Exhibit 10.2


                                LOCK-UP AGREEMENT

         THIS AGREEMENT, dated as of March 31, 1999, by and among Allis-Chalmers
Corporation,  a  Delaware  corporation  (the  "Company"),  the  Pension  Benefit
Guaranty  Corporation,  a United  States  government  corporation  acting in its
individual  capacity and as trustee of the Allis-Chalmers  Consolidated  Pension
Plan (the Pension Benefit Guaranty  Corporation,  together with its designee for
the purpose of holding  company  capital  stock,  are  collectively  referred to
herein as the  "PBGC"),  AL-CH  Company,  L.P., a Delaware  limited  partnership
("AL-CH"),  Wells Fargo Bank, as trustee under that certain Amended and Restated
Retiree  Health Trust  Agreement  for UAW Retired  Employees  of  Allis-Chalmers
Corporation (the "UAW Trust"),  and Firstar Trust Company, as trustee under that
certain Amended and Restated  Retiree Health Trust Agreement for non-UAW Retired
Employees of Allis-Chalmers Corporation (the "Non-UAW Trust").

                              W I T N E S S E T H:

         WHEREAS,  each party to this  Agreement,  other than the Company,  is a
significant stockholder of the Company;

         WHEREAS,  the  parties to this  Agreement  believe  that it is in their
respective  best  interests to provide for the transfer  and/or  disposition  of
shares of Company common stock,  $.15 par value  ("Common  Stock") under certain
circumstances,  and, except for the Company, with respect to the voting of their
shares of Common Stock under certain circumstances; and

         WHEREAS,  the  Company  and  the  PBGC  are  parties  to  that  certain
Agreement,  dated as of March 31,  1999 (the  "Master  Agreement"),  pursuant to
which this Lock-Up Agreement is being executed and delivered.

         NOW, THEREFORE, the parties to this Agreement,  intending to be legally
bound, hereby covenant and agree as follows:

         1. No Transfer or Disposition of Shares.  Unless the Company's Board of
Directors  ("Board") has terminated the Common Stock transfer  restrictions  set
forth in Article  XIII of the  Company's  Amended and  Restated  Certificate  of
Incorporation  ("Certificate"),  each of AL-CH,  the UAW  Trust and the  Non-UAW
Trust covenant and agree that,  during the period  commencing on the date hereof
and continuing  until the third (3rd)  anniversary of the Release Event Date, it
will not, directly or indirectly,  sell,  transfer,  assign or otherwise dispose
any shares of Common  Stock now  beneficially  owned.  Nothing  provided in this
Agreement  shall  restrict  AL-CH,  the UAW  Trust  or the  Non-UAW  Trust  from
distributing to any partner or beneficiary, respectively, shares of Common Stock
as long as such  partner  or  beneficiary,  as the  case  may be,  executes  and
delivers a lock-up agreement containing provisions  substantially similar to the
provisions of this Section.


<PAGE>


         2. Prior Opportunity to Sell.

              (a) Each of AL-CH,  the UAW Trust and the Non-UAW  Trust  covenant
and agree that,  during the period (the  "Window  Period")  commencing  with the
third (3rd) anniversary of the Release Event Date and continuing until the fifth
(5th)  anniversary  of  the  Release  Event  Date,  it  will  not,  directly  or
indirectly,  sell, transfer, assign or otherwise dispose of any shares of Common
Stock without first giving the PBGC an opportunity to sell all or any portion of
the  shares of Common  Stock it now  beneficially  owns  pursuant  to (b) or (c)
below.

              (b) If AL-CH,  the UAW Trust or the Non-UAW  Trust  desire to sell
shares of Common Stock during the Window Period in a public offering pursuant to
an  effective  registration  statement  under  the  Securities  Act of 1933,  as
amended,  it shall first give written  notice to the PBGC of such  intention not
less than twenty (20) business days prior to effecting any sale. If the PBGC, by
written notice to all of the other parties to this Agreement given within twenty
(20) business days after the receipt of such notice of intention to sell, elects
to sell shares of Common Stock,  then AL-CH, the UAW Trust and the Non-UAW Trust
shall refrain from effecting any sale until the earlier of (i)  forty-five  (45)
days after receipt of written notice from the PBGC indicating its desire to sell
its shares or (ii) the fifth (5th)  anniversary  of the Release Event Date.  The
PBGC  covenants  and agrees  that,  if it elects to sell shares of Common  Stock
during the Window Period prior to sales by AL-CH,  the UAW Trust and the Non-UAW
Trust,  that it will diligently  pursue the sale of such shares,  subject in all
cases to market conditions,  and that it will notify all of the other parties to
this  Agreement  in  writing  at  any  time  that  the  PBGC  has  completed  or
discontinued its proposed sale of shares of Common Stock.

