landlord may make or cause to be made such repairs and shall not be
responsible to the Tenant for any loss or damage that may accrue to its stock or
business by reason thereof, and if the Landlord makes or causes to be made such
repairs, the Tenant agrees that it will, forthwith on demand, pay to the
Landlord the cost thereof with interest at 10% per annum, and if it shall make
default in such payment, the Landlord shall have the remedies provided herein
for default in payment of rent.

29. REMEDIES NOT EXCLUSIVE: It is agreed that each and every of the rights,
remedies and benefits provided by this Lease shall be cumulative, and shall not
be exclusive of any other of said rights, remedies and benefits, or of any other
rights, remedies and benefits allowed by law.

30. WAIVER: One or more waivers of any covenant or condition by the Landlord
shall not be construed as a waiver of a further breach of the same covenant or
condition. Similarly, one or more waivers of any covenant or condition by Tenant
shall not be construed as a waiver of a further breach of the same covenant or
condition.

<PAGE>
                                                                   Page 12 of 13

31. DELAY OF POSSESSION: It is understood that if the Tenant shall be unable to
enter into and occupy the Premises hereby Leased at the time above provided, by
reason of the Premises not being ready for occupancy, or by reason of the
holding over of any previous occupant of the Premises, or as a result of any
cause of reason beyond the direct control of the Landlord, the Landlord shall
not be liable in damages to the Tenant therefore, but during the period the
Tenant shall be unable to occupy the Premises as herein before provided, the
rental therefore shall be abated.

32. RIGHT TO SELL: Landlord reserves the right to sell this property at any time
during the Lease period. Landlord agrees that if it elects to sell the property
at any time during the term of this Lease including any extensions, Landlord
shall first negotiate with Tenant in good faith to enter into a mutually
acceptable purchase agreement.

In the event Landlord desires to sell the Premises and Tenant does not purchase
same, such sale shall be subject to the terms of this Lease and any extensions
or renewals.

33. QUIET ENJOYMENT: The Landlord covenants that Tenant, upon paying rent due
hereunder and performing all the covenants aforesaid, shall and may peacefully
and quietly have, hold and enjoy the Premises for the term aforesaid.

34. NOTICES: Every notice, request, consent, approval or other communication
(hereafter in this subsection collectively referred to as "notices" and singly
referred to as a "notice") which Landlord or Tenant is required or permitted to
give to the other pursuant to this Lease shall be in writing and shall be
delivered personally or by overnight courier service or shall be sent by
certified or registered mail, return receipt requested, first-class postage
prepaid, if to Landlord, at Landlord's address as set forth at the beginning of
this Lease, or if to Tenant, at Tenant's address as set forth at the beginning
of this Lease until such time that Tenant takes possession of the Premises and,
thereafter, at the Tenant's offices located on the Premises, or at any other
address designated by either party by notice to the other party pursuant to this
subsection. Any notice delivered to a party's designated address by (a) personal
delivery, (b) recognized overnight national courier service, or (c) registered
or certified mail, return receipt requested, shall be deemed to have been
received by such party at the time the notice is delivered to such party's
designated address. Confirmation by the courier delivering any notice given
pursuant to this subsection shall be conclusive evidence of receipt of such
notice. Landlord and Tenant each agrees that it will not refuse or reject
delivery of any notice given hereunder, that it will acknowledge, in writing,
receipt of the same upon request by the other party and that any notice rejected
or refused by it shall be deemed for all purposes of this Lease to have been
received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service or the
courier service. Notices are deemed given upon receipt or when delivery is
refused.

35. LANDLORD'S CONSENT: Whenever Landlord's prior written consent or approval is
required under the Lease, such consent or approval shall not be unreasonably
withheld.

36. DUMPSTER: Tenant shall be entitled to locate a dumpster in the parking lot,
at Tenant's cost. Tenant shall retain a garbage removal company to arrange for
removal and emptying of all exterior trash.

<PAGE>
                                                                   Page 13 of 13

37. UTILITIES: Landlord acknowledges that all utilities are separately metered
for Tenant's Premises.

38. ENTIRE AGREEMENT / AMENDMENT: This Lease Agreement contains the entire
agreement of the parties and there are no other promises, conditions,
understandings or other agreements, whether oral or written, relating to the
subject matter of this Lease. This Lease may be modified or amended in writing,
if the writing is signed by the party obligated under the amendment.

39. SEVERABILITY: If any portion of this Lease shall be held to be invalid or
unenforceable for any reason, the remaining provisions shall continue to be
valid and enforceable. If a court finds that any provision of this Lease is
invalid or unenforceable, but that by limiting such provision, it would become
valid and enforceable, then such provision shall be deemed to be written,
construed, and enforced as so limited.

40. CONTROLLING LAW; JURISDICTION: This Lease shall be construed in accordance
with the laws of the State of Michigan. Both parties consent to venue for all
judicial proceedings in the County of Wayne. Tenant and Landlord hereby waive
the right to a jury trial.

IN WITNESS WHEREOF, the parties have hereunto set their hands and seals the day
and year first above written.

<TABLE>
<CAPTION>
<S>                                                           <C>

Dated:____________________________                            Arens Investment Company, a Michigan Limited Partnership

Witness:__________________________                             By___________________________
                                                                   Ted G Arens - its partner

Dated:____________________________                             Power Efficiency Corporation, a Delaware
                                                               corporation

Witness___________________________                             By____________________________
                                                                  Richard Koch - its President

</TABLE>

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