Document:

PERFORMANCE CONTROLS
                                 LEASE AGREEMENT

                             ANN ARBOR COMMERCE PARK
                               Ann Arbor, Michigan

      THIS LEASE is made as of the 16th day of February, 1996, by and between
HIGHLAND INDUSTRIAL PROPERTIES, L.L.C., a Michigan Partnership, the address
of which is 28777 Northwestern Hwy., Suite 100, Southfield, Michigan 48034,
as Lessor, and Performance Controls L.L.C., a Michigan, corporation, the
current address of which is 3741 Plaza Drive Suite "B", Ann Arbor. Michigan,
as Lessee.

      IN CONSIDERATION OF the rents to be paid and the mutual covenants,
promises and agreements herein set forth, Lessor and Lessee agree as follows:

      LESSOR hereby leases unto Lessee Office and Warehouse Space situated in
the Township of Pittsfield, County of Washtenaw, State of Michigan, in a single
story office/industrial building located at 4220 Varsity Suite "E" Ann Arbor
Commerce Park (the "Building"), which development is shown on the site plan
marked Exhibit "A", attached hereto and made a part thereof, such Leased
Premises being designated by cross-hatching. The legal description of the
Building is more particularly described on Exhibit "B", attached hereto and made
a part thereof.

      TO HAVE AND TO HOLD for a term of Sixty (60) months from and after the
commencement of the term as hereinafter provided.

                                    SECTION 1
                            Construction of Building

      Section 1.0 1: Lessor agrees, prior to commencement of the term of this
Lease, to complete construction of the Leased Premises and related improvements
on the site in accordance with the plans enumerated on Exhibit "C", attached
hereto and made a part hereof, which shall be deemed part of the Building
referred to above. The Leased Premises shall consist of an exterior or
approximately 5745 square feet on one (1) floor. No minor change from such plans
which may be necessary during construction shall affect, change, or invalidate
this Lease. If Lessor shall be in good faith delayed in construction by any
labor dispute, strike, lockout, fire, unavailability of material, weather, or
casualty or any other cause beyond its reasonable control, then the period of
delay necessarily caused thereby shall be added to the time limit provided for
such construction.

                                    SECTION 2
                       Possession and Commencement of Term

      Section 2.01: Except as herein provided, Lessor shall deliver possession
of the Leased Premises to Lessee on or before the date specified for the
completion of building construction. The Leased Premises shall be deemed ready
for Lessee's occupancy when Lessor shall have substantially completed
construction of said Leased Premises pursuant to the plans on Exhibit "A" and
receive a temporary Certificate of Occupancy from the Township of Pittsfield. By
occupying the Leased Premises, Lessee will be deemed to have accepted the Leased
Premises and acknowledged that they are in the condition called for hereunder.
The rentals herein reserved and the term of this Lease shall commence on the
date when the Premises are delivered to Lessee as required hereunder.  Lessor
will require its contractors to cooperate with Lessee's installers of equipment
trade fixtures, furnishings, and decorations attached to the real estate
improvements to the maximum extent possible, but delay of or interference with
construction caused by such installers shall not postpone the commencment of the
term or the obligation to commence paying rent.

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      Section 2.02: In the event Lessor fails to deliver the Leased Premises oil
the commencement date because the Leased Premises are riot then ready for
occupancy, or because the previous occupant of said Leased Premises is holding
over, or for any other cause whatsoever, except as provided in Section 1.01,
Lessor shall not be liable to Lessee for damages, as a result of Lessor's delay
in delivering such promises, and Lessee shall have no right to terminate the
Lease or contest the validity of the Lease, and the commencement date of the
Lease shall be postponed until such time as the Leased Premises are ready for
Lessee's occupancy, and the termination date of this Lease shall be extended for
a period equivalent to the period of such postponement, provided such postponed
termination date shall occur on the last day of a calendar month; if not, then
such termination date shall be extended by an additional period so as to fall on
the last day of such calendar month in which it would otherwise occur.

      Section 2.03: On the commencement date, or within fifteen (15) days
thereafter upon request by Lessor, Lessee shall execute a written instrument
confirming the commencement date and the termination date of the Lease, that the
Lease is in full force and effect, the rent is paid currently without any offset
or defense thereto, the amount of rent, if any, paid in advance, and that there
are no uncured defaults by Lessor, or stating those claimed by Lessee, provided
that, such facts are accurate and ascertainable.

                                    SECTION 3
                                  Basic Rental

      Section 3.01: In consideration of the leasing aforesaid, Lessee hereby
covenants and agrees to pay Lessor, at such place as Lessor may hereafter from
time to time designate in writing, a minimum net rental payable monthly in
advance on the first day of each and every month in equal monthly installments
as follows:

      Year 1, $8.75 per square foot NNN, or $4,189.07 per month Year 2, $9.00
      per square foot NNN, or $4,308.75 per month Year 3, $9.25 per square foot
      NNN, or $4,428.44 per month Year 4, $9.50 per square foot NNN, or
      $4,548.15 per month Year 5, $9.75 per square foot NNN, or $4,667.82 per
      month

Receipt of Six Thousand ($6,000.00) Dollars, representing Security Deposit is
hereby acknowledged. The rental payments shall be made by Lessee at the office
of Lessor without any prior demand therefore and without any deductions or
set-offs whatsoever.

      Section 3.02: Lessor and Lessee intend that the minimum net rental shall
be net to Lessor, so that this Lease shall yield, net, to Lessor, not less than
the minimum net rent specified in Section 3.01 hereof during the term of this
Lease, and that all costs, expenses, and charges of every kind and nature
relating to the Leased Premises which may be attributable to, or become due
during the term of this Lease, shall be paid by Lessee, and that Lessor shall be
indemnified and held harmless by Lessee from and against the same. Provided,
however, that if the Lease term shall commence on a day other than the first day
of a calendar month, then the rental for such month shall be prorated upon a
daily basis based upon a thirty (30) day calendar month.