              (c) If any  time  AL-CH,  the UAW  Trust or the  Non-UAW  Trust is
presented  with an  opportunity to sell shares of Common Stock during the Window
Period  other than in a public  offering,  AL-CH,  the UAW Trust or the  Non-UAW
Trust,  as the case may be, shall first give written  notice to the PBGC and all
of the other  parties  to this  Agreement  of such  opportunity  (including  the
proposed  sale  price and other  material  terms and  conditions)  not less than
twenty (20)  business  days prior to effecting any sale. If the PBGC, by written
notice to all of the parties to this Agreement given within twenty (20) business
days  after the  receipt of such  notice of  intention  to sell,  elects to sell
shares of Common Stock in such transaction,  then the PBGC shall have the right,
until the  earlier of (i)  forty-five  (45) days after  delivery  of the written
notice  from the PBGC  indicating  its  desire to sell  shares or (ii) the fifth
(5th)  anniversary  of the Release  Event Date,  to sell shares of Common  Stock
pursuant to such  opportunity.  If the PBGC has not consummated a sale of shares
of Common  Stock  during  such time  period,  then  AL-CH,  the UAW Trust or the
Non-UAW  Trust,  as the case may be,  shall be entitled to sell shares of Common
Stock upon terms no less favorable than those offered to the PBGC.

              (d) Nothing  provided in this Agreement shall limit or restrict in
any way the  Company's  right of refusal  set forth in Section 4.6 of the Master
Agreement.

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<PAGE>


         3. Voting. During the term of this Agreement,  each party covenants and
agrees to vote, at any annual or special meeting of the Company stockholders and
in a written consent,  all shares of Common Stock beneficially owned in favor of
the  election as director the persons  nominated  for director of the Company by
the  Nominating  Committee of the Company's  Board of Directors,  and to refrain
from taking any action contrary to or inconsistent with such obligation.  During
the term of this Agreement,  each party further covenants and agrees not to vote
its shares of Common  Stock or to take any other  action to amend the  Company's
Certificate or By-laws in a manner that is  inconsistent  with, or in breach of,
the Master  Agreement.  Without  limiting the generality of the foregoing,  each
party  hereto  agrees that it will (i) vote all of its Common  Stock in favor of
the amendments to the Company's  Certificate  identified on the attached Exhibit
A, (ii) vote all of its Common Stock for the election of the persons  designated
by the PBGC (each, a "PBGC  Director") to serve on the Board of Directors of the
Company  and (iii)  vote all of its  Common  Stock in favor of the  election  of
Company  directors  who are committed to cause,  and who do cause,  one (1) PBGC
Director to be appointed to the Nominating  Committee of the Company's  Board of
Directors  ("Board"),  and one (1) PBGC Director to be appointed as the Chairman
of the Compensation Committee of the Board.

         4. Representations and Warranties. Each of AL-CH, the UAW Trust and the
Non-UAW Trust hereby  severally  represents  and warrants to the PBGC as follows
(it being understood and agreed that no such party, including but not limited to
AL-CH,  is  making  any  representations  or  warranties  on behalf of any other
party):

              (a)  Each is duly  organized  and  validly  existing,  and has all
requisite  power  and  authority  to  conduct  its  business  as it is now being
conducted.

              (b) Each has full  legal  power and  authority  to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and  performance  of this  Agreement  on behalf of such party,  and the
consummation of the transactions  contemplated hereby, have been duly authorized
by  appropriate  action on behalf of such party,  and no other  legal  action is
necessary on its part to authorize the  execution,  delivery and  performance of
this  Agreement.  This Agreement  constitutes a valid and binding  obligation of
such party,  enforceable  against such party in accordance  with its terms.  The
execution,  delivery and  performance  of this  Agreement by such party will not
conflict  with,  violate or result in a breach of any  provision  of,  require a
consent under, or constitute a default (or an event which,  with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of  or  accelerate  the  performance  required  by,  or  result  in a  right  of
termination or  acceleration  under (i) the charter,  articles of  organization,
limited  partnership  agreement or  comparable  organizational  document of such
party,  or (ii) any  mortgage,  note,  indenture,  deed of  trust,  lease,  loan
agreement,   warrant,  registration  rights  agreement  or  other  agreement  or
instrument,  the violation of which would have a material adverse effect on such
party.

              (c) Each is the beneficial owner of the number of shares of Common
Stock set forth after its name on the attached Exhibit B.

                                      -3-
<PAGE>


              (d)  No  consent,   approval,   order  or  authorization   of,  or
registration,  declaration  or filing with, any federal,  state,  local or other
governmental  authority or body is required in  connection  with the  execution,
delivery  and  performance  of this  Agreement on the part of such party and the
consummation of the transactions contemplated hereunder.