                                    SECTION 4
                        Taxes, Assessments and Utilities

      Section 4.01: Lessee agrees to pay Lessor its proportionate share of all
taxes and assessments which have been or may be levied or assessed by any lawful
authority, for any calendar year during the term hereof, against the land and
Leased Premises presently and/or at any time during the term of this Lease
comprising the Building. Lessee's proportionate share shall be equal to the
product obtained by multiplying such taxes and assessments by a fraction, the
numerator of

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which shall be the number of square feet of floor area in the Leased Premises,
and the denominator of which shall be the total number of square feet of
constructed leasable floor area in the Building. Any tax and/or assessment of
any kind or nature presently or hereafter imposed by the State of Michigan or
any political subdivision thereof or any governmental authority having
jurisdiction there over upon, against or with respect to the rentals payable by
tenants in the Building to Lessor or on the income of Lessor derived from the
Building or with respect to the Lessor's, or the individuals or entities which
form the Lessor herein, ownership of the land and buildings presently and/or at
any time during the term of this Lease comprising the Building, either by way of
substitution for all or any part of the taxes and assessments levied or assessed
against such land and such buildings, or in addition thereto, shall be deemed to
constitute a tax and/or assessment against such land and such buildings for the
purpose of this Section, and Lessee shall be obligated to pay its proportionate
share thereof as provided herein. In addition, Lessee shall also be obligated to
pay any sales tax imposed by any governmental authority on the payments by
Lessee or on the receipt by Lessor of any and all payments from Lessee. If the
sales tax is separately assessed, then Lessee shall pay that amount imposed on
the individual payments of Lessee; if the sales tax is not separately assessed,
the Lessee shall pay its proportionate share monthly as provided herein.

    5745 (Lessee's square feet) / 28,776 (square feet of building) = .1996
                               (Lessee's share)

      Section 4.02: Lessee's share of all of the aforesaid taxes and assessments
levied or assessed for or during the teen hereof; as determined by Lessor, shall
be paid in monthly installments on or before the first day of each calendar
month, in advance, in an amount estimated by Lessor; provided, that in the event
Lessor is required under any mortgage covering the land and improvements Leased
to Lessee to escrow real estate taxes, Lessor may, but shall not be obligated
to, use the amount required to be so escrowed as a basis for its estimate of the
monthly installments due from Lessee hereunder. Upon receipt of all tax bills
and assessment bills attributable to any calendar year during the term hereof,
Lessor shall furnish Lessee with a written statement of the actual amount of
Lessee's share of the taxes and assessments for such year. In the event no tax
bill is available, Lessor will compute the amount of such tax. If the total
amount paid by Lessee under this Section for any such year, as shown oil such
statement, Lessee shall pay to Lessor the difference between the amount paid by
Lessee and the actual amount due, such deficiency to be paid within thirty (30)
days after demand therefore by Lessor; and if the total amount paid by Lessee
hereunder for such calendar year shall exceed such actual amount due from Lessee
for such calendar year, such excess shall be credited against the next
installment of taxes and assessments due from Lessee to Lessor hereunder. All
amounts due hereunder shall be payable to Lessor at the place where the fixed
annual rental is payable. For the calendar years in which this Lease commences
and terminates, the provisions of this Section shall apply, and Lessee's
liability for its proportionate share of any taxes and assessments for such
years shall be subject to a pro rata adjustment based on the number of days of
said calendar years during which the term of this Lease is in effect. A copy of
a tax bill or assessment bill submitted by Lessor to Lessee shall at all times
be sufficient evidence of the amount of taxes and/or assessments assessed or
levied against the property to which such bill relates. Prior to or at the
commencement of the term of this Lease and from time to time thereafter
throughout the term hereof, Lessor shall notify Lessee, in writing, or Lessor's
estimate of Lessee's monthly installments due hereunder. Lessor's and Lessee's
obligations under this Section shall survive the expiration of the term of this
Lease.

      Section 4.03: Lessee also agrees to pay all charges made against the
Leased Premises for gas, heat, electricity, and all other utilities separately
metered during the continuance of this Lease as the same shall become due.

      Section 4.04: In the event any or all of the foregoing utilities are to be
paid from an escrowed funds required to be established by Lessor or its
financial institution under the terms of any financing, the Lessor shall notify
Lessee and Lessee shall be required to include with the additional monthly
payments referred to in Section 4.02 a monthly amount to satisfy the estimated
monthly utility costs. If the utilities, when due, exceed the total amount then
in the utility escrow, then the Lessee shall, upon demand, pay any deficiency to
Lessor. If such payments by Lessee, over the term of the Lease, exceed the
amount of utilities paid from the escrow, such excess shall be refunded by
Lessor to Lessee at the expiration of the Lease term, or when such excess is
refunded

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by the financial institution to Lessor, whichever first occurs. The utility
escrow shall be adjusted as often as necessary to provide sufficient funds to
pay current utilities.

                                    SECTION 5
                                 Use of Premises

      Section 5.01: It is understood and agreed between the parties, that the
Leased Premises, during the continuance of this Lease, shall be used and
occupied for Office, Production, Warehouse only and for no other purpose without
the prior written consent of Lessor. Lessee agrees that it will not use or
permit any person to use the Leased Premises or any part thereof for any use or
purpose in violation of the laws of the United States, the State of Michigan,
the ordinances or other regulations of the Township of Pittsfield or of any
other lawful authorities. During the original term or any extended term, the
Lessee will keep the Leased Premises and every part thereof and the area
adjacent to the Leased Premises (including service areas), orderly, neat, safe,
and clean and free from rubbish and dirt, and at all times shall store all
trash, garbage, or any other material solely within the Leased Premises arid
Lessor shall arrange for the regular pickup of such trash and garbage at
Lessee's expense. Lessee shall not burn any trash or garbage at any time in or
about the building. If Lessor shall provided any services or facilities for such
pickup, then Lessee shall be obligated to use the same and shall pay a
proportionate share of the actual cost thereof within ten (10) days after being
billed therefor. Lessee shall not store or leave any material outside of the
building at any time. All signs arid advertising displayed in and about the
Leased Premises shall be such only as to advertise the business carried on upon
the Leased Premises, and Lessor shall control the location, character, and size
thereof. No signs shall be displayed except as approved in writing by the
Lessor; and no awning shall be installed or used on the exterior of said
building unless approved in writing by the Lessor. Upon breach of the use of the
Leased Premises, Lessor shall have the right to terminate this Lease forthwith
and to re-enter and repossess the Leased Premises.