              (e)  To  the  knowledge  of  such  party,   there  are  no  legal,
administrative,  arbitration  or other  legal  proceedings  claims,  actions  or
governmental  investigations  of any nature pending against such party which, if
adversely  decided,  would  have a  material  adverse  effect  on  such  party's
ownership of the Common Stock or legal power and  authority to execute,  deliver
and perform this Agreement.

         5. Miscellaneous.

              5.1 Survival of Representations and Warranties.  All covenants and
agreements and all  representations and warranties made herein shall survive any
closing hereunder.

              5.2  Notices.  All  demands,  notices,   request,   consents,  and
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given if personally delivered by courier service,  messenger,  or confirmed
telecopy at, or if duly deposited in the mails, by certified or registered mail,
postage prepaid,  return receipt requested,  to the following addresses, or such
other  addresses  as may be  furnished  hereafter  by notice in writing,  to the
following parties.

                  To the Company:   Allis-Chalmers Corporation
                                    2255 Glades Road, Suite #307E
                                    Boca Raton, FL 33431
                                    Attn:  John Grigsby
                                    Telecopy No.: (561) 994-3298

                  With copies to:   Robert E. Nederlander
                                    Nederlander organization, Inc.
                                    810 7th Avenue
                                    New York, NY 10019
                                    Telecopy No.: (212) 586-5862

                                    Foley & Lardner
                                    777 East Wisconsin Avenue
                                    Milwaukee, WI 53202-5367
                                    Attn:  Luke E. Sims
                                    Telecopy No.: (414) 297-4900

                  To the PBGC:      Pension Benefit Guaranty Corporation
                                    1200 K Street, N.W.
                                    Washington, D.C. 20005


                                      -4-
<PAGE>


                                    Attn: Frank McCulloch, Esq.
                                    Telecopy No.: (202) 326-4112

                  With copies to:   Anderson Kill & Olick, P.C.
                                    1251 Avenue of the Americas
                                    New York, NY 10020-1182
                                    Attn:  Mark D. Silverschotz, Esq.
                                    Telecopy No.: (212) 278-1733

                  To the UAW        Richard D. Lichtenstein, Ph. D.
                  Retiree Trust:    University of Michigan
                                    Department of Healthy Management & Policy
                                    1420 Washington Heights
                                    Ann Arbor, MI  48109
                                    Telecopy No.: (734) 764-4338

                  With copies to:   Groom Law Group
                                    1701 Pennsylvania Avenue, Suite 1200
                                    Washington, DC  20006
                                    Attn.:  Ian Lanoff
                                    Telecopy No.: (202) 659-4503

                  To the Non-UAW    Art Streich
                  Retireee Trust:   1307 Milwaukee Street
                                    Delafield, WI  53018
                                    Telephone No.: (414) 646-8182

                  With copies to:   Michael Best & Friedrich
                                    100 East Wisconsin Avenue, Suite 3300
                                    Milwaukee, WI  53202
                                    Attn.:  Scott H. Engroff, Esq.
                                    Telecopy No.:  (414) 277-0656

All demands,  requests,  consents, notices and communications shall be deemed to
have been given either:  (x) at the time of actual delivery  thereof;  or (y) if
given  by  certified  or   registered   mail,   five  (5)  business  days  after
certification  or  registration  thereof,  to  any  officer  (or  an  authorized
recipient of deliveries to the office) of the party to whom given.

              5.3 Specific  performance.  Each of the parties to this  Agreement
shall be entitled to enforce its rights under this Agreement,  specifically,  to
recover damages and costs  (including  attorneys'  fees) caused by any breach of
any provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement, and that any
party  may in its  sole  discretion  apply  to any  court  of law or  equity  of
competent  jurisdiction  (without  posting  any bond or  deposit)  for  specific
performance  and/or


                                      -6-
<PAGE>


other  injunctive  relief in order to enforce or prevent any  violations  of the
provisions of this Agreement.

              5.4 Integration and Severability.  Except for the Master Agreement
and that certain  Registration  Rights Agreement,  dated as of the Release Event
Date,  between the  Company and the PBGC,  this  Agreement  embodies  the entire
agreement  and  understanding   among  the  parties  and  supersedes  all  prior
agreements and understandings relating to the subject matter hereof. In case any
one or more of the provisions contained in this Agreement,  or in any instrument
contemplated  hereby, or any application thereof,  shall be invalid,  illegal or
unenforceable  in any respect,  the  validity,  legality and  enforceability  of
remaining  provisions  contained herein and therein,  and any other  application
thereof shall not in any way be affected or impaired thereby.

              5.5  Counterparts.  This  Agreement may be executed in one or more
counterparts,  each of  which  shall  be  deemed  an  original  but all of which
together shall constitute one and the same instrument.