Lessor agrees not to invoice Lessee more then $.75 per square foot for the
common area maintenance (excluding real estate taxes and insurance) for the
first year of the Lease with not more then a .04% increase per year thereafter.

Example:    Year 1: Not more then $.75/sf
            Year 2: Not more then $.78/sf
            Year 3: Not more then $.81 /sf
            Year 4: Not more then $.85/sf
            Year 5: Not more then $.89/sf

                                    SECTION 6
                  Operation and Maintenance of Common Areas

      Section 6.01: Lessor agrees, at Lessor's sole cost and expense, to
construct the building and hard surface, to properly drain, landscape, and light
a parking area or parking areas, all substantially as shown on Exhibit "A".
Lessor further agrees to cause to be operated, managed, and maintained during
the term of this Lease, all parking areas, roads, sidewalks, landscaping,
drainage, and common area lighting facilities in the Building. The manner in
which such areas and facilities shall be maintained and operated, and the
expenditures therefore, shall be at the sole discretion of the Lessor, and the
use of such areas and facilities shall be subject to such reasonable regulations
as Lessor shall make from time to time.

      Section 6.02: Lessee agrees to pay to Lessor in the manner hereinafter
provided, but not more often than once each month, Lessee's proportionate share
of all costs and expenses of every kind and nature paid or incurred by Lessor in
operating, equipping, policing and protecting, lighting, insuring, repairing,
replacing, and maintaining the common areas of the Building. Such costs and

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expenses shall include, but not be limited to, illumination and maintenance of
the Building signs, cleaning, lighting, line painting and landscaping, premiums
liability and property insurance. Any utilities furnished or supplied to common
areas of tire Building which are not separately metered shall be considered a
cost to maintain the common areas and shall be included as part of such cost.
For the purpose hereof, any charges for utilities contained in the foregoing
costs and expenses shall be at the same rates as the rates for comparable
service from the applicable utility company serving the area in which the
Building is located. The proportionate share to be paid by Lessee shall be
computed on the basis that the total number of square feet of floor area in the
Leased Premises bears to the total number of square feet of the Building.

      Lessee's proportionate share of such costs and expenses for each Lease
year and partial Lease year shall be paid in monthly Installments on the first
day of each month, in advance, in an amount established by Lessor. Within one
hundred eighty (180) days after the end of each Lease year or partial Lease
year, lessor shall furnish Lessee with a statement of the actual amount of
Lessee's proportionate share of such costs and expenses for such period. If the
total amount paid by lessee under this Section for any calendar year shall be
less than the actual amount due from Lessee for such year as shown on such
statement, Lessee shall pay to lessor the difference between the amount paid by
Lessee and the actual amount due, such deficiency to be paid within thirty (30)
days after the furnishing of each such statement, and if the total amount paid
by Lessee hereunder for any such calendar year shall exceed such actual amount
due from Lessee for such calendar year, such excess shall be credited against
the installment due from Lessee to Lessor under this Section 6.02.

                                    SECTION 7
                  Maintenance and Repairs of Leased Premises

      Section 7.01: Lessor shall keep and maintain the foundation, exterior
walls, and roof of the Building in which the Leased Premises are located and the
structural portions of the Leased Premises which were originally installed by
Lessor, exclusive of door, door frames, door checks, windows, and exclusive of
window frames located in exterior building walls, in good repair, except that
Lessor shall not be called upon to make any such repairs occasioned by the act
or negligence of lessee, its agents, employees, invitees, licensees, or
contractors, except to the extent that Lessor is reimbursed therefore under any
policy of insurance permitting waiver of subrogation in advance of loss. Lessor
shall not be called upon to make any other improvements or repairs of any kind
upon said Premises and appurtenances, except as may be required under Section 11
and 12 hereof.

      Section 7.02: Except as provided in Section 7.01 of this Lease, Lessee
shall keep and maintain in good order, condition acrd repair (including
replacement of parts and equipment if necessary) the Leased Premises and every
part thereof and any and all appurtenances thereto wherever located, including,
but without limitation, the exterior and interior portion of all doors, door
checks, windows, plate windows, store front, all plumbing and sewage facilities
within the Leased Premises, including free flow up to the main sewer line,
fixtures, heating and air conditioning, and electrical systems (whether or not
located in the Leased Premises), sprinkler system, walls, floors, and ceilings.
The plumbing and sewage facilities shall not be used for any other purpose than
that for which they are constructed, and no foreign substance of any kind shall
be introduced therein. Lessee hereby agrees to be responsible for any expenses
incurred in connection with any breakage, stoppage, or damage resulting from a
violation of this provision by Lessee, its agents, employees, invitees,
licensees, or contractors.

      Lessor shall be responsible for all costs, as long as such costs are not
due to the negligence of Lessee, related to the following: (1) replacement of
the main electrical distribution panel if such panel cannot be repaired but
rather needs complete replacement; (2) the roof-top H.V.A.C. units, if such
components cannot be repaired but rather such H.V.A.C. units need complete
replacement; and (3) if the underground sewer or water system shall burst or
break.

      Lessee shall keep and maintain the Leased Premises in a clean, sanitary,
and safe condition in accordance with the laws of the State of Michigan and in
accordance with all direction, rules, and regulations of the health office, fire
marshall, building inspector, or other proper officials of the

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governmental agencies having jurisdiction, at the sole cost and expense of
Lessee, and Lessee shall comply with all requirements of law, ordinance, and
otherwise, affecting said Leased Premises. If Lessee refuses or neglects to
commence or complete repairs required by Section 7.02 hereof promptly and
adequately, Lessor may, but shall not be required to do so, make all or any part
of said repairs, and Lessee shall pay the cost thereof to Lessor upon demand,
non-payment of which shall entitle Lessor to exercise any remedy available to it
in the event of the non-payment by Lessee of rental or any other charge due to
Lessor under this Lease. At the time of the expiration of the tenancy created
herein, Lessee shall surrender the Premises in good condition, reasonable wear
and tear, loss by fire, or other unavoidable casualty excepted.

      Lessee, at its own expense, shall maintain fire extinguishers and other
fire protection devices as may be required from time to time by any agency
having jurisdiction thereof and the insurance underwriters insuring the building
in which the Leased Premises are located.

      Section 7.03: All damages or injury done to the Leased Premises by the
Lessee, or by any person who may be in or upon the Leased Premises with the
consent, invitation or license of the Lessee, shall be repaired and paid for by
the Lessee.

                                    SECTION 8
                                   Alterations

      Section 8.01: Lessee agrees that the Leased Premises shall not be altered,
improved, or changed without the written consent of Lessor, and that unless
otherwise provided by written agreement, all alterations, improvements, and
changes which may be desired by the Lessee and so consented to by the Lessor
shall be done either by or under the direction. of the Lessor, but at the cost
of Lessee. All alterations, additions, and improvements made in or to the
Building or the Leased Premises, except movable office furniture put in at the
expense of the Lessee and removable without defacing or injuring the building or
Leased Premises, shall, unless otherwise provided by written agreement, be the
property off Lessor and remain upon and be surrendered with the Leased Premises;
provided, however, the lessor will designate by written notice to Lessee those
alterations, additions, and improvements which shall be removed by Lessee at the
expiration or termination of the Lease, and Lessee shall promptly remove the
same and repair any damage to the Leased Premises caused by such removal.

                                    SECTION 9
                                      Liens

      Section 9.01: Lessee shall keep the Leased Premises free from any and all
liens arising out of any work performed, materials furnished, or obligations
incurred by or for Lessee, and agrees to bond against or discharge any
mechanic's or material-men's lien within ten (10) days after written request
therefore by Lessor. Lessee shall reimburse Lessor for any and all costs and
expenses which may be incurred by Lessor by reason of the filing of any such
liens and/or the removal of same, such reimbursement to be made within ten (10)
days after receipt by Lessee from Lessor of a statement setting forth the amount
of such costs and expenses. The failure of Lessee to pay any such amount to
Lessor within said ten (10) day period shall carry with it the same consequences
as failure to pay any installment of rental.

                                   SECTION 10
                             Insurance and indemnity

      Section 10.01: Lessee shall, during the entire term hereof, keep in full
force and effect a policy of public liability and property damage insurance with
respect to the Leased Premises, and the business operated by Lessee and any
subtenants of Lessee in the Leased Premises, including steam boiler insurance if
applicable, in which the limits of public liability shall be not less than One

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Million Dollars ($1,000,000.00) per occurrence, and in which the limit of
property damage liability shall be not less than Five Hundred Thousand Dollars
($500,000.00). The policy shall name Lessor, any other parties in interest
designed by Lessor, and Lessee as insured, and shall contain a clause that the
insurer will not cancel or change the insurance without first giving the Lessor
thirty (30) days prior written notice. Such insurance may be furnished by Lessee
under any blanket policy carried by it or under a separate policy therefor. The
insurance shall be with an insurance company approved by Lessor and a copy of
the paid-up policy evidencing such insurance or a certificate of insurer
certifying to the issuance of such policy shall be delivered to Lessor prior to
commencement of Lease Term and upon renewals not less than thirty (30) days
prior to the expiration of such coverage.

      Section 10.02: Lessor agrees, during the term hereof, to carry insurance
against Fire, vandalism, malicious mischief, and such other perils as are from
time to time included in a standard extended coverage endorsement and, at
Lessor's option, special extended coverage endorsements including rental
interruption insurance equal to twelve (12) full months of rental and tax
obligations, insuring the improvements of the Building in an amount determined
solely by Lessor, but not less than one hundred percent (100%) of the full
replacement cost, if available, and with or without deductible, at the option of
Lessor. Lessee agrees, from time to time, to pay Lessor, Lessee's proportionate
share of the cost of such insurance, such payment to be made within ten (10)
days after receipt of a written statement from Lessor setting forth such cost.
The proportionate share to be paid by Lessee shall be computed on the basis that
the total number of square feet of floor area in the Leased Premises bears to
the total number of square feet of constructed leasable floor area in the
Building.

      Lessee shall not carry any stock of goods or do anything in or about said
Leased Premises which will in any way tend to increase the insurance rates on
said Leased Premises and/or the Building of which they are apart. If Lessee
installs any electrical equipment that overloads the lines in the Leased
Premises, Lessee shall, at its own expense, make whatever changes are necessary
to comply with the requirements of the insurance underwriters and governmental
authorities having jurisdiction.

      Section 10.03: Lessee covenants to indemnify Lessor, and save it harmless
(except for loss or damage resulting from the negligence of Lessor, its agents,
or employees) from and against any and all claims, action, damages, liability,
and expense, including attorney's fees, in connection with loss of life,
personal injury, and/or damage to property arising from or out of any occurrence
in, upon, or at the Leased Premises or the occupancy or use by Lessee of the
Leased Premises or any part thereof, or arising from or out of Lessee's failure
to comply with Section 7.02 hereof, or occasioned wholly or in part by any act
or omission of Lessee, its agents, contractors, employees, servants, customers,
or licensees. For the purpose hereof, the Leased Premises shall include the
service areas adjoining the same and the loading platform area allocated to the
use of Lessee. In case Lessor shall, without fault on its part, be made a party
to any litigation commenced by or against Lessee, then Lessee shall protect and
hold Lessor harmless, and shall pay all costs, expenses, and reasonable
attorneys' fees incurred or paid by Lessor in connection with such litigation.
Lessee shall also pay all of Lessor's costs, expenses, and reasonable attorneys'
fees that may be incurred by Lessor in enforcing the Lessee's covenants and
agreements in this Lease.