              5.6 Covenant of Further  Assurances.  Each party hereto  agrees to
execute any and all documents,  and to perform such other actions, to the extent
permitted by law, that may be  reasonably  necessary or expedient to further the
purposes of this  Agreement  or to further  assure the  benefits  intended to be
conferred hereby.

              5.7 Public  Announcements.  The parties hereto agree that no party
hereto shall make any public  announcement or other dissemination of information
concerning  the contents of this Agreement and the documents to be delivered and
transactions contemplated hereby, without the prior written consent of the other
parties  hereto.  Notwithstanding  the foregoing,  any party hereto may make any
disclosure   which  its  counsel  advises  is  required  by  applicable  law  or
governmental  rule and  regulation,  in which  case the other  parties  shall be
advised in advance,  and the  parties  shall use  reasonable  efforts to cause a
mutually agreeable release or announcement to be issued.

              5.8 Captions. The captions used in this Agreement are for purposes
of convenience only and shall not be deemed to modify,  or provide any basis for
interpretation of, any of the provisions of this Agreement.

              5.9 Governing Law. The Agreement  shall be construed in accordance
with, and shall be governed by, the internal laws of the State of Delaware.

              5.10 Jurisdiction. The courts of the State of New York in New York
County and the United  States  District  Court for the Southern  District of New
York shall have  jurisdiction  over the parties  with  respect to any dispute or
controversy between them arising under or in connection with this agreement and,
by  execution  and  delivery  of this  agreement,  each of the  parties  to this
Agreement submits to the jurisdiction of those courts, including but not limited
to the in personam and subject matter  jurisdiction of those courts,  waived any
objections to such jurisdiction on the grounds of venue or forum non conveniens,
the  absence of in  personam  or subject  matter  jurisdiction  and any  similar
grounds, consents to service of process by mail (in accordance with Section 5.2)
or any other manner permitted by law, and


                                       -6-
<PAGE>


irrevocably  agrees to be bound by any judgment  rendered  thereby in connection
with this Agreement.

              5.11 Mutual  Waiver of Jury  Trial.  Because  disputes  arising in
connection with complex financial transactions are most quickly and economically
resolved by an  experiences  and expert  person and the parties wish  applicable
state and federal laws to apply  (rather than  arbitration  rules),  the parties
desire that their disputes be resolved by a judge applying such applicable laws.
Therefore,  to achieve the best  combination  of the  benefits  of the  judicial
system and of  arbitration,  the parties hereto waive all right to trial by jury
in any  action,  suit or  proceeding  brought to enforce or defend any rights of
remedies under this Agreement.

              5.12 Term.  This  Agreement  shall  continue  in effect  until the
earlier of (i) the fifth (5th)  anniversary  of the  Release  Event Date or (ii)
such time as the PBGC ceases to beneficially own not less than 117,020 shares of
Common Stock (subject to adjustment as provided in Section 5.13 hereof).

              5.13 Equitable Adjustment.  In the event of a stock split, reverse
stock  split,  recapitalization,  reorganization  or  comparable  change  in the
Company's  capital  structure  (other than an issuance of Common  Stock for fair
value),  any  reference  to a specific  number of shares of Common  Stock herein
shall be equitably adjusted to reflect such change.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written.

                                         ALLIS-CHALMERS CORPORATION


                                         By: /s/John T. Grigsby, Jr.
                                             Name: John T. Grigsby, Jr.
                                             Title: Executive V.P. and CFO


                                         PENSION BENEFIT GUARANTY CORPORATION


                                         By: /s/Robert M. Klein
                                             Name: Robert M. Klein
                                             Title: Acting Chief Negotiator


                                      -7-
<PAGE>



                                         AL-CH COMPANY, L.P.
                                         By: Q.E.N., Inc.

                                         By: /s/Robert E. Nederlander
                                             Name Robert E. Nederlander
                                             Title: President


                                         AMENDED AND  RESTATED   RETIREE  HEALTH
                                         TRUST   AGREEMENT   FOR   UAW   RETIRED
                                         EMPLOYEES OF ALLIS-CHALMERS CORPORATION

                                         By:    WELLS FARGO BANK, N.A., in its
                                                Representative capacity of the
                                                above-named Trust:

                                                By:   /s/Jane McKeever
                                                      Name: Jane McKeever
                                                      Title: Trust Officer


                                         AMENDED  AND   RESTATED  HEALTH   TRUST
                                         AGREEMENT FOR NON-UAW RETIRED EMPLOYEES
                                         OF ALLIS-CHALMERS CORPORATION

                                         By:     FIRSTAR TRUST COMPANY


                                                By:   /s/Richard A. Whittow
                                                      Name: Richard A. Whittow
                                                      Title: Vice President




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