                                   SECTION 11
                         Destruction of Leased Premises

      Section 11.01: In the event the Leased Premises shall be partially or
totally destroyed by fire or other casualty insured under the insurance carried
by Lessor pursuant to Section 10.02 of this Lease, as to become partially or
totally untenantable, the damage to the Leased Premises shall promptly be
repaired by Lessor, to the extent of any proceeds received from any insurance,
unless Lessor shall elect not to rebuild as hereinafter provided, and a just and
proportionate part of the fixed minimum rental and all other charges shall be
abated, annually, until so repaired. The obligation of Lessor hereunder shall be
limited to reconstruction of the Leased Premises in accordance with the initial
plans and specifications for the construction of the Leased Premises. In

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no event shall Lessor be required to repair or replace Lessee's merchandise,
trade fixtures, furnishings, or equipment. If more than thirty-five (35%)
percent of the Leased Premises or more than thirty-five (35%) of the floor area
of the Building in which the Leased Premises are located shall be destroyed by
fire or other casualty, then lessor may elect either to repair or rebuild the
Leased Premises or the Building of which the Leased Premises are a part, as the
case may be, or to terminate this Lease by giving written notice to Lessee of
its election to so terminate, such notice to be given within sixty (60) days
after the occurrence of such damage or destruction. If Lessor elects to restore
the Leased Premises, Lessor shall do so within one hundred eighty (180) days
after giving notice to Lessee of such election. If Lessor fails to tender
possession to Lessee after the one hundred eighty (180) days, Lessee shall have
the option of terminating this Lease by sending notice on the one hundred
eightieth (180th) day to Lessor. Such notice shall inform Lessor of Lessee's
election to terminate.

      Section 11.02: 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 from which
insurance (permitting waiver of liability and containing a waiver of
subrogation) is carried by the injured party at the time off such loss, damage,
or injury to the extent of any recovery by the injured party under such
insurance.

                                   SECTION 12
                                 Eminent Domain

      Section 12.01: In the event, during the term of this Lease, proceedings
shall be instituted under the power of eminent domain which shall result in the
taking of any part of the Leased Premises or the floor area of the Building in
which the Leased Premises are a part, or the taking of a material portion of the
parking area so that the number of spaces is thereby reduced to such all extent
that Lessee's business is significantly acrd adversely affected, and which shall
result in an eviction total or partial of the Lessee therefrom, then at the time
of such eviction, this Lease shall be void and the term above demised shall
cease and terminate; and if Lessee shall thereafter continue in possession of
the Leased Premises or any part thereof, it shall be a Lease from month to month
and for no longer term, anything in this instrument to the contrary
notwithstanding. If there is only a partial taking, not including a portion of
the Building but reducing the parking to the extent described in the previous
sentence, the Lessor shall restore the parking to the extent necessary to permit
Lessee to continue the use of the premises and there shall be no reduction in
the monthly rental. Provided, further, that the whole of any award for any
portion of the Building taken by reason of said condemnation proceedings shall
be the sole property of, and be payable to, the Lessor, and provided, further,
that the whole of any award for loss of business and for removal and relocation
expenses in any condemnation proceedings shall be the sole property of, and be
payable to, the Lessee. It is further agreed that in any such condemnation
proceedings, the Lessor and Lessee shall each seek its own award at its own
expense.

                                   SECTION 13
                                   Assignment

      Section 13.01: Lessee shall not assign or sublet the Leased Premises or
any part thereof without first obtaining the Lessor's written consent, (Lessor's
consent is not to be unreasonably withheld), except that the Lessee may, without
Lessor's consent, assign or sublet all or any of the part of the Premises to
wholly or substantially owned subsidiaries of the Lessee, for a use permitted
pursuant to Section 5.01 hereof, and provided that Lessee is not at such time in
default hereunder, and provided further that such successor shall execute an
instrument in writing assuming all of the obligations and liabilities to the
Lessor, and provided further that such assignment or subletting shall not
operate to release Lessee from any of its obligations under the Lease.

                                       8

<PAGE>

                                   SECTION 14
                             Inspection of Premises

      Section 14.01: Lessee agrees to permit Lessor and the authorized
representatives of Lessor to enter the Leased Premises at all reasonable times
during business hours for the purpose of inspecting the same.

                                   SECTION 15
                             Fixtures and Equipment

      Section 15.01: All fixtures and equipment paid for by the Lessor and all
fixtures and equipment which may be paid for and placed on the Leased Premises
by the Lessee from time to time, but which are so incorporated and affixed to
the Building that their removal would involve damage or structural change to the
Building, shall be and remain the property of the Lessor.

      Section 15.02: All furnishings, equipment, and fixtures other than those
specified in Section 15.01, which are paid for and placed on the Leased Premises
by Lessee from time to time (other than those which are replacements for
fixtures originally paid for by Lessor) shall remain the property of the Lessee.

                                   SECTION 16
                                Notice or Demands

      Section 16.01: All notices to or demands upon Lessor or Lessee desired or
required to be given under any of the provisions hereof shall be in writing. Any
notices or demands from Lessor to Lessee shall be deemed to have been duly and
sufficiently given if a copy thereof has been mailed by United States mail in an
envelope properly stamped and addressed to Lessee at the address of the Leased
Premises, or at such other address as Lessee may have last furnished in writing
to Lessor for such purpose, and any notices or demands from Lessee to Lessor
shall be deemed to have been duly and sufficiently given if mailed by United
States mail in an envelope properly stamped and addressed to Lessor at the
address last furnished by written notice from Lessor to Lessee. The effective
date of such notice shall be one (1) business day following the delivery of the
same to the United States Post Office for mailing.

                                   SECTION 17
                                   Bankruptcy

      Section 17.01: Lessee covenants and agrees that if any one or more of the
following events occur, namely:

      (a) Lessee shall be adjudged a bankrupt or insolvent or trustee shall be
appointed for Lessee after a petition has been filed for Lessee's reorganization
or arrangement under the Federal Bankruptcy Laws, as now or hereafter amended,
or under the laws of any State, and any such adjudication or appointment shall
not have been vacated or stayed or set aside within thirty (30) days from the
date of the entry or granted thereof; or

      (b) Lessee shall file, or consent to any petition in bankruptcy or
arrangement under the Federal Bankruptcy Laws, as not or hereafter amended, or
under the laws of any State; or

      (c) A decree or order appointing a receiver of the property of Lessee
shall be made and such decree or order shall not have been vacated, stayed or
set aside within thirty (30) days from the date of the entry or granted thereof,
or Lessee shall apply for or consent to the appointment of a receiver for
Lessee; or

                                       9

<PAGE>

      (d) Lessee shall make any assignment for the benefit or credits;

then it shall be lawful for Lessor, at his election, to declare a default as
hereinafter defined and the term of the Lease ended.

                                   SECTION 18
                         Default, Re-entry, and Damages

      Section 18.01: In case any rent or other payments required to be made by
Lessee shall be due and remain unpaid for more than ten (10) days after due, or
if default be made in any of the other covenants, agreements, stipulations, or
conditions herein contained and such default shall continue for a period of
thirty (30) days after written notice of such default, or if the Leased Premises
shall be deserted, or vacated, or if Lessee is declared bankrupt or insolvent as
detailed in Section 17.01 herein, Lessor, in addition to other rights or
remedies it may have, shall have the immediate right of re-entry and may remove
all persons and property from the Leased Premises pursuant to applicable
Michigan law, such property may be removed and stored in any other place in the
Building in which the Leased Premises are situated, or in any other place, for
the account of, and at the expense and at the risk of Lessee. Lessee hereby
waives all claims for damages which may be caused by the re-entry of Lessor and
taking possession of the Leased Premises or removing or storing of furniture and
property as herein provided, and will hold Lessor harmless from any and all
losses, costs, or damages occasioned Lessor thereby, and no such re-entry shall
be considered or construed to be a forcible entry.

      Section 18.02: Should Lessor elect to re-enter as herein provided, or
should it take possession pursuant to legal proceedings or pursuant to any
notice provided for by law, it may either terminate this Lease or it may, from
time to time, without terminating this Lease, re-let the Leased Premises or any
part thereof for such term or terms and at such rental or rentals and upon such
other terms and conditions as Lessor, in its sole discretion, may deem
advisable, with the right to make alterations and repairs. to the Leased
Premises. Rentals received by Lessor from such re-letting shall be applied as
follows:

      First, to the payment of any indebtedness, other than rent due hereunder
from Lessee to Lessor, including all damages sustained by Lessor as a result of
the default of Lessee;

      Second, to the payment of rent or other payments required of Lessee for
taxes, insurance, or utilities due and unpaid hereunder;

      Third, to the payment of any other sum specified in Section 3.02 hereof;

      Fourth, to the payment of any cost of such re-letting;

      Fifth, to the payment of the cost of any alterations or repairs to the
Leased Premises;

and the residue, if any, shall be held by Lessor and applied in payment of
further rent, as the same may become due and payable hereunder. Should such
rentals received from such re-letting during any month be less than the amount
agreed to be paid that month by Lessee hereunder, the Lessee shall pay such
deficiency to Lessor. Such deficiency shall be calculated and paid monthly.

      No such re-entry or taking possession of the Leased Premises by Lessor
shall be construed as an election on its part to terminate this Lease unless a
written notice of such intention be given to Lessee or unless the termination
thereof be decreed by a court of competent jurisdiction. Notwithstanding any
such re-letting without termination, Lessor may, at any time thereafter, elect
to terminate this Lease for such previous breach. Should Lessor, at any time,
terminate this Lease for any breach, in addition to any other remedy, it may
recover, from Lessee all damages it may incur by reason of such breach,
including the cost of recovering the Leased Premises, and including the worth at
the time of such termination of the excess, if any, of the amount of rent and
other payments required of Lessee hereunder and charges equivalent to rent
reserved in this Lease for the

                                       10

<PAGE>

remainder of the stated term, over the then reasonable rental value of the
Premises for the remainder of the stated term.

                                   SECTION 19
                      Surrender of Premises on Termination

      Section 19.01: Whenever this Lease shall be terminated, whether by lapse
of time, forfeiture, or in any other way, Lessee will yield and deliver up the
Leased Premises, including the Building and improvements thereon and the
fixtures and equipment belonging to lessor therein contained, peaceably to
Lessor in as good repair as when taken, except for reasonable and normal wear
and tear.

                                  SECTION 20
               Performance by Lessor of the Covenants of Lessee

      Section 20.01: Should Lessee at any time fail to do any of the things
required to be done by it under the provisions of this Lease, Lessor, at its
option and in addition to any and all other rights and remedies of Lessor in
such event, may (but shall not be required to) do the same or cause the same to
be done, and the reasonable amount of any money expended by Lessor in connection
therewith shall be due from Lessee to Lessor as additional rent on or before the
next rental due date, bearing interest at the rate of ten (10%) percent per
month from the date of payment until the repayment thereof to Lessor by Lessee.
On default of such payment, Lessor shall have the same remedies as on default in
the payment of rent.

                                   SECTION 21
                               Rights to Mortgage

      Section 21.01: Lessor 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 Lessor's interest in the said Leased Premises and on the land and
Buildings of which the said Leased Premises are a part or upon any Buildings
hereafter placed upon the land of which the Leased Premises form a part. Lessee
covenants and agreed 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 Lessor and any mortgagees or
proposed mortgage, and hereby irrevocably appoints Lessor the attorney-in-fact
of Lessee to execute in compliance with this Section 21.01 and deliver any such
instrument or instruments for and in the name of Lessee. Lessor acknowledges
that Lessee shall be permitted to remain in possession of the Premises under the
terms of this Lease as long as Lessee is not in default under the terms of this
Lease or any subordination.

                                   SECTION 22
                          Covenants of Quiet Enjoyment

      Section 22.01: Lessor covenants and agrees to and with Lessee that, at all
times when Lessee is not in default under the terms of and during the term of
this Lease, Lessee's quiet and peaceable enjoyment of the Leased Premises shall
not be disturbed or interfered with by Lessor or any person claiming by,
through, or under Lessor.

                                       11

<PAGE>

                                   SECTION 23
                                Security Deposit

      Section 23.01: Pursuant to Section 3.01 hereof, Lessee shall deposit the
sum of Six Thousand Dollars ($6,000.00) which Lessor agrees 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 Lessor be obliged to apply
the same upon rents or other charges in arrears, or upon damages for the
Lessee's failure to perform the said covenants, conditions, and agreements; the
Lessor may so apply the security at its option; and the Lessor's right to the
possession of the Premises for nonpayment of rent or for any other reason shall
not in any event be affected by reason of the fact that the Lessor holds this
security. The said sum, if not applied toward the payment of rent or other
charges in arrears, or toward the payment of damages suffered by Lessor by
reason of the Lessee's breach of the covenants, conditions, and agreements of
this Lease, shall be returned to the Lessee when this Lease is terminated,
according to these terms, and in no event is the said security to be returned
until the Lessee has vacated the Premises, delivered possession to the Lessor,
and Lessor has inspected said Premises.

      In the event that the Lessor repossesses itself of the said Premises
because of the Lessee's default or because of the Lessee's failure to carry out
the covenants, conditions, and agreements of the Lease, the Lessor may apply the
said security upon all damages suffered to the date of said repossession and may
retain the said security to apply upon such damages as may be suffered or shall
accrue thereafter by reason of the Lessee's default or breach. The Lessor shall
not be obliged to keep the said security as a separate fund, but may mix the
said security with its own funds and there shall be paid no interest on said
security deposit.

                                   SECTION 24
                                  Holding Over

      Section 24.01: In the event of Lessee 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 subject to all the
conditions, provisions and obligations of this Lease insofar as the same are
applicable to a month to month tenancy, but at a monthly rental of one hundred
fifty percent (150%) of the monthly rental stipulated in Section 3.

                                   SECTION 25
                         Remedies Not Exclusive; Waiver

      Section 25.01: 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.

      Section 25.02: One or more waivers of any covenant or condition by Lessor
shall not be construed as a waiver of a further or subsequent breach of the same
covenant of condition, and the consent or approval by Lessor to or of any act by
Lessee requiring Lessor's consent or approval shall not be deemed to waive or
render unnecessary Lessor's consent or approval to or of any subsequent similar
act by Lessee.

                                   SECTION 26
                             Right to Show Premises

      Section 26.01: The Lessee hereby agrees that, for a period commencing one
hundred eighty (180) days prior to the termination of this Lease, the Lessor may
show the Leased Premises and building to prospective Lessees, and one hundred
eighty (180) days prior to the termination of this Lease, Lessor may display
about said leased Premises the usual and ordinary "For Lease" signs.

                                       12

<PAGE>

                                   SECTION 27
                                Lessee's Property

      Section 27.01: Lessee shall be responsible for and shall pay before
delinquency all municipal, county, state, and federal taxes assessed during the
term of this Lease against any leasehold interest or personal property of any
kind, owned by or placed in, upon, or about the Leased Premises by the Lessee.

      Section 27.02: The Lessor shall not be responsible or liable to the Lessee
for any loss or damage that may be occasioned by or through the acts or
omissions of persons occupying adjoining Premises, or any part of the Leased
Premises adjacent to or connected with the Leased Premises hereby Leased, or any
part of the Building of which the Leased Premises are a part, or for any loss or
damage resulting to the Lessee or its property from bursting, stoppage, or
leaking of water, gas, sewer, or steam pipes, or for any damage or loss of
property on or within the Leased Premises from any cause whatsoever.

                                   SECTION 28
                                  Miscellaneous

      Section 28.01: This Lease shall be governed by and construed in accordance
with the laws of the State of Michigan. If any provisions of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease shall not be affected
thereby, and each provision of the Lease shall be valid and enforceable to the
fullest extent permitted by the law.
      Section 28.02: The captions of this Lease are for convenience only, and
are not to be construed as part of this Lease, and shall not be construed as
defining or limiting, in any way, the scope of intent of the provisions hereof.

      Section 28.03: Whenever herein the singular member is used, the same shall
include the plural, and the masculine gender shall include the feminine and
neuter genders.

      Section 28.04: This Lease shall constitute the entire agreement of the
parties hereto; all prior agreements between the parties, whether written or
oral, are merged herein and shall be of no force and effect. This Lease cannot
be changed, modified, or discharged orally, but only by an agreement in writing,
signed by the party against whom enforcement of the change, modification, or
discharge is sought.

      Section 28.05: If Lessor shall fail to perform any covenant, term, or
condition of this Lease upon Lessor's part to be performed, and if as a
consequence of such default Lessee shall recover a money judgment against
Lessor, such judgment shall be satisfied only out of the proceeds of sale
received upon execution of such judgment and levied thereon against the right,
title, and interest of Lessor in the Building and property of which the Leased
Premises are a part and out of the rents or other income from such property
receivable by Lessor, and neither Lessor nor any of the members comprising the
limited liability corporation which is the Lessor herein shall be liable for any
deficiency.

      Section 28.06: In the event any proceedings are brought for the
foreclosure of or in the event of exercise of the power of sale under any
mortgage made by Lessor covering the Leased Premises, Lessee shall, at the
option and request of Purchaser, attorn to the Purchaser upon any such
foreclosure or sale and recognize such Purchaser as the Lessor under this Lease.

      Section 28.07: In the event of any transfer or transfers of Lessor's
interest in the Premises, the transferor shall be automatically relieved of any

                                       13

<PAGE>

and all obligations and liabilities on the part of Lessor accruing from and
after the date of such transfer. Lessor acknowledges that the obligation of the
Lessor under this Lease shall be transferred to the party receiving the interest
of Lessor.

      Section 28.08: All rights and liabilities herein given to or imposed upon
the respective parties hereto shall extend to and bind the several respective
heirs, executors, administrators, successors, and assigns of the said parties;
and if there shall be more than one Lessee, they shall all be bound jointly and
severally by the terms, covenants, and agreements herein. No rights, however,
shall inure to the benefit of any assignee of Lessee unless the assignment to
such assignee has been approved by Lessor, in writing, as provided in Section
13.01 hereof.

      Section 28.09: This agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective heirs, administrators, executors,
representatives, successors, and permitted assigns.

      Section 28.10: No payment by Lessee or receipt by Lessor of a lesser
amount than the monthly rent herein stipulated shall be deemed to be other than
on account of the earliest stipulated rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Lessor shall accept such check or
payment without prejudice to Lessor's right to recover the balance of such rent
or pursue and other remedy in this Lease.

      Section 28.11: The submission of this Lease for examination does not
constitute a reservation of or option for the Leased Premises. This Lease shall
become effective only upon execution and delivery thereof by Lessor to Lessee.

                                   SECTION 29
                                  Environmental

      Section 29.01: Lessee shall neither generate, store, discharge nor bury
any toxic or hazardous waste or substance or material or any chemicals or
substances which are either toxic or hazardous at or upon the Leased Premises
and Building, as the terms "toxic" or "hazardous" are defined under all
currently existing or future applicable federal, state or local environmental
laws, Lessor and Lessee understand and acknowledge, however, that Lessee may
utilize certain substances or materials in the Leased Premises incidental to its
operations which are or may be classified as hazardous or toxic substances, such
as cleaning solvents, degreasing agents, adhesives, greases, oils and
lubricants, and the like. All such substances may be utilized and stored in
proper containers only temporarily on the Leased Premises and shall be properly
disposed of and transported off the Leased Premises in compliance with all
applicable environmental and other laws and ordinances. All other substances
which are non-toxic or non-hazardous shall be stored in proper containers. No
substances or materials shall be stored outside of the Building which
constitutes the Leased Premises without Landlord's prior written approval.
Tenant shall forever indemnify and hold harmless and defend Landlord, its
successors and assigns and any mortgagee from and against all loss, damage,
claim and expense, including attorney's fees, incurred in connection with the
generation, burial, storage or disposal by Tenant of said hazardous or toxic
substances upon the Premises, and such indemnification shall survive the
expiration or termination of this Lease or any extensions.

                                       14

<PAGE>

                                   SECTION 30
                               Lessor Construction

      Section 30.01: The Lessor agrees to finish off the interior of the space
as outlined on Exhibit "C" of this Lease including the following improvements:

            Office Area
            Heat and Air Conditioning
            Approx. 70% standard finished office area
            Wall and door lay out per Exhibit "C"
            Aluminimum vestibule with window and door
            Three (3) bathrooms, (one bathroom in the warehouse to have a
urnal)
            Kitchen area with eight (8) foot upper and lower cabinets w/ sink
            Standard lighting and electrical Standard floor coverings Standard
            2'x4' drop ceiling One (1) closet with bi-fold door Tenant to supply
            and install 480 volt outlet in Demo room Lock sets on all doors
            Building standard window blinds

            Warehouse Area
            Heat and Air Conditioning
            Slop sink
            Flourcient lighting
            Painted walls
            One (1) 12'x 14' overhead grade level door w/ electric operator
            One entry door

      IN WITNESS WHEREOF, the Lessor and Lessee have executed this Lease as of
the date set forth at the outset hereof.

WITNESS:                            LESSOR:

                                    HIGHLAND INDUSTRIAL PROPERTIES,
                                    L.L.C., a Michigan Partnership

                                       By: /s/ [illegible signature)
--------------------------                 ------------------------------
                                      Its:
--------------------------                 ------------------------------

                                     LESSEE:

                                    Performance Controls, L.L.C.

                                       By: /s/ [illegible signature)
--------------------------                 ------------------------------
--------------------------             Its:  Managing Partner
                                           ------------------------------

<PAGE>

                                 EXHIBIT "A"

[Architectural Diagrams - omitted]

<PAGE>

                                 EXHIBIT "B"

                                LEGAL DESCRIPTION

Lots 8 and 9 of the Varsity Industrial Park as recorded in the Washtenaw County
Register of Deeds.

<PAGE>

                                 EXHIBIT "C"

[Floor Plan - omitted]POWER EFFICIENCY CORPORATION

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

                                        PREPARED FOR:
                                 MILLAR ELEVATOR
                                 SERVICE COMPANY
                                    (REVISED)

                                 AUGUST 17,2000

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

<PAGE>

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

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

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

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

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

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

3.      APPLICABLE TERMS

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

4.      SCOPE OF THE PURCHASE AGREEMENT

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

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

<PAGE>

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

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

5.      DELIVERY

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

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

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

6.      PURCHASE PRICE

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

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

7.      TIME OF PAYMENT

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

8.      VOLUME INDICATIONS

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

9.      DAMAGES (GTC 4.3)

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

<PAGE>

10.     GUARANTEE PERIOD (GTC 5.4)

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

11.     CONTRACT DOCUMENTS

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

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

12.     PARTIES REPRESENTATIVES (GTC 8)

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

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

13.     OTHER PROVISIONS

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

<PAGE>

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

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

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

                                            Date: 9/20/00

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

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

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

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